SCHOOL OF LAW- PARKLANDS

BACHELOR OF LAWS

UNIT NAME: INTERNATIONAL TAX LAW

UNIT CODE: BLW4206

COURSE INSTRUCTOR: HON. EUNICE NG’ANG’A

CAT 2 (part 1)

NAME REG. NUMBER SIGNATURE

LUKA KIPRONO BLAW/2020/62907

JOSEPH B. OMAYO BLAW/2021/81972

ZIPPORAH GICHUKI BLAW/2020/89412

JAMES NYAMU BLAW/2014/57664

THE INTERNATIONAL CASE ON TAX LAW

The United States v. John Gotti, commonly known as the "Teflon Don"

Correct case citation: UNITED STATES OF AMERICA v. JOHN A. GOTTI,

U.S. v. Gotti, No. S3 04 Cr. 690 (SAS) (S.D.N.Y. Aug. 7, 1992)

TABLE OF CONTENTS
1.0. INTRODUCTION................................................................................................................3

2.0. BACKGROUND OF THE CASE........................................................................................3

3.0. FACTS AND ISSUES (using IRAC method)......................................................................4

4.0. THE ILLEGAL SOURCES OF INCOME AND TAXATION...........................................5

5.0. PRINCIPLES OF TAXATION VIOLATED BY JOHN GOTTI........................................6

a) Principle of Equity:...............................................................................................................7

b) Principle of Certainty:.......................................................................................................7

c) Principle of Convenience:.....................................................................................................7

d) Principle of Economy:......................................................................................................7

e) Principle of Simplicity:.........................................................................................................8

6.0. CONCLUSION:...................................................................................................................8

7.0. REFERENCES.....................................................................................................................9

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 EXECUTIVE SUMMARY

The case of United States v. John Gotti, also known as the "Teflon Don," stands as a landmark

example of the government's pursuit of tax evasion, even among high-profile figures engaged in

organized crime. John Gotti, as the leader of the Gambino crime family, was involved in various

criminal activities, including racketeering, conspiracy to commit murder, and illegal gambling,

which generated substantial income.

Despite the illegal nature of his earnings, Gotti was obligated to report and pay taxes on his

income under U.S. tax law. However, he attempted to conceal his earnings and evade taxation,

ultimately leading to his conviction for tax evasion in 1992. This case underscores the

government's commitment to holding individuals accountable for tax evasion, even when their

income is derived from illegal sources.

Tax evasion involving illegal income poses significant challenges for tax authorities, as

individuals may employ various tactics to hide their earnings, such as cash transactions, offshore

accounts, and money laundering schemes. Detecting and prosecuting tax evasion related to

illegal income requires close cooperation between law enforcement agencies, financial

institutions, and tax authorities, as well as the use of advanced investigative techniques and tools.

In conclusion, the United States v. John Gotti case serves as a reminder on how states and the

governments are determined to combat tax evasion, regardless of the source of income. By

convicting Gotti of tax evasion, the government demonstrated that individuals engaged in

criminal activities cannot evade their tax obligations and will be held accountable for their

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actions, highlighting the importance of upholding tax laws to ensure fairness and integrity in the

tax system.

INTRODUCTION

The case "United States v. Gotti" involved legal proceedings against individuals associated with

the Gotti faction, including John Gotti, in the context of various criminal charges. The case has

garnered significant attention and legal scrutiny especially on matters of tax from illegal sources

and tax evasion.

BACKGROUND OF THE CASE

John Gotti, also known as the "Teflon Don," was a prominent figure in the American Mafia,

particularly the Gambino crime family, one of the five major Mafia families in New York City.

Gotti rose through the ranks of the Gambino family, eventually becoming its boss in the mid-

1980s after orchestrating the assassination of then-boss Paul Castellano. Gotti's leadership style

and flamboyant personality earned him considerable attention from both law enforcement and

the media. Despite facing numerous criminal charges over the years, including assault, extortion,

and racketeering, Gotti managed to evade conviction in multiple trials during the 1980s, earning

him the nickname "Teflon Don" due to his apparent immunity to prosecution.

However, in 1992, Gotti was finally brought to justice in what became known as the United

States v. John Gotti case (the case for this discussion). The federal government charged Gotti

with various crimes, including racketeering, conspiracy to commit murder, illegal gambling, and

tax evasion. The tax evasion charges stemmed from allegations that Gotti failed to report income

derived from his criminal activities and engaged in various schemes to conceal assets and evade

taxes.

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The trial attracted significant media attention, as Gotti was one of the most high-profile figures

ever to be prosecuted by the federal government. Despite his previous successes in court, Gotti's

luck ran out, and he was ultimately convicted on all charges in 1992. The case marked a

significant victory for law enforcement agencies in their ongoing efforts to dismantle organized

crime syndicates and hold their leaders accountable for their criminal activities. Gotti's

conviction also served as a warning to other mob bosses that even the most powerful figures

were not beyond the reach of the law.

FACTS AND ISSUES

John Gotti was implicated in a conspiracy within the "Gambino Crime Family" to engage in

illegal activities like gambling, extortion, robbery, and murder. The indictment detailed a pattern

of racketeering and criminal conduct within the organization. Evidence presented included

wiretapped conversations implicating Gotti and his associates in bribery schemes, tribute

payments, and other criminal acts. The case also highlighted challenges related to witness

intimidation, obstruction of justice, and the risk of jury tampering. John Gotti's defense attorney,

Cutler, faced criticism for making comments to the media that could have prejudiced the trial

proceedings. The legal proceedings involved complex arguments regarding sentencing, forfeiture

orders, and the need for fact-specific inquiries to ensure a fair trial. Ultimately, the case shed

light on the intricate web of criminal activities associated with organized crime and the legal

complexities surrounding such cases.

THE ILLEGAL SOURCES OF INCOME AND TAXATION

Illegal sources of income refer to funds obtained through criminal activities or other illicit

means, such as drug trafficking, fraud, extortion, money laundering, and organized crime. While

individuals who earn income from illegal sources are obligated to report and pay taxes on that

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income, the reality is that many individuals engaged in criminal activities may attempt to conceal

their income and evade taxation.

In the case of United States v. John Gotti, John Gotti was involved in various criminal activities

as the leader of the Gambino crime family, including racketeering, conspiracy to commit murder,

and illegal gambling. These criminal activities generated substantial income for Gotti and his

associates, much of which was likely obtained through illegal means.

Despite the illegality of his income sources, Gotti was still required to report and pay taxes

on his earnings under U.S. tax law. However, like many individuals engaged in organized crime,

Gotti likely attempted to conceal his income and evade taxation to avoid drawing attention from

law enforcement and tax authorities. By convicting Gotti of tax evasion, the government

demonstrated that individuals engaged in criminal activities cannot escape their tax obligations

and will be held accountable for their actions.

Tax evasion involving illegal sources of income poses significant challenges for tax authorities,

as individuals may use various methods to conceal their earnings, such as cash transactions,

offshore accounts, and money laundering schemes. Detecting and prosecuting tax evasion related

to illegal income requires close cooperation between law enforcement agencies, financial

institutions, and tax authorities, as well as the use of advanced investigative techniques and tools.

The case of United States v. John Gotti highlights the efforts by states to combat tax evasion

related to illegal income and demonstrates the consequences individuals face when attempting to

evade their tax obligations, even in the context of organized crime.

PRINCIPLES OF TAXATION VIOLATED BY JOHN GOTTI

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The principles of taxation are fundamental concepts that guide the design, implementation, and

evaluation of tax systems in countries around the world. These principles help ensure that taxes

are imposed fairly, efficiently, and effectively.

a) Principle of Equity: The principle of equity suggests that taxes should be imposed fairly,

with individuals and businesses paying their fair share based on their ability to pay. In the

case of John Gotti, his conviction for tax evasion demonstrates the importance of

ensuring that all individuals, regardless of their social status or influence, comply with

tax laws. By evading taxes, Gotti violated the principle of equity by not contributing his

fair share to support public services and infrastructure.

b) Principle of Certainty: The principle of certainty requires that taxpayers know how

much tax they owe and when they are required to pay it. Gotti's conviction for tax

evasion highlights the importance of certainty in tax administration. Despite his attempts

to conceal income and assets, the legal system ultimately held him accountable for his tax

obligations, providing certainty to other taxpayers that tax evasion will not go

unpunished.

c) Principle of Convenience: The principle of convenience suggests that taxes should be

collected in a manner that is convenient for taxpayers and minimizes compliance costs.

Gotti's case underscores the importance of convenience in tax administration by ensuring

that tax laws are enforced efficiently and effectively. While Gotti may have attempted to

evade taxes to avoid financial obligations, the legal system worked to ensure that tax

collection remained convenient and straightforward for law-abiding taxpayers.

d) Principle of Economy: The principle of economy emphasizes the need for tax

administration to be cost-effective and efficient. Gotti's conviction for tax evasion

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 demonstrates the importance of allocating resources effectively to combat tax evasion

and enforce tax laws. By investing in enforcement efforts and pursuing cases like Gotti's,

governments can ensure that tax administration operates with economy and efficiency.

e) Principle of Simplicity: The principle of simplicity suggests that tax laws should be

clear, easy to understand, and administer. Gotti's case highlights the importance of

simplicity in tax administration by ensuring that tax laws are applied consistently and

transparently. Despite the complexity of the case, the legal system worked to apply tax

laws in a manner that was simple and understandable to both taxpayers and enforcement

authorities.

CONCLUSION:

The United States v. John Gotti case serves as a significant example of the consequences

individuals face when engaging in tax evasion, even when they hold positions of power and

influence. Gotti, a prominent figure in organized crime, was convicted not only for racketeering

and conspiracy to commit murder but also for tax evasion, highlighting the seriousness with

which authorities treat financial crimes.

In international tax law, the principle of tax evasion is universally condemned. Countries around

the world, including Kenya, have stringent regulations in place to combat tax evasion and ensure

compliance with tax obligations. Tax evasion undermines the integrity of the tax system,

depriving governments of essential revenue needed for public services and economic

development.

Kenyan income tax law, like many other jurisdictions, requires individuals to report all income

earned, including income from illegal activities, and pay taxes accordingly. Failure to comply

with these obligations constitutes tax evasion and is subject to legal penalties.

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The case of John Gotti underscores the importance of cooperation between law enforcement

agencies and tax authorities in combating financial crimes. In Kenya, the Kenya Revenue

Authority (KRA) plays a crucial role in enforcing tax laws and investigating cases of tax evasion.

The KRA utilizes various tools and techniques, such as data analytics and information sharing

agreements with other countries, to identify and prosecute tax evaders.

Furthermore, the Gotti case highlights the need for transparency and accountability in financial

transactions. In Kenya, efforts to enhance transparency in tax administration and improve

compliance have led to the implementation of initiatives such as electronic tax filing and the use

of taxpayer identification numbers (PINs) to track income and tax payments.

Furthermore, the Tax Appeals Tribunal (TAT) in Kenya provides taxpayers with an avenue to

challenge tax assessments and decisions made by the KRA. The TAT plays a vital role in

ensuring taxpayer rights are upheld and that tax disputes are resolved fairly and transparently.

Overall, the United States v. John Gotti case serves as a reminder of the importance of upholding

the rule of law and ensuring that individuals, regardless of their status or influence, are held

accountable for their actions, particularly when it comes to fulfilling their tax obligations. In both

international and domestic contexts, combating tax evasion remains a priority for governments

seeking to promote economic stability and social equity.

REFERENCES

Case Text, found at < https://casetext.com/case/us-v-gotti> accessed on 6th March , 2024.