Every year as April 15 approaches, we observe an uptick in the frequency of Internal Revenue Service and Justice Department press releases announcing criminal charges against individuals accused of violating the tax laws. The conventional wisdom appears to be that high profile headlines will ensure that last minute tax filers take care to file accurate and timely returns. This year is no different, with the DOJ’s Tax Division issuing a lengthy press release yesterday aptly titled “Justice Department Reminds Taxpayers that No One Is Above the Law or Below the Radar” which cites no fewer than 22 criminal prosecutions of tax offenders who received jail sentences for their crimes.
The text of the DOJ press release is as follows:
With the annual tax filing deadline approaching on Wednesday, April 15, the Justice Department’s Tax Division reminds U.S. taxpayers across the country and around the world of their obligation to file timely and accurate income tax returns.
“As U.S. taxpayers, we enjoy many benefits, including the security provided by our U.S. military, the ability to travel on public roads and highways, and the beauty and enjoyment of national parks and monuments,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Tax Division. “Those individuals who choose to accept these benefits and yet turn a blind eye to their federal tax obligations by failing to file required returns, filing false and fraudulent returns, and evading the assessment and payment of tax due will be pursued for their criminal conduct. No one is above the law or below the radar.”
The Justice Department works with the Internal Revenue Service (IRS) and other law enforcement partners to enforce the nation’s tax laws fully, fairly and consistently through both criminal and civil litigation. During the past year, the Tax Division’s prosecutions have included:
— April 2015 – Daniel Porter, a Chino, California, businessman, was sentenced by a federal court in Las Vegas to serve 55 months in prison for conspiring to defraud the United States by promoting and selling fraudulent tax products, including a product called Tax Break 2000. The intended tax loss of the scheme was more than $60 million. Porter designed and sold Tax Break 2000 directly and through other individuals and entities, including NADN, a company in Las Vegas. Alan Rodrigues, NADN’s former general manager and executive vice president, Weston Coolidge, the former president of NADN, and Joseph Prokop, a former NFL punter, were convicted at trial in a separate criminal case. In March 2015, Rodrigues was sentenced to serve 72 months in prison, Coolidge was sentenced to serve 70 months in prison and Prokop was sentenced to serve 18 months in prison to be followed by 30 months home confinement.
– Arkan Summa, an owner of Happy’s Pizza franchises, was sentenced by a federal court in the Eastern District of Michigan to serve 18 months in prison and ordered to pay $199,847 in restitution for his role in a wide ranging conspiracy to defraud the IRS. The conspiracy involved diverting more than $6.1 million in gross receipts, underreporting wages and understating income and expenses of the pizza franchises. The total tax loss resulting from the scheme was more than $6.2 million. The founder of Happy’s Pizza, Happy Asker, was previously convicted at trial, and three others have also pleaded guilty to related charges.
— March 2015 – Jon McBride, owner of a cell phone clip company and a real estate investor in Utah, was sentenced by a federal court in Utah to serve 27 months in prison and ordered to pay $174,684 in restitution following his conviction for filing a false return and tax evasion. McBride filed a false tax return for 2005 that failed to report his gross income. He later filed a false amended return for the same year and again failed to report his gross income. McBride created several nominees to conceal his income and ownership in real properties to evade the payment of his taxes for 1999 through 2002, tried to evade the assessment of his 2006, 2007, and 2009 taxes, filed false 2006 and 2009 returns, and failed to file a return for 2007.
— March 2015 – Paul DiLorenzo, a doctor from Ocean Township, New Jersey, was sentenced by a federal court in New Jersey to serve 46 months in prison and ordered to pay $304,293 in restitution for structuring cash transactions to avoid reporting requirements and for aiding and assisting in the filing of his own false tax returns. The court also ordered DiLorenzo to forfeit nearly $1 million in illegally derived proceeds.
— March 2015 – Yvette Johnson was sentenced by a federal court in Maryland to serve two years in prison for tax evasion. Her husband, Shannon Johnson, was previously sentenced to serve 72 months in prison for his role in the tax evasion and conspiracy to commit mail and wire fraud. Shannon Johnson held himself out as a wealthy international investment banker offering financing to businesses and investors, who wired and mailed advance banking fees to multiple bank accounts in different states controlled by the Johnsons. Shannon Johnson received millions in fees and payments, but never provided the promised financing. Yvette and Shannon Johnson filed false claims for refunds for the 1998 through 2001 tax years based on fictitious Forms W-2, and further evaded their taxes for the 2002 through 2006 tax years. The court also ordered Shannon Johnson to forfeit $3.7 million based on fraud committed against investors.
— February 2015 – Kenneth and Kimberly Horner, who owned and operated Topcat Towing and Recovery Inc., were each convicted by a federal court in Georgia of filing false personal and corporate tax returns. According to the charges and information presented in court, between 2005 and 2008, the Horners skimmed more than $1.5 million in cash receipts from their towing business and deposited that money into their personal bank account without disclosing the income to their tax return preparer or on corporate and personal tax returns filed with the IRS. They owe approximately $400,000 in taxes to the IRS for their unreported income.
— February 2015 – Thair Alwan, the owner of a pizza shop, was sentenced by a federal court in North Carolina to serve 12 months and one day in prison and ordered to pay $237,587 in restitution and a $10,000 fine for filing a false tax return for 2008. According to court filings, Alwan skimmed cash from pizza shops he owned, failed to report the cash on the corporate returns and under-reported his income on his personal income tax returns.
— February 2015 – Fidencio Moreno, owner of a charter bus company, was sentenced by a federal court in California to serve 41 months in prison for conspiring to defraud the United States. Arturo Moreno, also an owner of the company, was sentenced to serve 28 months in prison for conspiring to defraud the United States, and conspiring to commit wire fraud and mortgage fraud. According to court filings, from 2005 until 2010, Fidencio and Arturo Moreno, along with their co-defendant Elena Moreno, conspired to file false and fraudulent corporate and personal income tax returns, on which they failed to report cash receipts from the charter bus company. The defendants also submitted fraudulent loan applications to purchase or refinance real properties. Elena Moreno was sentenced to serve 22 months in prison in January 2015.
— January 2015 – Matthew Libous, an attorney licensed to practice in New York, was convicted by a federal jury in New York of filing false tax returns for tax years 2007, 2008 and 2009. According to court filings, Libous failed to report income from his law practice and tens of thousands of dollars in personal expenses that he caused to be paid by another company he operated.
— January 2015 – Michael Stover, a Michigan businessman, was sentenced by a federal court in Michigan to serve 42 months in prison for tax evasion and wire fraud. From 2004 through 2010, Stover was president of a company from which he embezzled more than $2 million, and he failed to report the income on his tax returns.
— December 2014 – Jesus Pons, a computer-services manager for Miami-Dade County, was sentenced by a federal court in Florida to serve 51 months in prison and ordered to pay $556,254 in restitution for tax evasion. According to court filings, from 2007 to 2011, Pons, who was in charge of managing information technology projects and county vendors, received illegal kickback payments in exchange for approving payments for consulting work that was never done and failed to report this income on his personal income tax returns.
— November 2014 – Joel Field, owner and operator of Cadillac Ranch restaurants and bars in Ohio and elsewhere, was sentenced by a federal court in Ohio to serve 12 months and one day in prison, to be followed by four months in a halfway house and four months of home confinement, and was ordered to pay $349,778 in restitution and a $4,000 fine for tax evasion. According to court documents, Field filed his 1997 through 2001 tax returns but failed to pay the full tax due and owing. While the IRS was attempting to collect his taxes, Field transferred assets into the names of nominees and submitted false IRS Forms 433-A (Collection Information Statements for Wage Earners and Self-Employed Individuals).
— October 2014 – Jeffrey Scott, owner and operator of Greenville Loop Seafood (GLS), a seafood distribution company, was sentenced by a federal court in North Carolina to serve 12 months and one day in prison and was ordered to pay $26,263 in restitution and a $25,000 fine for attempting to evade his 2007 taxes. According to court filings, between 2006 and 2010, Scott paid nearly all of his living expenses with checks from GLS, including his mortgage, utilities, insurance premiums, landscaping, home improvements, school fees and a country club membership. Scott also purchased five vehicles for more than $200,000, a $100,000 boat and a $2.1 million waterfront home. Scott did not report these funds as income. He also filed a false corporate tax return for 2011 claiming the painting of his personal residence, plumbing work at his personal residence and vet bills for his family dog as business expenses.
–October 2014 – Michael Mangold, a doctor specializing in emergency medicine and urgent care, was sentenced by a federal court in Wisconsin to serve 18 months in prison for tax evasion and making false statements. According to court filings, Mangold earned income working for various hospitals, emergency rooms, urgent care facilities and state and county correctional facilities. From 1997 through 2007, Mangold concealed his income by filing false tax returns and asserting frivolous legal arguments to the IRS.
— September 2014 – Nick Jodha, also known as Nick Persaud, an owner and operator of contracting company United HVAC Services Inc., was sentenced by a federal court in New York to serve 12 months and one day in prison and ordered to pay $214,529 in restitution for evading his 2007 through 2010 taxes. According to court filings, Jodha cashed checks written to United HVAC at a check-cashing service rather than depositing them into the business bank account. He failed to tell his accountant about these cashed checks, which were not reflected in the statements that the accountant used to prepare United HVAC’s corporate returns, or about the fact that he used a portion of the cashed checks to pay business and personal expenses.
–April 2014 – Amberula Levitt, who owned and operated Tax Time Tax Service, a tax-preparation business with multiple locations throughout Atlanta, was sentenced by a federal court in Georgia to serve 21 months in prison, ordered to pay $620,004 in restitution and ordered to complete 100 hours of community service for filing false tax returns for 2004 and 2005, assisting in filing a false tax return for 2006, and failing to file tax returns for 2007, 2008 and 2009.
Additional highlights from the U.S. Attorneys’ Offices include:
–April 2015 – William M. Weisberg, an attorney from Vienna, Virginia, was sentenced by a federal court in Virginia to serve 12 months and one day in prison and ordered to pay $451,955 in restitution for willful failure to pay tax due and owing. According to court filings, Weisberg filed his income tax returns, but failed to pay his taxes for 2008 and 2010, and paid only a portion of his taxes for 2009. During this time, Weisberg paid approximately $250,000 to rent a house in Vienna, $150,000 for private and parochial schools for his two children, $35,000 for maid service and $130,000 for travel and entertainment. 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.
– March 2015 – Gwendolyn Muller, a receptionist previously employed by a medical office in Kearny, New Jersey, was sentenced by a federal court in New Jersey to serve 34 months in prison and ordered to pay $556,000 in restitution for embezzlement, using fraudulent credit cards to obtain goods and services and tax evasion. According to court filings, from 2007 through 2011, Muller used her position at the medical practice to take cash and conceal more than $446,000 in checks paid by insurance companies to the medical practice for services to patients. At various times during this same period, Muller also fraudulently obtained 10 credit cards in the name of a principal of the medical practice and used those cards to charge more than $218,000 in goods and services – a portion of which Muller paid for with embezzled funds. Muller admitted to filing a false tax return to evade the payment of taxes on this illegally obtained income.
— February 2015 – Don F. Lindner, an attorney from Severna Park, Maryland, pleaded guilty to filing a false return and agreed to pay $341,730 in restitution. According to court filings, Lindner practiced law in Glen Burnie, Maryland, and treated his law practice as a sole proprietorship. For his tax returns for 2007 and 2011, Lindner omitted $1,230,614 in gross receipts from his law practice. He also maintained a rental property and falsely reported on his tax returns that he paid more than $82,700 in repairs on the rental property during the same tax years, when in fact no repairs were done, thereby fraudulently decreasing his purported taxable income.
— February 2015 – Rebecca Hoff, a former office manager and accounts payable bookkeeper from Ironwood, Michigan, was sentenced by a federal court in Wisconsin to serve 15 months in prison for filing a false income tax return. According to court filings, Hoff used company checks to pay her personal expenses, which included the purchase of a vehicle, home improvements and mortgage payments. Although the employer did not pursue charges for the embezzlement, Hoff never declared the money she embezzled as income on her federal tax returns, resulting in a tax liability of more than $300,000.
— February 2015 – Joel Carlson, an investment advisor, was sentenced by a federal court in Minnesota to serve 42 months in prison for tax evasion. Carlson deposited client investments and additional funds solicited from his father into a Trust Financial Group account, which he treated as his personal bank account. Carlson spent the money on personal items and, when confronted, lied to his clients about the existence of their investments. In addition to misappropriating assets, totaling more than $1.5 million, Carlson failed to file personal income tax returns for tax years 2010 and 2011. Carlson will pay approximately $3.1 million total in restitution, which includes $1.2 million in restitution to the IRS.
– November 2014 – Dennis Weiss, formerly a suburban home builder, was sentenced by a federal court in Illinois to serve 30 months in prison and ordered to pay $296,643 in restitution to the IRS for filing a false federal income tax return and making false statements in a bankruptcy petition. According to court documents, Weiss filed false individual federal income tax returns for 2005 through 2009 and failed to file corporate tax returns for both of his companies, Custom Homes by D.R. Weiss Inc. and Reliable Home Solutions Inc. Between 2005 and 2009, Weiss paid personal expenses from a business bank account, accepted cash payments from customers of his businesses 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.
— October 2014 – Patrick J. Belzner, also known as Patrick McCloskey, a home builder residing in Selbyville, Delaware, was sentenced by a federal court in Maryland to serve 15 years in prison and ordered to pay $19.8 million in restitution on charges of wire fraud conspiracy, wire fraud and tax evasion. According to court filings, Belzner worked for the McCloskey Group, a real estate development business, and conspired with others to defraud investors through a fraudulent investment scheme. Belzner admitted that investor funds were used to pay personal and business expenses, as well as to make partial repayments to earlier lenders and to pay fees to some of the victim investors to keep them from demanding the return of their money. In addition, Belzner admitted to stealing more than $1 million from former employers and failing to report those sums on his federal tax returns. He further admitted evading the payment of the tax due and owing by placing his residences, other real estate and automobiles in the names of corporations that he formed, as well as by paying his personal expenses – including his mortgage, ground rent for a vacation home, construction costs on a house that he built, car payments, Baltimore Ravens season tickets and private school tuition – from bank accounts he opened in the names of the corporations or from payments out of the real estate development business. In 2006 and again in 2009, Belzner submitted forms to the IRS falsely claiming that he did not have sufficient income to make any payments on the assessed back taxes, penalties and interest. By August 2013, the total assessed tax, interest and penalties due and owing by Belzner exceeded $2.6 million.
The Justice Department will continue to vigorously pursue and prosecute those engaged in tax crimes. These efforts of the department, the IRS and its other law enforcement partners are critical to the continued integrity of our national tax system, and send a strong message to those individuals who make good faith efforts to comply with their tax obligations that we will hold accountable those who do not.