Attorney Sanders handed 18 months in federal prison

Published 12:00 am Wednesday, March 11, 2009

JACKSON — Vicksburg attorney Marshall Sanders’ voice was low but his words showed a measure of acceptance just before an 18-month prison sentence was handed down in federal court Tuesday.

“I’ve never tried to defraud anybody,” Sanders told U.S. Magistrate James C. Sumner in a collection of short, general references accented by requests to the court to consider his 22-year career.

“I had nothing to hide. I simply didn’t file taxes on a timely basis,” Sanders said.

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Of his career practicing mostly civil law, Sanders said, “If I say so myself, I have a pretty good record.”

Sanders, 57, was also ordered to pay $1,025,453 in restitution to the Internal Revenue Service. His guilty plea, entered in November, was two misdemeanor counts. The sentence for one was six months and the other 12 months with the time to be served consecutively.

He also will be on probation for one year after his release from prison, expected to be in Yazoo City.

Sanders’ first payment on the restitution — for $250,000 — is due in 45 days and subsequent payments will be $3,000 monthly.

Sanders was indicted in May 2008 on three felony counts of income tax evasion for 2000-2003. The plea agreement also allowed Sanders to pay taxes for 2000 through 2002, thereby avoiding a felony conviction that could have resulted in a 15-year sentence. According to documents filed with the U.S. District Court, Sanders filed no returns despite having grossed more than $2.3 million in 2001 and nearly $500,000 in 2002.

Prosecutors with the Tax Division of the U.S. Department of Justice said in November that Sanders has cooperated with the IRS to determine his correct income tax liability from 1995 to the present because he also did not file any returns during that period. Sanders is to file complete and accurate returns for those years, during which the government alleged he owed more than $1.4 million to the IRS.

In the indictment, the government alleged Sanders used his attorney escrow account to disperse his personal income. The accounts are typically used for client funds, real estate closings and other matters.

Before the sentence was read, Sanders’ lead attorney, Frank W. Trapp, referenced business use of a vehicle as one concession agreed to by the government in calculating the restitution and that the portion of client funds tapped from the escrow account was still in question.

Those funds “were always handled properly,” Trapp argued, adding Sanders was “a victim” of a separate fraud scheme based in the Caribbean involving other family members that affected his ability to pay income taxes, but did not elaborate.

In response, prosecutor Kevin Lombardi cited a 1971 case before the U.S. Tax Court that stated a law firm cannot postpone reporting of income from fees held in trust once all events in a case have transpired.

“The government has run out of patience,” Lombardi said, referencing the amount of money the IRS alleged was owed by Sanders in the past 14 years.

Appearing in court by request of Sanders’ legal counsel were Secretary of State Delbert Hosemann and Vicksburg certified public accountant Russell Hawkins. Trapp argued for a lower restitution, totaling $913,793, based on figures Hawkins provided. Hosemann said after the sentencing that he appeared because of his experience with tax law and was not acting as a state official. Hosemann was in private practice with a Jackson firm before being elected in 2007.

In accordance with the plea agreement, the government dismissed the indictment.

Sanders’ status with the Mississippi Bar remains active, according to its Web site. Attorneys charged with misdemeanors can face action from the bar if they involve fraud, dishonesty, misrepresentation, deceit or willful failure to account for a client’s money or property.

Such proceedings are confidential and announced only if they result in a public admonition, license suspension or disbarment.

Sanders has maintained the confidence of longtime friends in Vicksburg, where he grew up before attending Harvard and earning an economics degree and Emory University School of Law.


Contact Danny Barrett Jr. at