Handcuffs for FraudBackground:

A business owner, after his IRS audit, closed his construction company and retired.

His audit was referred to IRS Criminal Investigation. The government believed, and gathered evidence that the business owner defrauded the government of tax, by intentionally concealing unreported income during several years. After a grand jury hearing, the government sought conviction on multiple felony criminal charges, of which 10-15 years of imprisonment was advised.

Actions Taken:

Since the client was under no threat of arrest or detainment, our first step in this tax cases was to review and challenge the government’s evidence. We had some exposure to the audit files, and were therefore familiar with the specific violation transactions.

These violations resulted in a civil tax deficiency, based upon the audit. Further, they also created a liability for criminal restitution, to award the government a return of its “losses”. These amounts were based upon the same general liability, and amounted to nearly $250,000. If convicted, this restitution liability must be repaid, at some point.

We attacked the government’s statement of facts, and the strength of its accusations. We acknowledged the owner did make several cash-related transactions, which were not included in his reported taxable income. However, we effectively argued that the omission of income from tax returns did not equate to a 26 U.S. Code §7201 Attempt to Evasion or Defeat Tax. Nor was theirs a strong case for conviction under Title 26, United States Code, Section 7206(1), Fraud and False Statements. We believed the element of willfulness was merely circumstantial.

Audit 01Therefore, we continuously argued that the evidence of the transactions would not be sufficient to obtain multiple felony convictions in a jury trial.

Both the government and client considered the risks of trial, and agreed to a single, substantially lesser charge. In this plea agreement, the client accepted responsibility for the single violation, based upon a single transaction, in a single year.

At sentencing, the Court considered multiple factors. The plea to a single violation, including the acceptance of responsibility, and the client’s cooperation affected to recommended guideline sentence. However, other background factors including the client’s age, health, family, and overall contributions and service to the community were strongly considered by the Court.

Golf 03Result:

The client avoided a 10-15 sentencing for felony conviction. Instead, given the plea agreement and other mitigating factors, the client was sent to a federal facility: a minimum security camp, where he spent only 10 months. We were able to defer his entry to the camp by another 4 months, while the client handled some personal and family matters.

Further, because the client retired from his business, his ability to pay the restitution was minimized. At the end of our representation, the client’s permanent restitution payment was $150 per month. The amount will be permanently deducted from his retirement income, and he needs take no further action. In 20 years, his entire restitution paid will only total $36,000. This result provided substantial financial benefit to the client’s family, saving well over $200,000 in avoided tax repayments.