The following case summaries were copies from the IRS’s web site. The IRS states that they are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Businessman Found Guilty on 29 Tax Charges
On January 7, 2004, in Dallas , Texas , Richard M. Simkanin, owner of Arrow Custom Plastics, who has not withheld taxes from his employees’ paychecks for three years, was convicted by a federal jury on 29 counts of tax violations. During trial, government witnesses testified that Simkanin’s bookkeeper and two members of the accounting firm who prepared the company tax returns for Arrow Custom Plastics, all told Simkanin that it was unlawful to refuse to collect taxes from employees’ wages. Evidence presented at trial also showed that Simkanin was warned by the senior partner of the accounting firm that he would get into criminal trouble if he refused to withhold taxes. By refusing to withhold taxes, during the period 2000-2002, Simkanin was able to retain over $175,000 in taxes lawfully due to the IRS. Simkanin told one of his accountants that he as a Free Man, he was not obligated to pay taxes or collect taxes from his employees’ wages. In March 2000, his accounting firm quit after it was unsuccessful in persuading Simkanin to reconsider and collect employee taxes.
Michigan Man Sentenced in Fraud Case
On January 5, 2004, in Detroit , MI , Peter W. Tietenberg pleaded guilty to wire fraud and failure to file a tax return. According to an information and his plea agreement, from 1998 through 2001, Mr. Tietenberg, an accountant, operated Business Financial Consultants, a business which provided accounting and tax services. During this time period, Tietenberg’s clients would submit information so that employee withholdings, social security, and Medicare taxes could be calculated. After determining the amount of taxes due Tietenberg would transmit payroll register forms via facsimile, indicating the clients’ taxes due and owing. Tietenberg then directed his clients to write checks, payable to Business Financial Consultants, so that he could make payment to the Internal Revenue Service on their behalf. Instead of making the required payments to the IRS, Tietenberg converted the funds to his own use, which totaled over $750,000. From 1998 through 2001, Tietenberg also failed to file his own personal tax returns, which included the failure to report over $390,000 in gross income on his 2000 federal tax return.
Bogus Sight Drafts Lands 33-Month Term
In St. Paul , Minnesota on December 16, 2003, Roger Leigh Oehler was sentenced to 33 months in prison after being convicted by a jury in July 2002 on 30 counts of passing fictitious obligations and give counts of submitting false statements to the IRS. From February 1999 to July 2000, Oehler used fraudulent sight drafts in an effort to pay debts, obtain money or obtain tax refunds. Oehler wrote nine bogus sight drafts for payment of child support to state agencies and the social services department for his child support obligations. He also wrote fake sight drafts to pay his tax obligations and defraud credit card companies of over $200,000. Oehler was also convicted of filing false 8,300 forms with the IRS.
San Diego Return Preparer Sentenced
On December 8, 2003, in San Diego , CA , Roosevelt Kyle was sentenced to 12 months in custody. A jury convicted Kyle for failing to file his personal income tax returns for the years 1995 through 1998. Evidence at trial showed Kyle earned over $300,000 and prepared over 3,000 tax returns, but failed to file his own personal income tax returns. According to evidence presented in court, Kyle promoted tax avoidance seminars, at which he advised clients that they could permanently stop paying income taxes. Kyle also promoted the book entitled, “Vultures in Eagles Clothing” which claims the income tax laws are not applicable to U.S. citizens. This book was written by Lynne Meredith, who is under criminal indictment in the Central District of California for various tax crimes.
Man Sentenced for Evading Over $235,000 in Taxes
On December 3, 2003, in Kansas City , Missouri , Mark A. Fronce was sentenced to 15 months in prison, ordered to pay a $2,000 fine, and ordered to pay $434,522 in back taxes with interest and penalties. Fronce pleaded guilty on June 26, 2003, to one count of tax evasion. By pleading guilty, Fronce admitted that he had taxable income of approximately $565,806 in 1997 and should have paid $235,486 in taxes. Instead, Fronce did not file a tax return and attempted to conceal his true income by diverting his income to “trust” bank accounts.
Readyville Man Convicted Of Income Tax Evasion
On November 20, 2003, in Nashville , TN , a jury convicted Rickey Brunet on four counts of tax evasion for 1995, 1996, 1997 and 1998. Brunet failed to file tax returns for the 1996, 1997 and 1998 tax years, despite the fact that he earned substantial income in each of these years from his occupation as a self-employed draftsman. Brunet also fraudulently transferred the title to his home and his automobiles to sham trusts for the purpose of evading the payment of his 1995 federal income taxes. Brunet testified that in mid 1995 he joined a group named Save-A-patriot Fellowship, an organization that questions the legal interpretation of the tax code, and began researching the tax law. Brunet told the jurors that he could not find in his research any information that would lead him to conclude that the IRS made him liable to file individual income tax returns or pay individual income tax. Brunet will be sentenced on February 9, 2004.
Optical Owner Sees Jail Time
On November 6, 2003, in St. Paul , MN , Michael F. Marsh, the former owner of Marsh Optical was sentenced on one year and one day imprisonment. Marsh pleaded guilty to failing to file federal income tax returns for the calendar years 1997 – 2000. Marshes total income for those years was $401,371, resulting in a tax loss of approximately $141,559.
Three Sacramentans Sentenced To Lengthy Prison Sentences In Tax Fraud, Investment Fraud and Money Laundering Scheme
On November 4, 2003, in Sacramento, CA, Herbert Arthur Bates, Christopher R. Bates and David Larry Smith were sentenced to lengthy prison terms after being convicted of conspiracy to defraud the United States by impairing and impeding the IRS in the assessment and collection of income taxes, conspiracy to engage in mail and wire fraud, and conspiracy to engage in money laundering. Herbert Bates, Christopher Bates, and David Larry Smith were sentenced to 136 months, 63 months and 151 months in prison, respectively. All three were also ordered to pay restitution in the amount of $1,738,520, a criminal forfeiture of $1,000,000, and serve 36 months of supervised release. Evidence presented at trial proved that the defendants sold a form of trust, which they called an Unincorporated Business Organization (UBO), to approximately 249 investors. The defendants charged between $3,000 and $7,500 for the creation of these UBO’s. Herbert Bates and Smith advised clients that they could transfer all of their income and assets to the UBO, and after transferring their income and assets, the clients no longer had to file individual income tax returns nor pay federal income taxes.
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