Drug money; ghosts of a chance; skin games; and other highlights of recent tax cases.
Newton, Massachusetts: Former attorney Kevin M. Brill has pleaded guilty to wire fraud and filing false returns in connection with a long-running embezzlement from trusts.
From 2012 to July 2017, Brill served as a trustee for three family trusts with funds at Morgan Stanley Bank. As part of his scheme, Brill created new accounts at Santander Bank through which he funneled funds he withdrew from the trust accounts.
Brill stole more than $600,000 from the various trusts and used the proceeds on personal expenses such as a personal vehicle, a vacation home in Vermont and personal credit card expenses.
He also failed to report his illegal income to the IRS, avoiding payment of more than $169,000 in federal income taxes.
Sentencing is April 5. Filing false returns provides for a sentence of up to three years in prison and a year of supervised release. The charge of wire fraud carries up to 20 years in prison, and three years of supervised release. Both charges also carry a fine of up to $250,000.
Newark, New Jersey: Preparer Sylvain Dienhoue, 53, of Tobyhanna, Pennsylvania, has pleaded to an indictment charging him with three counts of aiding and assisting in the preparation of false and fraudulent returns.
Dienhoue worked as a preparer at Cadi’s Multi Services in Newark. He knowingly and willfully aided and assisted in the preparation of 44 fraudulent returns on behalf of clients for the tax years 2014 through 2016.
Dienhoue used fabricated and inflated figures, including expenses and itemized deductions, to generate inflated refunds.
Each count of aiding and assisting in the preparation of false and fraudulent tax returns carries a maximum of three years in prison and a fine of up to $250,000. Sentencing is May 24.
Union City, New Jersey: Alex Fleyshmakher, 34, of Morganville, New Jersey, the son of a former co-owner of a pharmacy, has admitted his role in multimillion-dollar conspiracies to pay kickbacks and bribes to health care professionals and to defraud the IRS.
Authorities said Fleyshmakher conspired to solicit and pay kickbacks with seven other individuals, three of whom were previously charged with him. His other conspirators included his father, Igor Fleyshmakher, of Holmdel, New Jersey, who previously pleaded guilty; and Eduard “Eddy” Shtindler, of Paramus, New Jersey, who previously pleaded guilty in a related kickback conspiracy.
Prime Aid Pharmacies — now closed — operated out of Union City and The Bronx, New York, as “specialty pharmacies” that processed expensive medications used to treat various conditions. To boost the volume of prescriptions, the conspirators paid kickbacks and bribes to doctors and doctors’ employees to induce doctors’ offices to steer prescriptions to the pharmacies. From 2008 to August 2017, these bribes included expensive meals, designer bags and payments by cash, check and wire transfers. The prescriptions that just one of those medical practices steered to Prime Aid Union City resulted in Medicare and Medicaid payments to the pharmacy of some $24.8 million.
From 2011 to August 2018, Alex Fleyshmakher, working with others, took insurance reimbursement checks totaling millions of dollars from the Prime Aid Pharmacies. Aided by his conspirators, Alex Fleyshmakher then cashed the checks at Brooklyn check cashing businesses or diverted them through Canadian bank accounts back into U.S. accounts that he owned and controlled. He concealed these funds and failed to report them on his personal income tax returns, resulting in a $9.1 million tax loss to the IRS.
The conspiracy and tax evasion charges to which Alex Fleyshmakher pleaded guilty each carries a maximum of five years in prison and a $250,000 fine. Sentencing is May 27.
Boston: Former CFO Pamela Smith, of Kirkland, Washington, formerly of Guilford, Connecticut, has pleaded guilty to aiding in the preparation of a false tax return.
Between approximately 2009 and 2018, Smith was the CFO of Equinox Home Care, a home health care staffing agency in Stratford, Connecticut. Equinox was established as a partnership between Theresa Foreman and another individual. In September 2012, the partnership ended, and, by court order, Foreman was obligated to make payments to her partner for the purchase of the partner’s interest.
At Foreman’s direction, Smith and the payroll manager of Equinox helped Foreman receive money from the agency that hid that Foreman was the true recipient of the funds. Beginning in 2012, the agency’s payroll included payments to “ghost employees” who did not work for Equinox; those funds were for Foreman’s benefit. In addition, Foreman received funds through cashed mileage checks that were issued to two individuals who did not drive on behalf of the agency.
As CFO, Smith became aware that the payroll checks were being issued. She also helped Foreman by issuing or causing to be issued bonus checks from Equinox to approximately 30 employees. The employees cashed the checks and provided the cash to Foreman.
Some of the employees later noticed that the amount of funds cashed had been included on their W-2s. Smith would issue a corrected W-2 only if an employee made a request. Several EHC employees did not request a corrected W-2 and, as a result, overpaid federal taxes.
Smith interacted with the preparer of the partnership return in addition to Foreman’s individual income tax returns and failed to inform the preparer about funds that Foreman received through these various mechanisms. More than $600,000 of such funds were not reported on Foreman’s 2014 return alone.
As part of Smith’s plea agreement, the government submits that some $266,000 of the tax loss was foreseeable to Smith.
At sentencing, she faces a maximum of three years in prison. Foreman previously pleaded guilty to one count of tax evasion and last January was sentenced to a year and a day of imprisonment and ordered to pay $641,941.46 in restitution.
San Diego: Restaurant-chain manager Aleksandar Sreckovic has pleaded guilty to employment tax fraud.
Sreckovic was a manager for San Diego Home Cooking, a restaurant group with over 110 employees and five restaurants in the San Diego area. He had significant control over the finances of the company, including having to account for and pay over federal employment taxes. In November 2014, Sreckovic directed an outside payroll company to stop making employment-tax payments. From the last quarter of 2014 through 2017, he did not file employment tax returns nor pay employment taxes for San Diego Home Cooking.
Sreckovic caused a tax loss totaling more than $1.5 million. Instead, Sreckovic paid other creditors and his own personal expenses.
He has agreed to pay more than $2.2 million in restitution, interest and penalties to the IRS. Sentencing is April 2, when Sreckovic faces a maximum of five years in prison as well as supervised release and monetary penalties.
Columbia, South Carolina: Restaurateur Rafael Salas Jr. has been sentenced to a year and a half in prison after pleading guilty to failing to pay over to the government taxes he withheld from his employees’ paychecks.
From January 2014 through August 2016, Salas owned and operated a local bar and grill employing some 20 workers during each tax period. While failing to file quarterly business returns and failing to fully pay the company’s employment taxes, Salas withheld trust fund taxes from his employees’ wages. He used the money for personal expenses, including $36,000 for his dwelling, $11,000 for a boat and trailer, and expenses of roughly $10,000 at a local strip club.
At the time of this offense, Salas was also on probation for a 2016 federal conviction for conspiracy to introduce misbranded drugs into interstate commerce.
He was also sentenced to a three-year term of court-ordered supervision.
