April 1, 2004

PRESS RELEASE

U.S. ATTORNEY AND IRS CRACK DOWN ON TAX OFFENDERS

Boston, MA... In a collection of Indictments and Informations recently filed by the U.S. Attorney's Office in federal court, including four new cases within the past week, a series of defendants have been charged with tax evasion, failure to file returns and the filing of false returns with the Internal Revenue Service during the period 1997 through 2001.

United States Attorney Michael J. Sullivan and Joseph A. Galasso, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation, announced the recent filing of six separate cases. U.S. Attorney Sullivan stated that the filing of these cases, during the heart of tax season, "should serve as a timely reminder that on April 15th, all of us must file a tax return with the IRS and satisfy the tax obligations that we owe to our country. People who seek to avoid fulfilling that obligation can and will be criminally prosecuted."

IRS Special Agent in Charge Galasso echoed Sullivan's message: "One of our aims is to foster confidence in the tax system and compliance with the law. Honest tax paying citizens should not have to bear the burden of someone else's tax liability. People who are thinking about cheating on their taxes should think again, as these six prosecutions demonstrate."

U.S. Attorney Sullivan and IRS Special Agent in Charge Galasso announced that the following new cases were charged within the past week:

PETER CAVALLARO, SR., age 68, of 8 Smith Hill Road, Lincoln, Massachusetts, was charged on April 1, 2004 in a two-count Information with willfully filing false tax returns that failed to report more than $500,000 in income, including approximately $440,000 in business receipts that CAVALLARO allegedly diverted from his Boston-based business, Albany Street Wholesale Florist, Inc., during the years 1997 and 1998.

KENNETH E. SMITH, age 59, formerly of Osterville and Centerville, Massachusetts, and currently of Hilton Head, South Carolina, was charged on April 1, 2004 in a three-count Information with willful failure to file returns disclosing more than $800,000 in gross income that SMITH allegedly received from the operation of his Cape Cod-based medical practice, Hyannis OB-GYN Associates, P.C., during the years 1997 through 1998.
ARTHUR M. KLOACK, age 47, of 12 St. Lo Drive, West Peabody, Massachusetts, was charged on April 1, 2004 in a four-count Indictment with filing false returns that failed to report more than $200,000 in vendor kickbacks and other payments that KLOACK allegedly was paid while employed as a Vice President of seafood operations and head sea food buyer for Legal Sea Foods, Inc. during the years 1997 through 2000.

RICHARD LABOMBARD, age 72, of 12 Peters Drive, Leominster, Massachusetts, was charged on March 25, 2004 in a four-count Indictment with tax evasion for allegedly failing to report employment income and falsely overstating withholdings during the years 1997 through 2001.

In addition to the foregoing cases, the U.S. Attorney recently announced the conviction on March 10, 2004 of MICHAEL SCHLEVENICK, age 51, formerly of 1 Franklin Springs Road in Franklin, Massachusetts and currently of Weston, Florida, on fourteen counts charging him with failing to pay to the IRS more than $175,000 in federal income, social security and medicare taxes that he withheld from the paychecks of employees of his former business, Coastal Marketing, Inc. in Franklin, Massachusetts, during the years 1997 to 1999, and three counts of failing to file individual income tax returns despite earning more than $500,000 in gross income over the same time period.

The U.S. Attorney also recently announced the indictment on February 26, 2004 of GEORGE SCHUSSEL, age 63, of 5 Kimberly Terrace, Lynnfield, Massachusetts, on three counts charging SCHUSSEL with conspiracy and tax evasion in connection with the alleged diversion of more than $8 million in receipts generated by SCHUSSEL's Andover-based company, Digital Consulting, Inc., to an offshore account in Bermuda. The former controller of SCHUSSEL's company, DIANE REED, age 53, of 641 Main Street, West Boxford, Massachusetts, pleaded guilty on March 15, 2004 to two counts of tax evasion charging her with failing to report on her personal tax returns certain bonuses and other monies that she received from SCHUSSEL.

If convicted, the foregoing defendants face up to 5 years' imprisonment on the conspiracy, tax evasion and false returns charges and up to 1 year in prison on the failure to file tax return charges.

The cases, which are unrelated, were investigated by the U.S. Internal Revenue Service, Criminal Investigation and are being prosecuted by Assistant U.S. Attorneys Lori J. Holik, Carmen M. Ortiz, and Michael J. Pineault in Sullivan's Economic Crimes Unit.

Press Contact: Samantha Martin, (617) 748-3139