Prosecutors trying the government’s case against high-profile US Supreme Court litigator Tom Goldstein are asking jurors to draw lots of inferences from circumstantial evidence to find him guilty of intentionally dodging his taxes.
The defense has given them lots of reasons to at least hesitate before making the leap.
In the first four weeks of his trial in the US District Court for the District of Maryland on tax evasion and other charges, Goldstein’s lawyers elicited testimony from some of the government’s key witnesses, suggesting it ignored or missed key evidence favorable to the defense.
They raised doubts about whether Goldstein—who won and lost millions of dollars at a time in poker games with Hollywood stars and billionaires—actually had net gambling income to report. His lawyers repeatedly said there’s no evidence that Goldstein directed anyone to mischaracterize transactions as business expenses, or that he intended for income to go unreported.
And that was all before Goldstein took the stand Feb. 11, not only to explain away the prosecution’s tax case but to introduce his defense to other charges he’d seemingly admitted to.
Goldstein collected two big wins before the trial even started. On the eve of trial, the government dismissed its tax evasion charges for all years except 2016, and Goldstein’s lawyers were able to exclude evidence that he had multiple extramarital affairs and put several of the women on his law firm’s payroll.
And while much of his defense pivoted on what was reported to whom, when and how, Goldstein and his lawyers came back to one key point: his adventures in high-stakes poker mostly cost him. And if he failed to report his gambling winnings and losses accurately, it either wasn’t willful or was the fault of his accountants.
Even in 2016, a year when Goldstein reported net winnings of $2.7 million on his tax return, he told jurors that was the result of bad math. He said he actually lost by several million, walking through records and explaining what he misunderstood when he calculated the figure he provided to his accountants in October 2017.
All told, Goldstein said he believes he’s down $10 million from his years of gambling.
“I’m a loser,” he told the jury.
Accountants on Trial
Goldstein is charged with on one count of tax evasion, eight counts of aiding and abetting in the preparation of false and fraudulent tax returns, four counts of willful failure to pay taxes, and three counts of making a false statement on a loan application.
The government rested its case-in-chief Feb. 10 following 12 days of evidence. Goldstein testified for a day and half after that.
The government has called 34 witnesses, including ultra high-stakes gambling compatriots and their representatives, former colleagues and clients, former Goldstein & Russell PC office managers, Goldstein’s former accountants, and representatives from mortgage and title companies that helped or considered helping Goldstein fund the purchase of a new home in 2021.
The appearance of Spider-Man star Tobey Maguire as a government witness lent the trial some star power, but Maguire—known for convening high-stakes poker games—testified only briefly about hiring Goldstein to help collect a gambling debt and re-directing the $500,000 fee to cover one of Goldstein’s own debts.
Goldstein failed to alert his accountants, and the income went unreported. But Goldstein testified that he instructed a firm manager to open a matter for Maguire, something he suggested would be inconsistent with trying to conceal the income.
Jurors heard that Goldstein’s accountants, perhaps the government’s most important witnesses, repeatedly made significant errors handling his taxes.
The original basis for the government’s investigation was Goldstein’s failure to list two foreign bank accounts on his tax returns—at least that’s what law enforcement agents told him when they informed him that he was under criminal investigation in October 2020.
But the failure to report the accounts was, without dispute, the accountant’s mistake. He took responsibility for it while on the stand.
Goldstein’s lawyers also elicited testimony showing that after he told his accountants, via his law firm manager, to record $500,000 in income from Malaysia that wouldn’t otherwise be reflected in any bank records, they failed to do so.
It would have been “the easiest thing in the world” to hide that income from the IRS, Goldstein’s lawyer Jonathan Kravis said while cross-examining Goldstein. But he didn’t.
Goldstein is also accused of failing to separately report his gambling wins and losses on his tax returns, even if it would have zero impact on his tax liability. But Goldstein claims he didn’t know that reporting requirement existed, and that his accountants should have.
“If there’s a tax rule that I don’t know or information that I don’t know to give them, I need them to ask me for it,” Goldstein testified. “That’s why I hired them.”
Government’s Evidence
The government presented evidence that Goldstein sometimes redirected certain fees that should have been sent to his firm, or directly used law firm funds, to satisfy his gambling debts—leaving it for the jury to decide whether he did that to conceal them for tax purposes.
Prosecutors also introduced evidence—some of it admitted to by the defense—that Goldstein spent significant sums of money on luxury items and travel when he had outstanding taxes.
Jurors heard that Goldstein made inconsistent statements to IRS officials and others about the source of almost $1 million in cash that he brought back from Hong Kong in a bag in 2018.
The government maintains that it’s taxable income. Goldstein testified that it was a loan—one of two—from his client and fellow gambler Paul Phua. He said he’d asked to borrow the money to pay off his outstanding taxes after the IRS revenue agent who helped arrange his payment plan recommended he get a loan.
Goldstein also admitted on cross examination, without qualification, to failing to check a box on his tax return indicating that he had cryptocurrency accounts in 2020 and 2021 and failing to pick up any income from there. Prosecutors have offered evidence showing significant trading volume.
On the false statement charges related to the loan application, the government seemingly scored a key win when Goldstein and his lawyers stipulated that he had indeed told legal writer Jeffrey Toobin, for a December New York Times Magazine article, that he understated his debts on a mortgage application to prevent his now-estranged wife and partner in founding SCOTUSblog, Amy Howe, from learning about the scale of his gambling debts.
Prosecutors tried, briefly, to get Goldstein to admit on the stand that he’d also lied to his wife about his extramarital affairs.
Goldstein sidestepped that questioning, though, and challenged the prosecution’s assertion that he signed the loan documents in Maryland. That was the technicality that helped former Baltimore state’s attorney Marilyn Mosby overturn her conviction on a false statement charge related to mortgage documents—in a trial also presided over by the judge overseeing the Goldstein case, Judge Lydia Kay Griggsby.
“Venue matters for charges like this,” Goldstein told the jury.
For charges of making a false statement on a loan application, venue—the district where the charges are brought—is proper only when an “essential conduct element” of the offense took place there.
Mishandled Transactions
Goldstein hasn’t denied that he sometimes used his law firm’s funds to pay for personal expenses, nor did he deny having clients send their legal fees elsewhere at times. But neither of those things are illegal.
Although some of those transactions weren’t properly reported or characterized on his tax returns, Goldstein said it was entirely unintentional.
For the six years at issue, the government identified a total of six personal expenditures that were improperly deducted as business expenses, and three instances where Goldstein asked a client to send fees owed to the firm to a third party.
The government hasn’t produced evidence that Goldstein told his firm managers or accountants to classify personal expenditures as deductible business expenses. Instead, it’s relying on jurors to infer that by failing to classify the transactions one way or another when he instructed his firm managers to make certain wires, Goldstein intended for them to be improperly deducted.
The defense plans to call a few more witnesses Tuesday—including the government’s lead case agent—before resting.
After the parties deliver their closing arguments—likely after they hash out jury instructions—Goldstein’s fate will be in the jury’s hands, assuming the judge doesn’t grant his renewed motion of acquittal.
But even then, Goldstein’s story may not be over.
After the trial began, the Hollywood production company responsible for the recent biopic of rock legend Bruce Springsteen announced it picked up the rights to a movie adaptation of writer George Pendle’s “Tommy Supreme and the Blitz.”
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