Goldstein Wins Bid to Toss Sordid Sham Employment Allegations

SCOTUSblog founder Tom Goldstein won on Friday his bid to dismiss allegations that he funneled money to paramours through his law firm, at least with respect to four counts of tax evasion.

Goldstein persuaded the US District Court for the District of Maryland that the government’s theory of tax evasion based on the alleged sham-employment relationships was void for vagueness.

Judge Lydia Kay Griggsby said she was “still struggling” to figure out when it becomes a federal tax crime for a business owner to deduct an employee’s salary and benefits as business expenses in situations where they’ve performed at least some work.

“I don’t know where the line is,” Griggsby said.

The law is clear that business owners can’t deduct expenses for a no-show sham employee. But even the government concedes that three of the four employees performed at least some work for the firm, and while a fourth didn’t do any work, she had a medical emergency and was put on nearly immediate medical leave, the defense said.

The government resisted Griggsby’s ruling with respect to the employee who went on medical leave, saying the woman told the grand jury that there was no job and never an expectation that she would perform any work. But Griggsby didn’t reconsider the her ruling.

Still, the evidence related to the women with whom Goldstein allegedly had extramarital relationships, which Goldstein’s counsel called “enormously prejudicial,” could be admitted in connection with other charged offenses.

The government indicated that it might seek to admit the evidence in connection with false tax return charges, but Griggsby said they’d have to demonstrate that the evidence is more probative than prejudicial.

Griggsby’s ruling may have landed a significant blow to the government’s tax evasion claims.

The prosecution said in court filings that “the nature and extent of Goldstein’s relationship with each of these women was an important factor in the grand jury’s determination of whether Goldstein’s purported employment of these women was mere nepotism or criminal evasion of Goldstein’s tax obligations.”

Griggsby also resolved a slew of evidentiary motions.

After Griggsby said one of the defense experts wouldn’t be able to testify to certain key issues, counsel for Goldstein told the court they planned to seek leave to notice a new expert and would ask for a continuance if necessary.

As it stands, the trial is set to begin with jury selection on Jan. 12.

Goldstein is represented by Munger, Tolles & Olson LLP.

The case is United States v. Goldstein, D. Md., No. 8:25-cr-00006-LKG, motions hearing 12/12/25.