Examples of Non-filer Investigations - Fiscal Year 2013
The following examples of non-filer investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
North Carolina Couple Sentenced for Obstructing the Tax Laws
On May 8, 2013, in New Bern, N.C., Michael L. Thomas and his wife, Carolyn S. Thomas, both of Fayetteville, N.C., were sentenced for corruptly obstructing and impeding the due administration of the Internal Revenue laws. Michael Thomas was sentenced to 21 months in prison and one year of supervised release. Carolyn Thomas was sentenced to 18 months in prison and one year of supervised release. Jointly, the Thomases were ordered to pay $255,853 in restitution. According to court documents, in 2005, Michael and Carolyn Thomas began marketing purported “debt elimination” programs for the Capital Consortium Group (CCG). From approximately 2004 to 2008, CCG perpetrated an $80 million Ponzi scheme. The Thomases were among the most successful of CCG’s marketers, with upwards of 1,000 customers and high six-figure commissions in 2006 and 2007. While Michael and Carolyn Thomas were profiting from their association with CCG, they filed a false federal income tax return for tax year 2005 in which they omitted most, if not all, of their CCG commissions. Then the Thomases stopped filing tax returns altogether until March 2009, when they submitted a false amended 2005 return, a false 2006 return, and a false 2007 return. Each return significantly underreported the Thomases’ CCG commissions and claimed large tax refunds based on fraudulent Forms 1099-OID. The Thomases also filed bogus financial instruments with the IRS in purported payment of their tax debts, including false bonds with stated face values ranging from $300 million to $100 billion.
Washington Businessman Sentenced for Failing to Report Millions in Income
On May 2, 2013, in Spokane, Wash., J. Scott Vrieling, of Moses Lake, Wash., was sentenced to 24 months in prison, one year of supervised release and ordered to pay $939,258 to the IRS for unpaid taxes. Vrieling was also ordered by the court to file all delinquent income tax returns and pay all tax due and owing, plus penalties and interest. In addition, Vrieling was ordered to pay a $100,000 fine and $14,269 in prosecution cost. Vrieling was convicted on four counts of failing to file federal income tax returns for the years 2004 through 2007. According to court records, Vrieling, the owner of Vrieling Financial, was an independent insurance agent licensed to sell employee benefits, health insurance, and other insurance products. Evidence at trial established that Vrieling received over $2.6 million in gross income during the years 2004 through 2007. However, Vrieling failed to file federal tax returns reporting this income.
Virginia Man Sentenced on Tax Charges
On April 11, 2013, in Lynchburg, Va., James Bowers Johnson, of Winchester, Va., was sentenced to 48 months in prison. In addition, he was sentenced to another 30 days in prison for contempt during his sentencing hearing. Johnson was found guilty following a jury trial in January 2013 on one count of obstructing the IRS and three counts of willfully failing to file personal tax returns. According to court documents, Johnson was self-employed and derived income from the sale of prepaid telephone cards, rental receipts and capital gains. Johnson hid his gross income from the IRS in a number of ways. He requested that customers place payments in a variety of nominee entities he controlled and used money orders or cash. He concealed his ownership of assets by placing assets, including his residence, and bank accounts in the names of limited liability companies, foundations, companies, corporations and domestic and foreign trusts. Between 1999 and 2007, Johnson attempted to conceal more than $1.4 million in income. In addition, Johnson willfully failed to file tax returns for the years 2005, 2006, and 2007, despite earning $668,000 in income for those years.
Missouri Business Owner Sentenced for Failing to Pay Taxes
On April 11, 2013, in Springfield, Mo., Paul Ray Rose Jr., of Highlandville, Mo., was sentenced to 27 months in prison and ordered to pay $586,739 in restitution to the IRS. On November 26, 2012, Rose pleaded guilty to two counts of failing to pay taxes. Rose owned and operated Highlandville-based Newby Enterprises, dba J.B. Enterprises, Inc. According to court documents, from 2006 to 2009, Rose withheld a total of $37,521 in employment taxes from his employees’ paychecks, but willfully failed to pay over the taxes to the IRS. Rose also failed to file individual income tax returns from 2006 to 2009, thereby failing to report income earned from his business. Based on more than $3.2 million in gross revenues and more than $1.7 million in gross profit for the years 2006 through 2009, Rose owed the IRS $375,631 in unpaid income tax.
North Carolina Man Sentenced for Filing False Return
On March 11, 2013, in Greensboro, N.C., Urchel Lavoy Hill, of Advance, N.C., was sentenced to 36 months in prison, one year of supervised release and ordered to pay $92,337 in restitution to the IRS. In October 2012, Hill pleaded guilty to filing a false tax return. According to court documents, Hill filed Form 1040EZ-T for 2006 on which he included a false statement that he was not required to file an income tax return. In an attached statement to the return Hill falsely reported that his total income was a non-taxable amount of $5,440. In fact, in 2006, Hill was required to file an individual income tax return and had received income from a residential rental property business, collectible coin business and other ventures. His total taxable income for 2006 was approximately $154,000.
Kansas City Real Estate Agent Sentenced for Tax Evasion
On March 21, 2013, in Kansas City, Mo., Joseph R. Fulgenzi was sentenced to 46 months in prison and ordered to pay over $400,000 in restitution. On August 1, 2012 Fulgenzi pleaded guilty to tax evasion. According to the plea agreement, between 1992 and 2007, Fulgenzi had $672,447 in unreported income. The total criminal computation including taxes, penalties, and interest, totals $402,223. Fulgenzi has been embroiled in non-filing and non-payment issues dating back to the 1980s. Fulgenzi last voluntarily filed a tax return in 1991 for tax year 1990. Fulgenzi repeatedly failed to cooperate and comply with court orders during IRS civil collection efforts. Although he filed returns from 1982 through 1990, he has paid no taxes due and owing since 1982. Fulgenzi admitted that he used his business and domestic partner to impede the IRS’s collection efforts and conceal his assets. For example, in order to conceal his income and assets, Fulgenzi diverted his real estate commissions and other income to his partner, through whose bank account all of Fulgenzi’s personal expenses were funneled.
Florida Resident Sentenced for Tax Fraud
On March 11, 2013, in Fort Myers, Fla., Peter Hesser, of Port Charlotte, Fla., was sentenced to 36 months in prison, three years of supervised release and ordered to pay $296,000 in restitution to the IRS. Hesser was found guilty in December 2012 on three counts of filing false tax returns and one count of tax evasion. According to court documents, Hesser filed fraudulent documents with the IRS in which he claimed to be owed a refund for tax years 2005, 2006 and 2007, of $500,000. These documents were not legitimate and were prepared with the sole purpose of defrauding the government. Hesser also changed his assets into gold and silver, as well as hid his mortgage payments in a bogus land transfer to avoid paying his taxes. This pattern of deceit stretched out over a decade, thereby evading the payment of taxes that had been assessed for tax years 2001, 2002 and 2003.
South Florida Brothers Sentenced For Tax Evasion
On February 8, 2013, in Miami, Fla., Michael Farnell and James Farnell, residents of Boca Raton, Fla., were sentenced to prison for income tax evasion. Michael Farnell was sentenced to 18 months in prison and ordered to pay $448,128 in restitution to the IRS. James Farnell was sentenced to 42 months in prison and ordered to pay $434,115 in restitution to the IRS. According to court documents, Michael Farnell and his brother, James Farnell, sold stock in a privately held Florida-based technology company between 2004 and 2006 and failed to report the capital gains or pay taxes on the capital gains from those stock sales. The Farnells held their stock in this Florida-based technology company in the name of nominee trusts. The proceeds of the stock sales were deposited into bank accounts titled in the name of these nominee trusts. Neither brother filed tax returns in 2004 and 2005. James Farnell also failed to file a 2006 tax return. As part of the sentencing, Michael and James Farnell both agreed that they failed to report additional income paid to them by this Florida-based technology company in 2001 through 2003.
Oregon Man Sentenced on Tax Charges
On February 5, 2013, in Eugene, Ore., Randall Blair Johnson, of Sisters, Oregon, was sentenced to 41 months in prison and ordered to pay $260,536 in restitution to the IRS and a $50,000 fine. Johnson was convicted by a jury on three counts of income tax evasion, three counts of willful failure to file tax returns and one count of witness tampering. According to the indictment, Johnson was a realtor and half owner of TR Hunter Real Estate, a real estate company in Florence, Oregon. Johnson’s primary sources of income were from sales of real estate, commissions and, in 2005, the sale of TR Hunter Real Estate. The evidence at the trial proved that Johnson filed federal income tax returns for nearly thirty years. Then, in 2002, he fired his CPA, stopped filing returns, stopped paying income tax, and started sending frivolous tax argument material to the IRS and Oregon Department of Revenue. Johnson’s income more than quadrupled from 2002 to 2005 but he paid no income tax, claiming that the tax laws did not apply to him. At trial, an IRS revenue agent testified that Johnson had over $260,000 in taxes due and owing for that four-year period. Despite not filing his own income tax returns, Johnson paid property taxes, filed corporate tax returns for TR Hunter Real Estate, and had delinquent income tax returns prepared for his wife. In April 2009, Johnson provided his brother-in-law and former business partner a letter instructing him to provide false answers to the prosecutor’s questions in the grand jury. Johnson’s attempt to corruptly influence grand jury testimony was the basis of his conviction for witness tampering. Johnson used sophisticated means to conceal income and assets from the IRS. Johnson sold real estate outside of escrow, transferred property into the names of family members and endorsed third party checks instead depositing them into his bank account. When he sold his interest in TR Hunter Real Estate to his partner in 2005, he insisted the sale not go through escrow, knowing that escrow would report the sale to the IRS.
Alaskan Couple Sentenced for Tax Crimes
On February 4, 2013, in Anchorage, Alaska, James Leroy Jensen, of Cordova, was sentenced to 36 months in prison, to perform 600 hours of community service and fined $25,000. Robin L. Jensen, also of Cordova, was sentenced to 24 months in prison, to perform 200 hours of community service and fined $10,000. The couple was also ordered to pay $311,605 in restitution to the U.S. Treasury and to file 2006 through 2009 tax returns. According to their plea agreements, James Jensen is a commercial fisherman and Robin Jensen ran a cabin rental business in Cordova. After the IRS audited their 1994 through 1997 tax returns, the Jensen’s owed over $100,000 in additional taxes. At this time, they began to challenge the jurisdiction of the IRS and the authority of the federal government to tax them. In 2001, the IRS recorded a Notice of Federal Tax Lien of $201,029 against the Jensen’s for tax years 1994 through 1997. The Jensen’s appealed the IRS collection process and went to tax court in 2003. The judge denied the appeal and fined James Jensen an additional $10,000. Instead of complying with the tax laws, the Jensen’s created several entities including a trust in Nevada and two “corporation soles” in Utah. These nominee entities were used to take title of assets that belonged to the Jensens, and thereby, open bank accounts to conceal income, including over a million dollars accredited to James Jensen’s fishing income between 2004 and 2007. James Jensen used money from these accounts to purchase gold coins and pay off a timeshare. In addition, according to the plea agreement, James Jensen tried to thwart IRS collection efforts by mailing a false document called a “Bill of Exchange” to the Secretary of the U.S. Treasury. This document purported to be a payment of $339,888 that would eliminate his tax debt for 1994 through 1997. James Jensen also attempted to use these same false documents to have IRS liens removed from his funds in the Exxon Qualified Settlement Fund. Both attempts failed. The Jensens also filed false tax returns from 1998 through 2003, claiming they had no taxable income because their earnings were not taxable under the discredited “claim of right” theory. Finally, the Jensens failed to file tax returns from 2004 through 2007, based on claims that the corporation sole entities they created in Utah, were exempt from filing tax returns or paying taxes for religious reasons.
Ohio Insurance Salesman Sentenced for Tax Obstruction and Currency Structuring
On January 24, 2013, in Cleveland, Ohio, William R. Herder, of Bellville, Ohio, was sentenced to 20 months in prison and ordered to pay $149,238 plus interest and penalties to the IRS. Herder pleaded guilty in October 2012 to corruptly endeavoring to obstruct the administration of the tax laws and currency structuring. According to court documents, Herder, an independent insurance salesman for Aflac Inc., failed to file timely and accurate income tax returns for the years 2000 through 2009 despite receiving warnings and notices from the IRS. Herder filed returns for the years 2010 and 2011 on which he reported owing taxes, but failed to pay the almost $50,000 in taxes that he owed. In 2004, Herder formed two entities in Nevada – one for the purpose of hiding his automobiles and another for the purpose of hiding his insurance business. Herder also began converting his insurance commission checks to cash and paying his expenses in cash to prevent the IRS from collecting his taxes from his bank account. The plea agreement and indictment filed in this case also stated that Herder submitted numerous obstructive letters and documents to the IRS, Aflac and his credit union in an effort to prevent the IRS from assessing and collecting his taxes. In these letters, Herder falsely claimed, among other things, that the tax laws were not applicable to him. In 2005, Herder attempted to pay his taxes with a fake financial instrument called an “International Bill of Exchange.”
Pennsylvania Man Sentenced for Tax Evasion
On January 23, 2013, in Washington, D.C., Stephen Thomas, of York, Pa., was sentenced to 18 months and ordered to pay $154,364 in restitution. On September 11, 2012, Thomas pleaded guilty to attempting to evade his 2006 federal income taxes. According to court documents, between 2002 and 2004, Thomas formed multiple entities whose names contained the initials ECG, which stood for ESOP Capital Group. ECG purported to provide financial, business and other management services to companies that were interested in creating ESOPs, which are employee stock ownership plans. Thomas admitted that he failed to file his 2005 through 2007 individual income tax returns and failed to file 2005 through 2007 corporate income tax returns for ECG. Thomas further admitted that he engaged in a series of affirmative acts of evasion during 2005 through 2007, including concealing his income by moving earnings from the Maine companies into bank accounts in the name of his wife, withdrawing cash on a weekly basis which totaled more than $400,000, using cashier’s checks, and titling his primary residence in the name of his wife.
Alaskan Couple Sentenced for Tax Evasion
On January 23, 2013, in Anchorage, Alaska, Gary and Marladeen Jokela, of Valdez, Alaska, were sentenced for willfully evading Gary Jokela’s tax liabilities for more than a decade. Gary Jokela was sentenced to 12 months in prison. Marladeen Jokela was sentenced to six months in prison and six months of home confinement. In addition to their prison sentences, the Jokelas were ordered to pay $51,889 in restitution. According to court filings, the Jokelas last filed a tax return in 1984. Meanwhile, Gary Jokela had outstanding tax liabilities that had not been paid since at least 1998. The IRS assessed taxes against Jokela and sent him numerous notices that they intended to levy his wages and bank accounts. When the Jokelas received these notices, both Gary and Marladeen began cashing Gary’s paychecks rather than depositing them to their joint bank account. In total, Gary cashed more than $170,000 of his paychecks. Around the same time, Marladeen Jokela opened a separate bank account in her own name. Neither Gary Jokela's name nor his social security number were associated with this new account. Marladeen Jokela deposited more than $112,000 into her separate account. The Jokelas also made sure that no taxes were withheld from Gary’s wages. In 2004, Gary submitted an IRS Form W-4 on which he claimed to be “exempt” from federal income tax withholding. When the IRS subsequently attempted to levy Gary’s wages directly from his employer, both of the Jokelas convinced the office’s bookkeeper not to honor the IRS notices.
Registered Nurse Sentenced for Misuse of a Social Security Number, Bank Fraud and Tax Evasion
On January 18, 2013, in San Francisco, Calif., Crystal Ann Poole was sentenced to 27 months in prison, three years of supervised release and ordered to pay $476,444 in restitution. Poole pleaded guilty on September 10, 2012 to tax evasion, bank fraud and Social Security fraud. According to court documents, Poole evaded taxes on more than $1.27 million in income that she earned from 1994 through the present as a registered nurse. During her career as a nurse, Poole failed to file returns with the IRS, failed to pay her taxes, used the Social Security number of another individual to hide income and assets, and filed false documents with her employers to stop them from withholding taxes from her wages. According to the plea agreement, Poole committed bank fraud in 2006 when she applied for a loan of $335,000 from a bank to buy a home in Florence, Miss. In her loan application, Poole misrepresented her financial circumstances by omitting debts and supplying a false Social Security number to conceal a then-pending bankruptcy and at least $150,000 in outstanding debts under her true Social Security number. Poole also submitted a falsified Form W-2, Wage and Tax Statement, that purported to be from her employer. This fraudulent document overstated her income and listed a false Social Security number. Based on her fraudulent loan application, the bank approved the loan. Poole ultimately stopped making payments on the loan, resulting in foreclosure and a loss to the bank of $43,822. In 2007, Poole committed Social Security fraud when she used the Social Security number of an Alabama schoolteacher to obtain a $30,158 loan to purchase a Lexus. Poole ultimately stopped making payments on the car loan, resulting in a loss to the bank of $32,424. Poole purchased the schoolteacher’s Social Security number before 2003 and has used the Social Security number to open and maintain bank accounts, hold property, and purchase assets. In using the schoolteacher’s Social Security number, Poole intended to conceal the nature, extent, and location of her assets from the IRS.
Pilot Sentenced for Tax Evasion
On January 10, 2013, in Anchorage, Alaska, Michael A. Spisak, of Kenai, Alaska, was sentenced to 44 months in prison. Spisak was found guilty of tax evasion by a jury on October 29, 2012. According to the evidence presented at trial, Spisak was a commercial pilot who had worked as a hunting and fishing assistant guide and transporter since the 1980s. Spisak did not pay over the income taxes, social security taxes and medicare taxes withheld from employees of two companies which Spisak either controlled or owned. As a result, in 2005, he was personally assessed tax penalties totaling in excess of $200,000. To evade the payment of the tax penalties, Spisak engaged in several acts of tax evasion: he created nominee companies to hold aircraft which he either used in his businesses or controlled, he created an overseas bank account in Belize, he placed assets in the names of others, he caused his financial obligations to be paid through or in the names of others, he transferred funds through the bank accounts of his children and he provided false or incomplete information to the IRS and to his tax preparer.
Louisiana Home Inspector Sentenced for Tax Fraud
On January 7, 2013, in Baton Rouge, La., Jack Carr, of Baton Rouge, La., was sentenced to 78 months in prison and one year of supervised release on multiple counts including preparing and filing false tax returns. According to court documents, Carr, a home inspector, threatened violence against a federal agent, filed false documents and tax returns with the IRS, and attempted to pay his tax debt with fraudulent bonds, fictitious money orders and a fake check. Carr falsely reported that his and his wife’s income was $0 despite earning hundreds of thousands of dollars during the 2001, 2002 and 2003 tax years. In 2009, on two tax returns, Carr falsely reported more than $100,000 of federal income tax withholdings using fake IRS Forms 1099-OID, resulting in a $150,000 fraudulent refund.
Georgia Couple Sentenced for Filing False Tax Returns and Conspiracy to Defraud the United States
On January 3, 2013, in Atlanta, Ga., Stephen Paul Thomas, of Lawrenceville, Georgia, was sentenced to 60 months in prison, three years supervised release and fined $10,000 for conspiring to defraud the United States and making false claims to the IRS. Thomas’ wife, Patricia Denese Anderson, was sentenced to 51 months in prison, three years supervised release and fined $10,000 for her participation in the same conspiracy. According to court documents, Thomas and Anderson, who were married and jointly owned and operated an outdoor yard furnishing store and general contracting business in Duluth, Georgia, stopped filing federal income tax returns in the 1990s. They then hired an organization to send obstructive and harassing materials to the IRS on their behalf. The IRS repeatedly sent notices to Thomas and Anderson notifying them that they had to pay their federal income taxes and that they had to comply with the tax laws. Thomas and Anderson continued to send a variety of obstructive, frivolous and harassing documents to IRS and Department of Treasury officials instead of paying their taxes and took various actions to hide money from the IRS. Finally, in 2009 after a decade of not filing tax returns, Thomas and Anderson submitted two false tax returns claiming over $420,000 in fraudulent refunds from the IRS. That same year, Thomas and Anderson also submitted fictitious financial instruments to the federal government, including a document purporting to be a $100 billion private registered bond, and instructed the government to use this bogus bond to pay any of their debts to the government.
Nevada Attorney Sentenced for Tax Fraud
On December 17, 2012, in Las Vegas, Nev., Ian Christopherson, an attorney, was sentenced to 33 months in prison and ordered to pay $728,786 in restitution. On September 23, 2011, following a five day trial, Christopherson was convicted of two counts of income tax evasion for his federal individual income taxes and for federal employment taxes. According to the evidence presented at trial, from 1994 through 1998, Christopherson ran a small law firm that employed up to nine individuals. He withheld taxes from each of his employees during these years, but did not timely file employment tax returns or his own individual income tax returns. In December 1998, the defendant filed more than 30 delinquent tax returns without making a single payment, even though he owed the federal government a total of $175,685 in federal taxes. Additionally, Christopherson spent five years engaged in stalling and diversionary tactics with the IRS. Christopherson submitted incomplete Offers in Compromise (OIC) for consideration, only to withdraw them later. He failed to disclose significant assets in the OIC, including up to $250,000. He also misrepresented his efforts to file other back tax returns as required by the IRS. The evidence at trial further showed that in August 2002, Christopherson set up a nominee account in the state of Montana in order to conceal his assets from further collection efforts by the IRS. Christopherson made use of a bank account under the name of “Industrial Consultants,” a company owned by friends, which was opened solely for the purpose of assisting Christopherson in evading his taxes. Over the next five years, Christopherson used this nominee account as his own - depositing checks from clients, transferring money from his client trust account, and writing checks for personal and business expenses. The total tax loss, including penalties and interest, is $728,786.
Former Mortgage Company Owner Sentenced on Tax Charges
On December 17, 2012, in Honolulu, Hawaii, Michael Eric Stewart, a former Maui County resident, was sentenced to 24 months in prison and ordered to pay $476,265 in restitution to the IRS. According to court documents, Stewart, owner and operator of Infinity Mortgage on Maui, earned income from soliciting mortgage loans from 2001 to 2006. He did not file tax returns from 1997 through 2006. Stewart transferred income earned through his mortgage business into the bank account of a nominee entity he established in Nevada. From 2001 to 2006, Stewart transferred $788,000 into the Nevada entity’s bank account, eventually transferring over $345,000 into his Hawaii bank account, from which he wrote checks totaling $280,000 payable to himself or cash.
Financial Advisor Sentenced for Attempting to Evade the Payment of Taxes
On December 14, 2012, in Buffalo, N.Y., Eric J. Justin, of Lancaster, N.Y., was sentenced to 12 months in prison and ordered to pay $216,295 in restitution. Justin was convicted of attempting to evade and defeat the payment of taxes. According to court documents, between April 15, 2002 and October 13, 2010, Justin redirected income to his wife as a nominee to hide his business interests, real estate, and personal car. In addition, Justin failed to use any typical record-keeping or accounting method, failed to differentiate personal and business bank accounts and transferred funds between various personal and business accounts. In addition, Justin failed to disclose to the IRS, or his accountant, the receipt of more than $98,000 in life insurance proceeds. The defendant also falsely claimed to the IRS that his real property was encumbered in order to deflate his asset equity numbers.
Insurance Broker Sentenced for Failing to Pay Taxes and Making Illegal Donations to Federal Campaign
On December 11, 2012, in Newark, N.J., Joseph Bigica, an insurance broker, was sentenced to 60 months in prison, three years of supervised release and ordered to pay $2.1 million, plus interest, in restitution. Bigica, of Franklin Lakes, N.J., pleaded guilty to an Information charging him with one count of corruptly interfering with the due administration of the Internal Revenue laws and one count of conspiring to violate the Federal Election Campaign Act (FECA). According to court documents and statements made in court, from January 2000 to September 2011, Bigica was employed as an insurance broker through his companies Joseph Bigica Inc. and Joseph Bigica LLC. Bigica. He failed to file timely tax returns for calendar years 1999 through 2006, or pay his taxes when they were due. Bigica admitted that from April 2000 to September 2011, he took steps to conceal his income and assets from the IRS, using bank accounts in the names of companies he controlled and in the name of his spouse, using a credit card in the name of an employee and her husband, and making extensive use of a Jersey City, N.J., check cashing business. The check casher handled approximately 241 checks totaling more than $2.5 million payable to Bigica, companies with which he was affiliated, and others. In addition, Bigica admitted that between April 2005 and May 2009, he conspired with others to make approximately $98,600 in illegal contributions to the campaign committee of a federal candidate. He used 19 straw donors whom Bigica then reimbursed using checks drawn on accounts in the name of his spouse or companies he controlled.
Former Basketball Program Supervisor Sentenced for Identity Theft and Tax Evasion
On December 10, 2012, in Manhattan, N.Y., Peter Iulo, a former referee and basketball program supervisor at Chelsea Piers Management, Inc., was sentenced to 24 months in prison, three years of supervised release and ordered to pay $200,000 in restitution to the IRS. Iulo pleaded guilty in June 2012 to one count of conspiracy to defraud the United States, one count of conspiracy to commit identity theft, and four counts of tax evasion. According to court documents and statements made in court, from 1996 through 2008, Iulo worked as a referee for Chelsea Piers’ adult basketball leagues. Chelsea Piers is a sports and entertainment complex in Manhattan where various adult basketball leagues play their games. Referees for the basketball games are paid approximately $40 per game by Chelsea Piers. In any year in which a referee is paid more than $600, Chelsea Piers must report the income to the IRS. Iulo and others participated in a massive identity theft and tax evasion scheme that used stolen identification information to ensure that dozens of referees were rarely, if ever, paid more than $600 per year in their own names. As part of the scheme, Iulo provided Chelsea Piers with false IRS forms that contained the stolen identification information. When Chelsea Piers issued checks payable to the names of the stolen identities, Iulo and other referees who received these checks, endorsed, and then cashed or deposited them. Iulo used numerous identities, including New York City police officers and firefighters who had acted as referees in the past. As a result of the scheme, Iulo avoided having Chelsea Piers report the income he was paid to the IRS, and thereby avoided paying taxes on that income. In addition, Iulo facilitated identity theft and tax evasion by dozens of referees at Chelsea Piers. Iulo also failed to file federal income tax returns between 2005 and 2008.
Pennsylvania Man Sentenced for Failure to Pay Taxes
On November 27, 2012, in Pittsburgh, Pa., Louis Lamanna, of Oakmont, Pa., was sentenced to 12 months and three days in prison and three years of supervised release on his conviction of three counts of willful failure to pay taxes. According to information presented to the court, Lamanna willfully failed to pay federal income taxes for tax years 2006, 2007 and 2008, resulting in a total tax loss of $925,145. Instead of paying his tax debt, Lamanna spent substantial sums of money on luxury items to support an extravagant lifestyle.
Maryland Contractor Sentenced for Tax Evasion
On November 27, 2012, in Baltimore, Md.. Randy Benjamin Wells, of Reisterstown, Maryland, was sentenced to 13 months in prison and three years of supervised release for tax evasion. Wells was also ordered to pay restitution of $349,588. Wells paid $74,404 to the IRS prior to sentencing. According to his guilty plea, from 2005 through 2009, Wells operated Wells Contracting and Demolition Company, Inc., Triple R Contractors, Inc., and Gryphon Contracting, Inc. Although Wells hired a tax preparer to prepare his individual tax returns for 2005 through 2009, Wells failed to file the income tax return with the IRS resulting in approximately $196,200 in taxes owed. Wells used several methods in an effort to conceal his income such as purchasing personal items using funds held in a company account. During this same time, Wells failed to pay employment taxes for the employees working for his companies. The tax loss as a result of Wells’ actions resulted in a total of $227,792 in employment taxes owed.
Rhode Island Couple Sentenced for Filing False Tax Returns and Conspiracy to Defraud the United States
On November 27, 2012, in Boston, Mass., Gail Thorick, of West Warwick, R.I., was sentenced to seven months in prison, 17 months of supervised release with seven months of that time to be served in home confinement, and ordered to pay $595,000 in restitution. Myron Thorick, of West Warick, R.I., was sentenced to two years probation with the first 12 months to be served in home confinement and ordered to pay $595,000 in restitution. On December 9, 2011, The Thoricks pleaded guilty to conspiring to defraud the United States and filing false tax returns. According to court documents, the Thoricks participated in a “underground warehouse banking” conspiracy. Gail Thorick helped run the day-to-day operations, including the bookkeeping and depositing of checks into bank accounts in nominee names such as “Calico” that helped clients of the scheme conceal income from the IRS. Myron Thorick helped cash hundreds of thousands of dollars in checks to further conceal client income and assets from the IRS. The Thoricks also falsified their own tax returns for the tax years 2003 through 2005.
California Man Sentenced for Tax Evasion
On November 20, 2012, in Oakland, Calif., Thomas Calise was sentenced to 21 months in prison and ordered to pay $493,887 in restitution. On May 11, 2012, Calise pleaded guilty to tax evasion. According to the plea agreement, Calise admitted that starting in 2004 he was employed with Fidelity Capital Funding where he was paid based on commission. During that period, Calise asked his employer to pay his commissions for 2004 and 2005 to his spouse. Calise admitted that he intentionally failed to report the income he earned from Fidelity Capital Funding to the IRS. Then in 2006 and 2007, Calise asked his employer to issue and pay his salary and commissions to a company that he controlled, TC Financial, rather than to himself. Calise also intentionally failed to report the income he diverted to TC Financial during 2006 and 2007. For tax years 2004 through 2007, Calise owed approximately $493,887 in additional tax.
Massachusetts Man Sentenced for Tax Evasion and Conspiracy to Defraud the United States
On November 15, 2012, in Boston, Mass., Kenneth Scott Alcock was sentenced to 12 months and a day in prison and ordered to pay $201,000 in restitution. Alcock pleaded guilty on January 24, 2012 to charges of tax evasion and conspiracy to defraud the United States. According to court documents, between 2001 and 2004, Alcock conspired with his brother, Gary Alcock, to set up and implement the banking and nominee services of Scott Dion and Catherine Floyd. Gary Alcock owned and operated a trash hauling business called G&K Trucking, as well as a landscaping business called Bark, Mulch, and Loam. The Alcocks set up a nominee company called “Alex Management” to divert and hide business receipts, to help Gary Alcock’s businesses fraudulently “disappear” on paper and to evade IRS assessments and IRS collection activity. The Alcock brothers further conspired to use the services of Contract America, run by Charles Adams, Dion and Floyd, in order to pay Gary Alcock’s employees “under the table” without withholding and paying over Social Security, Medicare and income taxes. On April 2, 2012, a jury convicted Adams, Floyd, and Dion of conspiring to defraud the IRS by promoting an “under the table” payroll scheme doing business as Contract America. Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal customer income and assets from the IRS. In addition, Kenneth Alcock evaded his own taxes by using the nominee and warehouse banking services of Dion and Floyd. Previously sentenced in this scheme were Dion to 84 months in prison, Floyd to 60 months in prison, Adams to 48 months in prison and Gary Alcock to 14 months in prison.
Former FedEx Pilot Sentenced for Tax Evasion
On November 13, 2012 in Memphis, Tenn., William Boyer, of Cordova, Tenn., was sentenced to 33 months in prison, three years of supervised release and ordered to pay $497,789 in restitution to the IRS. Boyer was convicted in October 2011 on five counts of tax evasion. According to court documents, for 2001 through 2005, Boyer was employed as a pilot for FedEx. He failed to file income tax returns, attempted to conceal over $977,000 in income, and filed false W-4 forms.
Texas Businessmen Sentenced for Failing to File Tax Return
On October 25, 2012, in Fort Worth, Texas, Richard Tilford was sentenced to 12 months in prison and ordered to pay $453,547 in restitution to the IRS. Tilford pleaded guilty in July 2012 to failing to file a federal income tax return. According to court documents, Tilford was a self-employed insurance agent. Between 1998 and 2006, he earned more than $1.1 million in sales commissions. Tilford failed to file tax returns for tax years 1998 through 2003. In 2004, Tilford hired Phillip Ballard to act on his behalf and file frivolous tax returns for 1998 through 2002. Each return indicated that Tilford had zero income and owed no taxes. Each of the tax returns was accompanied by a letter acknowledging that Tilford earned money during the relevant year, but denied that the earnings were income in the “constitutional sense.” On October 15, 2012, Bartlett M. Smith, aka David L. Burns, was sentenced to 12 months in prison. He pleaded guilty in April 2012 to failing to file a federal income tax return. Smith operated a drywall construction business. He also followed the advice of Phillip Ballard in attempting to eliminate his federal income taxes. Smith, or Ballard acting on behalf of Smith, used several different methods in an attempt to avoid income taxes, including using a false employer identification number, establishing a fake church and establishing a shell trust and shell corporations. In addition, on behalf of Smith and with Smith’s knowledge, Ballard submitted “zero returns” to the IRS for tax years 1999 through 2004. In addition, for calendar year 2005, Smith willfully failed to file a personal income tax return, despite his drywall business having gross receipts of $1,737,458, and a profit, after expenses, of at least $56,000.
Massachusetts Businessman Sentenced for Tax Evasion and Conspiracy to Obstruct and Impede the IRS
On October 17, 2012, in Boston, Mass., Gary Alcock, of Westborough, Mass., was sentenced to 14 months in prison and ordered to pay $515,518 in restitution. Alcock pleaded guilty on December 9, 2011, to charges of tax evasion, conspiring to defraud the United States and willfully failing to file tax returns. On April 2, 2012, Charles Adams, Catherine Floyd and William Scott Dion were convicted by a jury of conspiracy to defraud the IRS by promoting an “under the table” payroll scheme doing business as Contract America. Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal subscriber income and assets from the IRS. According to information presented in court, Alcock owned and operated a trash hauling business called G&K Trucking, as well as a landscaping business called Bark, Mulch and Loam. Between 2001 and 2004, Alcock set up a nominee company called “Alex Management” to divert and hide business receipts and help his businesses fraudulently “disappear” on paper to evade IRS assessments and collection activity. Alcock also used Contract America to pay his employees “under the table” without withholding or paying Social Security, Medicare and income taxes. Dion was previously sentenced to 84 months in prison, Floyd to 60 months in prison, and Adams to 48 months.
Ohio Insurance Salesman Sentenced for Tax Evasion
On October 16, 2012, in Akron, Ohio, William A. Herder, of Richland County, Ohio, was sentenced to 37 months in prison for tax crimes. Herder was convicted by a jury on May 21, 2012, on one count of tax evasion, one count of corruptly endeavoring to obstruct the administration of the Internal Revenue laws and five counts of willful failure to file tax returns. According to the evidence at trial, Herder sold insurance for Aflac Inc. Despite earning substantial income from insurance sales, Herder failed to file timely and valid tax returns. For 2000, Herder filed a tax return on which he falsely claimed that he had not earned any income. Subsequently, Herder failed to file any tax returns for 2001 through 2009. In addition, Herder attempted to conceal his assets from the IRS. In 2003, he transferred title to his house to a bogus foundation he established in Utah called “The Mentor Foundation.” Herder also cashed out an Individual Retirement Account and a life insurance policy, converted large amounts of cash to silver coins, and paid personal and business expenses with cash and money orders, all in an effort to prevent the IRS from collecting his unpaid taxes. According to trial evidence, Herder submitted numerous obstructive letters and documents to the IRS in an effort to prevent the IRS from assessing and collecting his taxes. In these letters, Herder falsely claimed, among other things, that the tax laws were not applicable to him.
Wisconsin Man Sentenced for Tax Evasion
On October 2, 2012, in Milwaukee, Wis., James A. Stuart, of Hartland, Wisconsin, was sentenced to 33 months in prison and ordered to pay a $6,000 fine. Stuart was convicted of three counts of tax evasion after a jury trial on December 9, 2011. Formerly the president and majority owner of New Age Chemical, Stuart was convicted of attempting to evade federal income taxes he owed for years 2005 through 2007. According to evidence introduced at trial, Stuart filed a 2005 tax return in which he claimed income of only $631 and that he owed no taxes. He did not file tax returns for 2006 or 2007. During these years, however, Stuart actually received more than $900,000 in income and owed more than $220,000 in federal income taxes. Instead of filing tax returns and paying his taxes, Stuart sent numerous letters to the IRS and other government officials in which he made a variety of claims, including that his earnings were not taxable wages, he had no social security number, he had loaned his consciousness to a trust entity, the IRS had no jurisdiction, and he was not a U.S. citizen.