Before sentencing Robert Kahre to 15 years in prison, federal Judge David Ezra revealed that Kahre had been diagnosed with a delusional disorder.
While Kahre's type of delusional disorder does not exonerate him, it does explain his conduct, Ezra said. "Because of his disorder, he simply couldn't veer from his course. He knew what he was doing was wrong ... but simply couldn't admit that."
At trial, Kahre had contended his acts were a form of legal tax avoidance based on sincere but erroneous beliefs about the tax system. The acts included paying workers in gold and silver coins and telling them they could calculate their income taxes based on the coins' face value, which is much less than their market value.
A person with the disorder might think he or she has special powers and might perceive enemies where none exist, according to medical references. Ezra said he would order prison services to treat Kahre's disorder, which Dr. Karen Cruey, a Las Vegas psychiatrist, diagnosed in 2008.
The 48-year-old's sentence was substantially less than the 27 to 33 years prosecutors had requested. The judge sentenced Kahre's sister, Lori Kahre, who had worked in payroll for Robert Kahre, to six years in prison, despite the government's request for 18 to 24.
Ezra ordered Robert Kahre into immediate custody but allowed Lori Kahre to remain free pending appeal.
"Please can I hug my dad? Daddy!" Robert Kahre's oldest daughter wailed as federal marshals surrounded him after sentencing. The marshals allowed him to embrace co-defendant Danille Cline, whom he married Saturday, but did not allow his two sobbing teen daughters to come close.
"This was a significant case," Paul Camacho, the top IRS official in Las Vegas, said after Kahre's morning sentencing.
"The government was not the only victim" in what Camacho called Kahre's "classic scam" of paying workers under the table. Prosecutors estimated that up to $120 million went untaxed: wages of Kahre's own workers and workers for other companies that used his payroll service.
Camacho said hundreds of workers were shorted Social Security credits by participating in Kahre's payroll system because no one documented their work history for the years in question, nor withheld federal taxes on their behalf.
"It's shameful. (Kahre) took that money and pocketed it," said Camacho, who is the special agent in charge of the Las Vegas office of the U.S. Internal Revenue Service.
Kahre owned several construction-trade businesses in Las Vegas. They have been shut down since August, the month that the businessman was convicted of multiple felonies, including evading his own taxes and interfering with collection of workers' taxes.
"I do have disdain for the judiciary," Kahre told the judge when permitted to speak in court before his sentence was announced. Kahre thanked Ezra for a fair trial but lashed out at others involved in his prosecutions, including prosecutor J. Gregory Damm, and federal Judge Robert Jones, who had presided at a 2007 criminal tax trial on similar counts. That trial ended in a hung jury for both Kahres and Alex Loglia but led to a revised indictment and the recent trial, which resulted in convictions of all three.
Loglia, who used to do legal research on liens for Kahre, is scheduled for sentencing today. So is Robert Kahre's new wife, Cline, who was not tried in 2007.
Cline did not work at his business but was convicted of helping hide taxable assets by allowing homes to be bought in her name despite her lack of income.
Contact reporter Joan Whitely at firstname.lastname@example.org or 702-383-0268.