Depend on nothing; love, law and the slammer; financial whizzes; and other highlights of recent tax cases.
Boise, Idaho: Tax preparer Andres Sanchez, 34, has been sentenced to a year in prison for willfully aiding and assisting in the preparation and filing of fraudulent returns for clients.
For 2014, 2015 and 2016, Sanchez counseled clients to include ineligible dependents on returns to increase refunds, in many cases where the clients would have owed taxes. The ineligible dependents resulted in dependency exemptions and refundable credits for Sanchez’s clients, including the Child Tax Credit, the additional Child Tax Credit and the Earned Income Tax Credit.
After Sanchez completes his prison term, he will serve a year of supervised release. He was also ordered to pay $38,119 in restitution.
Landing, New Jersey: Construction exec Zeki Donuk has pleaded guilty to tax evasion, employment tax crimes, aiding the filing of false returns and making false statements in bankruptcy.
He operated a construction business first under the name Titan Builders and later as Titan Steel Construction (collectively, “Titan”). From at least 2016 through 2019, Donuk cashed checks payable to Titan instead of depositing them into business bank accounts. He concealed the cashed checks and did not report them either as gross receipts on Titan’s corporate returns or as income on his or his wife’s personal returns.
From the third quarter of 2016 through the third quarter of 2017, he also did not collect, account for or pay over to the IRS employment taxes withheld from employees’ wages. For those quarters, he also failed to file employment returns on behalf of the businesses.
In 2019, Donuk lied on documents in a personal bankruptcy case, concealing that he owned a vacation property in Pennsylvania, had signatory authority over certain bank accounts, owed federal tax debts and operated his construction business as Titan Builders and Titan Steel.
Sentencing is Jan. 4. He faces a maximum of five years in prison for each count of tax evasion, failure to account for and pay employment taxes, and bankruptcy fraud, and a maximum of three years for each false return. He also faces a period of supervised release, restitution and monetary penalties.
Louisville, Kentucky: A suspended attorney and his wife have been sentenced for wire fraud and willful failure to pay tax.
Andrew Nicholas Clooney was sentenced to 33 months in prison to be followed by two years of supervised release. Christel Marie Clooney was sentenced to 27 months in prison to be followed by two years of supervised release.
Andrew Clooney practiced as a personal injury attorney through the Clooney Law Office, where Christel Clooney was office manager. From August 2016 through October 2018, they used funds that belonged to clients of the law office on personal expenses.
The couple also made some $426,098 in income in 2016, on which they owed some $107,140 in federal income taxes. The Clooneys neither filed a return for tax year 2016 nor paid any of their outstanding tax liability for that year.
The couple was also ordered to pay $663,965.16 in restitution to former clients.
Lexington, Kentucky: Ronald Coburn, owner and CEO of a toxicology lab, has pleaded guilty to health care fraud and tax evasion. The compliance officer of the lab, Erica Baker, also pleaded guilty to a health care fraud conspiracy with Coburn.
Coburn owned and operated LabTox, a laboratory that performed urine drug testing services and billed them to Medicare and Kentucky Medicaid. Coburn knew that those health care programs only pay for medically necessary urine drug testing and admitted knowing that urine drug testing ordered by courts for judicial proceedings was not medically necessary.
With Coburn’s knowledge and approval, Baker recruited a company to refer court-ordered urine drug testing to LabTox. Coburn knew this was not medical testing but caused it to be billed to Medicare and Kentucky Medicaid, resulting in fraudulently obtained payments to LabTox of $1,864,429 between June 2019 and March 2021. Coburn has agreed to repay this money.
He also admitted to receiving income of more than $1.5 million per year from LabTox between 2017 and 2021, and to concealing this income and his ownership of LabTox by placing the business in the name of his partner. Coburn created the false appearance that he did not earn income during this time; he did not file any returns in his own name. While he caused returns to be filed in the name of his partner, he never paid any of the federal income tax that he knew he owed.
Coburn must pay $3,566,645 to the IRS, representing income tax he owed in 2017 through 2021.
Baker was LabTox’s director of operations and compliance officer and participated in a health care fraud conspiracy with Coburn between January 2019 and January 2021. At Coburn’s direction, she solicited urine drug testing from non-medical substance abuse recovery programs, typically faith-based residential programs or homeless shelters. Baker knew that urine drug testing for clients of these programs was not done for any medical reason, as would be required before Medicare or Kentucky Medicaid would pay for the tests.
Baker misled sober home directors and induced the facilities to send in more tests to LabTox by putting facility staff on LabTox’s payroll and compensating them based on the number of urine drug tests sent to the lab. The resulting fraudulent Medicare and Kentucky Medicaid payments were at least $937,594.
Coburn and Baker will be sentenced on Dec. 18. Both face up to 10 years in prison and a fine of up to $250,000.
Kinnelon, New Jersey: Salvatore Caravella Jr., operator of construction and real estate companies, has pleaded guilty to evading federal income taxes.
Caravella oversaw all aspects of the businesses’ operations, including the filing of the necessary federal returns. For 2015 through 2018, he willfully did not report some $692,185 in self-employment income he earned from his businesses on his personal 1040s, causing a total federal tax loss of $235,999.
He faces a maximum of five years in prison as well as a period of supervised release, restitution and monetary penalties.
Angleton, Texas: Tax preparer Jean Montalvo, owner of Montalvo Tax Service, has been sentenced to three years in prison after pleading in June to one count of making and subscribing a false return.
At the hearing, the court heard how she suffered from numerous medical conditions and was sorry for her actions. The judge still imposed a longer sentence due to her criminal history and the loss amount in the case.
Montalvo admitted that she began filing returns under her business in 2010. From 2014 through 2016, she willfully failed to report a portion of the amount she received for customer fees, costing the IRS $197,136.
She also filed some 58 federal income tax returns for calendar years 2014 through 2017 that contained false and fraudulent items. Some of those included charitable contributions, qualified fuel property, business meals, business mileage and entertainment expenses. She created an additional tax harm of $311,214.
Montalvo will also serve a year of supervised release and was ordered to pay $508,350 in restitution.
Scottsdale, Arizona: Business owner James Piccolo has been sentenced to 18 months in prison and three years of supervised release and ordered to pay full restitution for willful failure to collect or pay over tax.
Between 2017 and 2018 Piccolo, who pleaded guilty in January, failed to remit federal taxes owed for two companies he owned and operated that aimed to instruct clients on how to manage online businesses and conduct internet marketing. Piccolo acknowledged that he was the responsible person for submitting tax payments due and owing to the IRS for these companies.
Over five quarters, he failed to remit taxes owed for the amounts reflected in the companies’ 941s, totaling $651,477.58.
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