Phillip Wasserman Case: Can You Withdraw a Guilty Plea in Tax Crimes?

Phillip Wasserman, a former insurance executive, faced legal trouble over tax-related charges that led to a guilty plea. His case raises an important question: Can someone withdraw a guilty plea in a tax crime case? This issue matters because pleading guilty often results in serious consequences, and defendants may later regret their decision or claim they were misled.

Understanding the process of withdrawing a guilty plea is crucial for anyone facing similar charges. While the legal system allows for such requests under specific circumstances, success is uncertain.

Criminal Tax Allegations and Court Proceedings

Wasserman was accused of fraudulent tax practices while running his insurance business. Prosecutors alleged he evaded taxes by underreporting income, inflating expenses, and misrepresenting financial transactions. The case relied on financial records, witness testimony, and forensic accounting to argue that he knowingly violated tax laws.

The charges fell under 26 U.S. Code 7201, which criminalizes tax evasion and carries severe penalties, including substantial fines and imprisonment. The IRS Criminal Investigation Division played a key role, using bank records and corporate documents to uncover financial discrepancies.

Prosecutors presented evidence of deliberate efforts to conceal taxable income, such as funneling money through shell companies and misclassifying personal expenses as business deductions. Wasserman’s defense contended that any discrepancies were due to accounting errors rather than intentional misconduct.

Withdrawing a Guilty Plea in Tax Cases

Reversing a guilty plea in a tax case is difficult but possible under limited circumstances. Defendants must provide a valid reason, such as ineffective legal counsel, newly discovered evidence, or proof that the plea was not made voluntarily. Federal Rule of Criminal Procedure 11(d) allows withdrawal before sentencing if the defendant can show a “fair and just reason.”

A common argument for withdrawal is that the defendant did not fully understand the plea’s consequences. Tax cases involve complex financial matters, and if a defendant was misinformed about penalties, restitution, or collateral consequences—such as professional license revocation or civil tax liabilities—they may argue their plea was not entered knowingly. Courts scrutinize these claims, especially if the defendant had competent legal representation and was advised of the plea’s implications.

Another potential basis for withdrawal is prosecutorial misconduct or misrepresentation. If the government withheld exculpatory evidence or provided misleading information that influenced the plea, a defendant might argue they were pressured into pleading guilty based on incomplete or inaccurate data. However, courts require clear proof that the withheld evidence would have significantly affected the case’s outcome.

Timing is critical. Judges are more likely to approve a motion made soon after the plea rather than one filed closer to sentencing. Delays can signal a strategic move rather than a legitimate concern. Additionally, if a defendant has already benefited from the plea agreement—such as reduced charges or sentencing recommendations—courts may be reluctant to allow a reversal.

Some defendants claim ineffective assistance of counsel, arguing their attorney provided inadequate representation, such as failing to investigate financial records or miscalculating tax loss amounts. Courts apply a high standard, requiring proof that the attorney’s errors directly impacted the plea decision. If the defense strategy was reasonable given the evidence, this argument is unlikely to succeed.

Consequences Following Conviction

A tax crime conviction carries long-term financial and legal repercussions. One immediate effect is the financial burden of court-ordered restitution and civil tax assessments. The IRS often pursues unpaid taxes, penalties, and interest separately from the criminal case, meaning a convicted individual may still owe substantial sums after serving a sentence. Under 26 U.S. Code 6663, civil fraud penalties can reach 75% of the underpaid tax amount.

Beyond monetary penalties, a conviction can severely impact employment prospects, particularly in industries requiring financial responsibility. Many professional licenses—including those for accountants, financial advisors, and attorneys—can be revoked. Employers conducting background checks may also hesitate to hire someone with a record of financial misconduct.

Access to credit and financial services can become more difficult. Lenders assess risk based on financial history, and a conviction for tax fraud may lead to higher interest rates or loan denials. Mortgage applications, business financing, and personal loans can all be affected, as banks may view tax fraud as a sign of financial unreliability. Some financial institutions may even close existing accounts if the conviction involved fraudulent banking activities.