How to Go to Jail

A few years ago, Steven Martinez won the coveted (not really) Tax Offender of the Year Award. His scheme was to tell clients that they had an amount due to the IRS and California. He then prepared a second set of tax returns showing a lesser amount due (or a small refund). He had his clients make checks out to his “client trust account.” He filed the second set of tax returns, and pocketed the difference. (He won the Tax Offender of the Year Award for hiring a hit man after his scheme was uncovered.) A New Jersey woman copied Mr. Martinez’s scheme (less the hit man, thankfully) with the expected result.

Doreen Gentile ran an accounting and tax practice in Toms River, New Jersey. As the Department of Justice press release notes,

Gentile admitted that as part of her scheme, she would show her clients a tax return that indicated that they had no tax or refund due, owed a minimal amount of tax, or were due a refund that was far less than the amount to which they were entitled. Gentile then prepared a second set of tax returns, signed without her clients’ permission, that she submitted to the IRS or the State of New Jersey for the full tax refund.

This was not a brilliant scheme by Ms. Gentile. Sooner or later one of her clients would be audited, or the client would obtain a transcript on their own; the return that was filed wouldn’t match their copy of the return. Indeed, inevitably this crime would be discovered and so it was. Ms. Gentile was indicted in 2014 and pleaded guilty to mail fraud and filing a false income tax return last year (she also didn’t include all of her income on her tax return—yes, the funds that were stolen were taxable income to her). She was sentenced earlier today to 37 months at ClubFed; she must also make restitution of $1,863,013.

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