Ouch; a lakely story; triple threat; and other highlights of recent tax cases.
Bakersfield, California: Pain management doctor Janardhan Grandhe, 65, has pleaded guilty to tax evasion.
Grandhe was doing business as Central Valley Pain Management and in 2017, 2018 and 2019 filed returns for CVPM with overstated expenses and false individual tax returns for himself that omitted gross receipts he received. In total, Grandhe evaded personal tax liability exceeding $300,000.
Grandhe provided checks to employees claiming to be reimbursements for employee expenses that were then included as deductions on the CVPM returns. He claimed the reimbursements were for out-of-pocket costs incurred by employees for continuing medical education, meals, mileage and travel. In many cases, those expenses were never incurred by the employees. Grandhe instead instructed those employees to cash the checks and provide cash back to Grandhe, which he deposited into accounts controlled by him or his family members. Grandhe then provided false documentation to his tax preparer to support the false deductions.
He diverted business receipts to his personal bank accounts and did not provide his tax preparer with these personal bank account records. These unreported business receipts included checks from customers for stem cell injections. Additionally, Grandhe diverted credit card receipts received by his business for medical services rendered into his personal bank account. The unreported income on the CVPM returns resulted in decreased net income on the Grandhe's personal returns.
Sentencing is Feb. 3. Grandhe faces a maximum of five years in prison and a $100,000 fine.
Austin, Texas: Former state representative Ronald Ray Wilson has pleaded guilty to evading payment of outstanding federal taxes.
From about May 2011 through October 2019, Wilson, an elected member of the Texas House of Representatives from 1977 through 2004 and founder of a law firm in 1995, tried to evade payment of income taxes he owed to the IRS.
After leaving the Texas House, Wilson earned a monthly pension from his service and continued to work as a lawyer. In September 2008 and February 2011, he agreed to two Tax Court decisions finding that he owed outstanding taxes to the IRS. After stipulating to these judicial decisions, Wilson took steps to conceal his income and assets to avoid payment.
Wilson used his law firm's trust account to conceal his personal assets by depositing his monthly salary into this account. To avoid an IRS levy on his personal bank account, he also ceased direct deposit of his monthly pension and instead ensured that he would receive physical checks. He deposited some of these checks into accounts belonging to a trust for which he served as trustee, then converted the deposited funds into cashier's checks for his own use.
In total, Wilson caused a tax loss to the IRS of some $794,632.
Wilson faces a maximum of five years in prison as well as a period of supervised release, restitution and monetary penalties.
East Lansing, Michigan: Real estate developer Scott Chappelle, 61, a former CPA and attorney, has been sentenced to 38 months in prison after engaging in a nearly decade-long effort to prevent the IRS from collecting unpaid taxes he and his businesses owed.
Chappelle, who previously
After the IRS began trying to collect the unpaid taxes, he attempted to evade payment of those taxes by making false statements to the IRS about his and his companies' assets and income. He also concealed his vacation house on Lake Michigan and purchased real property in the names of businesses instead of in his own name. Chappelle falsely told IRS employees that he and his companies could not afford to pay their tax debts because of financial hardships, while he simultaneously paid substantial personal expenses using bank accounts in the names of at least six different businesses he controlled. These expenses included mortgage payments on three houses and a condominium, payments toward the purchase of a yacht, college tuition for his children, plastic surgery, personal credit card bills, life insurance premiums, car payments for himself and one of his children, and expenses associated with boats he owned.
Chappelle also admitted to making false statements to IRS investigators, including not telling them about a house in Ohio purchased just one month before the interview, and he concealed the source of the funds used to pay a mortgage on a condominium in East Lansing. He filed a false employment return for the companies reporting that the company had no employees and paid no wages during the period covered by the return and lied on a loan application when he refinanced the mortgage on his vacation house.
Chappelle was also ordered to serve three years of supervised release and pay $1,233,836 in restitution to the United States.
Jacksonville, Florida: Former CEO Jason Cory has pleaded guilty to evading federal income taxes based on a fraud he ran on his employer.
In 2015 and 2016, Cory was a manager at a New York-based information technology services company. From 2017 through 2019, he was the CEO of a different information technology services company in Jacksonville. From 2015 through 2018, he caused his employers to direct more than $1.5 million to Gambit Matrix, a shell company he controlled; he told the second employer that the money was for consulting services that Cory in fact never provided.
Cory did not report the income he earned through transfers on his 2015, nor did he file returns for 2016 through 2018. He invented fictitious owners of one of the companies, made false representations to his employer and falsified emails and W-9s. Between 2015 and 2018, he evaded more than $600,000 in taxes.
Sentencing is Jan. 30. Cory faces a maximum of five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Miami: Tax preparers Nixon Cyrius Cherfils, Kerline Pierre and Jonas Augustin have been sentenced for conspiracy to file false returns.
Cherfils, the leader of this conspiracy and owner of the tax prep business Cherfils Enterprises, was sentenced to four years. Pierre was sentenced to 28 months and Augustin to eight months in prison and nine months of house arrest.
For several years, the defendants included false education credits on many of their unwitting clients' returns, increasing the refunds or reducing the tax liability to grow the business and their profits or compensation.
Cherfils was ordered to pay nearly $3.5 million in restitution to the IRS. Pierre was ordered to pay $351,196 in restitution to the IRS and Augustin was ordered to pay $330,579.
Cherfils and Pierre also were convicted of wire fraud for applying for and fraudulently obtaining several loans under the CARES Act. They submitted falsified returns and false information to support their applications even though they had not filed tax returns during the relevant years. Cherfils was ordered to pay $380,232 in restitution to the U.S. Small Business Administration; Pierre was ordered to pay $319,952.
Cleveland: Tax preparer Jamika Raymond, 38, of Slidell, Louisiana, has pleaded guilty to one count of making and subscribing a false return.
Raymond operated a prep business and in February 2016, Raymond underreported business income for calendar 2015 on her return. Her actual income was substantially more than what was reported on her individual return.
Sentencing is Feb. 7, when she will face up to three years in prison.
