In New Jersey, the former CFO of a large capital management company pled guilty to one count of wire fraud and one count of tax evasion. From 2008 until 2011 he embezzled company funds by requesting check and wire transfers from investment account custodians and by diverting these funds to bank accounts which he controlled.
To avoid detection, he opened the account with a name similar to that of his employer’s. On one occasion, he caused as much as $2.4 million to be deposited into that account. Investigators with IRS Criminal Investigations said most of the funds came from the management company itself, not from investor accounts.
This scheme served as the basis for the wire fraud conviction, but the former CFO opened himself to criminal liability for tax evasion when he failed to disclose the $2.8 million plus he received from the scheme on his income tax return. Investigators say he cost the United States over $1 million in taxes.
He was sentenced to 54 months in prison, followed by 3 years of supervised release. He was also ordered to pay over $10 million in restitution to the IRS.
A New York woman recently pled guilty to theft of government money and filing a false tax return. From 1989 to 2010 she collected Civil Service Retirement System benefits to the tune of approximately $570,000, which was being mistakenly sent to her deceased father-in-law.
On several occasions during the 21-year period of her scheme, she repeatedly lied to the government agency, claiming that her father-in-law was indeed alive. She also failed to report these monies on her annual federal income tax returns.
Investigators say she deprived the US government of over $13,000 in tax revenue.
While she could easily have been brought up on multiple charges— tax evasion, making fraudulent claims against the US government, making false statements to an agency of the US government, among others— she was only charged with and ultimately plead guilty on theft and filing false returns. She was sentenced to 3 years of probation, including 24 months of home confinement.
This case perfectly illustrates the broad latitude prosecutors possess in choosing which charges to apply to a general tax fraud case. Certainly she could have been charged with several other counts. Part of the reason prosecutors don’t “throw the book” at every defendant is because they like to ensure they keep their conviction rates high. Sometimes they choose not to bring certain charges because of problems with proving particular elements of those offenses.
In this particular case, the prosecution might have determined that the dollar amount of unpaid taxes did not warrant the extra burden of going to trial on several counts for the same basic offense. Ultimately, however, it is within the prosecutor’s discretion in a case like this to decide which charges to bring and how many. It is important to have a skilled defense attorney who can negotiate with prosecutors on matters of this sort if you are facing criminal charges of this nature.
If at any time, you feel unsure about whether your filing methods are within the legal requirements, contact the tax attorneys at The Blanch Law Firm immediately.