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21 09, 2020

When a Biscuit is a Puck, Cheating the Team Can Put One Out of Luck

By |2020-09-21T17:42:20+00:00September 21st, 2020|Embezzle, tax evasion, Tax problem|0 Comments

Hockey players call the puck a “biscuit.” Borrowing more of hockey’s specialized language, one might describe Jennifer Durham, office manager of Rapid City Rush, a professional hockey team in South Dakota, as “a dirty deke who dangled” her way to $700,000 of ill-gotten team money. She pleaded guilty, in plain English rather than Hockey-ese, to wire fraud and tax evasion for embezzling $700,000 from the organization. Not only do her crimes expose her to the prospect of prison, but they also create a tax problem, an unpaid tax debt which will exist during, and perhaps after her incarceration.

While employed as the team’s office manager between 2010 and 2019, Durham falsified entries into accounting records to make it appear that the money she was stealing was spent on legitimate business expenses.

Hockey player image represents subject of post, a hockey team.

hockey player, black and white drawing

Durham paid herself $87,000 in mileage reimbursement and sales commissions, transferred nearly $285,000 from the team’s bank account to pay her American Express bill and transferred another $181,000 to her personal bank account. Durham also admitted to taking $214,971 in cash receipts to use for personal expenses and made payments totaling $7,712 to cover her family’s cell phone bill. She did not report the additional income to the IRS, causing a tax loss of $186,277 to the federal government.

The investigation began when new team owners discovered, “Inconsistencies and irregularities with regard to some bookkeeping handled by a single former employee.”

As part of the plea agreement, Durham must pay restitution to the team totaling $700,000 and the IRS $186,277. She faces up to 45 years in prison.

 

20 02, 2017

The Anti-Loophole: The “Voluntary” Tax Which is Not So Voluntary

By |2020-04-06T21:22:51+00:00February 20th, 2017|IRS Collection, Tax, Tax Crimes, tax evasion|0 Comments

Once again, we are confronted with the truth the our “voluntary” tax system is not entirely voluntary after all. As Dan Ackroyd said on Saturday Night Live in the 90s, playing then-presidential contender, Bob Dole as he berated then-President, Bill Clinton, “You know it, I know it, and the American People know it.”

But, apparently, North Carolinian, Chet Lee West, didn’t know it. Or so he acted. He was convicted in District Court of three counts of tax evasion. West, acting as his own attorney at trial, stated in his closing arguments that the jurors should ‘see the truth and set me free.” The jurors did not agree with his statement and reached the guilty verdict in only 1 hour.

Owing more than $52,800 in back taxes, West, claimed he found a loophole in the tax code that freed him from having to pay income taxes. West attempted to read from a book containing federal tax codes but the judge had him stop, explaining that she would instruct the jurors what the law is.

During the trial, West admitted that he had not filed taxes since 2000 and had sent a letter to the IRS explaining that he elected to not be subject to income tax.  (Now that is an election almost everyone could support – at least until one considers Supreme Court Justice Oliver Wendell Holmes’s take on this issue. Holmes famously said: “I like to pay taxes. With them I buy civilization.”) The IRS responded to West’s “election not to be subject to income tax” with a letter back to West informing him that American citizens cannot opt out of paying taxes.

Donald J. Kleine, the Federal prosecutor said that West knew he had an obligation to pay his taxes but, “just didn’t want to.”

West was sentenced to Federal prison for a term of more than 4 years and ordered to pay restitution to the Internal Revenue Service in the amount of $439,515.

2 07, 2016

Bakery Owner Can’t Have His (unpaid tax obligation) Cake and Eat It Too

By |2020-02-12T14:20:16+00:00July 2nd, 2016|100% Penalty, Tax, Tax Crimes, tax evasion|0 Comments

macaron cookieOne baker seems to have gotten caught with his fingers in the cookie jar:

Owner of Kasia’s Bakery in New Britain, CT Marian Kobryn pled guilty to tax evasion by operating his business on a cash-only basis and not reporting the cash income or (of course) paying tax on it. From 2010 to 2013, sales totaling $730,860 were deposited into personal bank accounts usually under $10,000 to evade bank’s currency transaction reporting requirements (another illegal practice known as “structuring.”

Pleading guilty to one count of making a false statement of a federal tax return, Kobryn was sentenced to time served due to serious health issues, Kobryn has been ordered to pay restitution in the amount of $435,00 to cover back taxes owed, hence being compelled to restore that raided cookie jar.

6 03, 2015

IRS: Skimming is for Milk, Not for Tax Reporting, & Bar Owner Finds Self in Pickle

By |2020-04-06T21:09:49+00:00March 6th, 2015|Tax Crimes, tax evasion, Tax fraud, Uncategorized, understatement of income|0 Comments

This might be called the Case of the Candid Calendar. A Wisconsin bar owner was sentenced to 18 months in federal prison and ordered to pay a $100,000 fine for filing false tax returns.

Cat-laps-milk-glassAccording to court records, Jared Jerome Hart, 36, of Eau Claire, Wis., owned a tavern called The Pickle Bar. His bar accepted payments only in cash, and at the end of each day, tavern employees would place daily sales in a safe for Hart to pick up. Hart would count the cash, and then record a number for the day in his own daily calendar. Hart would then deposit only some of the cash from into the business account.

Hart gave his accountants the payroll information, bank statements, the check register and vendor invoices. From these records, which Hart knew were incomplete, the accountants created the official books of the bupicklesiness.  Hart never told his accountants about the cash he was “skimming” from the tavern, or the second set of books he was keeping at home.  Hart’s daily calendars were discovered during the execution of a search warrant at his home in June 2012.

Between 2008 and 2011, there was more than a $1 million discrepancy between the gross receipts of The Pickle Bar reflected in the books the accountants maintained and the second set of books Hart maintained at his home.

3 03, 2015

Chiropractor Adjusts Tax Return, Gets 15 Months

By |2020-02-12T14:20:16+00:00March 3rd, 2015|Income, State Tax, Tax Crimes, tax evasion, Tax fraud|0 Comments

Working on more than spines, a Pennsylvania chiropractor attempted a sort of tax decompression by manipulating and adjusting her tax return to file a 2006 federal income tax return that falsely claimed her taxable income was $89,754, when, in fact, she had taxable income of $1,151,928, and owed at least $363,566 in taxes for that year.

Unhappily for tspine-diagramhe chiropractor, Maria Giacalone-Hewson, 43, of Canadensis, Penn., who operated Canadensis Healthcare Inc. was sentenced to 15 months in prison for aiding the preparation and filing of a false federal income tax return and false statements relating to healthcare matters.

At her sentencing, Giacalone-Hewson was also ordered to pay $113,821 in taxes that she owed forthe years 2007 through 2010.

In addition to the prison term, Judge Mariani ordered that Giacalone-Hewson be supervised by a probation officer for three years following her release from prison.

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