A pair of executives in a California-based adult entertainment business have pleaded guilty to federal tax charges.

Oscar A. Macias, 36, pleaded guilty Monday to a one-count information charging him with subscribing to a false individual tax return for tax year 2003 on behalf of the company, Universal Media Management. A former business associate, Catherine Shihad, 34, pleaded guilty last week to a one-count information charging her with subscribing to a false corporate tax return for the same company for the fiscal year ending Sept. 30, 2004. They were both officers and shareholders in the business, which provided live adult entertainment to cash-paying customers.

According to Macias’ plea agreement, from 2003 through 2005, he received income from UMM that he did not report on his federal income tax returns, causing a total tax loss of approximately $32,897 to the federal government, according to prosecutors. 

Under his plea deal, he has agreed to file amended tax returns for 2003 through 2005 correctly reporting his unreported income, prior to the time of sentencing. He also agreed to pay at or before sentencing all the additional taxes, penalties, and interest assessed by the IRS.

As a result of his guilty plea, Macias faces up to three years in federal prison and a fine of $250,000.  Sentencing is scheduled for January. 

According to Shihad’s plea agreement, in 2003 and 2004, she knew that UMM kept track of its income with detailed daily logs itemizing the cash received from customers. Shihad was responsible for providing information on UMM’s income to the company’s tax preparer, who prepared a false corporate income tax return for the fiscal year ending Sep. 30, 2004.  Shihad’s false statements to the tax preparer caused a tax loss of approximately $140,470 to the government, according to prosecutors.

Shihad has agreed to take the appropriate steps to cause UMM to file amended tax returns correctly reporting unreported income for 2003 and 2004, prior to her sentencing. She faces up to three years in prison and a fine of $250,000. Her sentencing is set for November.

The investigation was conducted by the IRS’s Criminal Investigation division in conjunction with the U.S. Attorney’s Office for the Central District of California.

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