FORMER BROKERAGE FIRM OPERATIONS BOSS INDICTED FOR NOT PAYING TAXES ON INCOME

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, October 25, 2013
Former Brokerage Firm Operations Head Indicted for Tax Crimes

An indictment was unsealed today charging Dominick Pannitti, formerly of North Bellmore, N.Y., with tax crimes, the Justice Department announced.

According to the indictment, which was returned by a grand jury on Sept. 26, 2013, Pannitti was Head of Operations at a securities brokerage firm in Syosset, N.Y.  The securities firm had an automated system designed to adjust customers’ trading accounts for amounts less than $1,000.  During 2005 and 2006, Pannitti used the automated system to credit his own trading accounts hundreds of times in increments less than $1,000.  Pannitti was not entitled to most of these credits, which totaled over $570,000.  Pannitti concealed from his accountant the income he obtained and failed to report the income on his tax returns.

A trial date has not been scheduled.  An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.  Pannitti faces a potential maximum sentence of eight years in prison and a potential fine of up to $500,000.

The case was investigated by the Internal Revenue Service (IRS) - Criminal Investigation and the FBI.  The case is being prosecuted by Trial Attorneys Mark Kotila and Jeffrey Bender of the Justice Department’s Tax Division.

BUSINESSMAN INDICTED FOR FAILURE TO PAY TAXES ON OVER $2 MILLION OF INCOME

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, September 12, 2013
Massachusetts Businessman Indicted for Tax Crimes

The Justice Department and Internal Revenue Service (IRS) announced that Richard L. Furnelli, formerly of Holyoke and South Hadley, Mass., was indicted today in Springfield, Mass.  Furnelli is charged in a nine-count indictment with one count of obstructing the internal revenue laws, four counts of tax evasion and four counts of failing to file his individual income tax returns.

The indictment alleges that from 1994 to 2009, Furnelli obstructed the IRS’s ability to identify his income and compute the income taxes due and owing by using nominee owners to disguise his ownership interests in a network of businesses and assets, including entities operating an adult entertainment venue called the Gold Club.

The indictment also alleges Furnelli earned over $2 million in total income from 2006 to 2009 and evaded his individual income taxes for that time period by, among other things, directing the payment of his income to the nominee entity, RLF Ventures LLC, utilizing a bank account in the name of a nominee in order to deposit his income and pay his personal expenses, as well as using cash extensively. The indictment further alleges that Furnelli failed to file his individual income tax returns from 2006 to 2009.

 Furnelli faces a maximum punishment of three years in prison for the charge of obstructing the internal revenue laws; five years for each count of evading his individual income taxes; and one year for each count of failing to file his individual income tax returns. He faces a maximum fine of $100,000 on each count of failing to file his income tax returns and $250,000 for each of the other counts.  An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

The case was investigated by special agents of the IRS - Criminal Investigation. Tax Division Trial Attorneys Thomas Voracek and Mark McDonald are prosecuting the case.

VIRGINIA RESIDENT INDICTED FOR TAX CRIMES

FROM:  U.S. JUSTICE DEPARTMENT
Tuesday, July 10, 2012
Virginia Man Charged with Tax Crimes
A Newport News, Va., federal grand jury has indicted Jeffrey Charles for conspiring with his daughter and son-in-law to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. Charles is charged with one count of conspiracy, three counts of aiding and assisting in the preparation of false tax returns and one count of filing a false tax return. The court has not yet set a trial date.

According to the indictment, Charles conspired with his daughter and son-in-law to impair and impede the IRS in ascertaining, computing, assessing and collecting federal income taxes. The indictment also alleges that Charles aided and assisted in the preparation of three false tax returns in his daughter’s name for tax years 2000, 2001 and 2005, and attached false documents to each tax return. As alleged in the indictment, Charles also filed a false tax return in his own name for tax year 2006 in which he allegedly falsely reported earning $0.00 income.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Charles faces a maximum of 17 years in federal prison and a maximum fine of $1.25 million.

The case is being investigated by IRS Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Brian Samuels of the Eastern District of Virginia and Trial Attorney Justin K. Gelfand of the Justice Department’s Tax Division.

CAR DEALERSHIP OWNER AND CFO PLEAD GUILT TO TAX CRIMES

FROM:  U.S. DEPARTMENT OF JUSTICE
Tuesday, May 29, 2012
Owner of Hawaii Car Dealerships and Chief Financial Officer Plead Guilty to Tax Crimes

Charles Alan Pflueger, owner of Pflueger Inc., Randall Kurata, the company’s chief financial officer, and Julie Kam, Pflueger’s executive assistant, pleaded guilty to filing false federal income tax returns before U.S. District Court Judge Leslie E. Kobayashi in Honolulu, the Justice Department and the Internal Revenue Service (IRS) announced today.

According to the indictment and other documents filed in Honolulu federal court, Charles Alan Pflueger, Randall Kurata, Julie Kam and others caused Pflueger Inc. to pay the personal expenses of Charles Alan Pflueger and others. The three defendants then caused Pflueger Inc. to improperly deduct the personal expenses as business expenses on Pflueger Inc.’s corporate tax returns. Pflueger caused another of his companies, Pacific Auto Distributors LLC, to pay additional personal expenses, and he did not report those payments as income on his personal tax returns.

Pflueger pleaded guilty to one count of filing a false individual federal income tax return for tax year 2005. Kam also pleaded guilty to one count of filing a false individual federal income tax return for tax year 2005 because she failed to report as income personal expenses that Pacific Auto Distributors LLC paid on her behalf.

Kurata pleaded guilty to one count of filing a false corporate federal income tax return for Pflueger Inc. for tax year 2003. Kurata admitted that from 2003 through at least 2005, he knew that Pflueger Inc. was paying for various individuals’ personal expenses, including Pflueger’s. Kurata further admitted that during 2003 he personally signed checks from Pflueger Inc. that paid individuals’ personal expenses.   Kurata filed Pflueger Inc.’s corporate tax return for 2003 knowing that it was false in that it improperly deducted as business expenses significant personal expenses of Pflueger.

Pflueger and Kam’s sentencing is set for Jan. 31, 2013, and Kurata’s sentencing is scheduled for Dec. 20, 2012.

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division thanked Special Agents of IRS - Criminal Investigation, who investigated the case, Assistant U.S. Attorney Leslie E. Osborne, Jr. and Tax Division Trial Attorneys Timothy J. Stockwell and Dennis R. Kihm, who prosecuted the case.

FORMER PARTNER IN ACCOUNTING FIRM SENTENCED FOR TAX CRIMES

FROM:  U.S. JUSTICE DEPARTMENT
Monday, April 16, 2012
Former Partner at Major International Accounting Firm Sentenced to Prison for Tax Crimes
Stephen A. Favato, a resident of Point Pleasant Beach, N.J., and a former partner in BDO Seidman LLP’s Woodbridge, N.J., office, was sentenced to 18 months in prison for tax crimes, the Justice Department and the Internal Revenue Service (IRS) announced today.   In August 2010, a jury sitting in Newark, N.J., found Favato guilty of one count of corruptly endeavoring to obstruct and impede the Internal Revenue laws and one count of aiding and assisting in the preparation and filing of a false income tax return.

During the trial, evidence presented proved that from late 2001 through April 2005, Favato attempted to obstruct the IRS by, among other conduct, advising his client, Daniel Funsch, on how to include false items on the 2002, 2003 and 2004 joint income tax returns for Funsch and his then-wife.   Additionally, the evidence proved that Favato knowingly prepared and signed false joint income tax returns for the Funsches for these years, causing over $114,000 of tax loss to the IRS in connection with the Funsches’ filed 2002 return and attempting to cause over $70,000 of tax loss in connection with tax years 2003 and 2004.

The evidence presented at the trial established that Favato advised Funsch to significantly reduce the salary payments that Funsch was receiving from his corporation and to instead have this compensation paid to Funsch’s limited liability company, Great Escape Yachts LLC, in the form of purported lease payments for Funsch’s yacht.   However, his corporation had not leased the yacht.   This course of action recommended by Favato enabled Funsch to fraudulently deduct his personal yacht expenses as business expenses.   In addition, the evidence presented showed that Favato advised Funsch on how to falsely increase his expenses in order to fraudulently eliminate a portion of the gain on three properties that Funsch sold in 2002 and 2004.   Finally, the evidence showed that Favato advised Funsch to report inflated charitable contributions on Funsch’s 2003 tax return.   The jury acquitted Favato on one count of tax evasion.

COUPLE PLEAD GUILTY TO USING OFFSHORE BANK TO HIDE INCOME

The following excerpt is from the Department of Justice website:

Wednesday, February 22, 2012
“Tennessee Couple Plead Guilty to Tax Crimes
Angela Palmer and her husband, Warren Palmer, both of Knoxville, Tenn., each pleaded guilty today to two counts of willful failure to file tax returns, the Justice Department and Internal Revenue Service (IRS) announced.

According to documents filed as part of their guilty pleas, during tax year 2005, Angela Palmer earned income as a mortgage broker and in tax years 2005 and 2006, she also earned income teaching music lessons.  Warren Palmer earned income, during tax years 2004 and 2006, doing construction and other jobs. Additionally, during the years in question, the Palmers maintained funds in an offshore bank account in the name of The Liahona LLC, an entity of which they were the sole members and managers.   Due to the income they received during the prosecution years, the Palmers were required to file tax returns, however, they failed to do so.

In accordance with their plea agreements, Angela Palmer has agreed to pay restitution in the amount of $58,646.85, and Warren Palmer has agreed to pay restitution in the amount of $70,887.45, to the IRS.
         
Sentencing is scheduled for June 14, 2012. The Palmers each face a maximum potential sentence of up to one year in jail and a maximum fine of $100,000 for each of the counts to which they pleaded guilty.
         
The cases were investigated by the IRS - Criminal Investigation and prosecuted by Trial Attorney Tracy Gostyla of the Justice Department’s Tax Division."