Journey's end; just shocking; house cleaning; and other highlights of recent tax cases.
Pueblo, Colorado: Resident Solomon Paul Garcia has been sentenced to a year and a day in prison, to be followed by three years of supervised release, for tax evasion.
Garcia worked for various employers as a journeyman electrical lineman. From 2016 to January 2020, he avoided income tax by submitting to his employers W-4s that claimed up to 99 allowances or false claims of exemptions. During this time, Garcia was only allowed to claim two allowances.
Although Garcia had an opportunity to pay all taxes due and owing for each calendar year by the respective filing deadlines, he did not file a tax return for any of the years, resulting in the evasion of $267,028.50 in federal taxes.
Garcia was also ordered to pay restitution, including interest and penalties, of more than $548,000.
Attleboro, Massachusetts: David Tetreault, 54, the former bookkeeper for an electrical and contracting business, has agreed to plead guilty to concealing income from the IRS and to stealing disability benefits.
Tetreault worked as a bookkeeper for a Massachusetts-based electrical contractor between 2015 and 2021, when he received wages in cash and used company funds to pay his personal credit card bills. He allegedly manipulated the company's accounting records and bank statements to disguise these payments as business expenses.
Tetreault underreported his personal income by at least $2.1 million and caused a loss to the IRS of more than $600,000.
Charges also alleged that Tetreault failed to report his work for the electrical contractor or his income to the Social Security Administration and submitted false information about his employment and income to the Employees' Retirement System of Rhode Island. He collected more than $320,000 in undeserved Social Security Disability Insurance benefits and state disability pension benefits between 2016 and 2024.
He has agreed to plead guilty to one count of tax evasion, one count of theft of government money and one count of wire fraud. Tax evasion provides for up to five years in prison and three years of supervised release; theft of government money provides for up to 10 years in prison and three years of supervised release; wire fraud provides for up to 20 years in prison and three years of supervised release. All the charges also carry a fine of up to $250,000 or twice the gross gain or loss, whichever is greater.
Chester, Connecticut: Resident Evan Bobzin has pleaded guilty to offenses, including tax charges, from a $2 million embezzlement.
From July 2013 until December 2023, Bobzin was employed by Hoffman's Gun Center in Newington, Connecticut, and, in 2016, became the head of information technology at Hoffman's. In January 2016, Bobzin began to steal cash receipts from a company safe in the company's front office.
Between 2016 and 2023, Bobzin and his former spouse made 287 cash deposits of stolen money from Hoffman's totaling $1,901,250 into his bank accounts, and seven cash purchases of cashier's checks totaling $161,330. Bobzin used the funds to pay for personal expenses.
In October 2022, the U.S. Attorney's Office notified Bobzin that he was conducting cash transactions in amounts below $10,000 in a manner indicative of structuring to avoid having his bank file currency transaction reports. Bobzin ceased making cash deposits at his bank, opened new accounts at a different bank and resumed making structured cash deposits into those accounts.
Bobzin failed to report the stolen income on his federal personal income tax returns for 2016 through 2022, resulting in a loss to the IRS of $436,178. As an example, on his income tax return for the 2020 tax year, Bobzin reported taxable income of $9,914 and tax owed of $0. The return omitted income of some $432,615 and understated tax due and owing by some $110,530.
Sentencing is Nov. 26. Bobzin pleaded guilty to one count of interstate transmission of stolen money, which carries up to 10 years in prison, and one count of tax evasion, which carries a maximum term of five years. He has also agreed to pay $2,062,580 in restitution and to cooperate with the IRS to pay $436,178 in taxes, as well as penalties and interest.
Madison, Wisconsin: Investment advisor Eric Upchurch has been sentenced to 28 months in prison for wire fraud, making false statements to the Small Business Administration and money laundering related to the Paycheck Protection Program.
Throughout 2020 and 2021, Upchurch submitted fraudulent PPP loan applications on behalf of several businesses, falsely claiming that his businesses earned hundreds of thousands of dollars in revenue and paid employees tens of thousands of dollars in payroll a month. He also provided lenders with forged payroll reports and tax forms.
None of Upchurch's companies formally employed anyone besides Upchurch, and none had the revenue necessary to cover the claimed payroll.
Upchurch stole $406,211 and attempted to steal an additional $400,378 in PPP money. He also laundered a portion of his fraudulently obtained PPP funds when he purchased $19,000 worth of bitcoin.
Agawam, Massachusetts: Tax preparer Colleen Gruska, 66, has been sentenced to two months in prison to be followed by a year of supervised release (the first six months to be served in home confinement) for filing false returns.
For more than a decade, Gruska used her tax prep service to file dozens of false returns for herself, her relatives and others. On these returns, she reported business losses that were either dramatically overstated or were for businesses that did not exist, resulting in little or no federal income tax owed by the taxpayer.
In her own filings, Gruska reported $189,000 in expenses over four years for a house and yard cleaning business despite there being no actual expenses, enabling her to avoid $36,079 in taxes. For a relative, she filed false returns that claimed a non-existent soccer coaching business with expenses totaling $233,561, enabling the relative to avoid $39,599 in taxes.
Gruska, who pleaded guilty in January, caused a loss to the IRS of $261,102 and was ordered to pay that amount in restitution.
Lee's Summit, Missouri: Neurologist Maria Donato has pleaded guilty to failing to report cash income from her practice on her federal returns.
Donato owned and operated Forest Park Neurology, where she practiced from 2012 to 2019. Her patients sometimes paid cash for her services from 2015 through 2019, but Donato failed to report the full extent of her cash income on her federal income tax returns. She specifically pleaded guilty to failing to report more than $120,000 in cash income in 2017. She also failed to properly report her cash income on her Missouri tax returns during those years.
Concord, North Carolina: Exec Ronald James McMurphy has pleaded guilty to failing to collect or pay over taxes.
From around the first quarter of 2016 to and including the third quarter of 2022, he was president of McMurphy Hydraulics Inc. and from around the fourth quarter of 2019 up to and including the third quarter of 2022 was also president of Powertek Equipment Inc., a manufacturer of heavy equipment for construction and forestry.
McMurphy was responsible for accounting for and paying to the IRS the employment taxes for both companies. For various tax periods, McMurphy failed to truthfully account for and pay over the trust fund taxes and employer matching taxes due and owing to the IRS on behalf of the companies' employees.
The employment tax liability for which McMurphy is accountable is $712,017.
Sentencing is Dec. 12. He faces up to five years in prison, as well as a period of supervised release of up to three years and monetary penalties.
