The Eighth Circuit overturned three of 65 convictions against a money laundering priest who stole collection money from several churches, but it upheld his tax fraud convictions.
In an April 27 opinion in United States v. Garbacz, Circuit Judge Raymond W. Gruender reversed three counts of wire fraud against Marcin Stanislaw Garbacz and remanded the case to the district court to vacate special assessments related to those counts while affirming his sentence, remaining convictions, forfeiture order, and restitution award.
Garbacz was working as a Catholic priest in South Dakota when he was caught on camera stealing cash that had been collected during Sunday masses in 2018. He later admitted that he similarly stole from other local parishes over the course of two years.
Though Garbacz admitted to stealing only $600, the IRS informed him that he was under investigation for theft of more than $200,000. The IRS found that while Garbacz’s after-tax earnings from 2012 to 2018 were reported to be $93,000, he had paid nearly $400,000 from his credit union account to his credit card for purchases made during that time. Garbacz’s pretax annual salary as a priest ranged from $20,000 to $24,000.
After speaking with the IRS, Garbacz withdrew more than $50,000 from one of his bank accounts, began researching how to move to Poland and withdraw cash without alerting the IRS, and began storing money in offshore accounts. He also arranged for an acquaintance to receive expensive statues and retrieve valuable items from a storage unit. He was arrested in May 2019 while attempting to flee the country to Poland.
Garbacz was convicted of 65 counts of wire fraud, money laundering, transporting stolen money in interstate commerce, and tax fraud for omitting money he embezzled. He was sentenced to 93 months in prison on all charges. He was ordered to pay more than $46,000 to the IRS and nearly $260,000 to the parishes in restitution. The district court imposed a $100 special assessment for each count.
Garbacz appealed all his convictions, the forfeiture order for his statues, the restitution award, and the application of a sophisticated means enhancement to his sentence. For his tax fraud convictions, he argued that he was unaware he had to report stolen money.
The court upheld the majority of his convictions, including the five counts of tax fraud, because the evidence presented by the government was sufficient. Gruender rejected Garbacz’s tax argument, reminding him that ignorance under the law is no defense and that he had a duty to report his ill-gotten gains.
However, Gruender overturned three wire-fraud convictions related to Garbacz's transferring money to pay off credit card debt because of clear and obvious error by the district court. The Eighth Circuit found that the transfers weren’t essential to his money laundering scheme.
“Although Garbacz used his credit card to purchase expensive items that he then passed off as gifts from others, those purchases themselves were not part of the fraud. Indeed, as Garbacz points out, the unnecessary purchases undermined his fraudulent scheme, as the appearance of extravagant spending caused other priests to ask Garbacz how he acquired the items,” Gruender wrote.
The case is United States v. Garbacz, No. 20-3559 (8th Cir. 2022).