The following examples of nonfiler investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.

Massachusetts Man Sentenced on Tax Charges

On April 29, 2009, in Springfield, Mass., Mark Lavoie was sentenced to 12 months and one day in prison, to be followed by one year of supervised release, and ordered to pay $44,112 in restitution to the Government.  Lavoie pleaded guilty on January 14, 2009 to two counts of filing a false tax return and three counts of failure to file a tax return. The prosecutor told the Court that had the case proceeded to trial, the Government’s evidence would have proven that Lavoie under-reported his income on his 2001 and 2002 income tax returns by over $132,000. Lavoie also failed to file income tax returns for 2004, 2005 and 2006 when he had approximately $774,900 total gross incomes for those three years.

Missouri Business Owner Sentenced for $1 Million Tax Evasion

On April 27, 2009, in Springfield, Mo., Kyle Jon Thompson, of Ozark, Mo., was sentenced to 30 months in prison and ordered to pay $1,073,959 in restitution to the government. Thompson, the owner of Branson Trailer Manufacturing in Ozark, pleaded guilty to tax evasion on November 18, 2008. Thompson admitted that he received income of approximately $2.8 million in 2006, failed to file an income tax return, and failed to pay the personal income tax owed for that year. Thompson also admitted that he did not file federal income tax returns for his company or for himself from 1997 through 2006. After entering his guilty plea, Thompson filed personal returns recognizing a tax due of $1,073,959.  Branson Trailer produced approximately 3,000 trailers in 2006, with estimated gross receipts of $6.9 million. After allowing for expenses, the gross profit for 2006 was approximately $2.8 million. From 2003 to 2005, Branson Trailer produced a total of approximately 6,500 trailers, with estimated gross receipts totaling nearly $15 million. Thompson attempted to conceal his income by paying his employees in cash, by purchasing real estate and other property with cash, and by concealing his ownership interest in vehicles by not registering those vehicles with the county assessor’s office. Thompson also structured cash bank deposits to avoid currency transaction reporting requirements. Thompson also admitted that in 2004 he purchased a 2004 Keystone Everest travel trailer, which he knew or should have known had been stolen. Thompson paid $10,000 and traded eight or nine manufactured trailers for the travel trailer, which had a retail value of $51,000.

Attorney Sentenced to Three Years in Prison; Fined $250,000 for Impeding the IRS

On April 17, 2009, in Salt Lake City, Utah, Thomas Wood, a practicing attorney from Cottonwood Heights, Utah, was sentenced to 36 months in prison and fined $250,000 for corruptly endeavoring to impede the Internal Revenue Service and failing to file federal income tax returns for two years. Wood was also ordered to pay $56,852 in restitution to the United States Treasury. According to the indictment and evidence presented at trial, from 1998 through 2002, Wood helped two individuals, Glenn Ambort and John Benson, hide millions of dollars in income. In those years, Ambort and Benson were awaiting trial in a federal prosecution for conspiracy to commit tax fraud. While assisting in their defense, Wood used several bank accounts that he held in trust to hide millions in income that Ambort and Benson were taking from the MyCor Investment Club.  To facilitate the use of this income without drawing the attention of tax authorities, Wood used non-interest bearing domestic trust accounts to receive and disburse funds, including one in the name of The Family Foundation, an entity he formed to help support the Goodman family, a popular singing group at the time. Wood also opened up and managed the use of offshore debit card accounts in the Bahamas for himself and others. Evidence showed that Wood had not filed a tax return since the 1980s. In the two years for which he was prosecuted, 2000 and 2001, his gross income was more than $180,000 and $56,000, respectively. The income came primarily from investor funds under his control in his nominee trust accounts that he used to pay for personal expenses.

Georgia Woman and Co-Conspirator Sentenced in Tax Conspiracy

On April 15, 2009, in Atlanta, Ga., Jacqueline Ann Demer, of Gainesville, Georgia, was sentenced to 63 months in prison, to be followed by three years of supervised release, and ordered to pay $315,829 in restitution and to pay a $15,000 fine.  Her co-conspirator, Jerry Robert Lahr, of Hurst, Texas, was sentenced to 37 months in prison, to be followed by three years of supervised release, and ordered to pay $1,115,444 in restitution. In addition, Lahr has also filed corrected income tax returns through the current tax year.  In December 2008, Demer was convicted by a trial jury on charges related to a scheme to impede the Internal Revenue Service (IRS) in its collection of income taxes.  Lahr pleaded guilty in December 2008 to conspiracy to impede the IRS. According to information presented in court: Between December 2001 and 2006, Demer performed banking and clerical services for Lahr. Demer, using the alias “Jessica Dalton,” mailed five false and fictitious obligations, captioned “Bond[s] to discharge attachment for debt,” to the IRS in October 2003.  These false bonds were submitted as purported payment of Lahr’s tax liabilities, penalties, and interest for the years 1996 through 2000.  Lahr had gross income totaling approximately $2,600,000 for tax years 1996 through 2003, but didn’t file federal income tax returns or make any payments to the IRS for those tax years. Lahr and Demer conspired to conceal Lahr’s assets, income, and expenditures through the use of bank accounts and shell “trust” entities, all in nominee names. The evidence at trial also established that Demer used at least 30 different business names and post office boxes in seven different locations, some of which were opened with a fraudulent identification card in the name of her alias, Jessica Dalton. Additionally, Demer served as the trustee for various shell entities set up to conceal Lahr’s ownership of assets, such as real property and automobiles. Evidence also showed that Demer had not filed a federal tax return since at least 2002. 

Arizona Man Sentenced to 18 Months for Filing False Tax Returns

On April 7, 2009, in Phoenix, Ariz., Lee B. Woodbury of Gilbert, Ariz., was sentenced to 18 months in federal prison and was also ordered to pay restitution of $97, 232. Woodbury pleaded guilty on August 18, 2008, to Willfully Filing a False Tax Return. According to court documents, between 1998 and 2001, Woodbury engaged in a number of income producing activities. Until contacted by the Internal Revenue Service, Criminal Investigation Division, he had not filed returns for tax years 1998 through 2001. Woodbury willfully made and subscribed a 1998, 1999 and 2001 U.S. Individual Income Tax return, Form 1040, that under reported his taxable income. In total, the tax loss as a result of Woodbury’s willfully filing false tax returns was $35, 633.

Michigan Credit Union Manager Sentenced for Embezzlement and Money Laundering

On April 3, 2009, in Grand Rapids, Mich., Ronald Tran, of Plainwell, Michigan, was sentenced to 46 months incarceration and ordered to pay $997,675 in restitution. Tran pleaded guilty in November 2008 to embezzlement from a credit union and money laundering. According to court records, between 2000 and 2004, Tran, while the general manager of the Plainwell Community Federal Credit Union, defrauded the credit union of approximately $1.3 million. Tran caused loans to be issued based on false information concerning the income and assets of applicants for the loans from the credit union. Tran used his position to misapply funds of the credit union for his own use and took funds from the proceeds of fraudulent loans. Tran conducted financial transactions to conceal the true ownership of the funds and the underlying financial institution fraud and embezzlement by issuing additional fraudulent loans to make payments on previously issued fraudulent loans. Plainwell Community Federal Credit Union ceased to exist as an independent entity and was incorporated into Federal Community Credit Union following the discovery of Tran’s fraudulent conduct.

Pennsylvania Father and Sons Sentenced in Tax Fraud Scheme

On March 26, 2009, in Scranton, Pa., Wendall Sollenberger was sentenced to 42 months in prison and ordered to pay $1,274,615 in restitution to the Internal Revenue Service (IRS).  Last week, Avery Sollenberger, Wendall's father, was sentenced to 44 months in prison and Gary Sollenberger, Wendall's brother, was sentenced to 42 months in prison.  In September 2008, a jury found Avery, Wendall, and Gary Sollenberger guilty of conspiracy to defraud the IRS.  According to court documents, the Sollenbergers own and operate a house framing business in Hanover, Pennsylvania. Evidence introduced at trial stated that beginning in 1994, Wendall, Gary and Avery began to employ a deceptive scheme consisting of bogus trusts, a foreign corporation and an off-shore bank account in Cyprus to conceal assets from the IRS. The three men have not paid any income tax on their business earnings since 1994. During the trial, the government also introduced evidence of defendants expenditures including the purchase of a $100,000 race car, a $40,000 custom made motorcycle, a motor boat, gold, silver, rental properties, a second home in Altoona, Pennsylvania, and hunting trips to Idaho.

Sixth Aegis Company Principal Sentenced to 10 Years in Prison for His Part in Firm’s $60 Million Tax Fraud Conspiracy

On March 24, 2009, in Chicago, Ill., Edward B. Bartoli, a Clearwater, Fla., resident and former attorney, was sentenced to 10 years in prison for tax fraud conspiracy, aiding and assisting in the filing of false returns, tax evasion, mail fraud, and wire fraud. Bartoli was a founder of Aegis and its legal director. He and his co-defendants carried out a decade-long scheme to market and sell sham domestic and foreign trusts through the Aegis Company to 650 wealthy taxpayer clients. According to court documents and evidence introduced at trial, the tax fraud scheme used a network of promoters, sub-promoters, managers, attorneys and accountants and resulted in a $60 million dollar tax loss to the United States. Aegis, which is now defunct, was formerly based in Palos Hills, Ill. Bartoli and his five co-defendants were convicted following an 11 week trial.  The defendants were indicted in 2004, following a lengthy undercover investigation by IRS agents, code-named "Operation Trust Me," and the seizure of roughly 1.5 million documents, computer files and related materials. Nationwide, the Chicago-based investigation resulted in convictions of more than 30 defendants and charges against approximately 30 other defendants around the country.

Wyoming Man Sentenced to Federal Prison for Interfering with the Administration of Internal Revenue Laws

On March 13, 2009, in Cheyenne, Wyo., Laurence Eustelle Wolff was sentenced to 27 months in prison for interfering with the administration of Internal Revenue laws and for mailing threatening communications. In addition, he was ordered to serve three years of supervised release and ordered to cooperate with the IRS in filing his income tax returns and pay his taxes. Wolff was indicted by a federal grand jury on September 24, 2008 and found guilty following a jury trial on December 11, 2008. According to the indictment, as well as the evidence presented to the jury during the trial, Laurence Wolff’s house was the subject of an Order of Foreclosure and Decree of Sale in 2007. On August 15, 2008, Wolff mailed threatening communications to numerous government employees, including IRS employees, which stated that he would defend his property, threatening to kill any person who attempted to enforce a Foreclosure Order and Decree of Sale. On August 18, 2008, Wolff refused to vacate his foreclosed property in Gillette, Wyoming. He was arrested on August 29, 2008 after vacating his property.

Mississippi Lawyer Sentenced for Failure to File Tax Returns; Failed to Report More Than $2.5 Million in Income

On March 10, 2009, in Jackson, Miss., Marshall E. Sanders, an attorney based in Vicksburg, Miss., was sentenced to 18 months in prison and ordered to pay $1,025,453 in restitution to the Internal Revenue Service (IRS). In November 2008, Sanders pleaded guilty to failing to file tax returns for years 2001 and 2002. According to the formal charging information and the court’s findings at sentencing, Sanders earned gross income of over $2 million in 2001 and almost $500,000 in 2002. Moreover, Sanders failed to file individual income tax returns since 1995 and owed over $1.4 million in taxes to the IRS. As part of his plea agreement, Sanders agreed to cooperate with the IRS in making a correct determination of his income tax liabilities for years 1995 through the present and to file complete and accurate tax returns for those years.

Former President of New Orleans Baton Rouge Pilots Association (NOBRA) Sentenced for Failure to File Tax Returns

On March 4, 2009, in New Orleans, La., Clifford E. Clayton, a river boat pilot, was sentenced to 18 months in prison, one year of supervised release, and ordered to pay approximately $608,000 which represents the federal tax liability for the years charged in the bill of information.  Clayton, former President of NOBRA (New Orleans Baton Rouge Pilots Association), pleaded guilty in March 2008 to a three-count bill of information for failure to file tax returns for the years 1999, 2000 and 2001.  According to the factual basis, Clayton knew that he was required to file returns and that he received sufficient wages which were in excess of the minimum filing requirement.  Clayton’s taxable income for 1999, 2000, and 2001 was $51,612,635 resulting in a tax due of $608,727.

Exercise Physiologist Sentenced on Tax and Mail Fraud Charges; Ordered to Pay Over $2.1 Million in Restitution

On February 18, 2009, in Cincinnati, Ohio, Michael Stinson was sentenced to 37 months in prison, three years of supervised release, and ordered to pay $92,148 in restitution to the Internal Revenue Service (IRS) and $2,103,187 in restitution to the Ohio Bureau of Workers’ Compensation (Ohio BWC). Stinson pleaded guilty to income tax evasion and mail fraud charges on June 5, 2008. According to court documents and testimony, Stinson, an exercise physiologist, is the sole owner of Reconditioning Exercise Physiology Specialists, Inc. (REPS). Between January 2001 and August 2007 Stinson defrauded the Ohio BWC in the amount of $2,103,187 by submitting false physical therapy billings for services to injured workers. REPS’s income was primarily generated from managed care organizations, which paid REPS with funds from the Ohio BWC. Stinson submitted billings to the Ohio BWC for services that only a licensed medical doctor or physical therapist could perform. Stinson used the Ohio BWC provider numbers of a physical therapist and a medical doctor, without their knowledge, for services that he actually provided. In addition, Stinson had not filed a federal income tax return with the IRS since 1999, even though REPS issued W-2s to Stinson for the 2001 through 2003 tax years. No W-2s were issued for the 2004 and 2005 tax years even though Stinson earned substantial income from REPS during these years.  Stinson concealed his income from the IRS by cashing business checks; depositing business checks into his personal account; paying personal expenses out of the REPS bank account; misclassifying personal expenses as business expenses; failing to keep accurate records; and providing false information to his return preparer. Additionally, REPS had not filed a corporate income tax return with the IRS since the 2000 income tax year. After a Revenue Officer contacted him, Stinson filed corporate income tax returns for REPS for the 2001 through 2005 tax years. These returns indicated that REPS had no taxable income and that Stinson was paid little or no salary. As a result of Stinson understating his income, he evaded $92,148 in federal income and employment taxes. Prior to the court proceeding, Stinson filed federal income tax returns with the IRS for the 2001 through 2005 tax years.

Arkansas Man Sentenced to Five Years in Prison on Tax Fraud Charges

On February 12, 2009, in Fayetteville, Ark., Wayne A. Hicks was sentenced to 60 months in prison, to be followed by three years of supervised release, and ordered to pay between $7 million and $20 million dollars in restitution to the Internal Revenue Service (IRS) and to pay a $25,000 fine. Hicks pleaded guilty to conspiracy to defraud the United States on October 7, 2008. During that hearing Hicks admitted that he conspired with others to impede the lawful operation of the IRS from July 19, 2002, through April 30, 2007. Hicks created an organization in 2002 called Americans for Lawful Financial Independence and Information (ALFII) and an alternative banking system for its members known as ICIS or MYICIS. ICIS is an acronym for several names including Integral Currency Interchange System, Interactive Currency Interface System or Internet Check Issuance System. Hicks promoted ALFII and ICIS at seminars sponsored by Pinnacle Quest International (PQI) in Cancun and Xtapa, Mexico during 2005. According to documents filed in court, ALFIL operated out of an office in Berryville, Arkansas, and maintained several bank accounts under the ICIS name.  This banking system provided a means for ALFII members to get out of the traditional banking system, thus concealing their financial transactions from the IRS. From April 2003 through October 2006, Hicks’ ALFII, and/or ICIS members deposited approximately $100 million in the ICIS bank accounts, concealing the true ownership of money from the government. Members deposited money into their ICIS accounts by mailing deposits or by wire transfers. Members accessed their money by logging into their account at a web site and printing a Digital Money Order (DMO). These DMOs could be used just like traditional checks. Through his plea agreement, Hicks admitted that the last tax return he filed with the IRS was for tax year 1992. 

Pilot Sentenced to Prison for Income Tax Evasion

On February 6, 2009, in Memphis, Tenn., Michael D. Mason, a pilot for FedEx, was sentenced to 27 months in prison and ordered to pay $229,064 in restitution to the Internal Revenue Service (IRS). Mason pleaded guilty to one count of income tax evasion in September 2008. According to court documents, Mason failed to file income tax returns for calendar years 2000 through 2004 as required by law. Additionally, the indictment alleges that Mason failed to pay the IRS income tax due and owing and concealed or attempted to conceal his true and correct income from the IRS. The count Mason pleaded guilty to was for calendar year 2003, a year in which he received approximately $240,359 in taxable income. As part of his plea agreement, Mason agreed that the tax loss to the United States for tax years 2000-2004 was $229,064. During his plea hearing, Mason admitted that he signed and filed false W-4 employee withholding forms with his employer claiming he was exempt from federal income tax withholding on his wages. Once Mason became aware of the IRS investigation he formed sham entities to be used as nominees. Mason opened bank accounts under these nominees and utilized these accounts for his personal business. Mason changed from direct payroll deposits to paper payroll checks which he deposited into the nominee accounts or accounts in his wife’s or son’s names. Mason also admitted that he employed an attorney to prepare legal documents making it appear as if Mason’s residence was mortgaged to one of Mason’s sham nominee entities, thus attempting to prevent IRS from any collection efforts against his home. 

Virginia Man Sentenced to 66 Months in Prison for Stealing Millions from Homeowners Associations

On February 6, 2009, in Alexandria, Va., Jeffrey S. Koger was sentenced to 66 months in prison, to be followed by three years of supervised release and ordered to pay more than $2 million in restitution. Koger pleaded guilty on November 10, 2008 to income tax evasion and wire fraud. According to court documents, Koger was the chief financial officer for Koger Management Group (KMG), which was the property management company for approximately 400 homeowners’ associations. Between 2003 and 2006, KMG had a bank account that received dues from homeowners that KMG distributed into the associations’ individual accounts. On approximately 140 occasions, Koger diverted funds of more than $3 million intended for the associations’ accounts into his personal accounts and that of an account for an unrelated business, Tri-Fitness in Annandale, Va., for which he was also the chief financial officer. According to court documents, Koger never filed personal income tax returns for the years 2003-2006 and evaded a total of $775,273 in federal income taxes. 

Former Liberty, Missouri Pathologist Sentenced for Failing to File Tax Returns

On February 5, 2009, in Kansas City, Mo., Pathologist Miles J. Jones was sentenced to 18 months in prison, fined $20,000, and ordered to pay $79,225 in restitution to the IRS for failing to file federal income tax returns. Jones pleaded guilty in August 2008 to two violations of failing to file federal tax returns for tax years 2002 and 2003. Jones was a medical doctor with his own practice, Consultative and Diagnostic Pathology, during those years. Jones earned $267,800 in 2002 and $271,000 in 2003. The taxes due and owing on his unfiled 2002 return were $63,498 and the taxes due and owing on his 2003 tax returns was $10,231.

Michigan Resident Gets Jail Time for Tax Evasion and Bankruptcy Fraud

On February 4, 2009, in Grand Rapids, Mich., Daniel Benham was sentenced to 72 months imprisonment, ordered to pay $45,679 in restitution, and ordered to cooperate with the Internal Revenue Service (IRS) in filing correct 2000 through 2007 income tax returns. Benham was found guilty following a seven day trial in October 2008. According to testimony and exhibits introduced at trial, for tax years 2000 - 2003, Benham knowingly failed to file tax returns, even though he received substantial income from his employment with several car dealerships and from conducting seminars and selling various materials dealing with taxes, bankruptcy, and the Uniform Commercial Code. Benham’s seminars purported to explain how others could avoid paying taxes by creating legal entities to shelter income. Benham’s seminars contained false and misleading information on tax avoidance activities; therefore Tax Division of the U.S. Department of Justice obtained an injunction preventing him from engaging in those activities. Benham’s combined gross income for the years 2000-2003 totaled more than $450,000. In the spring of 2005, however, he filed tax returns for those years listing his income as $0. A year later, he filed amended returns that listed only his car dealership income. Benham also failed to list his seminar/sales related income when he filed for bankruptcy in 2003. As a result, the discharge of his debts obtained later that year was based upon fraudulent representations to the court.

Local Member of Hells Angels Motorcycle Club Sentenced for Failure to File Tax Returns

On February 2, 2009, in Boston, Mass., Christopher Ranieri was sentenced to 12 months in prison and ordered to pay $33,438 in restitution to the U.S. Treasury. Ranieri pleaded guilty on December 8, 2008 to two counts of failure to file federal income tax returns. At the plea hearing, evidence revealed that for tax years 2005 and 2006, Ranieri failed to file personal income tax returns despite having sufficient taxable income in those years. After executing a search warrant at Ranieri’s home on September 20, 2007, federal agents found various tax forms as well as an article that attempted to justify, on legal and philosophical grounds, a U.S. citizen refusing to pay federal income taxes. This investigation is part of a larger investigation of local chapters of the Hells Angels Motorcycle Club.

Illinois Business Owner Sentenced on Child Pornography and Tax Evasion

On January 21, 2009, in Chicago, Ill, James Mecca, a Melrose Park, Illinois businessman, was sentenced to 23 months in prison, followed by two years of supervised release and ordered to pay $30,999 in restitution to the Internal Revenue Service (IRS).  Mecca owned and operated Casino Magic, a business which distributed slot machines in the Chicago area. In October 2008, pursuant to a plea agreement, Mecca pleaded guilty to the tax evasion or other federal charges. According to the plea agreement, Mecca admitted that from 1999 through 2005, he sought to evade reporting his income and evade the payment of taxes on his income from Casino Magic. To conceal his income from the IRS, Mecca engaged in cash sales, using his nephew's bank account to pay personal expenses and using ATM machines to make cash withdrawals. Mecca purposely kept his name and social security number from being listed on the Casino Magic business account and also used that account to pay his personal expenses.

District of Columbia Police Detective Sentenced to Prison on Tax Evasion Charges

On January 14, 2009, in Washington, D.C., Michael C. Irving, an 18 year veteran of the District of Columbia Metropolitan Police Department (MPD), was sentenced to 14 months in prison. Irving, a homicide detective, was convicted in May 2008 on two counts of tax evasion for tax year 2005 following a jury trial. According to evidence introduced at trial, Irving fraudulently arranged for his employer, the MPD, to stop withholding taxes from his paychecks for years 2003 through 2005. For those same years, Irving failed to file tax returns with the IRS and the D.C. Office of Tax and Revenue (OTR). Despite receiving wages from the MPD totaling over $625,000 for tax years 2002 through 2005, Irving did not pay any federal or D.C. income taxes, resulting in a tax loss of more than $130,000. As part of the scheme, Irving filed false documents with the IRS and OTR in an effort to obtain refunds for taxes paid in a previous year.  Irving filed a late 2002 tax return on which he claimed he made zero wages, despite evidence introduced at trial showing that Irving earned wages of $155,211 during 2002.  During the same time period that Irving failed to file returns or pay taxes, he spent money on, among other things, custom-tailored suits, jewelry for his wife, Redskins tickets, dining out, renovations on his $805,000 home, apartment building investments, and vitamins and nutritional supplements.

South Carolina Man Sentenced for Income Tax Evasion

On January 12, 2009, in Columbia, S.C., Stephen Verner Talmage, of Piedmont, South Carolina, was sentenced to 24 months in prison, to be followed by three years of supervised release. Talmage pleaded guilty in September 2008 to evading the payment of federal income taxes. According to court documents, beginning in 1992, Talmage stopped filing income tax returns and paying any taxes. The Internal Revenue Service (IRS) repeatedly notified him that he owed taxes, but Talmage would respond that he was exempt from paying taxes, citing legal theories that courts have ruled as frivolous.  He also hid assets from the IRS, and even quit his job when he learned that his wages were to be garnished by the IRS to satisfy the taxes he owed. It is estimated that Talmage owes approximately $250,000 in taxes, plus additional penalties and interest.

Defendant Sentenced to More Than Three Years in Prison for Failing to File Income Tax Returns

On December 30, 2008, in Lubbock, Texas, James Michael Long was sentenced to 37 months in prison following his conviction at trial in October on four counts of willful failure to file an income tax return. In addition, Long was ordered to pay $93,484 in restitution.  During Long’s trial, the government presented evidence that during tax years 2001 through 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; however, he failed to file tax returns for those years. His total income for tax years 2001 through 2004 was $461,823.

Former Skydiving Company Owner and Return Preparer Sentenced for Tax Fraud

On December 16, 2008, in Houston, Texas, Madison Lee Oden, a former executive with Sterling McCall Automotive Group, and Richard Duane Davis, former owner of Skydive Houston in Waller, Texas, were sentenced to 15 months and 36 months in prison, respectively.  In June 2008, following a bench trial, Oden was convicted of filing false tax returns for years 2000 through 2002 and Davis was convicted of aiding or assisting in the preparation of these same false returns. According to the evidence presented by the government at sentencing, Oden underpaid his income taxes for years 1993 through 2003 by approximately $1.7 million. The tax loss for years 2000 through 2002 was approximately $800,000.  According to the evidence presented at trial, Davis purported to run his skydiving business through various partnerships.  Davis prepared tax returns and provided financial services under various business names, including R. D. Davis & Associates, R. D. Davis Investments and Financial Management Services.  Oden had his tax returns prepared by Davis since at least 1991. The evidence further demonstrated that Oden purchased tax write-offs from Davis as purported partnership “investments.” Evidence showed that at least two tax returns prepared for Oden by Davis were audited, resulting in disallowance of items and tax due and owing. Oden refused to cooperate during the IRS’s audit of his 1993 tax return, which Davis had prepared; instead, he sent frivolous correspondence to the IRS. Evidence at trial demonstrated that this audit resulted in a tax liability of $73,000, which Oden paid in 1997.  In addition to the fraudulent skydiving partnership losses reported on Oden’s returns, Oden also offset his income with losses from a fictitious auto finance sole proprietorship and false losses related to Oden Family Limited Partnership, which Davis set up and through which Oden purported to manage property and assets.

Baby Bliss Owner Goes to Jail for Tax Evasion

On December 15, 2008, in Grand Rapids, Mich., Charles Lee Edkins, the former owner of Baby Bliss, Inc., was sentenced to 48 months in prison, followed by three years of supervised release, and ordered to pay $285,711 in restitution, with $200,000 due immediately. Edkins was also ordered to cooperate with the Internal Revenue Service (IRS) and file back tax returns.  According to court records, between 1995 and 1998, Edkins owned and operated Baby Bliss, Inc., which manufactured young girls’ clothing primarily for Pleasant Company, the marketer and distributor of “American Girl” brand products. During 1995 through 1997, Edkins filed false tax returns with the IRS and, in 1998, failed to file a tax return.  Edkins’ gross income over the four-year period totaled more than $885,000. During the investigation, Edkins refused to provide books and records to the IRS, as required by law. He also directed a business associate to lie to the IRS if questioned about his income. In addition, Edkins disguised personal expenses as business expenses, including referring to a purchased Lincoln Town Car in his records as “five used Singer sewing machines,” purchasing two personal residences utilizing a sham corporation, and withdrawing corporate funds for personal use. After his June 2005 indictment, Edkins fled to the Bahamas and was considered a fugitive until his arrest in Miami, Florida, in February 2008. Prior to being arrested, $66,000 in checks issued to him from a numbered Swiss banking account was seized by authorities. The judge also ordered that Edkins endorse these checks, which were provided to the Court for payment towards his restitution.

California Man Sentenced To Prison for Tax Evasion and Ordered to Pay $311,587 in Back Taxes

On December 8, 2008, in Oakland, Calif., Richard Wayne Cutshall was sentenced to 12 months and 1 day in prison and ordered to pay restitution of $311,587 for income tax evasion. Cutshall pleaded guilty on June 25 to two counts of tax evasion and admitted in his plea agreement he intentionally did not file tax returns on income he received as an independent consultant/contractor for General Automation (GA Express) in Irvine, Calif. To hide his income and assets from the IRS, Cutshall arranged for his compensation to be paid to “LVR Holdings,” a limited liability company. Some of the cashier’s checks were deposited into a bank account held by LVR Holdings, which he and his wife had control over. Cutshall failed to report receipts of $1,467,290 and thereby evaded tax due and owing of $311,587.

Las Vegas Lawyer Sentenced to 15 Months in Prison for Tax Evasion

On December 1, 2008, in Las Vegas, Nev., Attorney Mark A. Lobello was sentenced to 15 months in prison and ordered to pay $141,667 in restitution to the Internal Revenue Service (IRS) for tax evasion and willfully failing to file federal income tax returns. Lobello was indicted in November 2006 and later pleaded guilty to failing to pay taxes for five years. According to court filings, Lobello earned more than $600,000 in income between the years 1997 and 2001, but willfully failed to file federal income tax returns or pay any federal income taxes for the those years, even though he owed the IRS over $140,000. Lobello also attempted to conceal his income from the IRS by dealing in cash; mixing business funds with personal funds; using multiple taxpayer identification numbers; holding assets in the names of nominees; filing frivolous motions to quash IRS requests for his records; and demanding that clients withdraw IRS paperwork indicating he had earned taxable income.

Contractor to Serve 37 Months for Tax Evasion

On December 1, 2008, in Baltimore, Md., Anthony Edwin Dorsey, Sr. was sentenced to 37 months in prison, to be followed by three years of supervised release for evading the payment of income taxes and failing to file income tax returns. According to evidence presented at trial, Dorsey operated an information technology consulting business known as Allnet System Resources since at least 1999. As an independent contractor, Dorsey was responsible for paying federal and state income, payroll and Medicare taxes on the payments he received for his computer consulting services. From 2001 to 2007, Dorsey was paid at least $895,000. He did not file federal or state tax returns or pay federal or state taxes on this income. According to trial testimony, from 1999 to the present, Dorsey attempted to evade his tax liability by: promptly converting $380,000 he was paid to cash and then using the cash for personal expenses; transferring $88,975 from his bank accounts to an offshore credit card account and then using that credit card for his personal expenses; providing an inaccurate social security number to the bank where he maintained his principal bank accounts to make it more difficult to identify his ownership of the funds and track the movement of funds from these accounts; making mortgage payments on his residence under the name of the previous owner, so that the previous owner was reflected on county property and tax records as the owner; and using false social security numbers when purchasing an interest in time share properties in Las Vegas, Nevada and Williamsburg, Virginia in December 2002 and July 2003.

North Carolina Business Executive Sentenced for Tax Evasion

On November 25, 2008, in New Bern, N.C., Ronald Cruickshank was sentenced to 32 months imprisonment, to be followed by three years of supervised release.  Cruickshank pleaded guilty on June 12, 2008, to three counts of tax evasion relating to his 2001, 2003, and 2004 federal tax obligations. As noted by the government during various hearings in this case, Cruickshank, a successful business executive, received large salaries during the periods in question. In 2002, Cruickshank worked as an executive at a Raleigh advertising company named Howard Merrill Partners.  Cruickshank received approximately $297,132 in taxable income. In 2003, Cruickshank, who became chief executive officer (CEO) of a sock manufacturer named Thor Lo Inc. midway through the year, received approximate taxable income of $256,668 in connection with his jobs at Howard Merrill and Thor Lo Inc. In 2004, Cruickshank received approximately $401,658.69 in taxable income from his job as CEO of Thor Lo Inc. and other investments. Rather than report his income to the Internal Revenue Service, as required by law, Cruickshank paid American Legal Research Institute/American Debt Eliminator for assistance in concealing his income. American Legal Research Institute/American Debt Eliminator, which was operated by Robert Pelletier and Laszlo Horvath, presented seminars in the Raleigh/Cary area and sold illegal tax shelters to persons seeking to evade their income tax obligations. Both Pelletier and Horvath were convicted of federal charges in connection with their illegal activities. Using techniques obtained from Pelletier and Horvath, Cruickshank arranged for his executive salary to be paid to nominee trusts, opened bank accounts for such trusts under the name of his mother-in-law, deposited his paychecks into such bank accounts, and then used the money in such bank accounts to pay his personal expenses. During the course of the prosecution, Cruickshank retained the services of “tax avoidance” groups in Florida, Arkansas, Arizona, and California and attempted to impede and obstruct the administration of justice. As a result of such obstructive conduct, the court enhanced Cruickshank’s sentencing range.

California Chiropractor Sentenced for Income Tax Evasion

On November 17, 2008, San Diego, Calif., Chiropractor Kathryn Hanes was sentenced to 18 months in prison and ordered to pay $80,000 in restitution. Her partner, Madonna Hanes, was sentenced to five months in prison. In March 2008, a jury in federal court convicted the defendants on charges of conspiracy to defraud the United States and income tax evasion. According to the indictment Kathryn Hanes and Madonna Hanes failed to file tax returns, mailed frivolous letters to the IRS claiming that (a) they were not U.S. citizens, (b) the IRS had no authority or jurisdiction to collect income tax from them, and (c) they earned no income and owed no income taxes. Trial evidence showed that the Hanes earned hundreds of thousands of dollars from Kathryn Hanes’ chiropractic business called “Biophysics Chiropractic.” In letters sent to the IRS, defendant Kathryn Hanes claimed that the IRS lacked authority to collect income taxes from her because she placed her income in a “pure trust” that did not have income tax reporting requirements. She also claimed that she was not a U.S. citizen and that she did not engage in business in the United States. Madonna Hanes sent similar correspondence to the IRS and spent the proceeds of the conspiracy on multiple trips to Hawaii, expensive automobiles, and other goods and services.

Self-Acclaimed Priest Sentenced to 54 Months for Tax Fraud

On November 14, 2008, in Fort Lauderdale, Fla., Earl R. Wolfe, a self-proclaimed priest, was sentenced to 54 months in prison and ordered to pay $224,869 in restitution. In September 2008, Wolfe was found guilty by a trial jury of conspiring to defraud the United States and filing false tax returns. According to the criminal indictment, court documents, and statements made in court, during years 1999 through 2004, Wolfe reported $600 of income on tax returns he filed with the Internal Revenue Service (IRS). However, evidence at trial proved he earned more than $750,000 as an unlicensed architect. Wolfe attempted to conceal his income by cashing more than $600,000 at a local check cashing store and utilizing nominee entities. Evidence presented at trial proved that Wolfe had not paid any income tax since 1989. In addition to concealing his income, Wolfe attempted to hide his assets from the IRS. In October 2003, falsely claiming to be a priest, Wolfe created the Office of the Presiding Overseer of the Domicile Creators Service Ministry, which purported to be a tax exempt religious entity. Wolfe then transferred ownership of his personal residence and two Harley Davidson motorcycles to the so-called ministry.

Professional Football Player Who Used Teammate’s Identity for Loans Sentenced in California

On November 7, 2008, in San Diego, Calif., Benjamin Leon Coleman, a former football player with the San Diego Chargers, was sentenced to 36 months and one day of imprisonment and ordered to pay $240,502 in restitution. Coleman pleaded guilty in December 2007 to 10 counts of submitting false loan applications, one count of using a false social security number, one count of aggravated identity theft, and two counts of tax evasion. In his guilty plea, Coleman admitted that he used a former teammate’s identity to get loans, lines of credit, and credit cards. He used a variety of corporate entities and identities and provided false financial and other information to banks in connection with his loan and credit applications. Coleman caused losses of more than $290,000 to the banks and used the loan and credit card proceeds to pay personal expenses. Coleman did not file tax returns for 2005 and 2006 and admitted that he willfully evaded paying taxes on his income.

ATM Service Man Sentenced for Bank and Tax Fraud  

On October 30, 2008 in Chicago, Ill., Brian Rogers was sentenced to 30 months in prison and ordered to pay $340,000 in restitution to his victim and $262,220 to the Internal Revenue Service (IRS) for bank fraud and two counts of failing to file federal tax returns. According to his plea agreement, Rogers owned and operated an ATM servicing business. A company employed Roger to maintain its ATM machines and gave him signatory authority over two of its banks accounts that allowed him to get cash to fill the ATM machines. Over an approximate six month period, Roger accessed the two bank accounts and took money out of the accounts for his own personal use. To conceal his theft of the company's funds, he falsely inflated the balance of the two bank accounts by "floating" checks between the banks that maintained the two accounts. Using this "check kiting" scheme, Rogers caused a loss to the banks totaling $340,000. Rogers further admitted to failing to file tax returns for the years 2005 and 2006, and to not filing tax returns for the years 2002, 2003, and 2004. His unreported income for the years 2002 through 2006 was $1.07 million from wages and gambling winnings. The corresponding tax due for those five years was $262,220.

Florida Man Sentenced to 240 Months on Mortgage Fraud and Tax Evasion Charges

On October 30, 2008, in West Palm Beach, Fla., Gregory Claude Brown was sentenced to 240 months in prison, to be followed by three years of supervised release, and ordered to pay over $2 million restitution to financial institutions and other victims of his fraud. In June 2008, Brown was convicted by a trial jury of conspiracy, wire fraud and mail fraud arising from a scheme to obtain more than $9 million in home mortgages by submitting false information to banks regarding the purchase of more than 10 homes.  Brown was also convicted of failure to timely file his federal income tax returns for the 2001 through 2005 tax years and of income tax evasion with regard to his 1998, 1999, and 2001 through 2005 taxes. According to the superseding indictment and evidence presented at trial, Brown failed to pay his 1998, 1999, and 2001 through 2005 income tax liabilities, which totaled approximately $214,299, and engaged in willful acts of evasion, including concealing his income and assets, filing false documents with the Internal Revenue Service, and placing funds and property in the names of nominees.  According to evidence presented during the trial, Brown and others created false income tax returns to justify the false income information on the mortgage applications.  Brown filed these false returns well after the filing dates required and failed to pay any taxes due and owing despite buying more houses, buying a 40 foot go-fast boat, traveling to foreign countries, leasing high end motor vehicles, and buying luxury items.  Co-defendant Monica Martinez, Brown’s girlfriend, pleaded guilty to filing a false tax return in connection with the scheme to obtain mortgages fraudulently. On July 28, 2008, Martinez was sentenced to three years of probation. In addition, co-defendant Wilfredo Martinez pleaded guilty to one count of wire fraud and was sentenced to 12 months probation on August 25, 2008.

Arizona Physician Sentenced to 51 Months in Prison on Tax and Fraud Charges

On October 21, 2008, in Phoenix, Ariz., Carlin Grant Bartschi, M.D. was sentenced to 51 months in prison and ordered to cooperate with the Internal Revenue Service (IRS) in paying more than $570,000 in taxes, interest and penalties. Bartschi was found guilty in June 2008, of 18 felony counts relating to tax evasion and mail fraud. Trial evidence showed that Bartschi created and presented five different fictitious financial obligations for payment of federal tax assessments. The fictitious obligations were prepared to appear as if they were drawn upon a nonexistent account at the U.S. Department of Treasury. In submitting the fictitious obligations to the IRS and the District Court, Bartschi was found to have used the U.S. Postal Service in attempting to execute a scheme to defraud. From 1995 through 2003, Bartschi was employed as an independent contractor and emergency room physician for hospitals in Globe and Phoenix, Ariz., and regularly earned well over $100,000 per year.

Lead Defendant in Aegis Company $60 Million Tax Fraud Conspiracy Sentenced to 223 Months in Prison

On October 2, 2008, in Chicago, Ill., Michael A. Vallone, a founder and executive director of The Aegis Company, was sentenced to 223 months in prison for his part in a $60 million tax fraud conspiracy. Vallone and five co-defendants were convicted in May 2008 of participating in a scheme to market and sell sham domestic and foreign trusts through a network of promoters, sub-promoters, managers, attorneys and accountants. They diverted income from businesses into sham trusts for clients, hiding hundreds of millions of dollars in income for those clients. The judge will rule later on the government’s request for forfeiture of more than $4 million, Vallone’s home and off-shore bank accounts, as well as the costs of prosecution. Vallone also remains liable for any taxes, penalties and interest owed. Vallone was convicted following an 11 week trial and was sentenced on 24 counts of aiding and assisting the filing of false tax returns, three counts of personal income tax evasion, seven counts of mail fraud and two counts of wire fraud.  Nationwide, the Chicago-based investigation has resulted in convictions of more than 30 defendants and charges against approximately 30 other defendants around the country.

Fiscal Year 2008 - Examples of Nonfiler Investigations

Fiscal Year 2007 - Examples of Nonfiler Investigations

Table of Contents - Nonfiler Investigations

Criminal Investigation (CI) Home Page

How to Report Suspected Tax Fraud Activities?