Date: February 3, 2020
LOS ANGELES – A former tax and estate-planning lawyer who set up shell companies to evade the payment of more than $1.4 million he owed to the IRS was sentenced today to 60 months in federal prison.
James Roy McDaniel of Long Beach was sentenced by United States District Judge S. James Otero, who also ordered McDaniel to pay $1.54 million in restitution.
In October 2019, McDaniel pleaded guilty to one count of tax evasion.
McDaniel was a licensed California lawyer from 1981 until he surrendered his law license in 2004, shortly before he pleaded guilty to one felony count of subscribing to a false income tax return. In 2005, McDaniel was sentenced to three years in federal prison for that crime. In that case, McDaniel's failure to report income – $1.6 million embezzled from his law firm clients – resulted in a tax loss of $677,368 to the federal government. The IRS subsequently assessed McDaniel more than $1.4 million in taxes, interest and penalties for the tax years 1997 through 2001. The Los Angeles County District Attorney's Office prosecuted McDaniel for grand theft in that matter and he was sentenced to two years in state prison.
Following his convictions in the previous cases, McDaniel willfully attempted to evade paying his debt to the IRS by creating two shell companies – Davis Bell Consulting LLC and James Roy Consulting LLC – where he directed payments for tax and estate planning consulting work, he performed after he was released from prison. Between May 2008 and late 2018, McDaniel attempted to mislead federal tax authorities and conceal his income by directing other people to sign documents identifying themselves as the sole managing members of the shell companies. McDaniel directed them to open bank accounts where he deposited checks for his tax and estate planning work.
In his plea agreement, McDaniel admitted to owing a total of $1,584,126 in unpaid taxes for the years 2008 to 2017. He has been in federal custody since his arrest in December 2018.
This case was investigated by IRS Criminal Investigation.
This matter was prosecuted by Assistant United States Attorney Ruth C. Pinkel of the Public Corruption and Civil Rights Section.