The United States Court of Appeals for the Sixth Circuit has affirmed the convictions and sentences of Christos Karasarides Jr. and Ronald A. DiPietro, the principal figures in a long-running illegal gambling and tax evasion scheme in Northern Ohio.
In a decision filed today, the appeals court rejected challenges to their trial procedures and sentencing calculations, upholding the district court’s judgments in the case of United States v. Karasarides, et al.
The Anatomy of the Scheme
The case revolved around two “skilled” gaming rooms, Redemption and Skilled Shamrock, which operated illegally and relied entirely on cash—cash payouts to players, cash to employees, and cash profits for the owners. The cash-based nature of the operations was central to concealing income and evading taxes.
- Christos Karasarides Jr., a co-owner, was deeply involved in the operation and concealment of the businesses, particularly as he had significant outstanding tax debt from prior years.
- Ronald A. DiPietro, an accountant, played a crucial role by using his professional expertise to help the owners hide the cash profits on the back-end, facilitating tax evasion through the filing of false tax returns.
Karasarides was ultimately convicted of 12 counts, including conspiracy to operate an illegal gambling business, conspiracy to defraud the United States, evasion of payment, conspiracy to commit money laundering, and tampering with a witness. DiPietro was found guilty of conspiracy counts related to Skilled Shamrock and multiple counts of aiding and assisting in the preparation of false and fraudulent income tax returns.
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Appeals Court Rejects Procedural Challenges
The Sixth Circuit, in an opinion written by Circuit Judge Nalbandian, addressed several points raised by the defendants:
Denial of Severance
DiPietro argued that his trial should have been separated from Karasarides’s, claiming prejudice due to the significantly more damaging evidence against his co-defendant. The appeals court disagreed, citing the legal preference for joint trials when evidence overlaps. The panel found that limiting instructions provided by the district court were sufficient to guide the jury in considering each defendant individually.
Statute of Limitations
DiPietro challenged his felony tax evasion conviction (Count 8), arguing the government failed to prove an affirmative act of evasion within the six-year limitations period. The court affirmed the conviction, holding that the government alleged numerous affirmative acts—such as filing false tax documentation and misleading the IRS—that occurred within the required window.
Jury Instructions
The panel found no error in the district court’s decision to read the overt acts from the indictment to the jury, noting the judge repeatedly reminded the jury that the indictment was not evidence of guilt.
Tax Loss Calculation Upheld at $3.5 Million
Both defendants challenged their sentences, which were based on the district court’s finding that they were responsible for a total tax loss of at least $3.5 million. This calculation significantly increased their recommended sentencing ranges under the U.S. Sentencing Guidelines.
- Karasarides argued that the loss amount was too speculative and included tax losses that were not his responsibility. The Sixth Circuit found the government’s estimation method, including extrapolating profits for Redemption based on Skilled Shamrock’s records, to be a “conservative and reasonable extrapolation,” especially since the defendants had destroyed the original financial records.
- DiPietro challenged the court’s explanation of the loss calculation. The appeals court determined that the trial court’s response was appropriate given the generalized and underdeveloped nature of DiPietro’s objections at the sentencing hearing.
Sophisticated Means Enhancement
Karasarides also challenged the application of a two-point sentencing enhancement for using “sophisticated means.” The Sixth Circuit affirmed, ruling that the combination of Karasarides’s methods—including setting up ALCAK Properties for fake investments, structuring a land contract to hide assets, and using a fake job to launder cash—was sufficiently “especially complex” to warrant the enhancement.
Ultimately, the Sixth Circuit affirmed the sentences—262 months for Karasarides and 112 months for DiPietro—finding no merit in the defendants’ challenges to the trial procedures or the substantive and procedural aspects of their sentencing.
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