Strict liabilities; thanks for all the fish; on the beach where he used to run; and other highlights of recent tax cases.
Providence, Rhode Island: Personal injury attorney Peter P.D. Leach has pleaded guilty to stealing from client settlement funds and trying to hide the money from the IRS while failing to pay more than $250,000 in taxes.
Leach admitted that he forged client signatures and deposited client settlement checks into his attorney IOLTA account, using those funds to pay personal expenses and repay earlier clients whose funds he had embezzled. He repeatedly lied to clients about the status of their cases and told them that he would pay their medical expenses and other bills with settlement funds he had received.
Investigation by the IRS and the Rhode Island State Police determined that Leach’s crimes cost clients more than $250,000.
Leach also admitted that from 2014 to 2019, he took multiple steps to conceal his gains from the IRS, including by making false statements on IRS forms regarding his assets; making false statements to IRS revenue officers about his ability and willingness to pay his taxes and about his withdrawal of over $540,000 of cash from his IOLTA accounts for payment of personal expenses; and by transferring money from his client account to the account of family members to make personal payments.
Sentencing is Jan. 4.
New Bedford, Massachusetts: Commercial fisherman John Doe has pleaded guilty to evading taxes on his income.
Despite receiving some $1.9 million in income between 2012 and 2021, Doe did not file returns with the IRS nor pay taxes on the income. To conceal his earnings, Doe cashed his paychecks from fishing companies at check-cashing businesses; he also used stolen identities to cash the checks.
He caused a tax loss to the IRS of some $520,415.
Sentencing is Dec. 1, when Doe will face up to five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Galveston, Texas: A federal court has permanently enjoined a local tax preparer from preparing federal tax returns for others and, among other things, from owning, operating or franchising any prep business in the future.
The complaint alleged that Johnathan Perry, individually and d.b.a. X-Pert Taxes and JOHNATHAN PERRY, prepared more than 4,000 federal income tax returns during the 2017 to 2022 filing seasons. A substantial number of the returns significantly overstated the clients’ refunds by claiming fictitious employee business expenses, fabricating household help income, fabricating or inflating business losses or claiming education credits or fuel excise tax credits.
Perry must disgorge $324,432 to the U.S. in prep fees and send notice of the injunction to each person for whom Perry, X-Pert Taxes or JOHNATHAN PERRY prepared federal returns. Perry must also post the injunction in all locations where he conducts business and on all social media accounts and websites used to advertise tax prep services.
Los Angeles: Dr. Fares J. Rabadi has pleaded guilty to filing false federal returns, underreporting his income by more than half a million dollars over several years.
Rabadi hid income from his accountant by depositing checks issued by health insurance companies for medical services rendered into his personal bank accounts, resulting in substantial undisclosed personal income for tax years 2014 to 2017.
After Rabadi’s accountant grew suspicious and terminated him as a client, Rabadi turned to a new accountant but continued to deposit health insurers’ checks into his personal bank accounts, resulting in undisclosed income for tax year 2018 as well.
Liberty Center, Ohio: John Everson has been sentenced to 30 months in prison after being convicted of evading taxes by using a sham trust to conceal income he earned from his electrical engineering business.
From approximately 2009 through 2016, Everson earned more than $2.3 million from the business. He attempted to conceal much of this income and evade the IRS by instructing clients to make payments to a trust that he controlled; he used the trust money to pay personal expenses and make large cash withdrawals.
He also funneled some of the trust funds to other bank accounts held in the names of nonprofit organizations that he and several family members controlled, even listing his home and airplane in the name of a nonprofit.
In total, Everson’s conduct caused a loss to the IRS of $658,487.
He was also ordered to serve two years of supervised release and pay restitution to the United States.
Mobile, Alabama: News reports said that tax preparer Carlos Lee Anderson, 59, has pleaded guilty to fraud, admitting that he submitted more than two dozen returns that contained inaccurate information leading to hundreds of thousands of dollars in undeserved refunds.
Anderson reportedly pleaded guilty to a single count of aiding and abetting false tax returns that cost the government more than $400,000 in illegal refunds.
Federal prosecutors have agreed to recommend sentencing leniency and ask the judge to dismiss the other counts, reports said, adding that the maximum sentence is three years in prison and a $100,000 fine.
Anderson reportedly worked for 15 years for Moffett Road Tax Service, which his sister owned. News outlets said he admitted that he fraudulently inflated clients’ refunds and pleaded guilty to submitting a fraudulent 2019 return that claimed business losses even though the client owned no businesses and claimed deductions for expenses that the client did not incur.
Adairsville, Georgia: Douglas K. Mittleider, operator of long-term care facilities nationwide, has pleaded guilty to seeking to obstruct the IRS from collecting employment taxes and related penalties.
From at least 2003, Mittleider was responsible for paying the federal income and Social Security and Medicare taxes withheld from the wages of the employees of the care facilities. In June 2004, the IRS assessed against Mittleider personally the employment taxes he hadn’t paid.
Beginning around at least November 2011, he took multiple steps to conceal business funds and impede the IRS. Among other moves, Mittleider directed the commingling of funds among businesses he controlled and used funds for purposes other than to pay the IRS. He also caused the creation of new operating companies and bank accounts to make it more difficult for the IRS to locate assets and levy accounts.
Mittleider’s conduct caused a total federal tax loss of more than $9.5 million.
Sentencing is Dec. 4. He faces up to three years in prison, a term of supervised release, monetary penalties and restitution.
Lake Oswego, Oregon: Exec Robert Kohnle has pleaded guilty to failing to pay more than $24 million in federal payroll taxes.
Kohnle was the president, secretary and CEO of Real Benefits Group Inc., d.b.a. Aliat, which provided payroll and payroll-related services. Beginning in the fourth quarter of 2016 through the fourth quarter of 2022, Kohnle received payroll withholdings from Aliat’s clients but did not pay the money over to the IRS. Instead, he used it to pay Aliat’s other expenses and creditors, including himself.
In total, Kohnle caused a tax loss to the IRS of $24,816,602.
Sentencing is Jan. 8. Kohnle faces a maximum of five years in prison, as well as a period of supervised release, restitution and monetary penalties.
