Submitted: October 21, 2016
from United States District Court for the District of
Minnesota - St. Paul
LOKEN, SMITH,  and COLLOTON, Circuit Judges.
COLLOTON, Circuit Judge.
2014, a jury convicted Bartolomea Montanari of tax evasion,
mail fraud, and wire fraud for conduct relating to the
operation of three companies that he owned in Minnesota and
Kentucky. The district court sentenced him to 78 months'
imprisonment, the bottom of the advisory guideline sentencing
range. Montanari challenges the conviction based on the
district court's limitation of his cross-examination of a
witness, and he disputes the court's calculation of his
advisory guideline range. We affirm the conviction and reject
most of Montanari's challenges to the sentence, but we
vacate the judgment and remand for resentencing based on one
guideline computation error acknowledged by the government.
owned a real estate business in Minnesota called St. Croix
Development, LLC and two businesses in Kentucky related to
coal mining, Emlyn Coal Processing, LLC and Montie's
Resources, LLC. From around 2004 to 2006, Montanari failed to
pay payroll taxes due from St. Croix Development and also
failed to file several of the company's quarterly payroll
December 2008, Minnesota-based IRS revenue officer Dale Mikel
was assigned to Montanari's case to collect St. Croix
Development's delinquent taxes. In fall 2009, Mikel sent
Montanari IRS Form 433-A to obtain financial information
about him for purposes of collection. Montanari returned his
completed Form 433-A, signed under penalty of perjury, in
Form 433-A, Montanari stated that he had "no income
currently." He listed St. Croix Development as an
"employer, " but did not mention Emlyn Coal or
Montie's, although he drew a monthly salary of up to $50,
000 from them. Montanari falsely represented that he had no
bank accounts, credit cards, or business assets. He also
failed to list multiple luxury vehicles that he owned or a
Tennessee home worth over $1.4 million in which he had been
living since September 2009.
ultimately determined that Montanari was liable for the
unpaid St. Croix Development payroll taxes under a trust fund
recovery penalty. This penalty is assessed against a person
who is responsible for paying withheld employment taxes and
willfully fails to pay them. 26 U.S.C. § 6672.
around the same time, Emlyn Coal and Montie's developed
tax problems in Kentucky. Minnesota businessman David Kloeber
had co-owned Emlyn Coal with Montanari from 2007 to 2009.
Until Montanari bought out Kloeber's interest in 2009,
Kloeber and his employees had managed the taxes of Emlyn Coal
and Montie's. After Kloeber's departure in 2009, the
companies fell behind in their obligations to pay employment
taxes and coal excise taxes. Montanari received numerous
notices from the IRS about the outstanding taxes.
IRS revenue officer Evelyn McDaniel began investigating Emlyn
Coal and Montie's in 2010. In an interview with McDaniel,
Montanari said that he was unaware that the companies were
failing to pay taxes or to file tax returns. He also stated
that the companies were not receiving any revenue. McDaniel
ultimately determined that Montanari was liable for unpaid
payroll and excise taxes from Emlyn Coal and Montie's
under a trust fund recovery penalty.
2011, Montanari filed a second Form 433-A under penalty of
perjury and failed to report bank accounts, credit cards,
personal property, and real property. He also did not explain
that he transferred funds from Emyln Coal and Montie's to
himself for personal expenses. From 2009 until 2012,
Montanari withdrew over $1.7 million from Emlyn Coal and
Montie's; some of the funds were transferred to a bank
account in the name of a shell company called Bella Luca
Properties LLC. Montanari spent much of this money on a new
home, vacations, and vehicles.
April 2012, Kloeber contacted IRS Special Agent James Shoup
regarding Montanari's conduct. Kloeber was acquainted
with Shoup through a prior unrelated tax investigation. Shoup
began a criminal investigation of Montanari. During a
telephone call with Montanari in September 2012, Shoup asked
several questions about why Montanari did not use any of the
money that he was taking from the companies to pay their
employment taxes. Montanari answered that he did not know
why. Shoup also inquired about a purchase of a bulldozer by
Montie's in 2009. In that transaction, Montanari was
suspected of ...