‘Tax Lady’ Roni Deutch’s Assets Frozen by Judge

accountingtoday.com
Sacramento, Calif. (April 21, 2011)

A California judge has frozen the assets of “Tax Lady” Roni Deutch after the state attorney general asked the court to hold her in contempt for shredding millions of documents and wrongfully diverting funds from clients of her tax law firm.

Sacramento Superior Court Judge Shellyanne W.L. Chang signed an order Wednesday freezing Deutch’s assets and appointed a receiver who will take over the financial aspects of her business. Deutch heavily advertises her services for helping clients resolve their problems with the Internal Revenue Service, but has been the subject of a $34 million lawsuit by the California Attorney General’s Office accusing her of swindling clients (see California AG Sues ‘Tax Lady’ Roni Deutch for $34M).

Attorney General Kamala D. Harris asked the court on Wednesday to hold Deutch in contempt of court, imprison her for five days on each violation, and fine her thousands of dollars for shredding millions of pages of documents and failing to pay refunds to her clients in violation of a court order.

“Deutch showed herself to be a predator for profit, preying on innocent, hard-working people who were simply hoping to settle their accounts with the IRS,” Harris said in a statement. “By defrauding these victims, and then pleading poverty, she created a real danger that her clients will never receive their advance fees back.”

In August, the attorney general filed suit against Deutch for swindling thousands of people facing serious and expensive tax collection problems with the IRS. On August 31, the court issued an order that prohibited Deutch from destroying evidence.

“Despite this order,” the attorney general said, “Deutch has been routinely shredding documents on an almost a weekly basis.” The Attorney General estimates that to date Deutch has shredded some 1,643,000 to 2,708,600 pages of documents. Deutch’s shredding campaign has permanently deprived the attorney general of evidence needed to fully prosecute the action against her.

Deutch’s law firm, based in Sacramento County, had revenues of at least $25 million a year. She spent $3 million a year on advertising, much of it on late-night cable TV, and frequently offered tax advice on popular TV shows. In her pitches, she promised to significantly reduce the IRS tax debts of people who signed up with her firm. Instead, she took thousands of dollars in up-front fees from clients but offered little or no help in lowering their tax bills. Hundreds of clients complained to the Attorney General and other government agencies.

In addition to shredding documents, the Attorney General also charged that Deutch violated a November 17 preliminary injunction by failing to issue some $435,000 in refunds to her clients within 60 days. Instead she “decided to disperse funds to friends, family and other creditors. By draining her estate and that of the law firm, Deutch has placed her clients at serious risk of never receiving their refunds.”

For instance, Deutch opted to transfer hundreds of thousands of dollars in equity from the sale of her home to a media firm. She also personally withdrew $241,000 from the law firm’s accounts and her personal accounts at just one bank. In addition, since the preliminary injunction order was issued, Deutch made more than $21,000 in unnecessary expenditures, including gifts to family and friends, and a payment to a NASCAR racing team.

The attorney general asked the court to fine Deutch $1,000 and imprison her for five days for each count of contempt, to immediately freeze Deutch’s personal assets, and to appoint a receiver to manage her law firm’s business operations.

A spokesperson for Deutch’s firm did not respond to a request for comment.

Man Indicted for Falsifying Charitable Deductions

accountingtoday.com
Los Angeles (June 21, 2011)

A Santa Monica man was arrested Friday morning on charges that he committed tax fraud and attempted to interfere with the administration of the Internal Revenue laws.

Howard Hal Berger, 51, appeared Monday morning before U.S. District Court Judge John F. Walter. Berger previously pleaded not guilty to the charges specified in an indictment returned by a federal grand jury late last week.

According to the indictment, Berger filed a partnership income tax return for Lab Holdings LLC for the 2006 tax year which falsely reported a contribution of $1 million, substantially reducing his income tax liability.

In addition, Berger filed an individual income tax return for the 2006 tax year which falsely reported gifts to charity of $991,700 on the attached schedule of itemized deductions.

While under audit by the Internal Revenue Service, Berger submitted a false charitable donation letter in an attempt to substantiate the deduction for gifts to charity taken on the 2006 individual income tax return.

If convicted of all charges specified in the indictment, Berger faces up to nine years in prison and fines totaling $750,000. Berger is currently free on bond pending trial. A trial is scheduled for Aug. 9, 2011, before Judge Walter.

The investigation of Berger was conducted by IRS-Criminal Investigation in conjunction with the U.S. Attorney’s Office in Los Angeles.

Former Louisianna Sheriff’s deputy, wife plead guilty to fraud

By Littice Bacon-Blood
The Times-Picayune, June 21, 2011

A former St. Charles Parish Sheriff’s lieutenant and his wife, who owned an accounting service company, pleaded guilty to fraud in federal court on Monday for filing false federal tax returns and collecting more than $800,000 using the names of inmates held in the parish jail, according to U.S. Attorney Jim Letten’s office.

The Times-Picayune archiveHale Boggs Federal Building, 500 Poydras Street, U.S. District Court, Eastern District of Louisiana
The couple is said to have filed false tax returns over a 10-month period from about April 8, 2005 to about Feb. 20, 2006.

Lt. Warren LeBeauf Jr., 42, and his wife, Tamara Scott-Landry, 37, entered the guilty plea the morning of their trial before U. S. District Judge Carl Barbier, authorities said.

The two were charged May 6, 2010 in an 88-count indictment and are set for sentencing on the charges on Sept. 22 before Barbier.

They face a maximum of 10 years on the conspiracy to commit fraud charge, a fine of $250,000 and up to three years of probation.

Scott-Landry, who also pleaded guilty to wire fraud and aggravated identity theft, faces a maximum 20 years on the wire fraud charge and a mandatory two years added to any sentence she receives for the aggravated identity theft charge.

LeBeauf, who had been employed by the Sheriff’s Office since 1989 and worked as a resource officer at Destrehan High School, was terminated July 30, 2010 for violating department policies, said St. Charles Sheriff’s Office spokesman Capt. Pat Yoes.

According to federal authorities, LeBeauf used a law enforcement data base to obtain personal information on inmates such as Social Security number and birth date and passed it along to Scott-Landry to make fraudulent income tax refund claims.

Authorities say that LeBeauf met a St. Charles Sheriff’s Office 911 call center operator at a park and paid $100 for more than 4,000 pages of print outs from that law enforcement database which was used to fraudulently collect approximately $810,183 in income tax refunds.

Yoes said the operator, who had worked for the department for nearly 30 years, resigned July 2, 2010 before disciplinary action could be taken against her.

The tax forms filed electronically with the IRS made the returns payable to cashiers checks and stored valued cards. The money was then deposited into bank accounts controlled by LeBeauf and Scott-Landry, authorities said.

According to the indictment, the individual tax return amounts ranged from $1,577 to $3,525.

At one point authorities say Scott-Landry withdrew $26,000 in cash over a three-day period from an ATM and the couple went to a Chevrolet dealership and bought a 2004 Chevrolet Suburban “with a paper bag full” of cash.

It was in that SUV, parked in the drive way of Scott-Landry’s house, that authorities say they found inmate names and other items used in the scam.

During the execution of a search warrant, and “in the presence of almost a dozen armed IRS agents,” authorities say LeBeauf arrived at the house with an unknown person and attempted to leave with the SUV.

The case was investigated by the Internal Revenue Service, Criminal Investigation Division which has made investigatin refund fraud and identity theft a top priority said James C. Lee, special agent in charge, IRS criminal investigation.

CA Man Arrested After IRS Mistakenly Deposits $110K In His Account

The Huffington Post
James Sunshine, 06/19/11

Last September, Laguna Beach resident Stephen McDow found $110,000 deposited in his bank account, courtesy of the IRS. That same deposit has now landed him in hot water, according to CBS Los Angeles.

The IRS mistakenly sent the tax refund money, meant for a 67-year-old woman, to McDow, instead, reports local news station KCAL. The Los Angeles woman reportedly failed to inform the IRS that she had closed the bank account she had filed with them, and the account number was subsequently assigned to McDow.

When the woman discovered that McDow had been the recipient of her refund, she called him and demanded her money back. McDow, in turn, offered to pay back the balance in monthly payments, as he had already spent $60,000 paying off student loans and his home mortgage. Unsatisfied with the suggested size of the monthly payment, the woman declined the offer, according to KCAL.

McDow was subsequently arrested and charged with one felony of grand theft by misappropriation of lost property. He reportedly faces four years imprisonment and is currently being held on bail for the exact amount he first received: $110,000.

Some tax cheats work at the IRS

Almost 3% of IRS workers caught cheating but some slip through cracks

By Andrea Coombes, MarketWatch.com
June 21, 2011, 5:35 p.m. EDT

SAN FRANCISCO (MarketWatch) — The IRS catches almost 3,000 tax scofflaws in its own ranks each year, but some employees still dodge the system, according to a new Treasury Department report.

The Internal Revenue Service’s internal program caught on average about 3,000 incidents of noncompliance on employee tax returns each year from 2004 through 2008 — that’s about 3% of its workforce — but 133 employees who may have violated tax law avoided that program’s net in 2006 and 2007, according to the report from the Treasury Inspector General for Tax Administration, or TIGTA, which monitors the IRS.

The potential violations include failure to file a tax return, filing late, failure to report income and failure to pay taxes due.

While the report found that only a tiny portion of the IRS’s some 107,000 employees (in 2007) slipped through the cracks, TIGTA called on the tax agency to root out any and all workers who may be trying to game the system.

“In the inspector-general community, we have a zero-tolerance policy for any incidence of fraud, waste or abuse,” a TIGTA spokeswoman said.

“As the agency of the federal government whose chief mission is to administer the federal tax system, IRS employees are particularly expected to comply with all tax laws,” the TIGTA report said. “The IRS risks an erosion of public confidence in the American voluntary tax system if it does not appropriately address employees who are not complying with their tax obligations.”

For its part, the IRS said in a statement that it imposes harsh penalties for tax fraud within its ranks. “Ensuring that IRS employees comply with the tax law is a top priority for the IRS… Employees who are judged to have willful tax-compliance problems are terminated, in addition to other potential sanctions.”

Also, the IRS said that it investigated the 133 problem cases and most did not constitute fraud. “In 44% of the cases, employees filed a tax return late but were due a refund. And over half the cases have already been reviewed and closed because the facts did not merit further review. We are analyzing the rest of the cases, and if there are problems they will be addressed,” the IRS said.

Inside job

While the scope of the problem appears to be small, examples of IRS workers committing fraud are not hard to find. An IRS agent in Santa Clarita, Calif., in May was sentenced to three years in prison for filing fraudulent returns “for himself and innocent relatives that claimed, among other things, bogus deductions for alimony and mortgage payments,” according to a U.S. Justice Department release.
In April, a part-time data-entry clerk at an IRS office in Fresno, Calif., was charged with filing false tax returns and committing wire fraud and identity theft after allegedly stealing 68 tax returns from an IRS office, filing fraudulent returns using taxpayers’ personal information and claiming excessive federal tax withholding, presumably to generate tax refunds.

Separately, another IRS employee in Fresno in April pleaded guilty to filing false income-tax returns in the names of her husband, who was in state prison at the time, and other prisoners. The tax returns claimed federal tax withholding on wages the prisoners had never earned, to generate tax refunds. The IRS issued tax refunds totaling more than $13,000 based on the false returns, according to Justice Department statement.

And a separate TIGTA report in 2009 found that 128 IRS employees claimed the first-time home-buyer tax credit, even though they might not have been eligible. TIGTA simply identifies potential problems that require further investigation by the IRS.

Andrea Coombes is MarketWatch’s personal finance editor, based in San Francisco.

Seizure on Restaurant Released, But Tax Problems Still Loom

By Jarret Bencks
Medford Patch, June 2, 2011

The bright orange seized sign on the front door of Il Faro restaurant has been taken down, but the Medford Square restaurant is still in hot water with the state’s Department of Revenue.

The seizure on the business was lifted after revenue officials determined nearly all of the restaurant equipment belonged to the landlord at 21 Main St. and could not be auctioned off to pay some of the back taxes, said revenue spokesman Bob Bliss.

The Italian eatery, owned by Giuseppe Longo, still owes $142,784.20 in taxes and penalty fees dating back to 2006, and has made no efforts to create a plan to start paying the debt off, Bliss said.

“The taxpayer clearly is not taking any steps to work anything out with DOR,” Bliss said.

Nearly all of the back taxes, which date back to 2006, stemmed from failing to pay the meals tax, Bliss previously said.

Before being taken down, the sign, dated May 11, read: “The Business Property of Il Faro, Inc. had been seized for nonpayment of taxes, and is now in possession of the Commonwealth of Massachusetts…Any person who attempts to tamper or interfere with this property will be prosecuted to the full extent of the law.”

Medford Square Restaurant Seized By MA DOR

By Jarret Bencks
Medford Patch, May 18, 2011

A seized Medford Square restaurant charged patrons a meals tax but didn’t pay what they collected to the state, a Department of Revenue Spokesman said Thursday.

Il Faro, an Italian eatery located at 21 Main St., was seized by the Department of Revenue last week because it owes the state a total of $142,784.20 in taxes and penalty fees, department spokesman Bob Bliss said. Nearly all of the back taxes, which date back to 2006, stemmed from the meals tax, he said.

“Patrons paid the meals tax, but the restaurant didn’t forward that to DOR,” Bliss said.

Seizing a business is the last thing the Department of Revenue will do in their efforts to collect unpaid taxes, Bliss said.

“You only get to this point when everything else DOR tries to collect has failed,” he said. “This is sort of the last stop.”

The restaurant had an orange sign on its door Tuesday, reading “SEIZED.” Several florescent signs remained lit inside the windows of the Italian eatery Tuesday afternoon.

If Giuseppe Longo, the owner of the restaurant, can come up with a reasonable down payment and payment plan going forward, the business could be reopened, Bliss said.

“We always hope that’s the case, because it’s a lot easier for us,” Bliss said. “We get the money, the business opens back up and the jobs don’t get lost.”

The business, not the building, was seized. If a payment plan isn’t agreed upon, the property of the restaurant will go to auction in about 4 to 6 weeks, Bliss said.

A call to the restaurant Tuesday was unanswered.

Original Story:

A restaurant in Medford Square has been seized by the Massachusetts Department of Revenue for nonpayment of taxes, according to a sign on its door.

Il Faro, an Italian restaurant located at 21 Main St. in Medford, had an orange sign on its door Tuesday, reading “SEIZED.” The sign was dated May 11, 2011.

Several florescent signs remained lit inside the windows of the Italian eatery Tuesday afternoon.

According to filings with the Massachusetts Secretary of State, the owner of the business is Giuseppe Longo. Il Faro first filed as a business with the Secretary of State in 1996, according to state records.

The business was seized but not the building.

The sign on the door read, “The Business Property of Il Faro, Inc. had been seized for nonpayment of taxes, and is now in possession of the Commonwealth of Massachusetts…Any person who attempts to tamper or interfere with this property will be prosecuted to the full extent of the law.”

Anguished 30 Year Retailer Avoids MA DOR Seizure And Bank Foreclosure

Henry was at the end of his rope. Mounting pressure from his bank to pay the delinquent balance of his business loan was beginning to become unbearable. He had already obtained two extensions on his loan. They were not going to wait much longer before foreclosing on his business. The MA Department of Revenue was also growing impatient and was about ready to seize his business in order to pay off nearly $50,000 in back taxes. Many corporate excise, sales, and withholding tax returns also needed to be filed. A loan application with a new lender to refinance and pay off his current bank loan was in danger of being rejected due to the state tax liens on his business and personal property. Without that new loan, he would be unable to pay off his current loan and avoid both a bank foreclosure and seizure by the MA DOR. Since he had also personally guaranteed the business loan and was held personally responsible by the MA DOR for the delinquent state taxes, he would lose all of his personal property as well. At age 54, he would have to start all over again and it would be difficult at best to obtain gainful employment after being out of the employment market for 30 years. He was at a loss as to what to do and called us for help. Our firm worked to submit any unfiled tax returns and then negotiated an installment agreement with the MA DOR for the delinquent taxes. This stabilized his tax situation and gave us time to work out the loan problem. Next, our firm negotiated with the MA DOR to obtain priority for the new lender’s mortgage over their state tax liens. As a result, the new loan was approved, the old loan was paid off, the MA DOR received $30,000 towards the delinquent taxes, and Henry’s 30 year old business was saved. The balance of nearly $20,000 in taxes would be paid off over the next 12 months ending his financial and emotional ordeal. Henry was given a new lease on life.

Distraught Taxpayer Saves Over $35,000 Straightening Out Life

Rosemary hadn’t filed returns in quite a few years and she knew she had a serious problem. She knew it was time to straighten out her financial life. Fortunately, the IRS hadn’t caught up to her yet. Our firm worked to get all Rosemary’s returns prepared and filed and then negotiated an Offer In Compromise settling her old liabilities for less than 16 cents on the dollar. She was very grateful to have her tax problems behind her with a clean slate and a bright future ahead.