Recently in Tax Crimes Category

Taxpayers Should Be Wary of Phone Calls from the "IRS"

March 26, 2014, by The McKellar Law Firm, PLLC

Taxpayers have lost more than $1 million this year in a scam where telephone callers are impersonating Internal Revenue Service officials. The impersonators are calling taxpayers and telling them they owe the IRS money and request payment via phone using a prepaid debit/credit card or wire transfer. If the caller balks at making the payment they are threatened with loss of driver's license, deportation, and/or imprisonment.

When calling, the scammers know the last four of the taxpayer's social security number and have a phone number that appears to be the IRS on a caller ID. In some cases they also follow up with taxpayers via official looking emails and call back claiming to be the police or the department of motor vehicles to further their ruse. Again, the caller ID supports the impersonator's assertions.

The IRS first warned of this scam in November 2013 and included it on its Dirty Dozen tax scam list for 2014. At first the scam seemed to be targeting new immigrants, but has since hit almost every state in the U.S.

The IRS wants taxpayers to know that its agents will not make these type of threats, or request bank card or bank information via phone. If you or someone you know gets a call like this and do NOT owe taxes to please call 800-366-4484; if you do owe taxes please call 800-829-1040. You may also check the IRS' website at to view its current Dirty Dozen scam list.


Tax Return Preparer Pleads Guilty to Filing False Tax Returns

September 3, 2013, by The McKellar Law Firm, PLLC

Mark Goldberg, (pictured below) a tax return preparer from the Bronx in New York City, pled guilty to tax fraud last month. In the indictment Goldberg was charged with 40 counts of willfully and/or knowingly inflating tax deductions for his clients, 4 counts of filing fraudulent returns of his own, 1 count of obstruction of justice, and 1 count of wire fraud.


Goldberg ran his tax preparation business out of a storefront in the Bronx. There were always long lines of clients at his door waiting for his assistance in filing their taxes. The Government alleges that part of the reason Goldberg's business was so busy was due to the fraudulent deductions he filed for his clients which totaled more than $7,000,000 over a span of five years. These fraudulent reductions resulted in thousands of dollars in tax refunds to individuals who were not otherwise entitled to this money.

Goldberg pled guilty to one count of subscribing to a false tax return for himself, one count of aiding and assisting in the preparation of a false tax return, and one count of wire fraud. At his upcoming sentencing hearing, Goldberg will face a maximum possible sentence of 26 years in prison. As a condition of his plea deal, he cannot contest a forfeiture to the IRS of a business bank account that had a balance of $500,000. Goldberg is set to be sentenced December 17, 2013.

Dept. of Justice Press Release

New York Daily News' article

Staffing Company Owner Sentenced to 51 Months in Prison for Failing to Pay Payroll Taxes

July 31, 2013, by The McKellar Law Firm, PLLC

A growing area of tax fraud is originating from staffing companies and PEO's (Professional Employer Organizations) who withhold taxes from their workers and fail to turn the withheld funds over to the IRS. A case earlier this month resulted in a former owner of such a company receiving a 51-month prison sentence for committing such a crime.


Richard Whatley, who was once part owner and/or financial controller for three staffing companies located in Utah, was indicted in 2010 for five counts of willful failure to account for and pay over employment taxes for these businesses which were under his control from 2001 to 2006. Prosecutors alleged Whatley's infractions resulted in the loss of more than $2.3 million in tax revenue.

Whatley struck a plea deal in his case in which he accepted a sentence of 51 months in prison and a fine of $541,513 in exchange for a plea of guilty to one count of willful failure to account for or pay over taxes. Whatley admitted to prosecutors that while he did collect fourth quarter taxes from employees of one of his staffing companies in 2003, he did not turn over the money to the IRS. T

26 USC § 7203 states that any persons found to have willfully failed to account for or pay over taxes to the IRS are subject to a fine up to $25,000 for an individual or $100,000 for a corporation. The statute also declares that the individual, if convicted, will be charged with a felony and could face up to five years in prison.

To determine the meaning of "willfulness" one must turn to the case law of Cheek v. United States, 498 U.S. 192, 201 (1991), United States v. Pomponio, 429 U.S. 10, 12 (1976), and United States v. Bishop, 412 U.S. 346, 360 (1973). These cases determined willfulness to be defined as the "voluntary, intentional violation of a known legal duty." Courts do not require direct proof of willfulness. Instead, the court can infer by the behavior or acts of a defendant that his or her conduct had the effect of misleading or concealing the desired information from the government. Spies v. United States, 317 U.S. 492-499 (1943). This conduct includes any efforts by the defendant that the court infers had the intention to "place assets beyond the government's reach after a tax liability has been assessed." United States v. Mal, 942 F.2d 682, 687 (9th Cir. 1991).

This was not Whatley's first brush with law. He previously served 27 months in prison for mail fraud and interstate transportation of stolen funds. He completed probation for these crimes in November of 2003.

Two Stars of "Real Housewives of New Jersey" Indicted for Federal Fraud and Tax Charges

July 30, 2013, by The McKellar Law Firm, PLLC

According to a press release from the Department of Justice, Teresa and Joe Giudice were indicted by a federal grand jury in a 39-count indictment for a multitude of federal crimes, including mail fraud, wire fraud, bank fraud, making false statements on loan applications, bankruptcy fraud, and failure to file tax returns. The New Jersey couple regularly appear on the Bravo TV show "Real Housewives of New Jersey."


According to the Indictment, the Giusepe's are accused of the following acts:

  • From 2001 to 2008, the Giuseppe's allegedly committed mail and wire fraud by submitting fraudulent loan and mortgage applications, along with false supporting documentation. In particular, they are accused of falsely stating that they were "employed and/or receiving substantial salaries when, in fact, they were either not employed or not receiving such salaries."
  • In 2001, Teresa Giudice applied for a mortgage loan of $121,500, and she allegedly falsely claimed she was employed as an "executive assistant," and she provided fake W-2 forms and fake paycheck stubs which she claimed were issued by her employer. The Government alleges that Mrs. Guidice's claims related to this mortgage loan were false.

  • In 2009, the Giudices filed a Chapter 7 bankruptcy protection in the U.S. Bankruptcy Court in Newark, New Jersey. The Guidice's, along with anyone else who files for bankruptcy protection, were required to disclose their assets, income, and liabilities, among other things, to the United States Trustee. The Government claims that the Giudice's intentionally "concealed businesses they owned, income they received from a rental property, and Teresa Giudice's true income from the television show 'The Real Housewives of New Jersey,' website sales, and personal and magazine appearances." The indictment also argues that the Giudice's concealed their anticipated increase in income from the upcoming season of the "Real Housewives of New Jersey." As a result of these alleged actions, the Giudice's are charged with committing bankruptcy fraud for concealing and making false oaths and declarations about the assets and income during their bankruptcy case.

  • The Indictment also alleges that during tax years 2004 through 2008, Giuseppe "Joe" Giudice received income totaling $996,459, but did not file tax returns for those years.

The Guidice's are looking at a potentially substantial sentence if convicted of these crimes, and are specifically looking at the following maximum punishments:

  • Conspiracy to commit mail and wire fraud - up to 20 years in prison and a maximum $250,000 fine.

  • Bank fraud and loan application fraud counts - each carry a maximum of 30 years in prison and a $1 million fine.

  • Bankruptcy fraud counts each carry a maximum penalty of 5 years in prison and a $250,000 fine.

  • Failure to file a tax return counts each carry a maximum penalty of one year in prison and a $100,000 fine.

Detroit Pizza Restaurant Owner Indicted for Tax Fraud

July 29, 2013, by The McKellar Law Firm, PLLC

Detroit, Michigan, Pizza Restaurant owner Happy Asker is most likely unhappy after the Justice Department indicted him and several others earlier this month for federal tax violations related to his business, Happy's Pizza.


Michigan-based Happy's Pizza grew into a thriving business with 100 franchises across six states. After a three-year investigation of the business, Happy along with Maher Bashi, Tom Yaldo, Arkan Summa and Tagrid Bashi are facing charges for multiple federal and tax offenses listed below:

• 3 counts of filing a false individual tax return for Happy
• 21 counts of aiding in the filing of false payroll tax returns for Happy and Maher;
• 23 counts of aiding in the filing of false payroll tax returns regarding specific Happy Pizza franchises for Yaldo
• 11 counts for aiding in the filing of false corporate tax returns in regards to specific Happy Pizza franchises for Happy and Bashi
• 1 count of obstructing the due administration of internal revenue laws for Happy and Bashi
• 1 count of obstruction for Summa and Bashi (charged together)
• 1 count of obstruction for Yaldo

The problems for Happy's Pizza originally came to light in 2010 when thirty DEA, ATF, and IRS agents infiltrated the company's corporate offices and seized all of the business and personal records. The company maintains they have completely cooperated with the authorities for the last three years, and asked the public not to pre-judge the situation. In a statement released by the company it stated that the IRS investigated all 100 of its franchisee restaurants and only found seven stores to have under-reported income (the government says there were nine stores). It further vowed to vigorously defend its founder.

Happy and his associates stand to face up to five years in prison and a $250,000 fine for the conspiracy charges; up to three years in prison and a $250,000 fine for each count of filing a false income tax return and aiding or assisting in filing a false return; and a maximum of three years in prison and a $250,000 fine for each count for obstruction.

Dept. of Justice Press Release, "Pizza Franchise Owner and Four Others Indicted for Tax Fraud," July 16, 2013

CBS Detroit, "Happy's Pizza Founder Will Fight Tax Charges," July 17, 2013

Self-Proclaimed "Queen of Tax Fraud" Begins 21-year Prison Sentence

July 19, 2013, by The McKellar Law Firm, PLLC

Tennessee criminal defense attorneys will rarely have clients as outspoken as self-proclaimed "queen" of tax refund fraud Rashia Wilson. Wilson was sentenced earlier this week to 21 years in federal prison for tax fraud, aggravated identity theft, and weapons charges.


Wilson, a 27-year-old resident of Tampa, Florida, admitted to stealing in excess of $3 million by using stolen social security numbers to file fraudulent tax returns. Wilson is suspected of taking nearly $20 million in total due to the tax refund scheme in which she was engaged. Wilson used the money on a variety of items, including throwing a $30,000 birthday party for her 1-year-old.

Prior to her arrest, Wilson taunted the Government by posting items to her Facebook account, including these gems:




Wilson's predictions about the difficulty in indicting her and about not serving time ended up being as spot on as her spelling. Wilson was singing a different tune at her sentencing hearing and asked the judge to "please don't take me away from my children by sending me to prison for a long time." "That would be something you should have considered...that you didn't want to be taken away from your children," the judge replied.

"Tax fraud 'queen' sentenced to 21 years" - The Tampa Bay Tribune

"Rashia Wilson, The 'Queen of IRS Tax Fraud' Gets 21 Years Behind Bars" -

Tampa, Florida Stripper Sentenced to 76 Months in Prison for Tax Fraud

April 23, 2013, by The McKellar Law Firm, PLLC

Earlier this month, Danielle Denson claimed she never knew she had to file income tax returns for her income as an adult "exotic" dancer. However, she filed 323 tax returns in other citizen's names claiming more than $1.6 million in refunds from tax years 2008 to 2011. Sentencing Judge Susan Bucklew presiding over the case, expressed disbelief over Denson's claim that she was unaware that she was supposed to file tax returns on her income as a stripper, and stated: "What did you think the IRS did? Just give money back? Yet you were filing hundreds of tax returns? I have a hard time believing that." Judge Bucklew then proceeded to issue a Judgment for Denson to serve 6 years and 4 months in federal prison for her tax crimes.


Denson's defense attorney's attempted to convince the Judge that Denson's hard life led her to engage in fraud as a way to simply survive. Denson's attorney stated Denson's mother died of AIDS and her father abused her. One of the victim's mothers was not persuaded by Denson's attorney's argument. Her daughter is a 27 year old autistic female that resides in a group home. On the false returns, Denson listed the victim as a student which resulted in a $9,046 tax return. The mother of the victim stated the she had also been severely abused as a child, yet she had maintained her job for 29 years. The mother of the autistic female asked the court to give Denson the maximum sentence possible.

The prosecution was also not persuaded by Denson's arguments.
The Government argued that Denson did not just participate in tax fraud to survive but rather to support her lavish lifestyle, which included a new Mercedes, spending over $300,000 at the Hard Rock Casino in 2007, and spending $14,000 at Gucci.

The Tampa Tribune - "Tampa Exotic Dancer Sentenced for Tax Fraud"

The Tampa Tribune - "Woman Set to Plead Guilty in Tax Fraud of $1 Million Plus" - "A Stripper, Danielle Denson Gets 6 Years for Tax Refund Fraud"

Tax & Criminal Defense Attorney Norman McKellar Provides Interview to ABC Affiliate Regarding Tax Crimes and the Pilot Flying J Investigation

April 17, 2013, by The McKellar Law Firm, PLLC

NOTE: The video clip references "2,500 investigations" performed by the IRS per year, but the reference should have been to approximately "2,500 convictions." The IRS last year performed 5,125 investigations.

Search Warrant Executed by IRS & FBI for Knoxville-Based Pilot Flying J

April 16, 2013, by The McKellar Law Firm, PLLC

As most Americans stressed yesterday for what is commonly known as "Tax Day," locally-based Pilot Flying J was swarmed on Tax Day by approximately 30 federal and local agents while executing a search warrant at its Knoxville headquarters as part of an "ongoing investigation." Pilot CEO Jimmy Haslam, father of Tennessee Governor Bill Haslam, stated that Pilot is "cooperating fully with authorities."


The IRS and the federal government have long been fans of moving forward with warrants, investigations, and indictments for higher profile individuals and companies near the dreaded April 15th tax filing deadline. Although this search warrant could have been executed on another day, April 15th is the most notable of tax dates, and it provides the IRS with an extra opportunity to remind the public at large that they are enforcing tax laws.

In a article, one Pilot worker commented on the IRS and FBI agents who were executing the search warrant by stating, "They didn't seem like they were on a witch hunt...They seemed like they knew what they were looking for." Oftentimes, when agents from the Criminal Investigation Division (CID) of the IRS show up, they have been investigating the case for a lengthy period of time. The Pilot worker was likely correct in that the IRS CID and FBI agents knew exactly what they wanted to obtain long before they entered the Pilot headquarters.

In fact, to obtain a search warrant, the federal government would have been required to present "probable cause" evidence to a judge that there had been a violation of federal law, which would allow for the issuance of a search warrant. However, the issuance and execution of a search warrant does not mean that Pilot Flying J and/or its officers have done anything wrong or illegal. Undoubtedly, Pilot will take swift action to have its attorneys begin (or possibly continue) their investigation and defense of the case.

UPDATE: Since the original posting of this blog, a second search warrant has been executed today, and federal agents are continuing their efforts at the Pilot Flying J headquarters in Knoxville, according to

Sources and Additional Articles

Knoxville Couple Found Guilty of Tax Crimes after Falsely Claiming $591,000 Refund

April 8, 2013, by The McKellar Law Firm, PLLC

Last month, Knoxville, Tennessee residents James and Beverly Beavers were found guilty by a jury of their peers of conspiring to defraud the federal government and for filing false claims for tax refunds in U.S. District Court for the Eastern District of Tennessee. The couple is scheduled to be sentenced on August 7, 2013.


According to a press release from the Department of Justice, James Beavers, a former director of an academic engineering center at the University of Tennessee, and Beverly Beavers, a former jewelry store owner, hired PMDD Services, LLC (PMDD) to prepare their tax refunds. PMDD aided its clients in claiming enormous tax refunds in order to pay off personal debt. In the Beavers' case, PMDD falsely reported their mortgage amount, credit card limits, and other personal debts as income in order to withhold federal income tax on the money via Forms 1099-OID. This led to the Beavers claiming a tax refund for 2008 of over $591,000. In addition, the Beavers requested, via amended returns prepared by PMDD, a tax refund of $193,056 for 2006 and $202,625 for 2007. The Beavers used the 2008 tax refund to pay off the mortgage on their home.

Penny Jones, of PMDD, prepared the returns for the Beavers based on information the Beavers submitted to her. She is currently serving a 144-month sentence in federal prison for her involvement in the scam. The "1099-OID" scam is routinely included among the IRS' Dirty Dozen Tax Scams.

Chicago Politician Faces Tax Evasion Charges While Arguing for a More Diverse Jury Pool

March 13, 2013, by The McKellar Law Firm, PLLC

William Beavers (pictured below), a former Chicago police officer and 7th Ward alderman, has been charged with tax evasion. Prosecutors allege that Beavers spent $226,000 of campaign money for his personal expenses over a three year period and never paid taxes on the funds. It is also alleged that in 2006 Beavers contributed $69,000 of campaign money to a city retirement fund which more than doubled his monthly pension. There are some grumblings that the prosecutors intend to show that Beavers gambled with a portion of the $226,000 at a casino in Hammond, Indiana.

william beavers.jpg

Beavers stated that the FBI is targeting him because he refused to wear a wire to help its investigation of Commissioner John Daley (brother of former Chicago Mayor Richard Daley). Beavers' defense maintains that the money from the campaign fund was a loan, and that some repayment has been made. Since the investigation started, Beavers amended his tax returns to reflect the income.

Judge James Zagel is presiding over the case. He advised Beavers that he can tell the jury that he amended his returns and repaid the campaign funds after learning that he was being investigated so long as he takes the stand to do so. Beavers has repeatedly stated that he will take the stand in his defense, and that he is not guilty of the charges levied against him.

Jury selection for Beavers' trial began on March 12, 2013 with controversy. Out of the fifty prospective jurors, none were African American. Because Beavers is African American, the defense has requested the pool be dismissed. The case is set to go to trial the week of March 18th, 2013. Should Beavers be convicted, he is facing a maximum penalty of three years in prison and a $250,000 fine for each count against him.


Stephen Baldwin and Owner of YouPorn Facing Tax Evasion Charges

December 11, 2012, by The McKellar Law Firm, PLLC

As a criminal defense and tax attorney, I often deal with the intersection of those two areas of practice when handling tax evasion and tax fraud cases. Even though the number of tax prosecutions by the federal government has increased in recent years, the total number of criminal tax prosecutions are relatively few. For example, in 2010, there were approximately 1,250 tax fraud charges brought by the Department of Justice.

Stephen Baldwin Mugshot.jpg

With so few tax prosecutions each year, the types of criminal tax prosecutions usually focus on a few groups of people: celebrities or high profile people, tax protesters, and lately, those who have attempted to evade taxes by hiding assets outside the country. Of course, there are cases which don't fit into of the aforementioned categories, but two recent tax fraud cases show how tax authorities have targeted a few higher profile individuals. While the IRS and the Department of Justice are usually the lead agencies in the pursuit of tax fraud prosecutions, other agencies can also get involved.

Last week, actor Stephen Baldwin (who is looking very "Baldwin-esque" in the mugshot above) was arrested in New York for failure to file state income taxes for $350,000 in earnings from 2008-2010. Baldwin denies that he committed any crime, but acknowledges that his personal bankruptcy and other financial factors contributed to his inability to pay his taxes. Baldwin is scheduled to return to court on February 5, 2013.

Apparently, the U.S. is not the only government which pursues higher profile individuals, as Germany arrested Fabian Thylmann last week on suspicion of tax evasion. Although Thylmann may not be a household name to many, he is the owner of 2 of the world's top 110 websites, YouPorn and Pornhub. Thylmann was arrested in Belgium and will likely be extradited to Germany in the near future.

New Jersey Couple Sentenced to 44 Months Imprisonment for Failure to Pay Employment Taxes

December 6, 2012, by The McKellar Law Firm, PLLC

As a Tennessee tax attorney, I often represent small business owners who are delinquent in paying their payroll taxes, which are commonly referred to as an owner's "941 taxes." While the majority of these types of clients are seeking to resolve their tax debts with the Internal Revenue Service by civil means, a few of these cases are criminal in nature. Simply put, the Government views failure to pay provide payment for payroll taxes as theft, as the employer has taken money from an employee's check and failed to pay the withheld amounts to the IRS.

Tax Fraud - Time.jpg

According to a press release from the Department of Justice, James and Theresa DeMuro of New Jersey each received 44-month prison sentences for conspiracy to defraud the Government and twenty-one counts of failing to pay payroll/employment taxes. The couple was also ordered to pay restitution of $1,337,952.12 to the IRS.

The couple's sentence came after a jury trial, where evidence was introduced that the couple withheld over a half-million dollars from their employees, but failed to pay any of this money to the IRS. The convicted couple also withheld money from employees' checks for health insurance, retirement accounts, and child support, but they also failed to provide these funds to the appropriate agencies or accounts. Instead, evidence was introduced showing that the DeMuros spent nearly $300,000 for purchases from Home Shopping Network, QVC, and Jewelry Television.

Florida Man Sentenced to Prison For Tax Evasion by Concealing Assets

September 23, 2012, by The McKellar Law Firm, PLLC

In an ordinary tax evasion case, the IRS focuses on prosecuting persons who evade taxes by either not filing tax returns or who choose to falsify income and expense information on tax returns. However, in the case of Florida resident Michael Murray, he was prosecuted for his efforts to evade payment of taxes that were legitimately owed. As a result of his actions, he was sentenced to one year and one day in Federal prison, three years of supervised release, and must pay $4.3 million in owed taxes.


According to a press release from the Department of Justice, Michael Murray began evading taxes in 2001 when the IRS determined he had a tax debt of $889,520 for income he made in 1993. The IRS issued liens and levies against Murray's properties and companies. Instead of paying his tax debt, Murray diverted money and property for his personal use into other people's name. He also made false statements to the IRS about his assets and income. He then compounded his problems when he violated the levies the IRS had placed by writing checks to himself for his personal benefit. Murray was able to evade the IRS' collection efforts for ten years with these tactics. By that time his tax debt had become $4.3 million due to penalties and interest that accumulated.

The lesson to learn from Mr. Murray's case is that attempts to settle or reach payment agreements on IRS can be handled legitimately, or they can be handled the way which Mr. Murray chose to handle them. Programs like Offer in Compromise allow taxpayers an opportunity to settle back taxes if they qualify for the program.

Morristown, Tennessee Veterinarian Sentenced for Tax Structuring

September 4, 2012, by The McKellar Law Firm, PLLC

Many people, lawyers included, are unaware of what "tax structuring" or "structuring payments" involves, but the consequences of engaging in this activity can be painful. 26 U.S.C. § 6050I and 31 U.S.C. § 5324 specifically prohibit "structuring" payments or deposits with the intent to evade tax responsibilities.


As an example, any person who receives $10,000 or more in cash is required to report this income/receipt to the IRS via Form 8300. However, some people choose to split (or structure) payments/deposits by making multiple deposits below $10,000, instead of making one deposit exceeding $10,000. Therefore, such a person would try to avoid the filing of a Form 8300, which means the money would not be reported to the IRS as required.

In an example closer to home, last month, Larry Mark Mangum, a veterinarian from Morristown, Tennessee, was sentenced by the U.S. District Court in Greeneville, "to serve 60 days in prison, five years probation, pay a $50,000 fine and complete 350 hours of community service" for structuring currency transactions to evade the reporting requirements made by the federal law, according to a press release from the Department of Justice. Mangum admitted he was making numerous deposits under $10,000 to keep the banks from filling out Form 8300 and reporting it to the Internal Revenue Service. In a two-year period, Mangum made over $400,000 cash deposits to three different banks.

31 U.S.C. § 5324(d) states that if a person violates this law, he/she can serve up to 5 years in prison and be fined. If a person "violates this section while violating another law of the Unites States or as part of a pattern of an illegal activity involving more than $100,000 in a 12-month period shall be fined twice the amount provided in subsection (b)(3) or (c)(3) of section 3571 of title 18, United States Code, imprisoned for not more than 10 years, or both."