Articles Posted in White Collar Crimes

The Department of Justice Tax Division’s Acting Deputy Assistant AG Stuart M. Goldberg recently announced that three individuals, two of them managers of a Michigan healthcare management company and one an executive assistant, have been indicted by a Flint federal grand jury in an alleged employment tax scheme. iStock_000003633021_Large-2-300x201

The managers, Joseph DeSanto and Edward Cespedes, are charged with failing to pay over payroll taxes to the IRS. Gerri Avery, executive assistant responsible for payment expenses, is charged with attempting to obstruct IRS laws.

The healthcare management services company is located in Southfield and operates under the name Integrated HCS Practice Management. According to the indictment, during the period from October 2013 to February 2014 DeSanto and Cespedes failed to pay the full taxes deducted from employee’s paychecks over to the Internal Revenue Service. The misappropriated money was allegedly used by the two men for personal expenses and company operating expenses.

Recently it was announced by the Department of Justice Tax Division’s Acting Deputy Assistant AG Stuart M. Goldberg that Sarah Vidican, owner of Magnalty LLC had been charged with failing to file tax returns and filing a false tax return. Vidican’s marketing and consulting firm (Magnalty) allegedly provides services to chiropractors and physicians in both Michigan and Florida. iStock_000001299669_Large-2-300x199

According to the indictment returned by a Flint federal grand jury, Vidican underreported the income for Magnalty when she filed a fraudulent 2012 partnership tax return. Vidican also did not file a partnership tax return for Magnalty for the year 2014, and failed to file a personal tax return for 2013 according to the indictment.

The investigation of Vidican and the business was conducted by IRS Criminal Investigation special agents. The case will be prosecuted by Tax Division Trial Attorneys William Guappone and Mark McDonald.

Recently it was announced by U.S. Attorney Barbara McQuade that 34-year-old Michael Davis of Detroit was sentenced to 40 months in prison and restitution after Davis engaged in a fraudulent scheme whereby he supplied luxury cars to drug dealers. IRS Criminal Investigation Special Agent in Charge Jarod J. Koopman and U.S. Secret Service Special Agent in Charge Jeffrey Frost joined McQuade in the announcement. iStock_000003965027_Large (2)

Davis pleaded guilty to one count of wire fraud and one count of money laundering, aiding and abetting according to court documents. Upon his release from prison, he will be on supervised release for three years for each count, to be served concurrently.

According to the press release, Davis recruited straw buyers to purchase vehicles including Porsches, Audis, Mercedes, BMWs, Cadillacs, and other luxury vehicles to be used in the scheme. In order to get financing for these luxury cars, the straw buyers would provide lenders with bogus financial information under Davis’ direction. After taking possession of the luxury cars, Davis ultimately removed the lender as a lien holder from the titles through a “washing” scheme involving a number of transactions before he and other working with him would sell the cars, often to criminals including drug dealers who wanted vehicles with unclear title histories.

Recently Marian Kay Dombroski, a resident of Whittemore, was sentenced to 12 months, 1 day in prison after pleading guilty to one count of attempting to evade and defeat the payment of tax according to court documents. Dombroski and her husband reportedly purposely tried to avoid paying income tax to the IRS for the years 2000 through 2003. iStock_000001299669_Large-2-300x199

Dombroski owed income taxes for the four year period in the amount of $105,827.70, and used various methods to avoid paying the taxes owed. According to case documents filed in January of this year, the defendant failed to file income tax returns with the IRS and concealed or attempted to conceal the correct income and asset information from the U.S. government. Dombroski will also be on supervised release for one year upon her release from prison, and must pay the IRS taxes owed in addition to penalties and/or interest. Court documents indicate the defendant will make payments to the IRS on a monthly basis.

The statutory penalties for this offense which is a violation of Title 26, United States Code, Section 7201 is a maximum of five years in prison, with up to three years of supervised release upon release from prison. Fines of up to $100,000 also apply in some cases in addition to repayment of back taxes to the IRS.

There are many offenses that fall under the category of white collar crimes, but all are law and justicegenerally motivated by the possibility of financial gain.  Some of these crimes include money laundering, embezzlement, tax evasion, insurance fraud, bribery, certain Ponzi schemes, and securities fraud.  The biggest factor that sets white collar crimes apart from other criminal offenses is that they typically don’t involve violence or overtly illegal activities, such as drug-related crimes.

In the majority of cases, white collar crimes are investigated by federal authorities.  If evidence is sufficient to warrant criminal charges, the case may be prosecuted at the federal level as well.  Much of the general population believes that those found guilty of white collar crimes are not punished accordingly, and often treated with leniency.  The truth is many individuals convicted of tax evasion, Ponzi schemes, embezzling and other financial crimes often face sentences that are just as severe as those found guilty of more serious or violent crimes.  Penalties may include significant fines, restitution, and long prison terms.
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Recently, U.S. Attorney Barbara L. McQuade and Special Agent in Charge, IRS – Criminal Investigation Jarod J. Koopman announced that a Pontiac woman, Amey Renee Tipton, was sentenced to 33 months in prison for her involvement in a scheme to file fraudulent tax returns and identity fraud. iStock_000000349200_Large-2-300x200

Tipton, a Pontiac tax preparer, pleaded guilty to four of 38 initial counts of fraud for her connection to a tax fraud scheme that netted more than $180,000. Between 2009 and 2011, Tipton received payment to file tax claims for 37 individuals, including false information in the returns and taking tax credits the customers were not eligible for. Fraudulent information included on the returns included student loan interest deductions, child care credits, earned income and wages, and more. According to the indictment, the clients who used Tipton to file their returns did not ask her to include fraudulent information in their tax returns.

In preparing the tax returns, Tipton added fraudulent dependents by using the identifying information of others, thereby committing identity theft. The fraudulent tax returns resulted in refunds ranging between $800 and $8,000, with a total loss to the IRS of $180,977.

Recently it was announced that a complaint had been filed against Craig Comer in federal court after it was discovered that employees at his tax businesses in Detroit had prepared fraudulent tax returns. Now, the U.S. Justice Department wants to shut down five Liberty Tax offices in the Detroit area owned by Comer, saying that returns filed by the franchise cost the U.S. Treasury approximately $4.5 million between the years of 2008 and 2013. iStock_000009283153_Large-2-300x201

Among other things, employees at the Liberty Tax locations used bogus dependents to claim credits, overstated expenses, and included other false itemized deductions. The complaint against Comer and Liberty Tax also states that employees forged signatures on some of the customer returns, and altered some returns that customers had already signed.

In one case, a customer who used Liberty Tax was due a $5,000 refund, however he believed the money would be applied to child support he believed he owed. The IRS refunded the customer more than $5,000 in 2012, direct deposited in a bank listed on the return. However, it was discovered the customer did not have a bank account at the listed bank on the return, and never received the $5,000.

In a November 30 Dept. of Justice press release it was announced that former Petoskey attorney Michael Aho Kennedy, 67, had pleaded guilty to one count each of filing false tax returns and mail fraud in connection with an October 2015 indictment. U.S. Attorney Patrick A. Miles, Jr. was joined in the announcement by IRS Criminal Investigation, Special Agent in Charge Jarod J. Koopman.

According to his plea agreement, Kennedy became a trustee for a family friend and long-time client; as her trustee, he eventually defrauded the woman of $1 million by withdrawing money from investment accounts to pay her expenses, but withdrawing more than was needed. The excess money withdrawn from her accounts was transferred to his own law office’s business account, and used to pay Kennedy’s own business and personal expenses.

Eventually, the client’s investment account funds were exhausted, however she was not aware of it due to the fact Kennedy sent fraudulent monthly statements to her that indicated her account was earning interest and stable. At this point, another client who was elderly was defrauded of $114,000 by Kennedy in his efforts to continue paying the initial client’s expenses, and for his own benefit as well.

Michigan white collar crimes attorneys know that even in situations where no violence is involved or harm done to others, crimes involving financial matters can result in serious punishment. Recently, 52-year-old Paul Joseph Waltner of Ypsilanti pleaded guilty to once count of filing a false tax return with the IRS. business-buttons-585040-m

On August 14, U.S. Attorney Barbara McQuade and IRS Special Agent in Charge-Criminal Investigation Jarod J. Koopman announced in a press release that Waltner had pleaded guilty before U.S. District Judge Stephen J. Murphy, III.

According to the release, Waltner failed to report his full wages and a bonus he earned for the year 2008 while working in the Kingdom of Bahrain at Unicom Investment Bank. He was employed at the bank from 2007 through March of 2011. While Waltner actually earned more than $246,000 and received a bonus of nearly $216,000 from UIB in 2008, the Form 1040 he filed with the IRS reported combined wages and bonuses of only $150,000. Waltner used the Foreign Earned Income Form 2555. By reporting approximately $310,000 less than he had actually received, the amount Waltner actually owed in taxes was understated by $101,998.

Recently, it was announced by U.S. Attorney Barbara L. McQuade and Special Agent in Charge Jarod J. Koopman of the IRS – Criminal Investigation unit that former Troy, Michigan resident Irvin Flemming had been convicted of structuring financial transactions by a federal jury. Flemming was involved in a drug trafficking organization orchestrated by Carlos Powell, an organization which was investigated over a period of several years. money-series-3-906662-m

According to the press release, Flemming’s role in the drug operation was to make financial transactions in a way that would prevent law enforcement from detecting the true source of the funds and Powell’s illegal drug activities.

The investigation, which was conducted by agents and officers from various organizations and county, city, and state law enforcement agencies including the DEA, Homeland Security, Michigan State Police, officers from Detroit, Plymouth, Warren, Redford, Northville, and others, led to the discovery that Flemming was structuring, or causing to be structured, nearly $240,000 in cash that belonged to Powell in September and October of 2010. Flemming was structuring deposits into bank accounts he controlled, depositing amounts of $10,000 or less with each deposit so that the banks/financial institutions would not report the transactions. Financial institutions are required under law to file a report regarding deposits of more than $10,000.