United States of America v. Kevin Shibilski

In the
United States Court of Appeals
for the Seventh Circuit
____________________
No. 23-1410
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
KEVIN SHIBILSKI,
Defendant-Appellant.
____________________
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 20-CR-122-JDP — James D. Peterson, Chief Judge.
____________________
ARGUED JANUARY 10, 2024 — DECIDED JUNE 10, 2024
____________________
Before SYKES, Chief Judge, and HAMILTON and LEE, Circuit
Judges.
SYKES, Chief Judge. A grand jury charged Kevin Shibilski
with environmental and wire-fraud crimes arising from his
operation of three Wisconsin-based companies engaged in the
business of recycling electronic equipment. The indictment
also included one count of conspiracy to defraud the United
States relating to his willful nonpayment of payroll taxes for
his employees.

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2 No. 23-1410
Shibilski pleaded guilty to a single felony count of willful
failure to pay employment taxes; in exchange, the govern-
ment dropped the other charges. Though the case had been
dramatically simplified, sentencing proved to be protracted.
Shibilski objected to the presentence report’s recommenda-
tions regarding relevant conduct under the Sentencing
Guidelines—notably, the recommendation to hold him re-
sponsible for the total amount of unpaid employment taxes
for all three companies. To address these objections, the dis-
trict judge held a seven-hour sentencing hearing, most of
which was consumed by the presentation of documents and
testimony, including testimony from Shibilski himself. Dur-
ing the evidentiary phase of the hearing, Shibilski’s attorney
pursued irrelevant and redundant lines of inquiry, prompting
the judge to step in to keep him on topic and on track to finish
on time.
In the end the judge found Shibilski responsible for the full
amount of unpaid taxes. The judge also declined to award
credit for acceptance of responsibility under U.S.S.G.
§ 3E1.1(a), finding that Shibilski had falsely denied responsi-
bility for relevant conduct. After weighing the statutory sen-
tencing factors, the judge imposed a sentence of 33 months in
prison, the bottom of the advisory Guidelines range.
Shibilski argues that the judge violated Rule 32(i)(4)(A)(i)
of the Federal Rules of Criminal Procedure by unduly curtail-
ing his attorney’s presentation of evidence. He also claims
that the judge improperly denied credit for acceptance of re-
sponsibility under § 3E1.1(a). Finally, he contends that the
judge committed procedural error by failing to meaningfully
address the statutory sentencing factors. We reject these argu-
ments and affirm.

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No. 23-1410 3
I. Background
This case has its roots in concurrent state and federal in-
vestigations into environmental and tax crimes occurring at
5R Processors, Ltd., a Wisconsin-based company engaged in
the business of recycling electronic equipment. The environ-
mental and tax inquiries led to a broader investigation of the
company’s operations. What follows is a condensed version
of the facts and procedural history of the case; a more detailed
account is not necessary to resolve this appeal.
Founded in 1988 by Tom Drake, 5R grew over time to in-
clude recycling and storage facilities in Wisconsin and Ten-
nessee. But the company was plagued by cash-flow problems,
so in 2011 Drake hired Keven Shibilski as a consultant to help
the company find new sources of operating capital. Shibilski
had spent most of his professional life in the public sector as
a county register of deeds, state senator, and (briefly) state
tourism secretary; he had limited relevant business experi-
ence.
After two years of fruitless searching, Shibilski proposed
to purchase 5R himself in a three-year phased transaction in
which he would incrementally acquire Drake’s ownership in-
terest while he continued to look for a secure source of oper-
ational financing. Drake agreed. As the deal was structured,
Shibilski paid nothing to acquire Drake’s shares but immedi-
ately began running the company. In March 2013 he assumed
control of 5R as its CEO and CFO, with a starting salary of
about $107,000, which increased to $156,500 by 2015 and
$170,500 by 2016. Drake temporarily stayed on as chairman
once Shibilski took over, but he had limited involvement be-
cause of serious health problems. Shibilski gradually acquired
a majority of Drake’s shares in a phased buyout in which

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4 No. 23-1410
Drake received annual “salary” and lump-sum payments
from 5R itself.
The company’s financial prospects did not improve after
Shibilski took the reins in March 2013. His search for operat-
ing capital failed, and cashflow problems worsened. In the
meantime, Shibilski began paying himself an extra $3,000 per
month for office space he leased to the company. He also put
his wife on the payroll as a ghost employee; she never came
to the office.
In 2014 5R stopped paying required employment taxes to
the Internal Revenue Service and the Wisconsin Department
of Revenue. In essence, the company was using employees’
withheld income and payroll taxes to help stem the deteriora-
tion of its financial condition. The nonpayment of taxes even-
tually drew the attention of state and federal taxing
authorities. State tax agents commenced an enforcement ac-
tion, and an IRS agent conducted a site visit.
In response to the company’s large looming liability for
unpaid employment taxes, Shibilski created two spinoff com-
panies to carry on 5R’s recycling and transportation opera-
tions: Pure Extractions Inc., which assumed 5R’s recycling
business, and Wisconsin Logistics Solutions LLC, which took
over 5R’s transportation operations. But nothing changed as
a functional or operational matter. 5R’s assets, employees,
and operations were moved to the two new companies, leav-
ing 5R with the liabilities.
At some point along the way, state and federal environ-
mental agencies began investigating the companies for im-
proper storage, transportation, and disposal of hazardous
waste from the recycling process. The environmental

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No. 23-1410 5
inquiries spawned an expanded financial investigation, and
law enforcement stepped in. In September 2020 a grand jury
returned a 10-count indictment charging Shibilski with envi-
ronmental and wire-fraud crimes and conspiracy to defraud
the United States. The conspiracy charge alleged that from
July 2014 through June 2016, Shibilski willfully failed to remit
payroll taxes to the IRS for the employees of 5R, Pure Extrac-
tions, and Wisconsin Logistics.
In May 2021 a magistrate judge entered a scheduling order
setting the case for trial on May 23, 2022, with a final pretrial
conference to be held on April 14, 2022. One week before the
pretrial conference, the parties reached a plea agreement in
which Shibilski agreed to plead guilty to a single felony
count—willful failure to pay employment taxes in violation
of 26 U.S.C. § 7202—as charged in an information filed that
same day. In exchange, the government agreed to dismiss all
charges in the indictment. The government also agreed to rec-
ommend that Shibilski receive credit for acceptance of re-
sponsibility under § 3E1.1(a) of the Guidelines—conditioned,
of course, on Shibilski’s actual acceptance of responsibility.
The government reserved the right to withdraw this recom-
mendation if Shibilski engaged in conduct inconsistent with
acceptance of responsibility.
As a factual basis for the plea, the agreement mentioned
only a portion of the unpaid taxes—$197,458, which reflected
the payroll taxes that had been withheld from the paychecks
of employees at Pure Extractions and Wisconsin Logistics but
not remitted to the IRS. Shibilski acknowledged responsibility
for this portion of the tax loss as part of the factual basis for
his plea; the agreement reserved a more complete accounting

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6 No. 23-1410
of relevant conduct until sentencing. Shibilski entered his
guilty plea a month later.
As expected, the presentence report (“PSR”) calculated a
much larger tax loss as relevant conduct. The probation of-
ficer recommended that the court find Shibilski responsible
for a total of $858,051 in tax losses. This figure included the
amount Shibilski had acknowledged in the plea agreement,
plus (1) the employer’s share of payroll taxes owed but never
paid for employees of Pure Extractions and Wisconsin Logis-
tics; and (2) all employment-related taxes for 5R—the unpaid
employees’ share, which had been withheld but never paid to
the IRS, and the employer’s share.
Shibilski objected to the PSR’s calculation of relevant con-
duct (among other objections). He insisted, implausibly, that
he had not been in control of financial matters for the busi-
nesses—particularly not 5R’s financial operations—and so
should not be held responsible for the total amount of unpaid
payroll taxes.
To resolve the objections, the district judge scheduled the
sentencing hearing over two days in February 2023, setting
aside four hours on the first day and three hours on the sec-
ond day. On the first day, the judge began by discussing the
timeframe and parameters for the evidentiary presentations
to ensure that the parties would use the allotted time effi-
ciently. The judge estimated that witness testimony and the
introduction of exhibits would consume the entirety of the
first day. Shibilski’s attorney told the judge that his client
would testify; the prosecutor said that he would trim his wit-
ness list to accommodate the defendant’s testimony and the
court’s schedule.

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No. 23-1410 7
Once the witness testimony was underway, Shibilski’s at-
torney immediately engaged in irrelevant and repetitious
lines of inquiry. After the first witness, the judge urged de-
fense counsel not to waste time on irrelevancies. From that
point on, the judge periodically stepped in to instruct Shibil-
ski’s attorney to avoid redundant questions or to move things
along. As the clock ticked down toward the end of the first
day, the judge said he would extend that day’s session for an
extra 20 minutes or so, but he made it clear that he would not
keep everyone in the courthouse beyond that time. Shibilski
took the stand late that afternoon with only 20 minutes of
hearing time remaining. The judge stuck to his timeline,
halted Shibilski’s direct testimony when the time expired, and
advised the parties that the hearing would continue with
cross-examination on the morning of day two.
The hearing resumed on day two with Shibilski’s cross-
examination, redirect by defense counsel, and recross by the
prosecutor. In all, Shibilski was on the witness stand for a little
over an hour. The judge then invited arguments from the at-
torneys about what the evidence had shown on the central
dispute concerning Shibilski’s control of financial matters for
the three companies. After exhausting that subject, the attor-
neys presented their sentencing arguments, uninterrupted by
the judge except to the extent that he had questions. The judge
then turned to the defendant for allocution. After cursory re-
marks about accepting responsibility, Shibilski spent most of
his allocution statement complaining about the prosecution,
shifting blame to his codefendants and others, minimizing his
role in the crime, and portraying himself as a victim of char-
acter assassination by the government and fraud by others
who were involved in the business.

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8 No. 23-1410
The judge ultimately rejected Shibilski’s objections and
found him responsible for the entire tax loss as described in
the PSR, basing his ruling on the “unequivocal” evidence that
Shibilski had been in control of the financial operations of all
three companies during the relevant period. Relying on that
same evidence, the government withdrew its recommenda-
tion for an offense-level reduction under § 3E1.1(a). The judge
agreed that credit for acceptance of responsibility was unwar-
ranted notwithstanding the guilty plea. The judge found that
Shibilski had falsely denied relevant conduct, blamed others,
and otherwise minimized his role in the offense, all of which
were inconsistent with acceptance of responsibility. The judge
thus declined to award the two-point offense-level reduction
under § 3E1.1(a).
These rulings produced a total offense level of 20, which
when combined with a criminal history category of I yielded
an advisory imprisonment range of 33 to 41 months. After
weighing the sentencing factors listed in 18 U.S.C. § 3553(a),
the judge imposed a sentence of 33 months in prison.
II. Discussion
Shibilski raises three claims of sentencing error, arguing
that the judge (1) violated Rule 32(i)(4)(A)(i) by unduly cur-
tailing his attorney’s presentation of evidence; (2) wrongly de-
nied credit for acceptance of responsibility under § 3E1.1(a);
and (3) committed procedural error by failing to meaningfully
address the § 3553(a) sentencing factors.
The first argument misunderstands the rule and is unsup-
ported by the record. Rule 32(i)(4)(A)(i) states only that the
judge “must provide the defendant’s attorney an opportunity
to speak on the defendant’s behalf.” FED. R. CRIM. P.

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No. 23-1410 9
32(i)(4)(A)(i). The judge complied with this requirement. On
day two of the hearing, he gave Shibilski’s attorney ample
time to present a sentencing argument. Counsel fully availed
himself of the opportunity—first by speaking at length when
the judge invited the attorneys to discuss what the evidence
had shown about Shibilski’s control of the three companies,
and later by raising multiple arguments in mitigation when
the judge entertained sentencing argument from each side.
The judge did nothing to curtail or cut off counsel’s oppor-
tunity to speak on Shibilski’s behalf. The record conclusively
refutes any argument to the contrary.
Shibilski’s argument appears to rest on a fundamental
misreading of the rule. His complaint is that the judge unduly
restricted his presentation of evidence during the sentencing
hearing. A different part of Rule 32 pertains to evidentiary
submissions at sentencing. Rule 32(i)(2) provides that the
judge may permit the parties to introduce evidence on objec-
tions to the PSR—not shall or must. Submission of evidence at
sentencing is thus entrusted to the district court’s discretion.
See United States v. Cunningham, 883 F.3d 690, 699 (7th Cir.
2018). Controlling the scope of witness testimony and setting
reasonable time limits, as the judge did here, is perfectly con-
sistent with the court’s exercise of this discretionary author-
ity.
Shibilski next argues that the judge wrongly denied credit
for acceptance of responsibility under § 3E1.1(a). A defendant
may earn a two-level reduction in his Guidelines offense level
if he “clearly demonstrates acceptance of responsibility for his
offense.” U.S.S.G. § 3E1.1(a). To determine whether to apply
this adjustment, the judge may consider whether the defend-
ant has “truthfully admitt[ed] the conduct compromising the

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10 No. 23-1410
offense(s) of conviction” and “truthfully admitt[ed] or not
falsely den[ied] any additional relevant conduct for which
[he] is accountable.” Id. cmt. n.1. A defendant who falsely de-
nies or frivolously contests relevant conduct “has acted in a
manner inconsistent with acceptance of responsibility.” Id.
Moreover, attempts by the defendant to minimize his involve-
ment in the offense are “sufficient to deny a reduction for ac-
ceptance of responsibility, even when the defendant has
pleaded guilty.” United States v. Major, 33 F.4th 370, 382 (7th
Cir. 2022).
It’s the defendant’s burden to prove by a preponderance
of the evidence that he qualifies for the § 3E1.1(a) adjustment,
and the district judge’s findings in this regard are entitled to
“great deference.” § 3E1.1 cmt. n.5. At its core the § 3E1.1(a)
credit is based on a credibility judgment that the sentencing
judge is best equipped to make. Id. We review the judge’s
findings for clear error and will reverse only if we are left with
the “definite and firm conviction” that a mistake was made.
United States v. Collins, 796 F.3d 829, 835 (7th Cir. 2015) (inter-
nal quotation marks omitted).
We see no basis to disturb the judge’s § 3E1.1(a) ruling
here. Shibilski spills much ink over whether his objections to
the PSR were legal challenges or good-faith factual chal-
lenges. We do not need to parse the record on this point.
Shibilski’s own words—both from the witness stand and in
his allocution statement—confirm that the judge had ample
reason to deny credit for acceptance of responsibility.
Despite a lengthy paper trail and robust testimony estab-
lishing that he controlled financial matters for 5R and the two
spinoff companies, Shibilski persisted in falsely denying re-
sponsibility for the total amount of unpaid employment taxes.

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No. 23-1410 11
Though he made passing reference to his “unequivocal” ac-
ceptance of responsibility during his allocution, he focused
mainly on minimizing his role, blaming his co-defendants
and the IRS, and painting himself as the victim of fraud by
others. He assailed the prosecution as an attack on his charac-
ter. He suggested that he had taken the fall for the misdeeds
of his codefendants, complaining that they had not “pa[id] a
nickel in … back taxes.” He speculated that he had been
charged because he was the “last person standing.” He de-
flected responsibility for his conduct, complaining that his
codefendants and others “took money, they took the com-
pany, and they boogied, and they’re going to point their fin-
ger at me and [] say I behaved dishonorably? Not true. I did
not behave dishonorably, Your Honor.”
He continued to cast aspersions, telling the judge that he
and his wife were the only ones affiliated with 5R who “paid
a price.” He walked this comment back a bit when the judge
reminded him that his codefendants received prison time and
one was also ordered to pay $3 million in restitution for re-
lated environmental crimes. But in the next breath Shibilski
dismissed the codefendant’s restitution obligation as insignif-
icant. Simply put, Shibilski’s persistent refusal to take owner-
ship of his own actions amply justified the denial of credit
under § 3E1.1(a). As the judge explained, he “blamed every-
body but himself.”1
1 Shibilski also complains that he lacked notice that the court might not
award credit for acceptance of responsibility. This is a nonstarter. The plea
agreement and the guilty-plea colloquy provided clear notice that the
court would rule on all Guidelines questions and determine the appropri-
ate sentence.

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12 No. 23-1410
Shibilski’s final argument is a procedural claim that the
judge failed to meaningfully consider his principal arguments
in mitigation under § 3553(a)—specifically, arguments con-
cerning his lack of criminal history, his public service and rep-
utation, his role as a caregiver for his aging mother, and the
sentences of other § 7202 offenders. This argument is frivo-
lous.
The judge need not march through the § 3553(a) factors in
a “checklist fashion” at sentencing. United States v. Banks, 828
F.3d 609, 618 (7th Cir. 2016). What’s required is a statement of
reasons showing that the judge engaged in an individualized
assessment, considered the defendant’s principal mitigation
arguments—“even if implicitly and imprecisely”—and ex-
plained the sentencing decision in sufficient detail to permit
meaningful appellate review. Id. (internal quotation marks
omitted).
The judge said more than enough to discharge these obli-
gations. He carefully considered the mitigating aspects of
Shibilski’s background, including his public service, reputa-
tion in his community, and the circumstances regarding his
infirm mother. The judge also addressed Shibilski’s argument
about sentences for other § 7202 offenders, explaining that he
consistently imposed prison sentences in tax-fraud cases. On
this point specifically, it was not necessary for the judge to say
more; indeed, he was not required to directly address and
weigh the possibility of unwarranted sentencing disparities
under § 3553(a)(6). We have repeatedly explained that the
Guidelines “are themselves an anti-disparity formula.” United
States v. Sanchez, 989 F.3d 523, 540 (7th Cir. 2021) (internal
quotation marks omitted). A sentence within the Guidelines

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No. 23-1410 13
range “necessarily complies with § 3553(a)(6).” Id. at 541 (in-
ternal quotation marks omitted).
In short, no procedural error occurred. The judge thought-
fully considered the § 3553(a) factors and Shibilski’s principal
arguments in mitigation, and his explanation for the within-
Guidelines sentence was clearly sufficient.2
AFFIRMED
2 After we heard oral argument, Shibilski sought a sentence reduction
based on new, retroactive amendments to the Sentencing Guidelines. The
judge expressed a willingness to reduce the sentence by two months, and
Shibilski notified us of this indicative ruling. FED. R. APP. P. 12.1. The res-
olution of this appeal clears the way for the proposed sentence modifica-
tion.

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