Archive for the ‘Tax Evasion’ Category

Semenza Gets 18 Months

Friday, January 16th, 2015

Last year I wrote about Lawrence Semenza. Mr. Semenza with the US Attorney for Nevada back in the 1970s. He was the youngest US Attorney at that time and has had a long and successful career since as a defense attorney. Unfortunately, he forgot about the law requiring a tax return to be filed; he didn’t file his corporate or individual returns from 2006 to 2010. He pleaded guilty last year, and was sentenced this week to 18 months at ClubFed. He has already made restitution.

If You Do Government Work, It Pays to Treat the Government Well

Thursday, January 15th, 2015

Your salary is taxable, of course. What about your bonus? Of course, that’s taxable. One business owner in Texas thought that wasn’t the case.

Robert Earl Carter is the owner and Chief Executive Officer of Enterprise Advisory Services Inc. From their website, it’s clear they specialize in government work, including contracts at NASA.

When you work with the government, you have to open your books to them. Apparently Mr. Carter forgot about that portion of dealing with the government. It also appears that the NASA Inspector General saw something on the books of EASI.

Back in 2009 Mr. Carter received a bonus check at year-end for $195,000. There’s nothing wrong with that, but there’s a lot wrong with calling it a “reimbursement.” It’s likely that caught the Inspector General’s eye, and that caused a referral to the IRS Criminal Investigation (CI) unit. And when CI discover another $309,821 of bonuses were paid to a company controlled by a family member who returned $286,821 to him one month later an indictment followed. Mr. Carter pleaded guilty two months later.

With a plea deal, you can hope for a sentence less than the maximum. That wasn’t the case yesterday.

It seems that Mr. Carter donated $500,000 of art to Texas Southern University. Mr. Carter claimed that deduction on his 2005 tax return, with carryover deductions extending to 2010. There was one minor problem: Texas Southern hadn’t received any art. Yes, to make a charitable donation you do have to actually donate something. Oops.

Judge Keith Ellison wasn’t amused by this faux pas. He found that Mr. Carter had not accepted responsibility for his criminal conduct and that his sworn testimony regarding the art wasn’t credible; he was sentenced to the maximum three years (36 months). He also was ordered to pay a $75,000 fine.

As always, it’s easier to just pay your taxes in the first place…but that usually doesn’t register with the Bozo tax contingent.

Tuition for Children Is Not a Business Expense

Friday, January 9th, 2015

But we already knew that, right? Nor are home improvements are your home itself. A Florida doctor learned that the hard way.

Dr. Krishna Tripuraneni pleaded guilty this week to evading tax on $18,128,066 million of income. Dr. Tripuraneni provided his tax professional with profit and loss statements used to prepare his returns for his businesses (he has a professional corporation and a partnership) and his personal return. The P&L’s had inflated expenses and, thus, understated his income from 2004-2008.

Not stated in the DOJ press release is that Dr. Tripuraneni has made restitution on about $10.2 million of the $11.8 million in tax and penalties he owes.

A helpful hint to potential fraudsters out there: Conspicuous consumption is not a good idea. Even better, skip the tax fraud. As I’ve said many times before (and will say many times in the future), it’s always a lot easier to just pay your taxes in the first place.

Varagiannis Gets 15 Months for Tax Evasion

Tuesday, January 6th, 2015

Manny Varagiannis received 15 months at ClubFed for tax evasion. Mr. Varagiannis was arrested back in 2012 on a count of structuring, but pleaded guilty in April to not paying $230,651 in taxes. He must also make restitution.

The charges relate to Midnight Entertainers, an escort service here in Las Vegas. Mr. Varagiannis supposedly sold the business, but back from 2009 – 2011 he didn’t report all of his income from it…and got caught.

According to the Las Vegas Review Journal,
the US Attorney and the Las Vegas police believe that Mr. Varagiannis is offering kickbacks to cab drivers and others. It was also alleged that Mr. Varagiannis remains the real owner of Midnight, Inc. (the legal name of Midnight Entertainers) and the current owners are just fronting him. It’s definitely possible that Mr. Varagiannis may face more charges over these allegations.

In any case, Mr. Varagiannis will be reporting to ClubFed in April.

Perhaps She’ll Cover the Guilty Plea in the Second Edition

Sunday, November 2nd, 2014

Perhaps we should have known this was going to happen. Her book, The Prosperity Principles: Secrets to Developing and Maintaining Generational Wealth, notes that business should be run, “…where everything you can do can be deducted from your reportable income as a business expense.”

Of course, you as readers of this blog know that the above quote is true as long as those deductions relate to necessary and ordinary business expenses. And you do have to include all of your income on your tax return, including income from drug traffickers.

It appears that Tanya Marchiol of Phoenix forgot those minor points. She was accused of not paying tax on $1.4 million of income from 2008 to 2010. Last week, Ms. Marchiol pleaded guilty to three counts of tax evasion. A story in azcentral.com states, “A number of Marchiol’s former employees told authorities she engaged in money laundering for personal profit, according to court documents.” The case began when Ms. Marchiol allegedly took money from drug traffickers to purchase a home in Phoenix but then commingled the funds with proceeds from other clients (professional athletes). This led to the indictment on tax evasion and money laundering charges.

As usual, if it sounds too good to be true it probably is. For Ms. Marchiol, she’ll likely have some time at ClubFed to ponder the truth of this.

Copying Steven Martinez’s Idea Is Not a Good Choice

Sunday, October 19th, 2014

I’m on the road this weekend, but a story from the San Francisco Bay Area caught my eye. Charles Waldo was already in jail. He was arrested on a 50-count indictment for insurance fraud, tax evasion, felony vandalism, and a high speed chase through central Costa Contra County. While awaiting trial, Mr. Waldo was in the Martinez, California jail.

When you’re in prison you do have time on your hands to determine your defense. There’s plenty of time to research the law on the charges you’re facing, work on strategy with your defense counsel, and perhaps other means of helping your case. Mr. Waldo allegedly decided to follow the idea of Steven Martinez. Mr. Martinez, for those who don’t remember, won the coveted 2012 Tax Offender of the Year award for hiring a hit man to eliminate the witnesses against him. Yes, Mr. Waldo supposedly did the same thing.

Mr. Waldo was indicted on Friday on nine counts of solicitation to commit murder and one count of conspiracy to commit murder. According to the press release from the Contra Costa County District Attorney’s office,

The indictment alleges that while serving time in custody at the Martinez Detention Facility, the defendant solicited and conspired with other inmates to arrange the killing of nine different witnesses that were set to testify against him at an upcoming trial. These ten new charges will be added to the fifty charges the defendant currently faces.

There is one bright spot for Mr. Waldo if he is found guilty and spends a very lengthy term at a California penal institution: He’s a shoe-in to be nominated for Tax Offender of the Year in a future year.

Legaspi Gets 21 Months

Sunday, October 5th, 2014

Francisco Legaspi didn’t want to go to jail. Back in November 1992, he pleaded guilty to tax evasion. Instead of showing up for his sentencing in January 1993, he headed to Mexico and then Canada to avoid prison. That worked for 20 years. In 2012, the State Department found him when the Bureau of Diplomatic Security found his Facebook page. (A helpful hint to any fugitives out there: Avoid posting anything on the Internet. Law enforcement reads the Internet, too.) They forwarded his information to the Royal Canadian Mounted Police who arrested him; the Mounties always get their man.

It was justice delayed last week as Mr. Legaspi received 21 months at ClubFed. He also received one year of supervised release following his term at ClubFed.

They Both Begin With “E”

Sunday, September 21st, 2014

Here’s a good way to make some money (for a while). You create a phony vendor, and send invoices to your company for that vendor for work that was, of course, never preformed. The money from the phony vendor isn’t reported on your tax return–it’s always good when your after-tax income is the same as your before-tax income.

Now, there are some potential drawbacks to this scheme. You would be embezzling from your company. Depending on how you do that, it will be some sort of felony. Not reporting the illegal income on your tax return is tax evasion, another felony. And if you do this scheme over multiple years, that’s multiple felonies.

If your business were audited, it’s possible that the IRS might discover this (or a state tax agency). That would be problematic.

Now, you might think that no one would do this–especially that no one would do this and steal money from his own company. You would be wrong.

Michael Stover of Plymouth, Michigan did this exact scheme. Mr. Stover was president of Omni Facility Service and did this scheme with his invented subcontractor from 2004 through 2010. And we’re talking big dollars here: Per the Department of Justice press release, “Stover embezzled approximately $2,178,423 from Omni.” He also didn’t report this income on his tax returns.

Mr. Stover is looking at spending some time at ClubFed, a possible fine, and restitution. He’ll be sentenced in January.

Zuckermans Sentenced; No Word on Fido & Lulu

Wednesday, September 17th, 2014

Earlier this year I reported on the case of Mathew and Sandra Zuckerman. The Zuckermans stopped filing and correctly paying taxes back in 1986. When you’re doing something illegal it’s best to keep a low profile. The Zuckermans eschewed that philosophy. Mr. Zuckerman became very successful in leading companies through reverse IPOs. They owned two expensive homes: one in Colorado and one in California. That’s not keeping a low profile.

But what drew my attention to the case was a strategy that probably will never be tried again. No, it wasn’t the interlocking web of corporate entities Mr. Zuckerman created to hide his transgressions; that’s been done countless times before and will be done countless times in the future. Rather, Mr. Zuckerman put his dog and cat on the board of one of his companies. Unfortunately, members of a board of directors must be human: Fido and Lulu don’t qualify.

The Zuckermans pled guilty earlier this year. Yesterday, the day of reckoning arrived. Mr. Zuckerman received 24 months at ClubFed and must make restitution of $693,706; he also will serve three years of supervised release once he’s released from ClubFed. Mrs. Zuckerman received 36 months of probation. Of Mr. Zuckerman’s restitution, Mrs. Zuckerman was held to be jointly liable for $112,511. Fido and Lulu escaped prosecution.

Cash & Carry

Wednesday, September 10th, 2014

Myong Ho Pak is the owner of Yama Sushi restaurant here in Las Vegas. The restaurant is popular and has done quite well; it features all you can eat sushi. It may have done a bit worse on its 2008 to 2010 tax returns than it really did, though. You see, the owner only included his credit card receipts on his tax return.

It turns out that Mr. Pak’s accountant received his business bank statements but the cash from the business went directly into his personal bank accountant. It’s a good scheme when it works. Unfortunately for Mr. Pak, the IRS discovered the evasion.

Mr. Pak pleaded guilty on Monday to tax evasion, and has agreed to make full restitution to the IRS of $244,045. He’ll be sentenced in December.