Tennessee Federal Criminal Lawyer Blog

All Certified Public Accountants (CPAs), or those claiming to be CPAs, are not created equally. Case in point is Elmer Virula formerly of Nashville, Tennessee. In a press release by the Department of Justice on December 5, 2011, the DOJ stated that Virula was sentenced to twenty-four months in prison for fraudulent preparation and submission of tax returns to the IRS and was fined $167,535.00 for false claims, credits and deductions, and he is no longer allowed to act as a CPA or prepare any tax returns for others.

Virula was indicted on April 8, 2010 for sixteen counts of aiding and assisting in the preparation of false income tax returns. He owned three tax preparation businesses located in Tennessee that almost exclusively assisted the Hispanic community. For the tax years of 2003 to 2006, Virula prepared returns claiming fraudulent fuel, education, and telephone excise tax credits.

During the sentencing hearing witnesses testified that Virula represented himself as a CPA and minister to the Hispanic community when in fact he did not even have a college degree. It was also testified by witnesses that Virula trained his employees on how to enter false credits on client's tax returns.

Christopher Henry, Special Agent in Charge of IRS Criminal Investigations, sent a warning to those seeking tax preparation services for the upcoming tax season. He stated that taxpayers should choose their preparers carefully and be sure to understand their returns fully as they are ultimately responsible for what is claimed. Jerry Martin, United States Attorney, echoed Agent Henry's sentiments by stating, "Those that attempt to defraud the IRS and prey upon the immigrant community should be aware that the federal government...will prosecute them to the fullest extent of the law."

As any good criminal defense lawyer will tell you, evading tax responsibilities often leads to drastic consequences. As a prime example of such consequences, the Kingsport Times reports that Dean Stover of Johnson City, Tennessee was indicted on November 9, 2011 for four counts of evasion of sales tax in violation of Tenn. Code Ann. § 67-1-1440(d). According to the story, Mr. Stover purchased four vehicles and falsified records of his purchases resulting in $14,933.76 in unpaid sales tax.

T.C.A. § 67-1-1440(d) makes it lawful for "any person to delay, hamper, hinder, impede, obstruct or thwart the state of Tennessee in the collection of any of its lawful revenue, or to deprive the state of the realization of such revenue at the time it is lawfully entitled thereto by any artifice, design, false weight or measure, stratagem, or by the falsification of any record, report or return required by law."

Mr. Stover is facing a maximum sentence of two years and possible fines of $3,000.00 for each count of tax evasion. He surrendered himself to authorities on November 21, 2011 and his bond was set at $20,000.00. Revenue Commissioner Robert H. Roberts vowed to aggressively pursue all individuals that attempt to defraud sales tax and offered this case as an example of those efforts.

According to the Department of Justice's website in an article titled "Barney Davis, Christen, Altman, and Jeffrey Bradford Plead Guilty to Horse Protection Act Violations," three Tennessee residents pled guilty in October to "soring" horses. The "soring" of horses is defined in the article as "...an unlawful practice where items like bolts are screwed against the soles of horse's hoofs or chemicals are applied to the pastern and hoof areas to produce pain and sensitivity to alter the gait of a horse."

According the article from the U.S. Attorney's Office for the Eastern District of Tennessee, the United States Department of Agriculture, Office of the Inspector General began investigating the case in August of 2010. In April of 2011, a grand jury in Chattanooga returned a thirty-four count superseding indictment against the three Shelbyville, Tennessee residents. Among the charges were violations of the Horse Protection Act of 1970, which is codified at 15 U.S.C. § 1821, and financial crimes related to the incident. The original charges were later amended to charge Davis with witness tampering. Davis pled guilty to the amended charges and waived presentation to the grand jury.

Violators of the Horse Protection Act are prosecuted federally and can be charged with both felony and/or misdemeanor crimes. Unites States Attorney Bill Killian expressed that he hoped that the prosecution of Davis, Altman, and Bradford will deter others in the industry from committing these types of crimes. Killian went on to say, "...we have been given dominion over the earth and its creatures, and we must exercise that privilege by being good stewards of this gift. Maiming and mutilating horses for sport and profit betrays that charge of stewardship."

Sentencing in this case has been set for February 13, 2012, at 9:00 a.m., in the United States District Court in Chattanooga.