As we reported in posts here and here, the Justice Department’s Tax Division and the IRS each issued press releases over the past two days touting their accomplishments over the past year in an effort to warn would-be tax cheats in advance of Tax Day. We take the opportunity here to review sentences imposed on defendants in 2014 for tax crimes. The cases mentioned here were not included in the two recent government press releases.
In this post, we review recent sentences relating to Foreign Bank Account, Tax Evasion, and Employment Tax crimes. We will cover sentences in cases involving False Tax Returns, Tax Return Preparers and Returns Submitted via Identity Theft in subsequent posts.
Foreign Bank Account
California attorney Christopher M. Rusch had pleaded guilty to conspiracy to defraud the government and failing to file a Report of Foreign Bank and Financial Accounts (FBAR) and testified against his two Arizona clients at their trial. Mr. Rusch had established nominee foreign entities and corresponding secret accounts at the Swiss banks of UBS AG and Pictet & Cie for his clients, which were used to conceal their ownership in the stock and income deposited into the accounts. Mr. Rusch also routed some of the money from the secret foreign accounts through his Interest on Lawyer’s Trust Account before disbursing it to his clients. This allowed his clients to evade reporting more than $6.6 million in income over the years 2007 and 2008. Mr. Rusch was sentenced to 10 months in prison (the same sentence each of his clients received) and three years of supervised release. [DOJ press release here].
Also in California, consultant Christopher B. Berg had pleaded guilty to failing to report a foreign bank account. From 2001 to 2005, Mr. Berg transferred over $600,000 in income to a secret bank account at UBS in Switzerland and did not report the account or the income to his accountants or to the IRS. Prior to sentencing, Mr. Berg paid $200,000 in restitution and an FBAR penalty of $287,896. Mr. Berg was sentenced to imprisonment for one year and one day and three years of supervised release. [DOJ press release here].
Jimmie Duane Ross had been convicted by a Utah jury for five counts of tax evasion for failing to pay taxes on an $840,000 arbitration award. To conceal the award proceeds, Mr. Ross had filed a false mortgage on his home, a false lien on his vehicle, dealt extensively in cash, and directed funds to an offshore account. In addition, Mr. Ross earned commission income in 2004-2007 and concealed that income by placing it in nominee entities. Mr. Ross was sentenced to 51 months in prison and three years of supervised release, and ordered to pay $532,389 in restitution. [DOJ press release here].
New Mexico farmer Bill Melot had been convicted by a jury for tax evasion, program fraud, and other crimes for failing to file tax returns since 1986, owing the IRS over $25 million in taxes. Mr. Melot also had provided false information – a false SSN and employer identification number – to the Department of Agriculture in order to obtain more than $225,000 in federal farm aid. He also had caused documents to be forged in order to conceal 250 acres that he owned in New Mexico and maintained an undisclosed Swiss bank account since 1992. Mr. Melot was sentenced to 14 years in prison and three years of supervised release and was ordered to pay over $18 million in restitution. [DOJ press release here].
Colorado contractor Michael Destry Williams, of Greenview Construction, Inc., had been convicted by a jury for tax evasion, structuring, bank fraud, and interfering with internal revenue laws. From 2005 through 2008, he failed to file income tax returns and pay income and employment tax. He utilized trusts to conceal income he earned in his construction business. He also structured a number of deposits totaling over $90,000 in 2008. When investigated, Mr. Williams sent frivolous correspondence to the IRS and made complaints about state court judges involved in other litigations. Mr. Williams was sentenced to 71 months in prison and five years of supervised release and ordered to pay over $60,000 in restitution. [DOJ press release here].
Former president of an Idaho highway construction company, Elaine Martin, of MarCon, Inc., was convicted by a jury of 22 criminal counts, including filing false tax returns, wire fraud, conspiracy, and obstruction. Ms. Martin concealed business income by diverting payments into a separate bank account, failing to reveal that account to corporate accountants, and destroying business records relating to those payments. She did not pay taxes on that income, referred to it as her “slush fund,” and lied to the IRS when questioned about MarCon’s business income. Ms. Martin also engaged in program fraud, by making false statements and taking actions to effectively lower her net worth in order to be eligible for federal- and state-sponsored construction programs. A co-owner of MarCon, Darrell Swigert, also was convicted of obstructing the IRS audit and subsequent criminal investigation into MarCon. Ms. Martin was sentenced to 84 months in prison and three years of supervised release. She was also ordered to pay restitution of over $98,000 and agreed to forfeit over $3 million. Mr. Swigert was sentenced to three months in prison and two years of supervised release and ordered to perform 100 hours of community service. [DOJ press releases here and here].
An Indiana ear, nose and throat surgeon, Ronald Eugene Jamerson, had pleaded guilty to one count of failing to account for and pay employment taxes to the IRS from 2003 through 2008. Dr. Jamerson deducted amounts from his employees’ paychecks for federal income tax and unemployment tax but failed to pay that amount over to the IRS and also failed to file employment tax returns. Dr. Jamerson was sentenced to 12 months and one day in prison and ordered to pay $541,083 in restitution. [DOJ press release here].