Congressman Randy “Duke” Cunningham (R-CA) pled guilty today to charges of conspiracy to commit mail fraud and wire fraud and tax evasion. The charges stem from Cunningham “selling” his house for an inflated price; the new owner then immediately re-sold the house and had a $700,000 loss. This while the San Diego housing marketing was skyrocketing.
Cunningham, who represents a San Diego area district, faces several hundred thousand dollars in fines and up to ten years in prison.
Sharon Lee Caulder, now of New Orleans, was convicted on Friday of failing to file tax returns and hiding assets during her bankruptcy. Ms. Caulder apparently made $1.7 million in gross income between 1998 and 2002, mostly from sale of her book, Mark of Voodoo. The Amazon cover photo (of the book) states that Ms. Caulder has a PhD. Apparently, she didn’t take any accounting or tax courses while at college.
Ms. Caulder will be sentenced in late February in Oakland. She faces up to 15 years in prison and fines of up to $1 million.
Voodoo is more profitable than I realized, especially if your net income after taxes is the same as your net income before taxes (until Uncle Sam catches you).
With the withdrawal of Harriet Miers as a nominee for the Supreme Court, speculation has centered on several individuals as a possible nominee, including Judge Michael McConnell. In this unpublished opinion, which is a model of brevity, Judge McConnell rejects some tax protesters’ appeal of the dismissal of their case at the Tax Court. As I’ve said many times before, you’re not going to win in court saying that the US doesn’t have an income tax.
What I liked most about the opinion is that it is short, sweet, and to the point. As Judge McConnell wrote, “As with their other frivolous arguments, petitioners have failed to put forth any relevant legal authority to support their claim that respondent “defaulted” during the administrative proceedings in this case.”
It’s simple. During sentencing for tax evasion, just question the judge’s credentials and the US government’s right to make you file a tax return. The judge involved, Walter Rice of Ohio, said it best, “Why are you doing this to yourself? You’re putting yourself in prison. Why?”
The defendant, Walter Maken, will have thirty months to think over his answer. And he’ll have to fork over $42,000 in taxes, plus penalties and interest.
Coverage: Dayton Daily News.
John Rigas, founder of Adelphia Communications, and his son Timothy, were indicted on tax evasion charges. According to this article, they diverted $1.85 billion for their personal use from Adelphia. The pair has already been found guilty of fraud and face prison terms of 15 and 20 years, respectively. Both are appealing their convictions.
In another development, two of the auditors of Adelphia were charged by the SEC with professional misconduct. The two engaged in “reckless and unreasonable” conduct when they approved false Adelphia financial reports, according to this story.
Survivor Richard Hatch pled not guilty today to charges that he didn’t report his $1 million in winnings from the reality television show, and charges of filing a false S-corporation tax return, mail fraud, wire fraud, and bank fraud. Hatch told the Providence Journal that, “I’ve always, always, always paid my taxes and always will.”
However, the government alleges that he didn’t. The allegations include that Hatch shopped around for the tax return that had him pay as little as possible to the government. The Journal says that he visited two accountants. The first prepared a return where he would have owed over $400,000 to the IRS; the second prepared a return where he would have paid over $200,000 to the IRS. Both of these returns included the income from Survivor. Neither return was filed. The second accountant then prepared a return that did not include the Survivor income; it showed Hatch receiving a refund from the IRS of $4,483. The accountant noted that it was for informational purposes only and should not be filed. Hatch filed that return.
Hatch is free on $50,000 bond until his trial.
…so does he know his fate in court?
“Caryville Psychic Accused of Tax Evasion” screams the headline.
Hat tip: Roth Tax Updates
Richard Hatch, the winner of the first Survivor television show, was indicted on ten counts of tax evasion and bank fraud. While his attorney calls the indictment “a publicity scheme,” Hatch could end up paying fines of over $1 million and spending 73 years in jail if convicted on all counts.
Hatch is accused of not reporting his $1 million in winnings and that he pocketed $36,500 in donations to his foundation. Earlier this year Hatch had made a plea agreement with the government but he backed out of the deal.
News Story: Reuters
The other shoe dropped on KPMG today. According to this story, KPMG will pay a fine of $456 million, accept an outside auditor, and shut down its tax practice for high net-worth individuals within six months. Additionally, seven former partners were indicted.
You can find full roundups on this story at Roth & Company Tax Updates and the TaxProf Blog.
Pity Mark Steven Miller, former CEO of Oakwood Deposit Bank in Ohio. Mr. Miller was convicted of fraud in 2003 for embezzling $49 million from his bank. He then took his profits and invested them in the Star Dancer Casino Boats—boats that sailed from Florida ports and offered casino games. Little did the bozo know that the owners of Star Dancer allegedly took the money they withheld from their employees and spent it rather than forward it to the IRS. The government apparently stumbled upon the second scam from the investigation of the initial embezzlement. The two owners of Star Dancer each face fines of $10,000 and five years imprisonment.
Links :Myrtle Beach Sun News and Toledo Blade
