Examples of Nonfiler Investigations - Fiscal Year 2010
The following examples of Nonfiler investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Illinois Man Sentenced for Income Tax Evasion
On September, 30, 2010 in Fairview Heights, Ill., Orvil Hassebrock was sentenced to 36 months in prison followed by three years of supervised release and ordered to pay restitution and fines of more than $1.71 million for failing to file tax returns. According to court documents, Hassebrock was convicted on April 29, 2010 for willfully attempting to evade and defeat the assessment and payment of income tax for 2004 and willful failure to file an income tax return resulting in a tax loss to the IRS of nearly $594,000. Hassebrock’s restitution includes back taxes, interest, fines and a special assessment.
Owner of Pennsylvania Pharmacy and his Wife Sentenced on Tax Charges
On September 29, 2010, in Williamsport, Pa., Albert L. Berrettini, Jr. and his wife, Mary Ann Berrettini, were sentenced for filing false federal tax forms. Albert Berrettini, a pharmacist and owner of Bert's Pharmacy in Sayre, Pennsylvania, was sentenced to 27 months in prison, three years of supervised release and ordered to pay a $8,500 fine. Mary Ann Berrettini, a clerk at Bert's Pharmacy, was sentenced to six months home confinement, two years probation and ordered to pay a $7,800 fine. In addition, the IRS will also calculate and assess them for back taxes, penalties and interest which is estimated to run close to $1 million. The Berrettinis were convicted by a trial jury in March 2010 of filing false federal tax forms. According to the court documents, the Berrettinis were clients of Tower Executive Resources, a Colorado-based organization whose primary purpose was to assist its clients in evading income taxes, filing false tax returns, and protecting assets from being seized by the IRS for failure to pay taxes. Tower accomplished these purposes by transferring their clients’ income into offshore accounts titled under the name of an International Business Companies (IBC). Albert Berrettini, Jr. was the “Executive Director” of two such IBCs created in the Turks and Caicos Island: Diversified Matlics, Ltd. and Matrixx, Ltd. He maintained bank accounts in the name of these IBCs in Pennsylvania and in the Turks and Caicos Islands. To hide their income and evade federal income taxes, the Berrettinis regularly sent funds to Tower, usually in the form of checks drawn on a Bert’s Pharmacy bank account. The majority of these funds were ultimately deposited, by Tower, into the offshore bank accounts controlled by the Berrettinis. On income tax returns, the Berrettinis fraudulently claimed that these payments to Tower were for consulting and management services rendered, although they knew that most of the payments to Tower actually ended up in the offshore accounts that they controlled.
New Jersey Man Sentenced for Failure to File Tax Returns
On September 22, 2010, in Trenton, N.J., John F. Mostler, of Brick, New Jersey, was sentenced to 18 months in prison, three years of supervised release and ordered to cooperate with the Internal Revenue Service (IRS) for the payment of his outstanding taxes. Mostler, a computer network engineer, was convicted by a jury in January 2010 of tax evasion for the years 2002 through 2005. He evaded the payment of federal income taxes on over $470,000 in income. According to the evidence at trial, Mostler evaded taxes by, among other things, submitting W-4 forms to his employers in which he falsely represented that he was exempt from federal income tax withholding. In addition, Mostler sent letters to IRS agents and employees who contacted him about his unpaid taxes – threatening to sue them for mail fraud if they continued to contact him.
Massachusetts Couple Sentenced for Failure to File Tax Returns for Ten Years
On September 16, 2010, in Boston, Mass., Frederick Allen and Kimberlee Allen, of Harwich, Mass., were both sentenced to 36 months in prison for conspiracy, tax evasion and failure to file tax returns. A jury convicted the couple on April 21, 2010. According to trial evidence, Frederick and Kimberlee Allen, who own a business on Cape Cod that specialized in nutritional and vitamin consulting, did not submit tax returns to the Internal Revenue Service (IRS) since tax year 1999. The evidence showed that the two conspired to conceal their assets and income from the IRS by receiving unreported wages, putting their residence in a trust, assigning their wages to third parties and using cash. Despite working in 1998 and 1999, Kimberlee Allen as a nurse practitioner and Frederick Allen as office administrator at various medical and nutrition offices, the two filed income tax returns with the IRS that reported zero income and zero taxes due. Starting in 2000, the Allens refused to file income tax returns and engaged in a pattern of conduct intended to obstruct the IRS and conceal their assets and income from the IRS.
Chicago Man Sentenced for Filing False Tax Returns
On September 15, 2010, in Chicago, Ill., Christopher Keller was sentenced to 24 months in prison, followed by one year of supervised release on two counts of failure to file tax returns. Keller was an executive vice president at BCI Aircraft Leasing, Inc. According to court documents, Keller earned gross income in the forms of commissions from BCI totaling more than $530,000 in 2004 and 2005. However, he failed to file tax returns for those two years.
Connecticut Man Sentenced for Evading Payment of More Than $1.4 Million in Taxes
On September 1, 2010, in New Haven, Conn., Albert Holland was sentenced to 36 months in prison, followed by three years of supervised release, and ordered to pay $2.26 million in restitution for tax evasion. According to court documents, in 1998 the Internal Revenue Service (IRS) notified Holland that he owed $1,421,498 in unpaid taxes, penalties and interest dating back to 1979. Holland had failed to file a tax return or underpaid his taxes for several years since that time. On November 25, 1998, Holland made an Offer in Compromise with the IRS that claimed that he was only able to pay $120,000 of the debt. However, in 1999, while Holland was challenging the IRS’s rejection of his Offer in Compromise, Holland and his partner settled a lawsuit for approximately $4.65 million. Rather than pay the IRS, Holland moved the judgment proceeds to “Jawbone,” an entity he formed in the name of his four children. Jawbone purchased a house in Kent, Connecticut, in which Holland and his wife lived. Holland held himself out as the owner of the house, and explained to certain individuals that he transferred his assets to Jawbone to avoid tax liability. Over the next five years, Holland rebuffed IRS attempts to collect the money he owed. Holland continued to claim that he did not have assets with which to pay his debt to the IRS, and he claimed that he had not transferred any assets of value in the previous 10 years. Holland also filed false tax returns for the 2002 and 2003 tax years. Holland claimed he had no income for those years when, in fact, he earned at least $40,000 in 2002 and more than $115,000 in 2003.
Florida Dentist Sentenced to 42 Months for Income Tax Evasion
On August 19, 2010, in Ocala, Fla., Mark S. Maggert, of Fruitland Park, was sentenced to 42 months in prison, followed by three years of supervised release, and ordered to cooperate with the Internal Revenue Service to pay all taxes due and owing, as well as applicable interest and penalties. Maggert had been found guilty by a jury on March 18, 2010 on tax evasion charges. According to trial evidence, in calendar years 2002 through 2005, Maggert, a dentist, received taxable income of more than $900,000 but failed to file any income tax returns or pay any income taxes. Maggert also utilized nominee companies for the purpose of concealing his income and assets, made withdrawals from the companies in the form of checks to cash, and filed documents with the Internal Revenue Service (IRS) designed to impair the IRS's ability to assess and collect the taxes he owed.
Florida Man Sentenced To 46 Months for Tax Evasion
On August 18, 2010, in Gainesville, Fla., Dr. Per-Olof Soren Ekstrand, of Yankeetown, Florida, was sentenced to 46 months in federal prison for tax evasion and obstructing and impeding the lawful functions of the Internal Revenue Service. Dr. Ekstrand pleaded guilty to these offenses in September 2009. The charges arose from Dr. Ekstrand’s willful evasion of the payment of tax for the years 1995, 1996, 1999, 2000, 2001, 2002, and his obstruction of the lawful functions of the Internal Revenue Service by, among other things, filing frivolous documents with the IRS and refusing to comply with IRS subpoenas. Dr. Ekstrand was also ordered to serve a term of three years’ supervised release upon his release from custody, pay restitution in the amount of $1,469,410 to the Internal Revenue Service, and forfeit his two residences.
California Tax Return Preparer Sentenced on Tax Charges
On August 9, 2010, in Los Angeles, Calif., Gene S. Wong, an El Segundo tax return preparer, was sentenced to 24 months in prison, three years of supervised release, and ordered to pay $255,236 in restitution to the Internal Revenue Service (IRS). Wong operated a tax return preparation and bookkeeping business known variously as TaxLAX, Tax 4 Less, and GW Accounting & Bookkeeping Center. He pleaded guilty to willfully failing to file his personal income tax return for 2005 and filing false claims for tax refunds on behalf of his clients. According to his plea agreement, Wong filed at least 92 false claims for tax refunds with the IRS on behalf of third parties from February 2003 through April 2007. The false claims for refunds claimed fraudulent tax credits including general business tax credits, fuel tax credits, and alternative vehicle tax credits; and resulted in a tax loss of more than $255,000. In his plea agreement, Wong admitted that there was no basis for the tax credits claimed on the false returns he prepared. Wong admitted that, for the tax years 2003 through 2006, he willfully failed to file his personal income tax returns. In an effort to disguise his income and make it difficult for the IRS to identify him as the tax return preparer, Wong used the identifying information of nominees, including that of his own son, to identify the paid return preparer on more than 500 tax returns he personally prepared. Additionally, Wong used different business addresses for the same business location and, on tax returns he prepared for clients, he spelled his name in two different ways.
Ohio Physician Sentenced for Failing to File Income Tax Returns for Five Years
On August 6, 2010, in Dayton, Ohio, Dominic Joseph Maga, a physician, was sentenced to 18 months in prison, to be followed by one year of supervised release, and ordered to pay $160,955 in restitution to the Internal Revenue Service (IRS). A federal court jury convicted Maga on August 6, 2009 of five counts of failure to file income tax returns disclosing more than $1.1 million in income from hospitals over the five-year period. According to court documents, Maga was an emergency room doctor employed at Grandview Medical Center and Southview Hospital, both located in Dayton, as well as Riverside Hospital and Grant Medical Center in Columbus, Ohio. Trial evidence showed that Maga failed to file federal income tax returns disclosing $1,159,431 in income for tax years 2002 through 2006.
Founder and Principal Manager of Genesis Fund Sentenced To 70 Months in Prison on Tax Charges
On August 3, 2010, in Los Angeles, Calif., John S. Lipton, formerly of Mission Viejo and Laguna Hills, Calif., was sentenced to 70 months in prison and ordered to pay $2,915,427 in restitution the Internal Revenue Service (IRS). On April 8, 2010, Lipton pleaded guilty to conspiracy to defraud the United States and tax evasion. Lipton and several co-defendants were indicted on charges stemming from the operation of the Genesis Fund, a bogus foreign currency exchange investment fund that operated as a Ponzi scheme from May 1998 to June 2002 and received millions of dollars in investments. According to the indictment, the defendants falsely claimed that investors received monthly returns of four percent, when investments were actually used to make "profit" distributions to defendants and early investors. Lipton was one of the founding members of the Genesis Fund and its principal manager. The defendants promoted the Genesis Fund as having no reporting obligations to the IRS. Bank accounts in the names of trusts and offshore bank accounts were allegedly used to receive distributions that were not reported to the IRS. In his plea agreement, Lipton admitted that he used, and conspired with others to use, foreign trusts, corporations, and bank accounts, to receive distributions from the Genesis Fund and did not report these distributions to the IRS. Lipton acknowledged that he did not file federal individual income tax returns from 1989 through 2005.
Former Tennessee Doctor Sentenced On Health Care Fraud, Drug, and Tax Charges
On July 30, 2010, in Greeneville, Tenn., John Theodore Hancock, formerly of
Mooresburg, was sentenced to 276 months in prison, followed by five years of supervised release, and ordered to pay $70,764 in restitution to TennCare. Hancock was convicted in July 2009 of health care fraud, unlawful dispensing of controlled substances, money laundering, tax evasion, and failure to file income tax returns. According to information presented in court, Hancock, while licensed to practice as a medical doctor by the State of Tennessee, operated a medical business known as "Hancock Family Medicine" in Mooresburg, Tennessee. Evidence presented at trial showed that Hancock improperly wrote prescriptions for controlled substances such as morphine, oxycodone, and hydrocodone, for patients without performing physical examinations and without determining a sufficient medical necessity for the prescriptions. Hancock, who charged patients $80 to $100 in cash for each visit, wrote prescriptions with the agreement that the patients would bring all or part of the drugs back to Hancock, usually for his personal use. Because most of the drugs prescribed were paid for through TennCare, Tennessee's program for indigent medical care, the jury found that Hancock engaged in a scheme to defraud the TennCare program by providing the medically unnecessary prescriptions to his patients for them to have filled at area pharmacies at TennCare's expense. Hancock was also found guilty of willful tax evasion for 1994 and 1995 by concealing the nature, sources, and extent of his income and assets by conducting his financial affairs almost exclusively in cash. Hancock also was found guilty of willfully failing to file income tax returns from 2002 through 2005 when he had gross income of over $1 million during that period.
Indiana Couple Sentenced to Prison for Income Tax Evasion and Failure to File Tax Returns
On July 13, 2010, in Indianapolis, Ind., Lisa Sorrell was sentenced to 30 months in prison and three years of supervised release for tax evasion; Christopher Sorrell was sentenced to 24 months in prison and one year of supervised release. According to court documents, the Sorrells admitted they evaded the assessment of income tax for the years 2002, 2003 and 2004 by failing to file income tax returns. The Sorrells owned a profitable wholesale turkey feather company with locations in Indiana and North Carolina. From 2002 through 2004, they earned approximately $1.4 million. They evaded taxes by using shell corporations, warehouse banks and family members as nominees. As a result of their conviction, the Sorrells paid more than $418,000 of back taxes prior to sentencing and still owe more than $76,000 as restitution.
Psychologists Sentenced to Prison for Tax Evasion
On July 12, 2010, in Honolulu, Hawaii, David Opollo Ross and Lei Lavarias Ross were sentenced to 45 and 18 months imprisonment, respectively, following their conviction in February 2010 on charges of conspiracy and income tax evasion for the years 1998 through 2002. The court also ordered the Rosses to pay $234,169 in restitution. According to the evidence admitted during the trial, the Rosses concealed over $1.8 million earned from providing contracted psychology services. The Rosses directed their income to be deposited into three different businesses they had set up, and they did not file income tax returns to report any of this income. The Rosses used two of these business entities and other nominees to pay for their personal expenses. At trial, it was shown that the Rosses should have paid over $230,000 in federal income taxes on income they received primarily from the State of Hawaii and charitable organizations.
Nonfiler Sentenced to 21 Months in Prison
On July 9, 2010, in Pittsburgh, Pa., Ronald J. Gardner, Jr., of Glenshaw, was sentenced to 21 months in prison and ordered to pay the costs of his prosecution. Gardner was convicted in March 2010 of endeavoring to obstruct or impede the due administration of the Internal Revenue Laws and willful failure to file federal income tax returns. According to information presented in court, Gardner had not filed a federal income tax return since 1992. The evidence presented at trial established that, although he claimed to be a citizen only of Pennsylvania, Gardner also had not filed returns or paid income taxes in Pennsylvania for at least 17 years. Gardner attempted to hide his income from the Internal Revenue Service (IRS) and took the benefit of federal rights and protections, undercutting his claim that his beliefs were genuinely held, and, instead, they amounted at most to a disagreement with the law.
Indiana Construction Company Owner Sentenced for Tax Evasion
On July 1, 2010, in Indianapolis, Ind., David W. Pittman, of Greenwood, was sentenced to 12 months in prison, 18 months’ home detention and two years of supervised release following his plea of guilty to income tax evasion. He must also cooperate with the IRS in determining his income tax liabilities. Pittman, the owner/operator of Pittman Framing, a residential construction framing company, failed to file income tax returns for the years 1994 through 1998. The IRS assessed the income tax owed by Pittman for each of these years, but he took steps to evade the payment of these assessed taxes. The total income tax deficiency owed by Pittman is approximately $497,000. Pittman also failed to file income tax returns for the years 2003 through 2005 and 2007. The total income owed by Pittman for those years is approximately $48,000.
Former Business Executive Sentenced for Tax Evasion
On June 30, 2010, Charleston, W.Va., Carl Steward, of Asheville, North Carolina, was sentenced to 24 months in prison for tax evasion. Steward pleaded guilty in February 2010 and admitted that he failed to file income tax returns for the 2000 and 2001 tax years and filed false income tax returns for the 2002 and 2003 tax years. According to court documents, from approximately 2000 to 2003, Steward was the vice president of marketing for American Canadian Expeditions (ACE), an outdoor adventure company operating in Oak Hill, West Virginia. During this time, Steward received “commissions” from ACE marketing vendors even though he was a salaried employee and not entitled to receive such commissions. In an effort to disguise the illegal income, Steward directed vendors to make commission payments to the Society for the Preservation of Vaudeville and Variety Arts, Inc. (SPVVA), a charitable entity operating in Florida. Steward opened a local bank account in the name of SPVVA, directed commission payments be made to that account, and then used the SPVVA account for personal use. In addition, in May 2006, Steward lied to an IRS agent by stating that he had filed accurate tax returns for the 2000 through 2003 tax years.
Florida Man Sentenced to 28 Years in Prison for Tax Avoidance Scheme
On June 21, 2010, in Tampa, Fla., Carel A. Prater, aka Chad Prater, of Sarasota, was sentenced to 336 months in prison and ordered to pay a $25,000 fine and to pay $440,000 in restitution to the Internal Revenue Service (IRS). Prater was convicted by a trial jury in March 2010 of corrupt interference with the Internal Revenue laws, aiding and assisting the filing of a false tax return, failure to file a tax return, criminal contempt, structuring transactions to avoid reporting requirements, and making false declarations before a grand jury. According to evidence presented at trial, Prater engaged in selling services that he claimed would legally remove his customers from the federal tax system. Prater advocated the position that income earned in the United States is generally not taxable, and, in exchange for fees, he prepared false tax returns and bogus tax documents on behalf of his customers that were submitted to the IRS and recorded in the public records. Prater also advised his customers to conceal assets and income from the IRS. Between 2000 and 2003, Prater’s gross receipts exceeded $2 million. In December 2002, a federal district court in the Middle District of Florida had enjoined Prater from promoting his anti-tax views and business. Prater violated that injunction and subsequent orders from the court by continuing to provide his false tax advice to customers and concealing revenue derived from his business. He also made false declarations to a grand jury investigating the matter when he voluntarily testified on October 1, 2008.
Tennessee Financial Advisor Sentenced in Fraud Case
On June 14, 2010, in Knoxville, Tenn., Delbert Foster Blount, III, of Ooltewah, was sentenced to 60 months in prison, followed by three years of supervised release, and ordered to pay $2,726,272 in restitution to Ameriprise and $467,169 in restitution to the Internal Revenue Service (IRS). Blount pleaded guilty in April 2009 to charges of mail fraud, wire fraud, and income tax evasion. According to his plea agreement, from June 2000 until December 2006, Blount used his position as a financial advisor to encourage people to invest money in various savings and retirement vehicles that included, 401(k) accounts, IRA accounts, and brokerage accounts, but then misappropriated the money for his personal use. Blount admitted that he deposited checks received from investors into a nominee account to hide his theft. Blount then created false statements on his computer and posted them on the internet to lead his clients to believe that he had actually invested their money. Blount also failed to report the proceeds from the theft of clients' funds on his federal income tax returns for 2002 through 2004; and failed to file income tax returns for tax years 2005 and 2006. These actions resulted in a tax loss to the government of $469,592 for tax years 2002 through 2006.
Connecticut Man Sentenced for Tax Evasion
On May 27, 2010, in Hartford, Conn., Vincent Mavilia, of Warren, was sentenced to 18 months in prison, to be followed by three years of supervised release, and ordered to pay a $5,000 fine. He was also ordered to pay $359,291 in back taxes, penalties and interest to the Internal Revenue Service (IRS) for evading taxes for more than a decade. Mavilia pleaded guilty on November 19, 2009, to one count of tax evasion. According to court documents and statements made in court, Mavilia owned and operated a number of bars and adult entertainment businesses. However, from 1992 through 2003, Mavilia took steps to conceal from the IRS his ownership of the businesses by placing them in the name of his adult daughter. Mavilia further attempted to conceal his income from his businesses by using bank accounts in his daughter’s name to deposit funds and make payments of his personal expenses. Mavilia also purchased and owned real property in Branford, Brookfield, and Danbury, but placed the properties in the names of other individuals to keep them beyond the reach of the IRS.
Final Defendant Sentenced in Scheme to Defraud IRS
On May 27, 2010 in Minneapolis, Minn., Mark Maxwell was sentenced to 57 months in prison on one count of conspiracy to defraud the IRS and two counts of assisting in the preparation of false tax returns; he was the last of six defendants to be sentenced in this scheme. According to court documents, from June 2001 through October 2004, the defendants conspiring to defraud the U.S. through two false return schemes and a third scheme to involving false non-profit organizations. In the false return schemes, the defendants prepared tax returns for themselves and others in which, despite earning income, the defendants and their clients attempted to pay no taxes and, instead, claimed fraudulent refunds by declaring all or nearly all of their earnings tax deductible. Some of their returns were accompanied by declarations in which the defendants and others stated their wages were not taxable income. As part of the use of false non-profits, the defendants structured their own businesses and the businesses of their clients as limited liability corporations, purportedly owned by non-profit organizations. The corporations then distributed their profits among bank accounts held by those organizations, which did not file tax returns or pay taxes. In reality, however, the bank accounts were controlled by the defendants or the defendants’ clients, and those clients then used that untaxed money to pay for personal expenses. The defendants charged their clients fees to participate in the various schemes. The defendants also charged and previously sentenced are Douglas Leiter sentenced to 121 months in prison; Brian Scott received 78 months in prison; Timothy McCarthy received 52 months in prison; Christopher Robinson was sentenced to 20 months in prison; and Laurie Brausen was sentenced to 6 months in prison.
Minnesota Musician and Money Transmitter Sentenced for Evading Payment of More than $1.1 Million in Taxes
On May 5, 2010, in St. Paul, Minn., Steven Renner was sentenced to 18 months in prison and ordered to cooperate with the IRS in the assessment and payment of taxes still due in connection with his conviction on four counts of tax evasion. According to court documents, between 2002 and 2005, Renner diverted funds from Cash Cards International (CCI), his Internet-based, stored-value and money-transmission business, to pay his living expenses as well as to make personal investments in coins, oil wells, art, stamps, and vintage musical instruments. He also used CCI funds to promote his blues-rock band, “Stevie Renner and the Renegades.” From 2001 to 2006, Renner was the sole owner of CCI, which had locations in Minnesota, South Dakota, and Hawaii. Although he knew he was legally obligated to file federal income tax returns and pay all federal taxes owed, he failed to do so for tax years 2002 through 2004, until March 5, 2006, when he also filed his 2005 federal income tax return.
Defendant Sentenced for Filing False Document with the Internal Revenue Service
On April 19, 2010, in Detroit, Mich., Peter Hendrickson was sentenced to 33 months in prison and ordered to pay a $25,000 fine. According to court documents, Hendrickson was charged with filing false documents with the Internal Revenue Service (IRS) for the calendar years 2000 through 2006. On October 26, 2009, he was convicted of 10 counts of filing false income tax returns and other forms stating that he had received no wages in those years. For two decades Hendrickson had attempted to avoid paying federal income taxes. In May 2007, a federal court permanently enjoined him from filing tax returns and forms on which he falsely reported his income as zero. The injunction order also required Hendrickson and his wife to repay more than $20,000 in federal income, Social Security and Medicare taxes that they owed as a result of filing false tax returns with the IRS. According to the order, Hendrickson based his improper conduct on a book he wrote called “Cracking the Code.” The book states that federal tax withholding and income taxes on wages are applicable only for a limited class of people, primarily government employees. The court found that position to be “false and frivolous,” and cited an earlier court decision holding the position to be “preposterous.” In addition, Hendrickson was convicted in 1992 on federal criminal charges for failing to file a federal income tax return and for a conspiracy involving a firebomb placed in a bin at a U.S. Post Office in Michigan on April 16, 1990, the last day on which tax returns could be postmarked that year.
West Virginia Attorney Sentenced for Failing to Pay Over $405,000 in Taxes
On April 14, 2010, in Charleston, W.Va., Richard A. Hayhurst, of Parkersburg, was sentenced to 21 months in prison and ordered to pay over $400,000 in restitution for failure to pay employment taxes for employees. According to court documents, Hayhurst practiced law in Parkersburg and operated his firm as a sole proprietorship. From early 2000 through late 2006, Hayhurst withheld federal income and FICA taxes from his four employees’ paychecks in the amount of $216,767. However, Hayhurst failed to pay over taxes as reflected on the IRS Form 941. Further, Hayhurst failed to pay the employer portion of his employees’ Social Security and Medicare taxes totaling $44,557 from the second quarter of 2003 through the third quarter of 2006. Finally, Hayhurst failed to pay his own personal income taxes for the years 2003, 2004, and 2005 totaling $134,965 in unpaid tax liability. In total, the charged tax liability and relevant conduct attributed to Hayhurst is $405,082.
Ohio Man Failed to File Tax Returns for Three Years
On April 13, 2010, in Toledo, Ohio, Mark J. Zokle, of Sandusky, Ohio, was sentenced to 15 months in prison for failing to file income tax returns for three years. Zokle pleaded guilty in May 2009 to willfully failing to file his federal individual income tax returns for 2001, 2002, and 2003. According to court documents, Zokle admitted he worked as an independent sales representative for TEMO Sunrooms, Inc., of Clinton Township, Michigan. He earned commission income of $862,463, $756,980, and $794,067, respectively, in those three. Zokle further admitted he failed to pay the Internal Revenue Service (IRS) $425,652 in individual income taxes for these three years combined.
California Man Sentenced for His Participation in Mortgage Fraud Scheme
On April 5, 2010, in Los Angeles, Calif., Lorenzo Espinoza, a Newport Coast man, was sentenced to 60 months in prison for defrauding the Department of Housing and Urban Development (HUD) by fraudulently obtaining mortgage loans that went into default. Espinoza was ordered to pay more than $614,000 in restitution to HUD. In December 2006, Espinoza pleaded guilty to conspiracy to defraud HUD, bankruptcy fraud, money laundering, and willful failure to pay tax to the Internal Revenue Service (IRS). In pleading guilty, Espinoza admitted that he engaged in a scheme that ran from April 1995 until approximately May 2001 and caused HUD to suffer losses when he and his associates fraudulently purchased nearly 100 residential properties. The properties were sold at inflated market values to “straw buyers” who were unable to make payments on the homes. Espinoza and his associates supplied the down payments for the straw buyers and in some cases obtained bogus tax forms and paycheck stubs that were submitted with the loan applications. The lenders relied on the false documents when they approved the loans, and HUD relied on the false documents in insuring the home loans. When the straw buyers defaulted on the home loans and the lenders foreclosed on the properties, HUD reimbursed the lenders for their costs and took possession of the properties. HUD ultimately suffered losses of more than $2 million when it sold the properties for far less than the fraudulent purchase prices of the homes. In addition to defrauding lenders and HUD, Espinoza committed bankruptcy fraud in 1999 when he filed for bankruptcy and failed to tell the United States Trustee that he owned a Rolex Daytona watch, two Ferraris and a Lamborghini. In late 2002, Espinoza laundered the proceeds of his bankruptcy fraud when he sold the Ferrari automobiles for $127,500. Espinoza also pleaded guilty to willfully failing to pay income tax, admitting that he did not pay $199,053 due for the 1996 tax year. In court papers filed in relation to the sentencing, prosecutors pointed out that Espinoza had not filed tax returns for well over 10 years and owes the Internal Revenue Service more than $5 million in taxes, interest and penalties.
Utah Man Sentenced for Mortgage Fraud
On March 30, 2010, in Salt Lake City, Utah, Jerry Huff was sentenced to 12 months and one day in federal prison, to be followed by five years of supervised release, and ordered to pay $264,050 in restitution. In June 2009, Huff was convicted by a jury on charges of wire fraud, money laundering, and failure to file a federal income tax return. According to the indictment, Huff, the owner of a construction business known as High Caliber Construction Company, fraudulently obtained $250,000 from First Greensboro Home Equity (FGHE), a mortgage bank headquartered in Greensboro, North Carolina, by making false statements to obtain a second mortgage on his house in Moab, Utah. Huff's loan application package reflected false statements of personal income and ability to repay the second mortgage, while at the same time omitting mentions of financial problems and non-payment of taxes. Huff also submitted a fictitious appraisal of the property and altered photos that gave the impression the house was completed both inside; fully landscaped; inhabited; and well appointed inside. Huff also provided personal tax return forms for the years 2001 and 2002 when in fact, the defendant did not file tax returns for those years. Once Huff obtained the second mortgage in the approximate amount of $250,000, he failed to make loan payments to FGHE.
Ohio Man Sentenced for Income Tax Evasion
On March 19, 2010, in Columbus, Ohio, Rudolph Joseph Fox, Jr. was sentenced to 12 months in prison, followed by three years of supervised release, ordered to pay $23,765 in restitution to the Internal Revenue Service (IRS), and fined $3,000. Fox was convicted by a jury in November 2009, of three counts of income tax evasion and one count of willful failure to file a federal income tax return with the IRS. According to court documents, during 2002 and 2003, Fox demanded that his employer not withhold federal income taxes from his salary or wages. During 2005, Fox stated his taxable income was zero even though he received a salary or wages as an employee of a medical company. As a result of the unreported income for tax years 2002, 2003, and 2005, the tax loss was $23,765. In addition, Fox willfully failed to file a 2004 federal income tax return, even though he received income for the year.
Owners of East St. Louis Day Care Center Sentenced on Fraud Schemes
On March 18, 2010, in East St. Louis, Ill., Monica M. Owens and Robby L. Owens, both of Clayton, Missouri, and formerly of Fairview Heights, Illinois, and Great Kids, Inc., an East St. Louis Day Care Center, were sentenced on charges relating to evasion of taxes, theft of federal program funds, and food stamp benefit fraud. Monica Owens was sentenced to 25 months in prison, three years of supervised release, and ordered to pay a special assessment of $300. Robby Owens was sentenced to 25 months in prison, three years of supervised release, and ordered to pay a special assessment of $100. The defendants were also ordered to pay $203,057 in restitution to the Illinois Department of Human Services (DHS) and $249,197 in restitution to the Internal Revenue Service (IRS). In addition, Great Kids, Inc. was sentenced to five years probation and ordered it to pay criminal restitution to the DHS on its conviction for theft of federal program funds. According to court documents, Monica and Robby Owens solely owned and operated Great Kids, Inc. The couple controlled all the business accounts and received all profits earned through Great Kids, Inc. Monica and Robby Owens, however, attempted to evade or defeat the assessment of income taxes and failed to file a tax return for 2005 and failed to pay income taxes. Monica Owens and Great Kids, Inc. further obtained payments by fraud by submitting false child care claims to the DHS, claims for child care of children who did not attend or were not present in the child care center. Monica Owens also falsely applied for food stamp benefits by denying that she was receiving a monthly household income from employment.
Chicago Businessman Sentenced to Five Years for Cheating on Federal Taxes Over Ten Years
On March 4, 2010, in Chicago, Ill, Jon Darmstadter was sentenced to 60 months in prison and ordered to pay nearly $2.3 million in restitution for tax evasion. According to court documents, in the late 1990s and early 2000s Darmstadter was an executive of the Children’s Beverage Group, Inc. (CBG), a publicly-traded company in Northbrook, Ill. He admitted using brokerage accounts in Canada to hold stocks and execute trades and then hiding the income from those stock sales in off-shore bank accounts in the Turks and Caicos Islands. He also admitted failing to report income from the sale of stock and capital gains from stock sales involving both CBG and another company he operated, Zkid Network Company, a media content company that developed and marketed software to protect children using the internet. Darmstadter also admitted that he made false statements on multiple occasions in U.S. Securities and Exchange Commission filings relating to Zkid, where he illegally generated more than $427,000 in over-the-counter sales of Zkid stock in 2003. Darmstadter filed false tax returns for all six years from 1998 through 2003, and that he failed to file tax returns for the years 2004 through 2007.
Former Corporate Executive Sentenced for Failing to File Tax Returns
On February 24, 2010, in Springfield, Mo, Ronald Kirkland was sentenced to 24 months in prison for failing to file income tax returns on millions of dollars of income. According to court documents, Kirkland was a sales representative and independent contractor for American Family Life Assurance Company (AFLAC) serving as AFLAC’s Missouri sales manager. During that time he was paid as an independent contractor rather than an employee. In 2004, Kirkland was promoted to senior vice-president and director of sales, which was a salaried position at the company’s headquarters in Columbus, Ga. Kirkland admitted that he failed to file tax returns for the years 2002 thru 2005. During that four-year period, Kirkland received total gross income of approximately $6,326,000. In each of those years, Kirkland filed for extensions of his deadline, but never filed returns.
Chicago Area Man Sentenced in Scheme that Utilized Defunct Business to Evade Taxes
On January 7, 2010, in Chicago, Ill., Rudy Fratto was sentenced to 12 months and a day in prison, to be followed by three years of supervised release, and ordered to pay more than $141,000 in restitution. According to court documents, Fratto was charged, in September 2009, with one count of income tax evasion for failing to file a 2005 tax return reporting $199,595 in gross income. Fratto admitted to the same offense for tax years 2001, 2002, 2003, 2004, 2006 and 2007. According to the Information, from January 1, 2005 and continuing through about April 17, 2006, Fratto utilized a bank account in the name of J.J.F. Inc, a corporation that was dissolved in November 1997, in order to conceal and avoid reporting his income to the IRS. Fratto instructed businesses and others to issue checks in payment of wages, compensation and other income to J.J.F. Inc. Fratto used the J.J.F. Inc. account to pay personal expenses and to withdraw cash. Fratto made his mortgage payments in cash and paid other bills with money orders, in order to conceal and avoid reporting his income to the IRS. The total unreported gross income for the seven year period was nearly $836,000.
Professional Golfer Sentenced for Failing to Pay More Than $2 Million in Taxes
On January 22, 2010, in Orlando, Fla., Jimmy L. Thorpe, aka Jim Thorpe, was sentenced to 12 months in prison, to be followed by two years of supervised release and 200 hours of community service for failing to pay more than $2 million in income taxes. Thorpe was also ordered to repay all taxes due and owing. According to court documents, Thorpe is a professional golfer on the Professional Golf Association (PGA) Champions Tour, formerly known as the PGA Senior Tour. During the years 2002, 2003, and 2004, Thorpe earned income playing in PGA events and from various endorsements, including Foxwoods Casino. JLT, Inc. (Foxwoods). Foxwoods was a Florida corporation incorporated in September 1998, in which Thorpe was the sole officer and director. Although he filed with the Internal Revenue Service extensions of time in which to file his personal income tax returns and corporate income tax returns for the tax years 2002, 2003, and 2004, Thorpe did not make any payments for personal income taxes with the extensions. In addition, Thorpe did not make any estimated tax payments for those tax years and had approximately $2,991 taxes withheld. For the calendar years 2002, 2003, and 2004, Thorpe received approximately $5,365,154 in gross income with an estimated tax due of over $2 million.
South Carolina Couple Sentenced on Failure to File Tax Returns
On January 19, 2010, in Greenville, S.C., Robert M. “Mark” Ledford, and Cheryl H. Ledford, of the Glenn Springs area were sentenced for income tax evasion. Robert Ledford was sentenced to 30 months in prison to be followed by three years of supervised release. Cheryl Ledford received a sentence of three years probation, including a requirement that she serve five months of house arrest. Both Ledfords were ordered to cooperate with the Internal Revenue Service (IRS) in filing tax returns and payment of back taxes estimated in excess of $875,000, as well as penalties and interest. According to court documents, the Ledfords had not filed U.S. individual income tax returns since 1991. Between 1992 and 1995, Robert Ledford owned and operated a nursery business in Spartanburg from which he derived substantial income upon which no income taxes were paid. In 1997, the IRS assessed him federal taxes, exclusive of penalties and interest, in the amount of $822,065. Robert Ledford, aided by Cheryl Ledford, took steps to avoid the payment of those taxes by, among other things, placing income, funds, and property into the names of nominee organizations, some of which were controlled by the Ledfords and by converting assets into cash. In 2005, Robert Ledford purchased and operated a garden center from which taxable income was derived. Again, no taxes were paid and nominee organizations were utilized to receive money from the garden center. Money from the nominee organizations was deposited into Cheryl Ledford’s personal bank account, which she used to pay personal expenses.
Former San Francisco Investment Fund Manager Sentenced
On January 15, 2010, in San Francisco, Calif., Edward S. Ehee, of Walnut Creek, Calif., was sentenced to 51 months in prison, to be followed by three years of supervised release, and ordered to pay restitution for committing wire fraud, tax evasion and making and subscribing a false partnership return. In his guilty plea on March 13, 2009, Ehee admitted that between 2001 and 2006 he defrauded investors in investment funds of more than $4 million. Ehee represented to investors that he would invest their funds in the securities markets and employ complex trading strategies to earn high returns with less risk than is ordinarily associated with such returns. Instead of investing the funds as promised, he diverted most of the funds for improper purposes, including the payment of existing investor distribution obligations using new contributions from other investors, and payments for the benefit of himself and his family. Ehee also admitted that although he had approximately $240,500 in taxable income in 2005, he did not file a tax return or pay any income tax for 2005. Ehee also admitted that he made and subscribed, under the penalties of perjury, a false partnership return for the tax year 2005 for one of his investment funds. Ehee intentionally inflated the assets reported on the balance sheet of the return to match the amount of money that he was supposed to have invested on behalf of his clients, when he knew that he had not invested any of their money in that fund in 2005.
Arizona Asphalt Paver Sentenced to Prison for Tax Evasion
On January 7, 2010, in Phoenix, Ariz., John Stacey was sentenced to 77 months in prison and ordered to pay $1.5 million in restitution for tax evasion. According to court documents, Stacey was convicted on charges of income tax evasion, corrupt interference with the due administration of the IRS, and multiple counts of fraudulent use of a social security number. According to the evidence presented at trial, Stacey operated a sole proprietorship asphalt paving company that did business under various names, including A to Z Paving, Triple A Paving, Texas Paving, Pave Your Way Construction and A to Z Paving Engineering, among others. Stacey earned gross income in excess of $4 million from his business during the years 2000 to 2003, but he has never filed an individual income tax return with the IRS. Since at least February 2002, Stacey knew that he owed taxes, penalties and interest for tax years 1995, 1996 and 1997. Stacey has made no payments to the IRS towards this tax debt. In addition to not paying his outstanding tax debt, Stacey took numerous steps to frustrate the IRS’s efforts to both investigate the case and collect tax that he owed.
Texas Couple Sentenced on Tax Evasion Charges
On December 11, 2009, in Sherman, Texas, Phillip G. Kellar and Michelle G. Kellar were each sentenced to 41 months in prison to be followed by three years of supervised release, and ordered to pay $312,825 in restitution to the Internal Revenue Service (IRS). According to court documents, from 2001 to 2008, the Kellars willfully attempted to evade payment of their income taxes by filing false Forms W-4 and attachments and filing false "Withholding Exemption Certificates." Additionally, during that time period they failed to file a tax return for tax year 2000 and filed returns for tax years 2001, 2002, and 2003 in January 2006. They submitted correspondence intended to obstruct the collection of taxes to the IRS, and also submitted checks designated for payment of taxes to the IRS that were drawn on accounts that contained insufficient funds.
Ohio Man Sentenced for Role in Mortgage Fraud Scheme
On December 10, 2009, in Cincinnati, Ohio, Julian M. Hickman was sentenced to 33 months in prison, to be followed by three years of supervised release, and ordered to pay a $12,500 fine. Hickman pleaded guilty in December 2008 to two counts of conspiracy and three counts of willful failure to file income tax returns. In a statement of facts filed with his plea, Hickman admitted that, between March 2002 and June 2008, he and others recruited unsuspecting individuals to buy residential properties, the majority of which were low income, dilapidated and otherwise depressed residential properties, at prices artificially inflated above legitimate fair-market values. Hickman admitted that he participated in 107 separate fraudulent real estate closings between March 2002 and June 2006. Hickman and his co-conspirators netted more than $3.8 million from the deals. Although he received in over $1.7 million in gross income in 2003, 2004, and 2005, he failed to file federal income tax returns. According to court documents, scheme led to foreclosure against owners of more than 90 percent of the properties.
Pennsylvania Man Sentenced to Four Years on Fraud and Tax Evasion Charges
On December 11, 2009, in Philadelphia, Pa., Lawrence Paul Cowan, of Boothwyn, Pa., was sentenced to 48 months in prison and ordered to pay a $5,000 fine and to pay $308,000 in restitution to the Internal Revenue Service (IRS), which includes back taxes and interest. According to court documents, Cowan worked under his deceased father’s social security number as an insurance agent from 1998 through 2004, making hundreds of thousands of dollars, yet he filed no federal tax returns during that period. Between 2002 and 2004, Cowan evaded more than $73,000 in federal income tax.
Mississippi Businessman Sentenced for Failing to File Tax Returns and Criminal Contempt
On November 30, 2009, in Jackson, Miss., Wiley Randolph “Randy” Kuyrkendall of Pearl, Mississippi, was sentenced to 46 months in prison, followed by one year of supervised release, for failure to file federal income tax returns and fleeing from his criminal trial. Kuyrkendall was also ordered to pay $443,806 in restitution to the Internal Revenue Service (IRS) and $3,113 to the U.S. District Court. According to court documents, Kuyrkendall, formerly a State Farm insurance salesman, was found guilty by a jury in August 2009 of failing to file income tax returns for the years 2002 through 2005, although he received almost $800,000 in gross income during those four years. The evidence during trial disclosed that Kuyrkendall had filed a federal civil lawsuit against the IRS seeking $1.1 billion and claiming that Congress did not have authority to tax. The court scheduled a pre-trial conference in the case for August 14, 2009, and the trial was set to begin on August 17, 2009. Kuyrkendall failed to appear on both dates and was arrested shortly thereafter by the U.S. Marshal Service. Based on these actions, the court charged Kuyrkendall with two counts of criminal contempt for fleeing and failing to appear for those two court-scheduled events.
Detroit Area Businessman Goes to Jail for Tax Evasion
On November 25, 2009, in Detroit, Mich., Marc Bruce was sentenced to 16 months imprisonment, followed by three years of supervised release, and ordered to pay $328,085 in restitution to the Internal Revenue Service (IRS) and to file accurate back tax returns. According to court records, during the 2001 through 2004 tax years, Bruce received over $890,000 in taxable income from his business M&C Trucking, Inc., and willfully failed to file tax returns with the IRS. Bruce also attempted to conceal his true and correct income from the IRS and failed to pay over $244,000 in tax due and owing. He also conducted business in cash and transferred his assets to nominees.
Florida Man Sentenced on Tax Evasion Charges
On November 23, 2009, in West Palm Beach, Fla., Carl Libertino, of Sebastian, Florida, was sentenced to 30 months in prison, to be followed by three years of supervised release, and ordered to pay $202,160 in restitution for unpaid taxes. Libertino pleaded guilty in July 2009 to tax evasion charges. According to stipulated facts read in open court at the guilty plea, Libertino did not file personal income tax returns from 2004 through 2007. During these years, Libertino received substantial income, in large part, from persons who believed they were investing their money through Libertino. To further conceal his income and evade taxes, Libertino operated mostly in cash, withdrawing amounts small enough to evade federal currency transaction reporting (CTR) requirements.
Rhode Island Couple Sentenced for Tax Evasion
On November 18, 2009, in Providence, R.I., Albert Martin and his wife, Lorraine Martin, were sentenced for committing tax evasion and conspiring to defraud the United States. Albert Martin was sentenced to 51 months in prison and three years of supervised release. Lorraine Martin was sentenced to 12 months and a day in prison and three years of supervised release. In addition to the prison terms, Albert and Lorraine Martin were ordered to pay $463,988 in restitution to the U.S. Treasury. According to the indictment and evidence introduced during their trial, Albert Martin and co-conspirator, Bruce Lapierre owned and operated a Woonsocket-based machine shop from which they earned substantial income. From 1997 to 2004, the defendants engaged in an elaborate scheme to conceal from the Internal Revenue Service (IRS) income that they earned through Classic Machine, and thus avoid paying taxes on that income. Rather than open business accounts for depositing business receipts and income, they allegedly used Lorraine Martin’s personal account to conceal business receipts, as well as an anonymous “private” banking service designed to conceal income from the IRS. The evidence also showed that the defendants, in order to further conceal their assets and income from the IRS, used multiple business names, such as Banner Technologies, Circle Machine, Preferred Enterprises and Royal Enterprises. The defendants also made extensive use of cash and money orders. In October 2009, Lapierre was sentenced to 51 months in prison for his role in the scheme.
Las Vegas Business Owner Sentenced To 15 Years in Prison for Tax Fraud Scheme
On November 16, 2009, in Las Vegas, Nev., Robert Kahre and his sister, Lori Kahre, were sentenced to 190 months and 72 months in prison, respectively. Both were found guilty in August 2009 of conspiring to defraud the federal government for the purpose of impeding the Internal Revenue Service (IRS) in its collection of income and employment taxes. According to information presented in court, between 1997 and 2003, Robert Kahre owned and operated six construction-related businesses in Las Vegas and paid employees over $100 million in cash wages. Additionally, Kahre provided a payroll service to approximately 35 other construction contractors who employed thousands of employees. Robert and Lori Kahre devised and used a payroll scheme that concealed and disguised the true amount of income received by his employees and the employees of the companies for which he provided payroll services. Robert Kahre claimed to pay employees in gold or silver coins, but which were actually immediately exchanged for pre-determined envelopes of cash. The face amount of the coins was one-eighth the amount of pay that the employee actually earned and received in the cash envelope. The defendants told the employees that the income was either not taxable or that they should falsely report their income to the IRS at the face amount of the gold and silver coins. During the course of the scheme, cash wage payments of at least $25 million were paid to Robert Kahre’s employees and cash payments of approximately $95 million were paid to the employees of the other contractors. No federal tax withholdings were made from the paychecks, and the wages were not reported to the IRS. The defendants took steps to hide the correct amount of income paid to the employees by using false invoices, keeping two sets of books, using false names on payroll records, making false statements on mortgage applications, and using nominees to conceal assets. In addition to the payroll scheme, Robert Kahre was convicted of evading personal income tax on approximately $12 million in income for the years 1999 through 2002; Lori Kahre was convicted of evading personal income tax on approximately $242,882 in income for the years 1998 and 2000 through 2005.
Maine Man Sentenced on Federal Tax Evasion Charges
On November 16, 2009, in Bangor, Maine, Richard J. Thomas was sentenced to 24 months in prison, three years of supervised release, and ordered to pay $15,082 in restitution and a $100 special assessment. The supervised release conditions required, among other things, that Thomas report to the Internal Revenue Service (IRS) true and accurate tax returns for the years 1995 through 2008. On January 11, 2006, Richard Thomas, a local chiropractor, was indicted on six counts of tax evasion from 1995 through 2001 (excluding 1997). Thomas pleaded guilty on February 2, 2009 to tax evasion for tax year 2001. According to court documents, Thomas owed substantial income tax for the year in question, but he willfully attempted to evade tax assessment for that year. Prior to 1995, Thomas had filed tax returns, which indicated he was aware of his duty to file tax returns.
Former Connecticut Resident Sentenced to Prison for Evading Taxes; Structuring Cash Deposits
On October 23, 2009, in Hartford, Conn., Eugene Cappello was sentenced to 24 months in prison, to be followed by two years of supervised release, for failing to pay more than $237,000 in federal taxes and structuring cash deposits. Cappello was also ordered to pay a $5,000 fine and to pay approximately $403,000 in back taxes, penalties and interest. In addition, Cappello was ordered to forfeit $39,500. According to court documents and statements made in court, in August 2000, Cappello was contacted by the Collection Division of the Internal Revenue Service (IRS) for non-payment of taxes related to his 1997, 1998 and 1999 individual income tax returns. After that Cappello made only nominal payments toward his total balance due and, in May 2004, he submitted a signed document to the IRS documenting his purported inability to pay the more than $237,000 in taxes and interest that he owed for his 1997 through 2003 tax returns. During this period, Cappello hid cash from the IRS and made significant personal expenditures, including $34,781 for a country club membership and $91,000 for a yacht. In addition, Cappello had a house built by making more than $350,000 in cash payments to building contractors. To help hide his assets from the IRS, Cappello had his paychecks issued in the name of another individual. Further, he directed this person to structure cash deposits into two different bank accounts.
South Carolina Man Gets Prison for Income Tax Evasion
On October 22, 2009 in Columbia, S.C., Barry Lusk was sentenced to 33 months in prison and three years supervised release for failing to pay income tax. According to court documents, Lusk was the sole operator of two businesses that he sold for nearly $1.5 million in 2000. Lusk used the proceeds to buy houses, real estate and purchase an airplane instead of paying the taxes due on the sale of the businesses. Lusk was part of a movement advocating income tax was not applicable to him and sent a letter to the Internal Revenue Service (IRS) detailing his beliefs. In 2002 the IRS began a civil audit of Lusk and an IRS representative attempted to contact Lusk regarding his responsibility to file an individual tax return for the year 2000. In 2003, Lusk filed a joint 1040 return for 2000 and claimed that he and his spouse had no income and that there was no tax due or owed. However, he asked for a refund of an estimated tax which had been paid in 2000. Lusk also filed amended tax returns for two prior tax years attempting to get refunds claiming the original returns were filed in error. Luck’s income was estimated at more than $843,000, with a tax debt of more than $183,000.
Anchorage Man And Wife Sentenced for Conspiracy to Defraud the IRS
On October 16, 2009, in Anchorage, Alaska, Eugene and Lorna Warner, of Anchorage, were sentenced in federal court for their convictions of conspiracy to defraud the Internal Revenue Service (IRS). Eugene Warner was sentenced to 37 months in prison, three years of supervised release and fined $15,000. Lorna Warner was sentenced to five years probation, including ten months of home confinement, and fined $8,000. Both defendants were ordered to file accurate tax returns from 1991, through present, make a good faith attempt to pay all back taxes, interest, and penalties to IRS, and comply with the tax laws. According to information presented to the court, the defendants were charged in a 37-count indictment with conspiracy to defraud the IRS, obstruction of the IRS, filing false tax returns, mail fraud, and making false claims against the United States. Eugene Warner was also charged with bankruptcy fraud. On July 30, 2009, both defendants entered guilty pleas to the charge of conspiring to defraud the United States. Both defendants were previously convicted in 1997 of obstructing the IRS and sentenced to 18-month prison terms. According to the indictment, the defendants engaged in a course of conduct intended to evade the payment of lawful debts, conceal assets from creditors, and obstruct collection activities by those creditors. The defendants attempted to evade these debts by concealing assets in nominee entities, so that their names did not appear as the owners of the property. They then failed to disclose his ownership of the property in documents filed with the United States District Court, the United States Bankruptcy Court, and the IRS. They were also accused of mailing worthless “International Bills of Exchange” to the IRS and other creditors in an unsuccessful attempt to pay off their debts. In their plea agreement and in open court, the Warners admitted that, as a part of the conspiracy, they both made false statements to the IRS about his assets, omitting real property and bank accounts held in the name of bogus nominee “trusts.” They also admitted sending to the IRS a sworn “commercial affidavit” that falsely claimed that the IRS owed them $1.5 million. Eugene Warner further admitted that he testified falsely before the U.S. Bankruptcy Court about his assets in a 2003 hearing.
Washington State Man Sentenced in Fraudulent $3.2 Million Consumer Debt Discharge Program
On October 15, 2009, in Spokane, Wash., Jason Paul Christensen, formerly of Pasco, Washington, was sentenced to 109 months of imprisonment, to be followed by three years of supervised release. Christensen was ordered to pay $3,238,997 in restitution to the victims of his scheme. According to court documents, Christensen fraudulently obtained $3.2 million from over 1,300 victims across the country through a Ponzi-type scheme advertised as a debt elimination program. Christensen pleaded guilty on April 16, 2008, to mail fraud and money laundering charges relating to the scheme he engaged in over a period of about three years through the Internet and a post office box business address in Richland, Washington. In his plea agreement, Christensen admitted that between approximately October 15, 2003, and December 31, 2005, he solicited his victims via websites on which he advertised that his company employed a team of federal attorneys who used loopholes in the law to discharge consumer debts. When in fact, he did not employ any team of attorneys and no such legal loopholes existed. Christensen promised his customers that his company would fully discharge their debts, his program was 100 percent successful, and customers were guaranteed success or would receive their money back. Customers, however, were required to pay Christensen’s companies amounts of at least $2,500 and as much as $20,970 in advance. He obtained the large number of victims by paying off the loans of some of his “clients” with other victims’ money and then recruiting his satisfied “clients” to become his “consultants” to whom commissions were paid for recruiting their family and friends into the program. After paying his “consultants” their commissions to promote the scheme, Christensen pocketed the rest of the proceeds for his personal use. In total, the scheme netted over $3.2 million from victims seeking debt elimination and located all over the United States.
Rhode Island Machine Shop Owner Sentenced to 51 Months for Tax Crimes
On October 7, 2009, in Providence, R.I., Bruce Lapierre of Pascoag, R.I., was sentenced to 51 months in prison and ordered to pay $463,988 in restitution. In March 2009, Lapierre and his co-defendants, Albert and Lorraine Martin, were convicted of conspiracy to defraud the United States and tax evasion. According to the indictment and evidence introduced at trial, Lapierre and Albert Martin owned and operated Classic Machine, machine shop based in Woonsocket, R.I. From 1997 to 2004, the defendants engaged in an elaborate scheme to conceal income from the Internal Revenue Service (IRS). Rather than open business accounts for depositing business receipts and income, they used Lorraine Martin's personal account to conceal business receipts, as well as an anonymous “private” banking service. Trial evidence showed that the defendants, in order to further conceal their assets and income from the IRS, used multiple business names, such as Banner Technologies, Circle Machine, Preferred Enterprises and Royal Enterprises. The defendants also made extensive use of cash and money orders. Additionally, evidence presented at trial showed that Lapierre tried to obstruct an IRS investigation of the machine shop's income by renaming business assets, by sending false and frivolous letters to the IRS claiming he was not required to file tax returns or pay taxes, and by directing a financial institution not to comply with an IRS summons for records. Sentencing for Albert and Lorraine Martin is scheduled for a later date.
Kentucky Chiropractor Sentenced to 21 Months for Failing to File Tax Returns
On October 1, 2009 in Paducah, Ky., Charles Boulton was sentenced to 21 months in prison, one year of supervised release, and ordered to pay nearly $95,000 in restitution for failing to file personal income tax from 2001 to 2006. According to court documents, Boulton, a provider of drug and alcohol tests to truck driving schools and transportation companies in Western Kentucky, earned nearly $496,000 from 2001 to 2006 and did not file tax returns.