U.S. Appellate Court Affirms U.S. Conviction of Violating Canadian Excise Tax Law

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Wednesday, October 1, 2003
Bruce Zagaris
On July 18, 2003, the U.S. Court of Appeals for the Fourth Circuit affirmed the conviction of David and Carl Pasquantino and one associate for using interstate wires in a scheme to defraud Canada of revenues related to taxation on the importation and the sale of liquors. The defendants ordered large quantities of alcohol from discount stores in Maryland, a portion of which would be smuggled into Canada and sold. The controversy among judges was whether prosecution of the defendants could be enacted in observance of the revenue laws of a foreign sovereign. The majority ruled that the defendants could be prosecuted under U.S. wire and mail fraud statutes when the victim of the scheme is a foreign sovereign as long as the prosecution does nothing civilly or criminally to enforce any tax judgments or claims.