Posts Tagged ‘Steven.Martinez’

2012 Tax Offender of the Year

Monday, December 31st, 2012

It’s time once more for that prestigious award, the 2012 Tax Offender of the Year. To be considered for this award you must do more than cheat on your taxes. It has to be special; it really needs to be a Bozo-like action or actions.

Coming in third this year is the Miccosukee Tribe of Indians in Florida. The Miccouskees run a successful casino near Miami. While the tribe itself is exempt from taxes (they’re a sovereign nation), the members of the tribe are not. The Miccouskees allegedly decided to ignore that little aspect of the law. Their attorney apparently advised them that wasn’t a good idea. So did the Miccosukees start withholding taxes on distributions to its members? Or did they sue their attorney for malpractice? And did they also allegedly not forward federal income tax withheld from patrons’ winnings to the IRS?

The Miccosukees can’t win in 2012; these are still all allegations and nothing has been resolved. However, they are very strong contenders for the 2013 Tax Offender of the Year award.

Coming in second place is last year’s winner, the United States Congress. While I’m tempted to put them in first place–after all, there’s an excellent chance I won’t be filing any personal tax returns until late March–I can’t. There’s still a day for everyone to get on the same page, and this will have an impact in 2013, not 2012. True, the US Senate has not passed a budget in years (President Obama’s proposed 2012 budget received no votes from either the House or the Senate), and the Tax Code keeps getting more and more convoluted; however, most of the changes that are coming are the result of the passage of Obamacare. I already awarded the 2011 Tax Offender of the Year to Congress for that (and their other acts of ineptitude).

Steven Martinez used to work for the IRS. After leaving the IRS, he became a tax preparer. Mr. Martinez had a unique method of filing tax returns. He first prepared the returns, showing his clients owed money to the IRS and the Franchise Tax Board (California’s income tax agency). He then had his clients make out checks to a client trust account rather than the IRS or FTB. He also had estimated taxes made out through that account.

Of course, since I’m writing this you know where the money ended up: home improvements for himself, a beach house in Mexico, usage of a private airplane, investments (more than $2 million), and for $2 million of payments on credit cards and loans.

After preparing those returns showing clients owing money, Mr. Martinez prepared a second set of returns. These showed the clients owing either a small amount of money or no tax at all. He then submitted those returns to the IRS and FTB.

Sooner or later this fraud was bound to be discovered. A taxpayer would obtain a transcript of his return and notice the differences between what was filed with the IRS (or FTB) and what his copy of the return showed. Or perhaps some unlucky taxpayer was audited and the copy of the return that the taxpayer had and the return the IRS had would not match.

He committed Social Security fraud and identity theft by preparing false tax returns with the IRS. He mailed those returns to the IRS; that’s mail fraud. He used nominee bank accounts to conceal $2 million of income. Yes, he also prepared false tax returns for himself.

All of the above is definitely Bozo behavior. However, what I’ve written is just the beginning of the story. Mr. Martinez was indicted on April 15, 2011 for 49 counts of fraud, money laundering, and identity theft.

After being indicted, there are a number of possible strategies. Getting a good attorney would be the first thing I’d want to do. I’d look at the defense I have to the charges (if any). Perhaps a plea bargain is in order. Maybe I should hire a hit man to kill the prosecution witnesses.

Wait a second: Did I just bring up the idea of finding a hired killer to eliminate the prosecution witnesses? I did. After all, if you’re accused of 49 felonies, what’s a few more anyway? And yes, Mr. Martinez did exactly that.

Luckily for all concerned, the man that Mr. Martinez solicited to commit the murders called the FBI; a second meeting between the would-be assassin and Mr. Martinez was taped by the FBI. Mr. Martinez told the man that “he could make him rich for the rest of his life, $100,000 cash, if he eliminated the lady in Rancho Santa Fe and the lady in La Jolla.” Mr. Martinez also helpfully told the supposed hit man to use two different pistols and buy a silencer.

In the end, Mr. Martinez pleaded guilty to not only the tax fraud charges, but murder-for-hire, witness tampering involving attempted murder, and solicitation of a crime of violence. Mr. Martinez is truly deserving of the 2012 Tax Offender of the Year award.

That’s a wrap for 2012. Hopefully, 2013 will be a fruitful and prosperous year for everyone.

Accountant Who Solicited Hit Man Pleads Guilty

Sunday, August 12th, 2012

Back in March I reported on Steven Martinez. Mr. Martinez is a tax preparer who faced charges of stealing $11 million from clients. He decided that the best strategy to fight this charge wasn’t hiring a good attorney, nor was it trying to disprove the charges; rather, he decided to hire a hit man to kill four witnesses. (One reason he didn’t try to disprove the charges is that they were true; Mr. Martinez has admitted he took the $11 million and used it to buy a home in Mexico and other personal expenses.)

The hit man to be told the FBI, and Mr. Martinez was arrested. He pleaded guilty on Friday to soliciting a violent crime, interstate commerce in murder for hire, witness tampering, mail fraud, and eight other felonies. Sentencing is set for November 30th and the 51 year-old Martinez faces 100 years at ClubFed.

Hiring a Hit Man Isn’t a Good Strategy

Friday, March 2nd, 2012

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.

From today’s news story, “CPA Accused of Tax Fraud Arrested for Alleged Murder-for-Hire Plot”:

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.