Date: February 6, 2020
BEAUMONT, Texas – A Beaumont, Texas business owner and his wife have been convicted of federal tax violations in the Eastern District of Texas.
Dick Brocato, Jr. and his wife, Judith L. Brocato both of Beaumont, Texas, were convicted on Feb. 5, 2020 by a jury following a three-day trial before U.S. District Judge Marcia A. Crone. The Brocatos were found guilty of conspiracy to defraud the United States for purposes of impeding the government functions of the Internal Revenue Service (IRS) in the collection of income tax and six counts of making and submitting false tax returns on both their personal and business for 2012-2014.
According to information presented in court, the Brocatos owned a lawn service company, Superior Lawn Service, which was operated for tax purposes as an S corporation. The Brocatos were the sole shareholders of the company with Judith Brocato as corporate president, maintaining the books and records of the corporation, and signing the corporate tax returns in that capacity. The Brocatos conspired to defraud the United States for the purpose of impeding, impairing, and obstructing, the lawful government functions of the Internal Revenue Service (IRS) in the ascertainment, computation, assessment, and collection of federal income and other taxes for years 2012, 2013, and 2014. As part of that conspiracy, they filed false corporate and personal income tax returns for years 2012, 2013, and 2014. To facilitate the scheme, the Brocatos underreported income received by checks from numerous customers of the company after having the checks cashed rather than depositing the checks into the company accounts. They then purposefully failed to report the cash income amount on the various tax returns. According to the indictment, the underreported income amounted to $503,281 in 2012, $687,534 in 2013, and $513,498 in 2014. A federal grand jury returned an indictment on Sep. 4, 2019 charging Dick and Judith Brocato with tax violations.
Under federal statutes, the Brocatos each face up to 5 years in federal prison at sentencing. The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.
This case was investigated by the Internal Revenue Service Criminal Investigation Division and prosecuted by Assistant U.S. Attorneys Robert L. Rawls and John B. Ross.