Talk to my agent; calling all volunteers; right in the teeth; and other highlights of recent tax cases.
San Tan Valley, Arizona: Former state legislator and justice of the peace Keith Allan Bee, 56, has been sentenced to six months in prison for filing a false return.
Bee, who also owns a company providing school bus transportation, previously pleaded guilty. He admitted that during each tax year from 2011 to 2013 he inflated his business expenses by including personal expenses and the depreciation of personal assets as if they were costs incurred by his business. Those personal assets included several Ford Mustangs, a Corvette and a Porsche.
Bee agreed that the tax loss resulting from his conduct was $214,414.
Tampa, Florida: Tax preparer Eurich Z. Griffin III has pleaded guilty to conspiracy to defraud the U.S. by promoting a tax fraud and helping others prepare and file false federal returns.
Between 2013 and 2018, he offered tax prep and consulting services for a fee and recruited clients by convincing them that their mortgage debt payments entitled them to tax refunds; he helped prepare and present false returns on their behalf.
Those returns falsely claimed that banks and other financial institutions had withheld large amounts of income tax from the clients, entitling them to refunds. Actually, the institutions had not paid any income to or withheld any taxes from these individuals. To make the refund claims appear legitimate, Griffin and conspirators filed tax documents with the IRS that matched the withholding information on the returns.
These tax returns collectively sought $5,231,749.15 from the IRS. As part of the conspiracy, Griffin also independently submitted six fictitious instruments totaling $1,354,809.21 to the IRS.
He faces up to five years in prison. Three other charges against him will be dropped at sentencing, according to court papers cited in news reports.
Weatogue, Connecticut: Businessman Carmine Bianco, who conspired with an IRS officer to con the United States out of $4 million in overdue employment taxes, has been sentenced to four years in prison.
Bianco admitted that at the suggestion of Sonya Vivar, an IRS revenue officer with whom he was friends, he acquired the assets of three businesses that were delinquent on their employment taxes, including a restaurant, an emergency services medical company and a rehabilitation center. In contracts with the business owners, Bianco pledged to resolve the businesses’ tax liabilities.
Instead, he transferred their assets into newly formed business entities and then continued to operate the businesses under different names without paying the delinquent taxes. Vivar made sure that the businesses’ tax cases were assigned to her and ensured that Bianco’s companies would not have to pay the taxes.
Eventually, the case was transferred to another revenue officer, who suspected fraud and referred the case to authorities. When she learned the case had been referred, Vivar made entries into IRS records systems indicating that Bianco was not responsible for paying employment taxes to the IRS. She then attempted to conceal her relationship with Bianco from investigators.
Vivar pleaded guilty in 2020 to corrupt endeavor to obstruct or impede the due administration of internal revenue laws and was
Bianco, who pleaded guilty in September, was also ordered to pay $4,744,326 in restitution.
Clare, Michigan: Former hotel manager Harold Walls, 58, has pleaded guilty to filing a false return.
His father, Karl Walls, 86, owner of the hotel, also pleaded guilty to witness tampering to obstruct the grand jury’s investigation of his son.
Harold Walls managed day-to-day operations of the business and did not report to the IRS any of the income he received from working at the hotel from 2013 through 2017. Rather than pay himself wages directly through the payroll system, Harold Walls paid himself by other means, including by writing checks to himself from the hotel operating account and using the business bank account to pay for personal expenses.
He also provided false and incomplete information to the hotel’s tax preparer for 2012 through 2017, resulting in the hotel’s business income being understated. For instance, he did not disclose to the preparer that the hotel had 11 off-book rooms that were not tracked in the reservation system. Harold Walls also provided the preparer with documents that overstated the amount of property taxes the hotel had paid to the City of Clare.
After the IRS began its investigation, Harold Walls told an employee to make false statements to the IRS about the nature and extent of his work at the hotel. He also denied to IRS special agents that he was employed at the hotel.
Karl Walls directed two witnesses to lie to the grand jury. In October 2018, two days before a former hotel employee was scheduled to provide grand jury testimony, the elder Walls told the employee to testify that Harold Walls did not work at the hotel. Karl Walls also attempted to convince his tax preparer to make a similar false statement to the grand jury about his son’s employment status.
Harold Walls faces a maximum of three years in prison for filing a false return. Karl Walls faces a maximum of 20 years in prison for witness tampering. Both also face a period of supervised release, restitution and monetary penalties.
Manor, Texas: Business owner David Evan Schanzle has been sentenced to a year and a day of confinement for failing to file his personal income tax returns and failing to pay taxes to the IRS.
Since 2000, Schanzle owned a for-profit business, Gardens of the Ancients, which sold medicinal and culinary herbs, and owned a related organization, Flower of Life Healing Ministries. The average annual sales at Gardens during 2013 through 2017 exceeded $850,000 and the business earned a combined net profit of at least $490,000 during those years. Schanzle was also the beneficiary of a trust from which he received more than $90,000 during that time.
He stopped filing tax returns and paying taxes from 2001 until shortly before being sentenced. After the IRS notified him of his obligation, Schanzle responded that he was not a U.S. citizen and instead was a “Nonimmigrant/Nonresident Alien Nontaxpayer.” He failed to keep adequate books and records for his business and concealed employees’ wages by paying them in cash. He issued no W-2s or 1099s and told employees to refer to themselves as “volunteers.”
Schanzle was also ordered to pay a fine of $55,000, restitution to the IRS consisting of the $163,125 in income taxes he owed for 2013 to 2017 plus an additional $43,451.97 in interest and a special assessment of $100. He will also serve three years of supervised release after his term of confinement.
Langhorne, Pennsylvania: Contractor Samuel Bullock has entered a plea of guilty for his orchestration of a fraud to avoid paying nearly $1.3 million in federal income taxes for his general contracting business, Bullock Construction.
In 2009, after he had failed to file federal income tax returns for nearly a decade, the IRS secured liens for more than $1.2 million in taxes, plus interest and penalties. Bullock responded by taking steps to avoid collection by arranging to have his business income paid over to a sole proprietorship that he had set up in the name of his spouse, including providing his clients with new W-9s with his spouse’s Social Security number; he also opened a new business checking account in his spouse’s name and the alleged sole proprietorship.
He then reported his own income on the return of his spouse, using the married-filing-separately status.
Ogden, Utah: Dentist Derald Wilford Geddes has been convicted of tax evasion, filing false tax returns and impeding the IRS.
He owned and operated Mount Ogden Dental, and from about 1998 through 2014 took numerous steps to evade some $1.8 million in back federal income taxes. He obstructed IRS efforts to collect these taxes, including by filing false liens against properties he owned and submitting to the IRS bogus “bonds to discharge debt” that he claimed were from the account of the former Treasury secretary.
Geddes faces a maximum of five years in prison for tax evasion and three years in prison for each count of filing a false tax return and impeding the IRS.
