The following examples of Non-filer Investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
North Carolina Businessman Sentenced for Income Tax Evasion
On Sept. 21, 2015 in Winston-Salem, North Carolina, Thomas Tilley, a millionaire businessman, was sentenced to 32 months in prison, one year of supervised release and ordered to pay $7,676,757 in restitution to the IRS. Tilley pleaded guilty on Nov. 21, 2014, to corruptly endeavoring to impede and obstruct the administration of the Internal Revenue Code. Starting in 1993 and continuing through at least 2010, Tilley sent the IRS fraudulent financial instruments in an attempt to fraudulently discharge his tax debt; used nominee and sham trusts to purchase and sell real estate to conceal his assets; and placed false liens on properties to impede the IRS’ collection of his tax debt. Tilley also failed to file federal and state income tax returns for tax years 1994 through 2013, despite earning substantial income. Specifically, in 2009, Tilley claimed a net worth as high as $30 million and annual income of $822,000 on a financial statement. Tilley obstructed justice by providing misleading information to probation and the court after pleading guilty and revoked his acceptance of responsibility credit based on this conduct.
Alabama Woman Sentenced for Food Stamp Fraud and Tax Evasion
On Sept. 21, 2015, in Birmingham, Alabama, Sherica Lacey Lee, of McCalla, was sentenced to 24 months in prison and ordered to forfeit $23,757 to the government as proceeds of illegal activity. She also was ordered to pay that same amount in restitution, plus interest, to the Department of Agriculture and to pay $134,448 in restitution, plus interest, to the IRS. Lee is currently serving a sentence for attempting to defraud the Gulf Coast oil spill fund. Lee pleaded guilty in August 2015 to tax evasion and wire fraud. Between July 2009 and June 2013, Lee received food stamp benefits she was not eligible to receive. In addition, Lee evaded income taxes for 2008 by preparing and submitting a personal tax return that falsely reported she had no taxable income, when she had $229,147 in taxable income. Lee also ran a tax preparation business, Lacey's Income Tax Service, with several locations in the Birmingham area. Between 2008 and 2010, Lee's company filed more than 2,000 tax returns and generated about $2.5 million in receipts.
Former Securities Broker Sentenced For Tax Evasion
On Sept. 16, 2015, in Tampa, Florida, Steven Staltare, of New Port Richey, was sentenced to 37 months in prison and ordered restitution of $1,689,248 to the IRS. Staltare pleaded guilty to tax evasion on Dec. 16, 2014. Staltare was a securities broker and evaded paying taxes on income that he had earned during tax years 1999 through 2009, instead, he enjoyed a lavish lifestyle and diverted money from his business for gambling and personal expenses.
Former Nebraska Man Sentenced for Failing to File Tax Returns
On Aug. 25, 2015, in Omaha, Nebraska, Chet Lee West, of Nebo, North Carolina, was sentenced to 51 months in prison, three years of supervised release and ordered to pay $439,515 in restitution. From 2007 through 2009, West earned taxable income of approximately $272,224 while living and working in Omaha. From that income West had a tax due and owing of approximately $52,824. West willfully evaded his personal income taxes by failing to file federal individual income tax returns for tax years 2007 through 2009. After being informed by the IRS that he was required to file federal individual income tax returns, West continued to submit information to his employer in an attempt to avoid the withholding of any employment taxes from his pay, including numerous letters and purported affidavits stating his position that he was not subject to taxation on his income. Between 2007 through 2009, West deposited personal income into bank accounts opened in the names of companies he created in an effort to hide and conceal his income from the IRS. West had not filed federal individual income tax returns since at least the 2000 taxable year.
Three Wyoming Residents Sentenced for Tax Fraud and Obstruction of Justice
On Aug. 21, 2015, in Cheyenne, Wyoming, Gloria Reeder was sentenced to 15 months in prison, three years of supervised release and ordered to pay a $100 special assessment and $310,428 in restitution for unpaid taxes. On Aug. 18, 2015, Joe Ruben Hill, aka Joe Hill, of Cheyenne, was sentenced to 41 months in prison and three years of supervised release. Lucille Kathleen Hill, aka Kathy Hill, of Cheyenne, was sentenced to three years of probation with special conditions, including six months of home confinement. The Hills were each ordered to pay a $100 special assessment and restitution for unpaid taxes. Joe and Kathy Hill last filed federal individual income tax returns in 1994. Reeder had not filed a return since 1985, and none of the defendants had paid any income taxes from those years to the present. Joe and Kathy Hill operated the business Creative Consulting Group (CCG), which sold sham trusts that they falsely claimed would reduce or eliminate an individual’s federal income tax liability. Essentially, the scheme involved fraudulently assigning income to the trust by using a bank account in the trust’s name that was opened with a false federal tax identification number. From 2007 through 2012, Joe and Kathy Hill earned almost $500,000 in income through selling the CCG trusts, while Reeder earned more than $400,000 in income from insurance commissions and a travel business. The unreported income related to the scheme exceeded $2.7 million.
Used Car Salesman Sentenced on Tax Charges
On Aug. 13, 2015, in Minneapolis, Minnesota, James Francis Volin, of Inver Grove Heights, was sentenced to 24 months in prison and ordered to pay $96,599 in restitution. In 2008 Volin agreed to pay nearly $100,000 in outstanding taxes to the IRS. Volin still owed the taxes in 2012 and 2013 when he was operating an unlicensed and illegal used car dealership that generated substantial cash income. Instead of paying the back taxes as agreed, Volin hid the income. Volin did not report the cash income or file tax returns. He put money into cashier’s checks and used bank accounts opened under another person’s name and social security number to avoid detection.
Tax Defier Sentenced for Failing to Pay Federal Taxes
On Aug. 4, 2015, Minneapolis, Minnesota, Tami Mae May was sentenced to 24 months in prison for failing to pay federal taxes for more than seven years. May pleaded guilty on June 9, 2014, to obstruction of due administration of Internal Revenue laws. From 1998 through 2004, May failed to file any income tax returns for the excavating business she ran with her husband, despite that fact that the business earned substantial income during that time. When notified by the IRS in April 2005 that the business owed tax debt, penalties and interest, May embarked on an eight-year campaign of frivolous filings, in an effort to obstruct the administration of Internal Revenue laws. May filed a host of fake documents with the IRS, including a “zero income” tax return, Forms 1099-OID falsely claiming that her husband had made payments to various IRS Revenue Officers, falsely claiming that the Mays or their business had received “original issue discounts” and had “federal tax withheld” by various banks and credit card companies, and forms claiming that the Mays were not United States Citizens, but instead were permanent residents of the “Kingdom of Heaven.” May also made nonsensical tax-defier-scheme-related statements to the IRS, including that her social security number was her “corporate fiction’s” social security number, that her family’s business was a foreign trust of which she was the trustee, and that there is no such thing as money.
Four Pennsylvania Family Members and Businessmen Sentenced for Tax Fraud
On July 23, 2015, in Allentown, Pennsylvania, four Lancaster County family members and businessmen were sentenced to prison for their participation in a long-term, complex and concerted effort to avoid taxation. In October 2010, Chester A. Bitterman Jr. and his sons, Craig L. Bitterman, C. Grant Bitterman and Curtis L. Bitterman, were convicted of conspiracy to defraud the United States. Craig Bitterman was additionally convicted of obstruction of justice. Prior to sentencing, the defendants paid $437,000 in restitution to the IRS. The four were sentenced as follows:
Chester A. Bitterman Jr. was sentenced to three years’ probation and ordered to pay a $5,000 fine;
Craig L. Bitterman was sentenced to 36 months in prison and ordered to pay a $10,000 fine;
C. Grant Bitterman was sentenced to 21 months in prison and ordered to pay a $7,500 fine; and
Curtis L. Bitterman was sentenced to 21 months in prison and ordered to pay a $7,500 fine.
From 1996 to 2005 the Bittermans owned and operated the Bitterman Scale Company. To conceal their income and assets from the IRS, the Bittermans used aliases, offshore bank accounts and a complex series of sham paper transactions to disguise income. The defendants transferred their personal and business assets to sham trusts purchased from the Commonwealth Trust Company, a tax protester organization that marketed trust products to clients for the purpose of avoiding federal income tax payment. The trusts were used to make it appear as though the defendants had little or no assets or income. In reality, the defendants retained complete access and control over their funds.
Insurance Salesman Sentenced on Fraud and Tax Charges
On July 10, 2015, in St. Louis, Missouri, Paul Parker was sentenced to 36 months in prison and ordered to pay $72,805 to the IRS and the Missouri Department of Revenue. Parker pleaded guilty in April to one count of mail fraud and three counts of failure to file a tax return. Parker held an account in the name of American Investors, Inc. for the purported purpose of receiving funds from clients to purchase life insurance annuities. Rather than purchase annuities on his clients’ behalf, Parker spent their money on personal expenses and gambling. In the course of the scheme, Parker also used monies contributed by later clients to fund repayments to prior clients. In total, Parker took in approximately $259,168 through false and fraudulent pretenses, resulting in a loss to investors of approximately $209,168. Parker also admitted to failing to file federal income tax returns for three years from 2010 to 2012.
Massachusetts Dentist Sentenced for Tax Evasion
On June 26, 2015, in Worcester, Massachusetts, George Fenzell, of Douglas, was sentenced to 16 months in prison, one year of supervised release and ordered to pay $157,407 in restitution to the IRS. In November 2014, Fenzell pleaded guilty to tax evasion. Fenzell operated a dental office in Shrewsbury, Massachusetts and from 1999 through 2012, Fenzell engaged in conduct intended to obstruct the IRS. For the years 1999 through 2007, he failed to file timely federal income tax returns and concealed income that he earned from his dental practice from the IRS. Additionally, Fenzell failed to file his tax returns for 2008 through 2011. He concealed his dental business receipts by diverting the funds through nominee entities, including River Valley Dental. He used multiple nominee bank accounts to conceal his ownership of his income and assets. Fenzell also titled and registered a Lincoln Navigator and Ducati motorcycle with another nominee entity, Smiling Trust, and made extensive use of cash in order to conceal his fraud from the IRS.
Texan Sentenced for Failing to File Federal Income Tax Returns
On June 16, 2015, in Dallas, Texas, Anthony Rolfe was sentenced to 22 months in prison, one year of supervised release and ordered to pay $100,490 in restitution to the IRS. Rolfe pleaded guilty in March 2015 to an Information charging him failure to file income tax returns. Rolfe was employed by Dr. LeeRoy McCurley at a pain management clinic in Dallas, known as Mid-City Medical Clinic. As part of his job, Rolfe picked up the clinic’s earnings and delivered them to McCurley, in person or through McCurley’s office in Grand Prairie, Texas. Rolfe also delivered office supplies to and distributed fliers for the clinic. For these tasks McCurley paid Rolfe thousands of dollars per week in checks that Rolfe deposited into a bank account in the name of Platinum A&C Group, LLC, an entity for which Rolfe was a managing partner. Bank records showed that Rolfe deposited more than $500,000 in payments from McCurley in 2010 and 2011 and used the majority of the money on clothing and jewelry, hotel and resort stays, nightclub tabs, and yacht rentals.
Members of Sovereign Citizen Movement Sentenced for Scheme to Defraud the IRS
On June 18, 2015, in Phoenix, Arizona, Gordon Leroy Hall, of Mesa, Arizona, was sentenced to 96 months in prison. Gordon Hall’s business partner, Brandon Adams, of Albuquerque, New Mexico, was sentenced to 40 months in prison. Gordon Hall’s son, Benton Hall, was sentenced to 27 months in prison. Gordon Hall partnered with Adams after they met at various seminars associated with the sovereign citizen movement. They devised a plan to create fictitious money orders to submit to the IRS in an attempt to eliminate Hall’s and Hall’s clients’ tax debts. The scheme operated out of Hall’s office and home in Mesa, Arizona, where Hall’s children, including Benton Hall, acted as office managers. Adams created all of the fictitious money orders based on information provided by Hall’s staff. In all, Hall and Adams created and caused the submission to the IRS of 149 fictitious money orders totaling approximately $93 million.
Owner of Scrap Metal Business Sentenced for Tax Evasion
On June 16, 2015, in Kansas City, Missouri, Nellie Brown Boxx, of Kearney, Missouri, was sentenced to 18 months in prison without parole, and ordered to pay $366,846 in restitution to the IRS and the Missouri Department of Revenue. Boxx, the owner of Frank Metal Company in Kansas City, pleaded guilty on Feb. 19, 2015 to tax evasion. Boxx assisted tax preparers to prepare tax returns that contained false information. For example, Boxx classified purchases such as food items, drinks, jewelry, dry cleaning, household items and high-end clothing as business expenses for her scrap metal company. Boxx received $320,345 in taxable income in 2008, and owed $87,123 in federal income tax. In addition, Boxx submitted a false 2008 Form 1040 to a bank in order to receive a financial loan and admitted that she made false statements to IRS agents, such as falsely claiming that business documents had been destroyed by water damage from a leak in the roof.
Washington Man Sentenced for Evading Taxes on Money Stolen from Investors
On June 10, 2015, in Spokane, Washington, Michael Peter Spitzauer, of Kennewick, Washington, was sentenced to 48 months in prison, one year of supervised release and ordered to pay $10,365,000 in restitution to the victims of his fraud scheme and $2,585,177 in restitution to the IRS. Spitzauer previously pleaded guilty to filing a false tax return and failing to file a tax return. Spitzauer served as the CEO and President of Green Power, Inc., a biodiesel fuel business, which Spitzauer asserted possessed the technology to turn waste into biofuel. Spitzauer defrauded various investors by representing that he would maintain their investment deposits in accounts controlled by an attorney, and not be utilized without the parties’ written agreement. In fact, Spitzauer controlled the bank accounts, and spent the investors’ deposits in unauthorized ways, such as on luxury goods, and repaying prior investors who sought return of their funds. Spitzauer also defrauded additional investors by falsely representing that their funds would be used to pay state agency fees or insurance bonds. From 2007 to 2013, Spitzauer stole more than $10.3 million from the various victims, who reside across the globe, including in China, Spain, the Netherlands, Ireland, Australia, Slovenia, Canada, Texas, and Maryland. In addition, Spitzauer filed false tax returns for tax years 2007 and 2009, when he reported that he received no income and failed to disclose the funds he fraudulently obtained from his investors, which totaled approximately $4.5 million in taxable income for 2007 and 2009. For tax year 2008, Spitzauer failed to file a tax return, despite receiving approximately $3.2 million in taxable income, which represented funds he stole from the defrauded investors. As a result, Spitzauer evaded the assessment of approximately $2.5 million in taxes.
Arizona Businessman Sentenced for Credit Card Processing Fraud and Tax Evasion
On June 9, 2015, in Phoenix, Arizona, Sean Clinton Mecham, of Mesa, was sentenced to 33 months in prison, three years of supervised release and ordered to pay $85,000 in restitution to victims of a credit card processing fraud scheme as well as $757,000 in restitution to the Internal Revenue Service. Mecham previously pleaded guilty to conspiracy to commit wire fraud and willful failure to collect or pay over taxes. Several of Mecham’s family members, as well as one of Mecham’s employees, also previously pleaded guilty to related charges. Mecham served as the CEO of a Mesa-based company that provided credit card processing services. Mecham, and others acting at his direction, intentionally concealed or misrepresented the lease terms for credit card pin-pad machines that were sold to customers. Mecham also directed employees to forge customer signatures on lease contracts and to alter documents. Mecham and his wife also engaged in a separate scheme to withhold and misappropriate employee payroll taxes that should have been remitted to the IRS. Mecham used employee withholdings to sustain a lavish lifestyle which included the purchase of a Maserati, expensive off-road racing vehicles, travel and other expensive personal items.
Minnesota Business Executive Sentenced on Charges of Conspiracy, Tax Evasion and Failure to File Tax Returns
On May 27, 2015, in Minneapolis, Minnesota, Michael Andrew Schlegel was sentenced to 60 months in prison and three years of supervised release. Schlegel was convicted on March 13, 2014, following a seven-day trial, of conspiracy to defraud the United States, tax evasion, and failure to file tax returns. From 2002 to 2009, Schlegel controlled NatureRich, Inc., a multi-level marketing company that sold natural and health-related products. Like similar companies, NatureRich paid commissions to salespeople based on direct sales and on the sales of downstream salespeople. At various times between 2002 and 2009, Schlegel and co-defendant Bradley Mark Collin received wages and commission payments from NatureRich that totaled more than $400,000. Schlegel caused NatureRich to pay his commissions to a nominee trust called the “Andrew James Living Trust,” from which he then paid his family’s expenses. During that time, Schlegel also operated a painting business, receiving more than $400,000 in income from painting contracts. In 2004, the defendants, through the use of nominee entities, began engaging the “warehouse” banking services of Olympic Business Systems and Century Business Concepts. The defendants also filed misleading federal corporate tax returns in the name of NatureRich in an effort to conceal the true extent of their personal interest in, and the income derived, from NatureRich. In all, the defendants attempted to conceal at least $3 million in gross income from the IRS, thereby avoiding income taxes on that amount and also avoiding having those funds seized for payment of their previous tax debts. From 2002 through 2010, Schlegel and Collin conspired with each other and others to defraud the U.S. by obstructing the IRS in its lawful collection and assessment of individual income taxes. Schlegel failed to make any payments toward the back taxes, interest and penalties levied against him in 2000, which totaled more than $600,000. Schlegel also failed to file federal individual tax returns for tax years 2002-2009. On Nov. 4, 2014, Bradley Mark Collin was sentenced to 24 months in prison and three years of supervised release.
Utah Man Sentenced for Filing False Claims and Presenting Fictitious Financial Instruments to the U.S. Government
On May 26, 2015, in Salt Lake City, Utah, Paul Ben Zaccardi, of Sandy, Utah, was sentenced to 24 months in prison, four years of supervised release and ordered to pay restitution to the IRS. On Oct. 29, 2014, Zaccardi pleaded guilty to tax evasion filing false claims for income tax refunds and filing fictitious obligations. In April 2004, Zaccardi embarked on a scheme to evade the payment of his federal income taxes. As part of that scheme and to avoid federal tax levies, Zaccardi transferred title to his residence to a nominee entity that he formed called Saved by Grace Christian Fellowship and caused his business receipts to be deposited into his wife’s bank account. Zaccardi also presented five separate false tax returns to the IRS falsely claiming tax refunds totaling more than $1.5 million. In addition, from June 2008 to October 2011, Zaccardi presented three separate fictitious financial instruments to the IRS, U.S. Department of the Treasury and the U.S. District Court of the District of Utah for a combined total of $605 million, to purportedly pay his federal income tax liabilities.
Wisconsin Man Sentenced for Filing Hundreds of False Documents with IRS
On May 12, 2015, in Madison, Wisconsin, Scott Bodley, formerly of Madison, was sentenced to 78 months in prison. Bodley was convicted on Feb. 6, 2015 for filing false money orders with the IRS, filing false 1099-OID documents, filing false tax returns, income tax evasion, and endeavoring to impede and obstruct the due administration of the Internal Revenue laws. Bodley stopped filing legitimate tax returns in 1999. In 2003, he threatened to file liens on an IRS agent who was auditing his 1999-2001 taxes. From 2004 to 2009, Bodley filed false W-4 documents with his employers in an effort to avoid the withholding of taxes from his paychecks. In 2004, he quit his job in an effort to stop an IRS levy on his wages. In 2008, Bodley filed in excess of 100 false forms with the IRS in an attempt to harass and impede IRS agents in the performance of their duties.
Oklahoma Couple Sentenced for Ponzi Scheme Related to Fictitious Hedge Fund
On April 21, 2015, in Las Vegas, Nevada, Linda Livolsi (aka Linda G. Findley, aka Linda Grogg) of Cleveland, Oklahoma, was sentenced to 45 months in prison, three years of supervised release and ordered to pay approximately $6.1 million in restitution. She pleaded guilty on Oct. 15, 2014, to wire fraud and making and filing a false and fraudulent tax return. Her husband, William Livolsi Jr., was sentenced to 24 months in prison, three years of supervised release and ordered to pay approximately $5 million in restitution. He pleaded guilty on Oct. 15, 2014 to wire fraud. Since about 2003, under the artifice of RGM Enterprises, LLC, Linda Livolsi solicited and induced persons to give her money for the purpose of investing in a purported hedge fund that offered large monetary returns. In reality, the hedge fund never existed and the Livolsi’s spent most the money for their personal benefit. William Livolsi participated in the fraud scheme by vouching to victims about the scheme, by creating a trust and bank accounts into which he received and withdrew monies deposited by victims, and by using the fraud monies for his own personal benefit. Victims were provided with false and fraudulent financial statements and account statements. The Livolsi’s fraudulently obtained about $6.5 million in funds from six investors from 2003 to 2007. Linda Livolsi also filed false federal tax returns for the years 2003 through 2006, and failed to file tax returns for 2007 and 2008. Her total tax liability for those years, not including interest and penalties, is approximately $1.1 million.
Former Prison Doctor Sentenced for Defrauding the IRS and Financial Aid System
On April 20, 2015, in Philadelphia, Pennsylvania, Dennis Erik Fluck Von Kiel, of New Tripoli, Pennsylvania, was sentenced to 41 months in prison, three years of supervised release, ordered to forfeit $165,988 and pay a $1,325 special assessment. In addition, Von Kiel was ordered to pay $256,920 in restitution to the IRS, to pay $262,303 to the Department of Health and Human Services (DHHS) and to pay $36,314 to the Department of Education. Von Kiel pleaded guilty on Jan. 12, 2015 to conspiracy to defraud the United States, attempting to defeat or evade a federal tax, attempting to obstruct the due administration of the Internal Revenue code, failure to file tax returns, wire fraud and aiding and abetting wire fraud, perjury in a bankruptcy proceeding, financial aid fraud and aiding and abetting financial aid fraud, mail fraud and attempted mail fraud. Since 2001, Von Kiel, the former medical director of Lehigh County Prison, engaged in a series of illegal schemes that were designed to help him evade creditors, including the DHHS to whom Von Kiel owed hundreds of thousands of dollars in outstanding medical school loans. He tried to defraud the IRS in order to avoid paying more than $200,000 in personal income taxes. Von Kiel also lied on applications to the Department of Education for financial student aid for four of his children, which enabled them to receive more than $36,000 in federal Pell Grants for their college educations. Von Kiel also intentional made a false statement under oath in a bankruptcy. Most of Von Kiel’s schemes involved him pretending to become a minister of a “church” called the International Academy of Lymphology (which later changed its name to the International Academy of Life and then the Christian Forum Assembly), purporting to take a “vow of poverty,” and then claiming that he had no taxable income because his earnings belonged to the “church.” Von Kiel convinced his employer that he was exempt from federal tax withholdings and directed his employer to deposit his bi-weekly paychecks into bank accounts for his “church.” Once the money arrived in those accounts, co-conspirators would transfer nearly the same amount of money into Pennsylvania bank accounts controlled by Von Kiel. Von Kiel then used the money to pay for all of his family’s day-to-day living expenses and to buy some luxury items.
Florida Man Sentenced For False Tax Claims and Obstructing the Internal Revenue Service
On April 20, 2015, in Fort Myers, Florida, Ronald Francis Croteau was sentenced to 56 months in prison. A federal jury convicted Croteau on Jan. 22, 2015 for filing false tax claims and for obstructing or impeding the administration of the Internal Revenue laws. Croteau belonged to a sovereign citizen, anti-government group; claimed to be a member of the Little Shell Pembina Band of North Dakota and deemed himself to be an ambassador of the Kingdom of Heaven. Between September 2008 and May 2010, he filed 10 false and fraudulent income tax returns claiming refunds totaling more than $3.8 million. These returns claimed federal tax withholdings from fraudulent Forms 1099-OID purportedly issued to Croteau by financial institutions. After being notified by the IRS that his income tax returns were frivolous, Croteau continued to file fraudulent income tax returns. In addition, he obstructed the administration of the Internal Revenue laws by filing false liens against IRS employees, submitting fraudulent instruments to the IRS in an attempt to discharge his tax liabilities and recording false documents with the Lee County Clerk of Court.
Virginia Attorney Sentenced for Tax Fraud
On April 1, 2015, in Alexandria, Virginia, William M. Weisberg, an attorney from Vienna, Virginia, was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $451,955 in restitution to the Internal Revenue Service. Weisberg pleaded guilty on Dec. 13, 2014, to willful failure to pay personal income taxes. From 2008 through 2010, Weisberg was a practicing attorney who filed his tax returns for those years, but failed to pay his taxes for 2008 and 2010 and paid only a portion of his taxes for 2009. During that same period, however, he paid approximately $250,000 to rent a house in Vienna, $150,000 for private and parochial schools for his children, $35,000 for maid service and $130,000 for travel and entertainment. In addition, when the IRS tried to work with Weisberg in 2010 to obtain the money he owed, Weisberg falsified a document from his law firm, which told the IRS that the firm was withholding money from his paychecks to give to the IRS when, in fact, no money was being withheld.
North Carolina Tax Preparer Sentenced for Tax Evasion and Filing False Tax Returns
On March 25, 2015, in Charlotte, North Carolina, Jessica Ordonez, of Belmont, was sentenced to 24 months in prison, one year under court supervision and ordered to pay $288,302 in restitution. Ordonez pleaded guilty in April 2014 to tax evasion and aiding and assisting in the preparation and presentation of a false tax return. Ordonez was the owner of Tax Pros (a/k/a “Ordonez Tax Services”), which provided tax preparation and other services and had offices in Gastonia and Morganton, North Carolina. Between 2004 and 2012, Ordonez prepared at least 100 false tax returns for 23 taxpayers, using fraudulent Individual Taxpayer Identification Numbers. Ordonez used false Additional Child Tax Credit and other false information to prepare the fraudulent returns, which entitled her clients to large fraudulent tax refunds. The tax loss associated with the fraudulent returns was approximately $202,217. In addition to filing the false returns, court records indicate that Ordonez failed to report her own income on her individual tax returns for tax years 2009 to 2011, with a corresponding tax loss of $86,085.
North Carolina Woman Sentenced for Embezzlement and Filing a False Tax Return
On March 24, 2015, Charlotte, North Carolina, Tara Gist-Savage, of Shelby, North Carolina, was sentenced to 60 months in prison, five years of supervised release and ordered to pay $512,586 in restitution. Gist-Savage pleaded guilty in September 2014 to wire fraud and filing a false tax return. From 2008 to 2013, Gist-Savage was employed by an energy services company based in Belmont, North Carolina, and was responsible for the energy company’s payroll, as well as the payroll of an affiliated company. Gist-Savage accessed the personal information of the two companies’ former and inactive employees and used it to generate fraudulent payroll checks in the names of at least 49 individuals. Gist-Savage provided the fraudulent information to various payroll businesses used by the companies to generate payroll payments, and directed the fraudulent payroll checks to be wired to four different bank accounts held in her name. Gist-Savage embezzled $410,936. In addition, for years 2008 through 2012, Gist-Savage failed to report the fraudulently obtained income on her U.S. Individual Income Tax Returns. The estimated tax due and owing relative to the unreported income was approximately $101,650.
Former Bechtel Executive Sentenced in Connection with Kickback Scheme
On March 23, 2015, in Greenbelt, Maryland, Asem Elgawhary, of Potomac, Maryland, was sentenced to 42 months in prison and ordered to forfeit $5.2 million. Elgawhary, the former principal vice president of Bechtel Corporation and general manager of a joint venture operated by Bechtel and an Egyptian utility company, pleaded guilty on Dec. 4, 2014, to mail fraud, conspiracy to commit money laundering, obstruction and interference with the administration of the tax laws. From 1996 to 2011, Elgawhary was assigned by Bechtel as the general manager at Power Generation Engineering and Services Company (PGESCo), a joint venture between Bechtel and Egypt’s state-owned and state-controlled electricity company, known as EEHC. PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids and awarding contracts to perform power projects for EEHC. Elgawhary accepted a total of $5.2 million from three power companies that paid to secure a competitive and unfair advantage in the bidding process. One of the power companies, Alstom S.A., pleaded guilty on Dec. 22, 2014, to violations of the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay bribes to foreign officials, including Elgawhary, in various countries. Elgawhary attempted to conceal the kickback scheme by routing the payments through various off-shore bank accounts under his control. In addition, Elgawhary obstructed and interfered with tax laws by failing to report any of the kickback payments as income for the tax years 2008 through 2011 and providing false information about foreign bank accounts.
Owner of Landscaping Business Sentenced for Diverting Over $2 Million of Business Receipts
On March 12, 2015, in Camden, New Jersey, Nicholas Lepore, of Deptford, was sentenced to 12 months and one day in prison and two years of supervised release. Lepore previously pleaded guilty to tax evasion. Lepore owned and operated Down to Earth Landscaping and Irrigation, Inc. (Down to Earth), which provided landscaping and irrigation services to commercial and residential customers. Down to Earth was a subchapter S corporation and as the owner, Lepore was required to report the flow through income and losses from Down to Earth on his personal tax returns. Lepore routinely cashed customer checks at local check cashing businesses to disguise the amount of income received by Down to Earth. Customer checks totaling $2,148,862 were deposited in years 2007 through 2010. Additionally, Lepore failed to file tax returns for the years 2007 through 2010 and thus, did not include any of the customer checks as income.
Florida Man Sentenced for False Tax Claims and Obstructing the IRS
On March 3, 2015, in Fort Myers, Florida, Armand J. Croteau, of Punta Gorda, Florida, was sentenced to 27 months in prison. Croteau pleaded guilty on July 2, 2014 to filing false claims with the IRS and corruptly obstructing or impeding the administration of the Internal Revenue laws. Croteau filed numerous false claims for tax years 2005 through 2009, seeking refunds totaling $1,918,118. He used the 1099-OID (Original Issue Discount) anti-tax scheme to present fraudulent Forms 1040 and 1040X to the IRS, reporting excess withholding that was fabricated by him. He also made false reports on Forms 1099-OID and on the tax returns. After being notified by the IRS that his income tax returns were frivolous, Croteau continued to file fraudulent income tax returns. In order to obstruct or impede the administration of the Internal Revenue laws, he filed false liens against IRS personnel, recorded false documents with the Charlotte County Clerk of Courts, and submitted fraudulent instruments to the Department of the Treasury in an attempt to discharge his tax liabilities.
Real Estate Agent Sentenced for Money Laundering and Tax Offenses
On March 2, 2015, in Phoenix, Arizona, Tanya Marchiol, of Phoenix, was sentenced to 48 months in prison. Marchiol previously pleaded guilty to willfully failing to file a tax return and was convicted by a jury in November 2014 of structuring financial transactions and money laundering. Marchiol, a former real estate agent and the author of a book on tax and financial advice entitled “The Prosperity Principles,” did not file tax returns in 2007, 2008, or 2009. Furthermore, after learning the IRS was planning to seize her bank accounts for unpaid taxes, Marchiol made a series of illegal withdrawals and then attempted to hide the money in a safe in her house. In addition, Marchiol attempted to help a pair of drug dealers buy a house with money they had earned from selling marijuana. Marchiol sought to conceal the drug dealers’ interest in the house by accepting a lump-sum delivery of $140,000 in cash from them, depositing the cash into her bank account, and using the cash to buy the house in her company’s name with the intent of later transferring the house’s title to them.
Business Operator Sentenced for Fraudulent Tax Refund Scheme
On Feb. 27, 2015, in San Francisco, California, Mark R. Maness, of Spartanburg, South Carolina, was sentenced to 41 months in prison and ordered to pay $1,176,668 in restitution to the IRS. On Nov. 18, 2014, Maness pleaded guilty to conspiracy to submit false claims. Maness and a partner operated a business named O.I.D. Process. Through the business, Maness and his partner aided and assisted in the preparation and filing of fraudulent U.S. Individual Income Tax Returns. Maness claimed fraudulent Original Issue Discount interest income and federal tax withholdings, resulting in claims for fraudulent federal income tax refunds. O.I.D. Process clients filed approximately 200 returns requesting fraudulent refunds totaling approximately $228 million. Maness and his partner charged clients a non-refundable registration fee to join the organization and a 20 percent “refund acquisition fee” for any refund check issued by the IRS. They also operated a website and conducted weekly conference calls with clients to offer advice and guidance on how to complete fraudulent tax returns. Clients were required to change their mailing addresses with the IRS to the address of an attorney in San Francisco, California, who was working with Maness and his partner, so that they could ensure receipt of their 20 percent refund acquisition fee.
Nebraska Woman Sentenced for Obstructing IRS and Filing False Property Liens Against Federal Officials
On Feb. 20, 2015, in Omaha, Nebraska, Donna Marie Kozak, of La Vista, Nebraska, was sentenced to 36 months in prison and three years of supervised release. Kozak, a former college instructor, was convicted by jury on Aug. 1, 2014, on charges related to tax obstruction, filing a false claim and filing false retaliatory property liens. Kozak stopped filing income tax returns in 1997, and from 1997 through 2012, she obstructed the IRS by hiding assets, applying for tax-exempt status for a sham entity, filing a false claim for a tax refund, sending harassing correspondence to IRS agents and filing false liens against an IRS-Criminal Investigation special agent and others. In about 2009, Kozak joined the “Republic for the united States of America,” a sovereign citizen group, and was the group’s designated “governor of Nebraska.” In 2012 and 2013, Kozak and Randall Due conspired to file false liens in retaliation for the federal criminal tax prosecution and trial convictions of associates David and Bernita Kleensang. To futher the conspiracy, Kozak and Due filed a false lien for $19 million on property located in Boyd County, Nebraska, that was owned by the federal U.S. District Court judge who presided over the Kleensang trial. After Kozak was indicted by a federal grand jury for the criminal tax charges, and while on pre-trial release, she filed five more false liens on properties owned by another federal U.S. District Court judge, the U.S. Attorney for the District of Nebraska, two Assistant U.S. Attorneys and an IRS-Criminal Investigation special agent. Due was convicted on Sept. 4, 2014 on related charges.
Colorado Residents Sentenced for Conspiracy to Defraud the IRS and Related Tax Charges
On Feb. 10, 2015, in Denver, Colorado, George Brokaw, John Pawelski and Mimi Vigil, all from Colorado Springs, Colorado, were sentenced for conspiracy to defraud the IRS and related tax charges. Brokaw and Pawelski were each sentenced to 78 months in prison, three years of supervised release and ordered to pay a $15,000 fine. Vigil was sentenced to 72 months in prison and three years of supervised. Beginning in October 2008 and continuing through May 2009, Brokaw, Pawelski, Vigil and others conspired with each other to defraud the United States by submitting false claims for income tax refunds to the IRS. The three filed, or caused to be filed, false, fictitious and fraudulent Form 1040 tax returns containing false claims for refunds in their names. A total of 12 fraudulent returns were filed attempting to receive more than $24 million dollars in fraudulent refunds. In connection with these false tax returns, they submitted or caused to be submitted, false Forms 1099-OID. The 1099-OID forms falsely reported that financial institutions, lenders or other entities had withheld and paid over to the IRS interest income from accounts which did not generate such interest income and from which no such withholdings were made. The Form 1040 tax returns claimed false refunds based on these false claims of withholdings. Furthermore, from March 2008 and continuing through April 2012, the defendants willfully conspired with each other to obstruct and impede the due administration of the Internal Revenue laws by attempting to thwart the legitimate collection of taxes owed to the IRS by them and others. They caused to be filed, or submitted to the IRS, a variety of false, fraudulent or illegitimate documents which purported to constitute payments of taxes owed to the IRS as well as purported electronic funds transfer drawn on closed bank accounts. In addition, the defendants filed a variety of false and fraudulent liens or other documents that falsely claimed IRS employees, who were engaged in legitimate tax collection efforts against one or more of the defendants, owed one or more of the defendants amounts of money ranging from tens of millions of dollars to billions of dollars.
Investment Advisor Sentenced for Tax Evasion
On Feb. 6, 2015, in Minneapolis, Minnesota, Joel William Carlson, of Vadnais Heights, Minnesota, was sentenced to 42 months in prison and ordered to pay approximately $1.9 million in restitution to the investment fraud victims and his father and approximately $1.2 million in restitution to the IRS. Carlson pleaded guilty on Sept. 10, 2014, to tax evasion. Carlson acted as an investment advisor during 2010 and 2011. He deposited client investments, as well as additional funds solicited from his father, into a Trust Financial Group account, which Carlson treated as his personal bank account. Instead of investing the funds, Carlson spent the money on personal items and, when confronted, lied to his clients about the existence of their investments. In addition to intentionally misappropriating both client assets and his father’s assets, totaling more than $1.5 million, Carlson failed to file personal income tax returns for tax years 2010 and 2011. Carlson also failed to timely file personal income tax returns for tax years 2005 through 2007. As a result, the IRS filed a federal tax lien against Carlson for approximately $495,000.
Physician Sentenced for Failing to File Tax Returns, Owes $1.5 Million
On Feb. 3, 2015, in Springfield, Missouri, Phillip Edward Psaltis, of Kimberling City, was sentenced to 24 months in prison and ordered to pay $1,581,594 in restitution to the IRS, the Missouri Department of Revenue and the Oklahoma Department of Revenue. On Oct. 9, 2014, Psaltis pleaded guilty to failing to file an income tax return. Psaltis, an emergency room physician, failed to file federal income tax returns since 2002. The two specific charges to which Psaltis pleaded guilty relate to his failure to file a federal tax return for 2009, when he earned approximately $450,664, and for 2010, when he earned approximately $433,339. Psaltis also failed to file federal income tax returns for 2009, 2010 and 2011. His unreported income during those years totaled $1,204,786 and the total tax loss was $377,022. Psaltis also owes $551,434 in outstanding federal taxes for the years 2002 through 2008. Because Psaltis did not file his 2012 tax return, it is estimated that he will owe approximately $128,109 in tax liability for 2012.
Lawyer Sentenced for Failing to File Tax Returns
On Jan. 14, 2015, in Las Vegas, Nevada, Lawrence J. Semenza II, was sentenced to 18 months in prison, one year of supervised release and ordered to pay approximately $290,000 in restitution to the IRS. Semenza, a lawyer who served as the U.S. Attorney for Nevada during the 1970's, pleaded guilty in August 2014 to willful failure to file a tax return. Semenza operated his law practice in Las Vegas as a subchapter C personal service corporation. For the years 2006 through 2010, Semenza individually had taxable income of approximately $655,000, and the corporation had taxable income of approximately $345,000, but Semenza failed to file individual or corporate income tax returns for those years, and failed to pay the tax due and owing to the IRS, totaling about $290,000.
Doctor and Wife Sentenced on Tax Charges
On Jan. 13, 2015, in San Diego, California, Dr. James Francis Murphy was sentenced to 48 months in prison and ordered to pay nearly half a million dollars in restitution to the IRS. His wife, Denine Christine Murphy, a co-defendant in the case, was sentenced to 12 months of house arrest and ordered to pay restitution of $147,528. Dr. Murphy operated medical practices in Encinitas, California, and Omaha, Nebraska. Despite earning as much as $1 million a year from their osteopathic medical practice, the Murphys paid almost no federal income taxes for a decade. Instead of accurately declaring their income and paying taxes lawfully owed to the United States, the Murphys filed false income tax returns for the medical practice using a bogus “trust,” and filed false personal income tax returns concealing their true income. In some years the Murphys simply refused to file required tax returns at all. When confronted by the IRS and notified that they owed substantial sums in taxes, the Murphys engaged in a variety of schemes to prevent the United States from correctly assessing and collecting these taxes. These schemes included: (1) falsely claiming that they were not citizens of the United States; (2) frivolously claiming that the federal tax laws did not apply to them; (3) fraudulently presenting fictitious documents such as “Private Offset Discharge and Indemnity Bonds” and “Bonded Promissory Notes,” purportedly worth hundreds of millions of dollars, as payment on their tax obligations; and (4) fraudulently claiming that the hundreds of thousands of dollars they paid to credit card companies, utilities, and other vendors were actually withholdings of federal income taxes, thereby entitling them to over a million dollars in refunds from the IRS.
Missouri Man Sentenced on Tax Charges
On Jan. 8, 2015, in St. Louis, Missouri, Peter Giambalvo, of Hawk Point, Missouri, was sentenced to 16 months in prison. Giambalvo was convicted in August 2014 of interfering with the administration of the Internal Revenue laws and filing false tax returns. Giambalvo was an employee of the Boeing Company and beginning in 2003 through 2010, he claimed zero earnings when, in fact, he had earned wages, salaries, tips, etc. of approximately $498,540 for those years.
Former Consultant to New York Democratic Senate Campaign Committee Sentenced for Tax and Fraud Conspiracy
On Dec. 19, 2014, in Manhattan, New York, Melvin Lowe, a former consultant to the New York State Democratic Senate Campaign Committee (DSCC), was sentenced to 36 months in prison and three years of supervised release. Lowe was convicted in September 2014 for conspiring with New York State Senator John Sampson to defraud the DSCC of $100,000, and for personal income tax offenses. According to court documents, Lowe arranged for a New Jersey-based political consultant to submit a false invoice to the DSCC for $100,000 in printing services. Sampson approved payment of the invoice and the DSCC sent $100,000 to the New Jersey-based consultant. Lowe instructed the consultant to send $75,000 of the proceeds to Lowe's consulting company. Lowe received more than $2.1 million in consulting income from 2007 to 2012. He reported less than $25,000 in income in each of his federal income tax returns for 2007 through 2009, which he did not file until late 2010. Lowe never filed tax returns for 2010 through 2012. He never made any payments toward his taxes for the years 2000 through 2012.
Mississippi Doctor Sentenced on Tax Evasion Convictions
On Dec. 18, 2014, in Gulfport, Mississippi, Timothy Dale Jackson, of Pass Christian, was sentenced to 75 months in prison, three years of supervised release and ordered to pay a $12,500 fine and $806,982 in restitution. On Sept. 25, 2014, Jackson, an orthopedic physician, was found guilty of four counts of income tax evasion and one count of obstruction of the due administration of the Internal Revenue laws. According to court documents, Jackson used a complex tax evasion scheme involving an entity in Utah, which claimed it was a tax exempt church, to evade his taxes. He had not filed any tax returns or paid any income taxes since the year 2003.
Alaska Man Sentenced for Tax Crimes
On Dec. 16, 2014, in Anchorage, Alaska, James R. Back, of Soldotna, was sentenced to 16 months in prison, one year of supervised release and ordered to pay over $17,000 for the cost of prosecution and to pay $113,286 in back taxes. In October 2014, Back was convicted by a jury of filing false 2006, 2007 and 2008 individual income tax returns and failure to file his 2009, 2010, 2011 and 2012 returns. According to trial evidence, Back earned over $125,000 in wages during each of the prosecution years, yet falsely claimed on the 2006, 2007, and 2008 returns that his wages were zero. For the years 2009 through 2012, Back simply failed to file. Back contributed over $140,000 to a retirement plan during the prosecution years, had investment accounts worth hundreds of thousands of dollars, owned real estate and purchased over $400,000 in gold and silver bullion. Back represented himself at the trial, and argued to the jury that taxation was immoral and unfair, and that he simply refused to submit to it anymore. He argued that the Alaska Permanent Fund Dividend was not taxable, even though he applied for and received it each year. He also argued that there was no evidence that state or federal laws applied to him. Back ignored prior warnings from his employer, his supervisor, the IRS, and a United States Tax Court Judge that his arguments were frivolous.
Daycare Operator Sentenced on Income Tax Charges
On Dec. 11, 2014, in Columbus, Ohio, Lindora Elizabeth Forrest, of Pickerington, was sentenced to 12 months in prison, three years of supervised release and ordered to pay $326,553 in restitution to the IRS. On June 24, 2014, Forrest pleaded guilty to one count of committing income tax evasion and two counts of willfully failing to file an income tax return with the IRS. According to court documents, between 2009 and 2011, Forrest owned and operated Just For You Daycare II, LLC. The daycare received payments from the county and state in conjunction with Title XX Child Care supplements, totaling approximately $1,893,792. Forrest used a portion of these funds to operate the daycare, but she also used these funds as the source of substantial personal income. For the 2010 tax year, Forrest willfully attempted to evade approximately $80,606 in income tax by underreporting the gross receipts she received and overstating expenses of the daycare. In addition, for the 2009 and 2011 tax years, Forrest received $599,000 and $625,000, respectively, in gross income but she willfully failed to file an income tax return with the IRS.
Physician and Author Sentenced on Tax Evasion Charges
On Dec. 11, 2013, in Kansas City, Kansas, Mary C. Vernon, of Lawrence, was sentenced to 41 months in prison and ordered to pay more than $299,000 in restitution. Vernon, a physician and author, was convicted on five counts of tax evasion. Vernon specialized in treating obesity and co-authored a book based on the ideas promoted by the late Dr. Robert Atkins titled, “Atkins Diabetes Revolution.” She also provided medical services and served as medical director for a number of nursing homes. Most recently, she served in a contract position as the director of the emergency room for the Southwest Medical Center in Liberal, Kansas. According to trial evidence, Vernon earned approximately $588,686 for services she provided in 2003 and 2004 to Atkins Nutritionals, Inc., a company that sold weight loss programs and products. From 2005 to 2008, she earned an additional $190,000 to promote Dr. Atkins’ nutritional theories. From 1999 to 2007, the IRS attempted to collect taxes, interest and penalties that Vernon owed and failed to pay from 1991 through 2005. The IRS collected approximately $2 million in taxes, interest and penalties through levies and seizures. In 2003, Vernon hired an attorney to create a corporation called Rockledge Medical Services. However, Rockledge Medical Services was a sham corporation that Vernon used to avoid paying taxes. She evaded paying incomes taxes for the years 2004 through 2008.
Former New Jersey Chiropractor Sentenced for Tax Fraud
On Dec. 3, 2014, in Trenton, New Jersey, David Moleski, a pilot and former chiropractor, was sentenced to 54 months in prison and five of supervised release. A jury convicted Moleski in February 2014 of 14 counts of mail fraud, one count of wire fraud, one count of corruptly endeavoring to obstruct and impede Internal Revenue laws and three counts of submitting false claims for tax refunds. According to court documents, Moleski submitted three false tax returns in 2009 for tax years 2006 through 2008 that collectively requested more than $1.3 million in income tax refunds to which he was not entitled. Prior to filing these returns, Moleski failed to file tax returns from 1999 through 2005, even though he was legally required to file. When the IRS assessed taxes for those years and began collecting, Moleski obstructed the collection efforts and demanded that a third-party financial institution not comply with an IRS levy. In addition, Moleski attempted to pay credit card bills and other debts with fake financial instruments that claimed to draw on an account at the U.S. Treasury that did not actually exist.
Hawaii Woman Sentenced for Fraud and Tax Charges Related to Debt Elimination Scheme
On Dec. 1, 2014, in Honolulu, Hawaii, Mahealani Ventura-Oliver, formerly of Maui, was sentenced to 78 months in prison and ordered to pay $424,534 in restitution. In October 2013, a jury found Ventura-Oliver guilty of conspiring to use fictitious financial instruments, mail fraud, money laundering, conspiring to submit false tax returns seeking $1.5 million in refunds from the IRS and submitting one false tax return. According to court evidence, Ventura-Oliver and others were part of a group known as Ko Hawaii Pae Aina, the Registry and Hawaiiloa Foundation. Between 2008 and 2009, the group held weekly seminars where Ventura-Oliver and others spoke about Hawaiian history and culture, and royal land patents. In return for the payment of a fee, the group offered to provide distressed homeowners with “bonds” and other documents that would pay off their mortgages and forestall collection efforts. The “bonds” purportedly directed the United States Treasury Department or the State of Hawaii Comptroller of the Currency to make payments on behalf of the homeowners. Many of the individuals tried to use the bonds but ultimately lost their homes through foreclosure, or had to renegotiate loans. Hawaiiloa Foundation collected approximately $468,000 from approximately 200 individuals who went through the debt elimination process. The Hawaiiloa Foundation also promoted a tax program whereby participants supposedly could seek refunds from the IRS for debts paid off with the purported bonds.
Former Illinois Home Builder Sentenced for Failing to Pay $1.27 Million in Federal Income Taxes
On Nov. 24, 2014, in Chicago, Illinois, Dennis Weiss, of South Elgin and formerly of St. Charles, was sentenced to 30 months in prison and ordered to pay $296,643 in restitution to the IRS. Weiss previously pleaded guilty to filing a false federal income tax return and making false statements in a bankruptcy petition. According to court documents, Weiss owned Custom Homes by D. R. Weiss, Inc., and Reliable Home Solutions, Inc. Weiss filed false individual federal income tax returns for 2005 through 2009, and he failed to file corporate tax returns for both of his companies. Between 2005 and 2009, Weiss paid personal expenses from Custom’s business bank account, accepted cash payments from Custom and Reliable customers, and failed to record the receipt of these funds on the books and records of the corporations, resulting in a total federal tax loss of $1,271,280. In Weiss’ personal bankruptcy petition, he intentionally concealed the existence of a company he owned and interests in three family held entities. In addition to criminal penalties, Weiss remains responsible for all taxes and interest due, as well as civil penalties of up to 75 percent of the tax owed.
New York Attorney Sentenced in Tax Fraud Scheme With Failing To Report Over $3 Million In Fee Income
On Nov. 21, 2014, in Albany, New York, Stanley L. Cohen, a Manhattan-based attorney, was sentenced to 18 months in prison and one year of supervised release. Cohen previously pleaded guilty to obstructing and impeding the IRS and two counts of failing to file a tax return. According to court documents, Cohen took multiple steps to impede the IRS including failing to file individual and corporate income tax returns for tax years 2005 through 2010, failing to file Forms 1099 or W-2 for a law office assistant at his firm, failing to maintain books and records for his law practice and not reporting payments received and expenses paid in cash. Investigators determined that for the years 2004 through 2010, Cohen had deposits totaling $3,673,906 in his financial accounts. As part of his plea agreement, Cohen is required to pay all federal and state income taxes due and owing from the years 2005 through 2010.
Florist Shop Owner Sentenced for Dodging Taxes and Filing False Liens Against Federal Officers
On Nov. 20, 2014, in Sacramento, California, James O. Molen, of Chico, was sentenced to 36 months in prison and three years of supervised release. According to evidence presented at trial, Molen ran Touch of Class Florist in Chico, and beginning in 2000, he stopped withholding and paying federal employment and unemployment taxes. After years of collection efforts by the IRS, Molen filed false liens in 2004 against people who had been involved in his case: two federal judges, the United States Attorney, two civil Department of Justice attorneys, an IRS revenue officer, and a witness. The liens claimed collateral of more than $93 billion. After a 2007 court order prohibited him from filing more false liens against federal officers, in 2010, Molen filed false liens against two revenue officers assigned to collect his taxes, claiming more than $199,000 in collateral. Molen ignored several court orders, sent a bogus tax payment to the IRS that he called an “International Bill of Exchange,” and sought to frustrate collections by placing his residence and bank accounts in trusts.
Connecticut Resident Sentenced for Tax Evasion
On Nov. 19, 2014, in New Haven, Connecticut, Robert Joseph Parker, of Fairfield, was sentenced to 18 months in prison and three years of supervised release. Parker was also ordered to pay $1,869,419 in taxes, interest and penalties for himself personally for tax years 1996 through 2012, and for Success Zone, LLC, for tax years 2003 through 2012. On March 5, 2014, Parker pleaded guilty to one count of tax evasion. According to court documents, Parker earned income by providing information technology services to various businesses. Between 1996 and 2012, Parker did not pay any federal income tax on approximately $2 million of income he received in his own name, and in the name of his alter ego entity known as Success Zone, LLC.
Texas Businessman Sentenced for Tax Evasion
On Oct. 10, 2014, in San Antonio, Texas, Sterling Benningfield was sentenced to 41 months in prison, three years of supervised release and ordered to pay $422,301 in restitution. Benningfield pleaded guilty on July 2, 2014 to attempt to defeat or evade taxes. According to court documents, in 1998, 1999 and through June 2000, Benningfield owned, controlled and operated Federation of Associated Health Systems, Inc. (FAHS). Benningfield created a shell company, VACCO Inc., which he placed in his daughter’s name. He opened a bank account for VACCO and then directed income he received from FAHS to be deposited into this shell account. Benningfield then used the funds in the VACCO bank account to pay for his personal and living expenses. In June 2000, Benningfield sold FAHS to Carnegie International Corporation. Carnegie retained Benningfield as a consultant and, in accordance with Benningfield’s instructions, the consulting fees were paid to VACCO. Benningfield failed to notify his accountant of monies paid on his behalf from FAHS to VACCO and therefore caused his taxable income to be understated. Through this scheme, Benningfield willfully attempted to evade his personal federal income tax for the years 1998, 1999 and 2000 by $3,169, $138,003 and $282,004, respectively, by filing federal income tax returns that understated his true taxable income for those years.
“Real Housewives of New Jersey” Stars Sentenced for Conspiracy, Bankruptcy Fraud and Tax Offenses
On Oct. 2, 2014, in Newark, New Jersey, Teresa Giudice and her husband, Giuseppe “Joe” Giudice, both of Towaco, were sentenced to 15 months and 41 months in prison, respectively. Both also were sentenced to two years of supervised release and ordered to forfeit $414,588. Both previously pleaded guilty to conspiracy to commit mail and wire fraud, bankruptcy fraud by concealment of assets, bankruptcy fraud by false oaths, and bankruptcy fraud by false declarations. Giuseppe also pleaded guilty to failure to file a tax return. According to court documents, from September 2001 through September 2008, both engaged in a mail and wire fraud conspiracy in which they submitted fraudulent applications and supporting documents to lenders in order to obtain mortgages and other loans. In relation to a petition for individual bankruptcy protection, the Giudices intentionally concealed businesses they owned and income they received and provided false testimony under oath. Giuseppe admitted that during tax years 2004 through 2008, he received income totaling $996,459 but did not file tax returns for those years.
Connecticut Man Sentenced for Investment Fraud and Tax Evasion
On Oct. 1, 2014, in Hartford, Connecticut, Frank Mete, of Berlin, was sentenced to 41 months in prison and three years of supervised release. Mete was also ordered to make full restitution to his victim investors and pay $666,851 to the IRS. On Dec. 4, 2013, Mete pleaded guilty to wire fraud and tax evasion. According to court documents, from approximately 2009 to November 2012, Mete operated an investment fraud scheme in which he held himself out as a broker of hard money loans between investors and purported individual borrowers who were willing to borrow money at interest rates of 15 to 18 percent. In fact, there were no such borrowers. In order to induce the investors to extend loans to the purported borrowers through him as the broker, Mete created false documents using the names of the fictitious borrowers. Mete forged signatures on the checks he received from the victim investors and deposited the funds into several bank accounts he opened in the borrowers’ names. Mete defrauded investors of approximately $1,191,610 and used the funds to pay for various personal expenses. Mete also failed to file federal income tax returns from 2009 to 2012, causing a tax loss of approximately $357,324.