Last April, Steven Martinez was arrested and charged with 49 counts including mail fraud, identity theft, and filing false tax returns. Here’s what Mr. Martinez was accused of:
The indictment charges Martinez with stealing over $11 million in tax payments that should have been sent to the IRS. According to the indictment, Martinez presented his clients with completed tax returns indicating that they owed a significant amount of tax. The indictment alleges that he then persuaded his clients to write checks payable for the amount of taxes (or estimated tax) due and owing to an alleged client trust account (instead of directly to the IRS or the California Franchise Tax Board). Rather than deposit these checks into an actual client trust account, Martinez deposited them into several bank accounts in the names of fictitious entities. The indictment further alleges that after disguising the nature of the funds in the accounts, he used millions of dollars in tax payments to fuel his extravagant lifestyle which included a multimillion dollar home in Ramona, an airplane, a boat, a motor home, trips to the Super Bowl, and vacations in Mexico. The indictment also alleges that Martinez, in an attempt to conceal his fraud, filed a different set of false tax returns indicating that his clients owed little or no income tax. In this manner, Martinez defrauded the IRS and the California Franchise Tax Board of more $11 million in federal and state taxes due and owing.
Now, that’s allegedly a rather nasty kind of fraud. Still, there are plenty of tax fraud stories and this story probably would have ended there (with perhaps another mention when the trial occurred). Mr. Martinez, a former IRS Revenue Agent, was out on what I believe is $350,000 bail.
The trial was apparently approaching and it was time to find a strategy for the trial. Perhaps a good attorney was in order. Maybe trying to prove the accusations wrong would work. One strategy that would not occur to me is what Mr. Martinez allegedly chose.
According to a complaint filed in U.S. District Court, Martinez offered an acquaintance $100,000 in cash to kill the prosecution witnesses, provided him with photos of the targeted people along with personal information about them and suggested using a silencer-equipped gun for the slayings.
For the record, Mr. Martinez is apparently not a CPA (there is no listing for him at the California Society of CPAs); rather, he is just a tax preparer (licensed by the California Tax Education Council–CTEC). He is listed on the CTEC website. That means he’s taken the required hours of continuing education. It sure has apparently helped his ethics (well, that’s what Commissioner Shulman would tell us).
Needless to say, hiring hit men is not a good strategy.