John M. Moore sentenced to Prison for Filing False Tax Returns

February 4, 2015

A tax preparer, John M. Moore, 53, was sentenced to 78 months in federal prison for filing false tax returns that cost a Kansas company more than $744,000.

Tax Fraud1Moore pleaded guilty to one count of filing a false tax return and one count of wire fraud. In his plea, he admitted a company he owns, Accent Payroll Services (APS), was hired to provide payroll processing services for Tytan International L.L.C. of Lenexa, Kan. From 2008 to 2010, APS was responsible for paying the wages of Tytan’s employees, withholding employment taxes, filing Tytan’s employment tax returns on Internal Revenue Service form 941 and paying withheld employment taxes to the IRS.

Moore transferred more than $2 million in employment tax withholdings from Tytan’s bank account to his company’s bank account. However, he only paid the IRS approximately $1.3 million. To keep Tytan from receiving notices from the IRS that taxes were not paid, Moore gave the IRS an address for Tytan at a post office box he controlled.

“These victims trusted Mr. Moore to properly remit their taxes, but instead he used their funds for his own purposes. Unfortunately, these victims are left holding the bag,” said Sybil Smith, Special Agent in Charge of IRS Criminal Investigation. “Businesses who utilize a third party for paying their payroll taxes must realize that if the taxes aren’t paid, they are ultimately responsible for the tax liability. The IRS will work with victims to set up payment plans or possibly reduce penalties.”


File Your Tax Returns or Go To Prison – James Michael Long Convicted of Failure To File

October 12, 2008

“During difficult economic times such as these, it is critical that American taxpayers feel confident that everyone is paying their fair share of taxes. Part of our mission is to vigorously enforce the tax laws to instill that confidence,” said Michael P. Lahey, Special Agent in Charge of IRS-Criminal Investigation, Dallas Field Office.

This quote from the US Attorney’s news release about the conviction of James Michael Long speaks volumes. You can bet that “during difficult economic times such as these” people will be tempted to avoid paying income taxes – either outright or through fraudulent deductions or both. If the choice is paying your mortgage and keeping the house or filing or paying your taxes – more than likely the house will come first. This is just the beginning of a title wave of such convictions that will occur for years to come.

But let’s look at this case! According to the news release, James Michael Long was convicted of failure to file tax returns.

During trial, the government presented evidence that during tax years 2001, 2002, 2003 and 2004, Long received income from several sources, including Dallas Auto Auction, ADESA Texas and affiliates, Assister and Associates, Caison Auction Service, Greater Nevada Auto Auction, John Sisk Auctioneering, Ward Brothers Tractor Co., and DFW Auto Auction. His income was $65,447.47 for 2001; $72,714 for 2002; $188,485 for 2003; and $135,177.60 for 2004. His income was well above the minimum amounts required to file an income tax return for each of the respective years.

Long was arrested in May on the charges and was detained pending further proceedings because, as U.S. Magistrate Judge Charles Bleil noted in a written order of detention, the defendant “refused to talk with probation officers about his background, employment, address or any pertinent information. Additionally, he refused to complete a financial affidavit. The defendant was also bizarre in his conduct, seemed irrational, and expressed a lack of recognition of any authority over him.” Long was eventually released on bond in early September.

The jury took 15 minutes to reach a verdict. Long’s sentence is to follow.

If Wesley Snipes can be sentenced to three years for not filing his tax returns, then Long could easily face a significant sentence. And, trust me, I know that time in federal prison is no fun…I was there (not proud of that fact) but know that every choice has a consequence. As a white collar crime and business ethics speaker, I remind audiences of that often.

Let’s hope that Long learns as he has time to reflect on his lost income while in prison. Earning 12 cents per hour for prison work is a radical change from his prior income patterns. But then prison earning are tax exempt.


IRS Revenue Agent – Harry Willner – Sentenced to Prison for Tax Fraud Scheme!

April 23, 2008

Just seven days before Wesley Snipes finds out his sentence for failure to file his tax returns, it seems that the government is busy sentencing others, including one of their own. Now, seldom do you find an IRS agent facing the Justice Department, but in this case his actions not only cost him his job, but also his freedom.

HARRY WILLNER – a former Internal Revenue Service (“IRS”) Revenue Agent – was sentenced to a year in jail for carrying out a scheme to obstruct the IRS by fraudulently attempting to sell to other taxpayers, and fraudulently using on his own personal income tax returns, tax losses belonging to a separate company he controlled. You’ve got to know that WILLNER clearly knew better. Surely, he didn’t think that he would get by with such actions?

WILLNER was employed by the IRS as a Revenue Agent assigned to the Large and Mid-Size Business (“LMSB”) Unit of the IRS in the Southern District of New York. WILLNER was also an officer of a corporation known as NIA Advertising, Inc. (“NIA”), which was purportedly in the advertising business. According to certain NIA records, NIA’s address was the same as WILLNER’s home address in New Jersey. WILLNER did not request approval from the IRS to serve as an officer of NIA, as was required by IRS regulations.

This would be a code of business conduct issue. As a point of clarification, I serve as a Senior Sales Executive for a public company. Likewise, I am a speaker – speaking on white collar crime and business ethics nationwide. That is fully disclosed to the company that I work for. I feel that if you have an interest outside of your full time work assignment, it should be fully disclosed.

WILLNER attempted in two principal ways to make fraudulent use of the NOLs purportedly generated by NIA in 2002. First, between 2003 and 2004, WILLNER attempted to, in effect, sell NIA’s NOLs to other taxpayers, which would enable those other taxpayers to use the NOLs to offset the income on their own tax returns and
thereby to fraudulently reduce their tax liabilities. WILLNER proposed to accomplish this fraud by having other taxpayers, who were owed income, direct the fee payment to NIA, which would report it as income. NIA would not pay tax on the payment because the income would be offset by the NOL. WILLNER would then remit the money, less a fee for himself, to the other taxpayer disguised as a loan repayment.

The second aspect of the scheme occurred between March 2002 and March 2006, when WILLNER used NIA’s NOLs to offset his own individual income tax liability by having fee income, earned by WILLNER in his individual capacity as an instructor at two Manhattan-based schools, paid or assigned to NIA. WILLNER
directed the two schools at which he earned off-duty teaching income to issue Form 1099s to NIA. WILLNER thereafter fraudulently reported the fee income on NIA’s corporate income tax returns as receipts of NIA. Because NIA carried the sizeable NOL deduction from 2002 through 2005, the taxability of the
teaching income was offset. As a consequence of this latter scheme, WILLNER evaded a total of approximately $20,957 in United States income taxes.

“I screwed up,” he said. “You can’t imagine how sorry I am. I caused pain and suffering for my family, myself and the organization I worked with for 35 years.”

Well now, Every choice has a consequence. It would appear that WILLNER might have thought he was the smartest guy in the room. But you reap what you sow. I know. I spent time in federal prison for bad choices which included tax fraud. It is not worth it. In WILLNER’S case he has been sentenced to one year in prison, one year of supervised release, a $10,000 fine and is required to pay any taxes, interest and penalties to the IRS.

I suspect as this is written on April 23, 2008 – Wesley Snipes will find himself facing a prison sentence tomorrow. One thing’s for sure, we’ll know in 24 hours.

White Collar Crime Speaker – Chuck Gallagher – signing off…


A Likely Prelude to the Wesley Snipes Sentence – Kevin Lynn Terry Sentenced to Prison for Failure To File Tax Returns…

April 16, 2008

The day before tax returns are due is a fitting day to find out your sentence for not filing your tax returns. That is the situation that Kevin Terry found himself in on Monday – April 14, 2008.

KEVIN LYNN TERRY, 45, a chiropractor in Puyallup, Washington, was to three months in prison and seven months in a halfway house. U.S. District Judge Benjamin H. Settle also ordered TERRY to file all delinquent tax returns and to pay all remaining taxes due. In November 2007, TERRY pleaded guilty to a three count Information charging him with willfully failing to file tax returns for the calendar years 1999 through 2001.

Now, doesn’t this seem similar to the Wesley Snipes trial – with less fanfare? Snipes will be sentenced next week for his conviction for the very same thing – failure to file.

According to the US Attorney’s office: For the tax years 1996 and 1997, Terry used trusts to conceal his chiropractic income and personal assets, including his home. Those two years were audited by the IRS and the trusts were found to be shams. TERRY later agreed to the IRS’ tax assessments for those years.

Beginning in 1998, TERRY changed tactics and began to willfully evade the IRS’ ability to assess and collect tax for the years 1999 through 2001. This included not filing individual Form 1040 returns. TERRY also formed a corporation in 1998, named Puyallup Chiropractic Clinic, Inc., with himself as president, for which he did not file Corporate 1120 tax returns. TERRY prepared and filed IRS Forms 940 and 941 returns reporting employee earnings, which falsely omitted funds paid to himself. TERRY sent correspondence to third parties, including banks, directing them to not comply with IRS summonses for the production of records. TERRY also prepared and submitted to the IRS a false “sight draft” purporting to be a check paying his back taxes and provided tax protestor literature to his employees. During the subject years of 1999 through 2001 Terry evaded tax of about $70,000. Before criminal charges were brought he filed tax returns for the subject years and paid the taxes due.

At sentencing today U.S. District Court Judge Settle said, “the term tax protestor is merely a polite way of saying tax cheater.” The judge stated further that “it’s not enough to just pay when you are caught. If being caught results only in having to pay the tax, our system would collapse.”

In a national poll, one out of five Americans admitted to cheating the IRS on their tax returns. The IRS says that 17% of taxpayers don’t fully comply with the tax laws on a regular basis. If you throw in people who cheat by not filing tax returns, the number is closer to one in four. Undoubtedly he figure would be higher if wage earners did not have axes withheld by their employers and the self-employed did not have their earnings reported to the IRS on 1099 forms.

As you can imagine, with a system of voluntary compliance, the IRS and Federal Government need to have convictions with teeth in order to scare folks into complying. That is what was a stake with the Perry sentence and will, likewise, be a stake with Wesley Snipes.

Expect Wesley to go to jail!

Your comments welcome! Chuck Gallagher, host of Wise Choices – The Great Advice Radio Show and speaker – signing off…


Federal Prison for Tax Fraud – Laura Figueroa What Were You Thinking?

March 3, 2008

You can’t commit a crime and assume that you won’t get caught. I tried it and it didn’t work. So, today I commit myself to sharing the message – Every choice has a consequence. I guess, however, I have been unsuccessful as Laura Figueroa, age 39, of Bristol, Connecticut was just sentenced to 5 years in federal prison for filing false claims on a tax return and mail fraud.

5 YEARS! You just can’t play with the IRS and assume you can win. You do reap what you sow…and Laura didn’t sow well.

FIGUEROA was involved in two schemes to defraud the federal and state governments. In the first scheme, FIGUEROA entered into an agreement and conspiracy to defraud the United States by obtaining or assisting others to obtain the payment of false and fraudulent claims for tax refunds. As part of the conspiracy, FIGUEROA and others prepared false Form W-2s and submitted them to commercial tax preparers for fraudulent refunds. FIGUEROA and others also conspired to prepare false tax returns, claiming false refunds by electronically filing returns with false income and tax withholding information. Over the course of the conspiracy, 59 false tax returns were submitted, reflecting three refund claims totaling $267,541, of which $181,641 was paid by the Internal Revenue Service.

Now one would think that if you’re going to defraud the government, it would be by some means other than the obvious. Perhaps FIGUEROA wasn’t that smart. Preparing false documents just isn’t bright. It’s pretty obvious that eventually the IRS would figure out that the refund they were sending didn’t match up against the real documents produced. Likewise, although the information isn’t clear, one would assume that the refunds were coming to one or more similar addresses. Now that doesn’t make sense either.

n the second scheme, FIGUEROA defrauded the Connecticut Department of Labor by filing false claims for unemployment insurance. FIGUEROA and others filed with the Connecticut Department of Labor various forms that established the registration of two companies, Bad Boyz Cleaning and Rough Edges, LLC, for the purposes of collecting unemployment taxes and the paying of unemployment insurance claims filed by employees. FIGUEROA filed false forms reporting several individuals as employees of those companies, and false wages earned by those individuals, when, in fact, those individuals were not employed by the companies. Thereafter, FIGUEROA and her associates filed fraudulent claims for unemployment insurance compensation on behalf of individuals who were not employed by the companies. The Connecticut Department of Labor paid benefits of approximately $130,000 in response to fraudulent claims made on behalf of individuals alleged to have been employees of the companies.

Now, based on the first scheme…I am not surprised at FIGUEROA – she’s just not too bright. But, when you read the rest of the story – it will all come together.

As a national speaker on white collar crime – I find it amazing the types and methods that people use to commit the crimes mentioned. The fact is – you reap what you sow. Good seeds produce a good harvest and bad seeds produce pain.

THE REST OF THE STORY: Since April 2005, FIGUEROA has been incarcerated on state larceny, credit card fraud, identity theft, and risk of injury to a minor charges. She has been ordered to pay restitution in the amount of over $300,000 and the 60-month federal sentence will commence following FIGUEROA’s release from state custody.

Not a bright future!


T. Milton Street Guilty of Not Filing Tax Returns – Same Verdict as Wesley Snipes

February 26, 2008

The similarities are amazing. T. Milton Street was charged with mail and wire fraud along with failure to file tax returns. Just like in the Snipes trial – all the government got was a conviction for failure to file tax returns. The jury acquitted Street of mail- and wire-fraud offenses in an alleged scheme to sell an airport-maintenance contract they did not control.

milton-street.jpg

“No corruption, no fraud. No corruption, no fraud,” Street, 68, said outside the federal courthouse in Center City after the verdict. “Failure to file – that’s what we were found guilty of. But as long as there’s no corruption, no fraud, and no wrongdoing with this whole issue, then I’m happy.”

While innocent of the more serious charges, Street admitted on the stand that he did not file tax returns for 2002, 2003 and 2004, claiming the federal income tax was unconstitutional. The jury did not accept that argument, which the Supreme Court has ruled is no defense no matter how sincere the belief.

According the the White Collar Crime Prof Blog: “this case has similarities with the prosecution against Wesley Snipes in that both were charged and acquitted of substantive charges beyond the failure to file taxes. In both cases, the individuals accused of crimes was only found guilty of misdemeanor tax offenses for some of the years in question. And in both cases the jury did not immediately reach a verdict.”

Now the question for both Wesley Snipes and T. Milton Street is will the government impose jail time for the crime they are convicted of? As a white collar crime speaker, I think they will. This, however, is speculation on my part. It just makes sense that two popular cases where folks who have garnered some attention and been convicted will not escape some jail time. IF they do – what message will be sent to the public at large?

Remember, we operate on a system of voluntary compliance. If that system has no teeth – then people won’t be motivated to comply.

Your comments are welcome!

Business ethics speaker, Chuck Gallagher, signing off…more to come!


Tax Fraud – Two Men Sentenced to Prison for Deducting Personal Expenses on Their Tax Returns – Ethics Speaker Chuck Gallagher Comments

February 21, 2008

Paul and Paul, both from Washington state, were sentenced to federal prison for making and subscribing to false income tax returns. Paul Austin, age 58, and Paul Werlink, age 61, were told at sentencing that “Our tax system will not work if people don’t comply with it and understand that it is for the betterment of the entire country.”

When the men pleaded guilty on October 25, 2007, they admitted that during the calendar years 1998 through 2003, PAUL AUSTIN, who was formerly the president, and a fifty percent owner of, The Safety Team, Inc. and PAUL WERLINK, who was formerly the corporate secretary, and the other fifty percent owner, directed that certain of their personal expenses be paid by the corporation. Their failure to report these payments as income caused a material understatement of their personal income and the income tax due and owing for each of these calendar years. AUSTIN has since paid $320,000 in back taxes, civil penalties and interest. WERLINK has paid $90,000 in back taxes, civil penalties and interest.

Now, just to make this clear, both men paid the government what was due – including penalties and interest. That means that whatever benefit they thought they were getting in the short run, was eliminated and perhaps the cost of restitution to the government was more than the benefit they received.

The Safety Team, Inc, is a business located at 670 South Lucile Street in Seattle, Washington, which specialized in the installation of fire extinguishing systems, the sales of fire prevention equipment, and consulting on fire safety. For each year in question, the aggregate amount of these payments for personal expenses was omitted from PAUL AUSTIN’s and PAUL WERLINK’s personal income tax returns, but was included as a corporate expense on the corporate income tax return of The Safety Team, Inc. In addition to understating their personal income, PAUL AUSTIN’s and PAUL WERLINK’s actions also caused a material overstatement of business expenses and a material understatement of the corporate income tax due and owing on the corporate returns for these same years. PAUL V. AUSTIN and PAUL WERLINK later sold their interests in The Safety Team, Inc., and are no longer involved as owners of the business.

Sure enough – Every choice has a consequence. For those who read my blogs regularly, you know that statement will resonate. You can make choices that you think have no consequence, but the reality is – you do reap what you sow.

At AUSTIN’s sentencing Assistant United States Attorney Robert Westinghouse told the court, “for more than ten years Mr. Austin systematically cheated on his taxes. He made a knowing decision to shirk his duty as a taxpayer…. The message should be ‘when you cheat on your taxes you are going to go to jail,’ and that is a message that will resonate with the public.”

As the gavel was dropped and the sentence handed down, Judge Martinez agreed with the prosecutor by telling the men, “Every time you used the corporate credit card to pay your personal expenses you cheated the rest of the taxpayers.”

TAKE NOTE: As a business ethics and white collar crime speaker, (www.chuckgallagher.com) I know first hand the effect of the choices you can make. Be honest with the government. Pay your taxes. Don’t take risks in this area. The price is too great. Federal prison is not fun!