Tax Fraud Blotter: Doctors in the house
Root of a problem; in the pipeline; little oversight; and other highlights of recent tax cases.
Gretna, Louisiana: Resident Patricia Hargis has been sentenced to 21 months of home confinement as part of a three-year probation term for charges stemming from filing a false federal income tax return.
Hargis admitted to understating her income in each return for 2011 through 2015, causing her taxes to be understated by some $110,810.
She was also sentenced to a $7,500 fine and ordered to pay restitution to the IRS.
La Crosse, Wisconsin: Dentist Frederick G. Kriemelmeyer, 71, has been sentenced to six years in prison for tax evasion.
In 2007, Kriemelmeyer was ordered to pay $135,337 for unpaid federal income taxes. By 2012, the IRS had assessed Kriemelmeyer for more than $450,000 in taxes, interest and penalties.
From at least 2013 through 2015, Kriemelmeyer did not file returns reporting the income from his dental practice, directed his patients to pay him in cash or by check with blank payee lines and paid his business and personal expenses with third-party checks and cash.
Kriemelmeyer, who was recently convicted, was also ordered to serve three years of supervised release and to pay $226,839 in restitution to the U.S.
Johnston, Rhode Island: Dr. Leonard Marino, a Providence, Rhode Island, chiropractor who failed to report to the IRS more than $1 million in business revenue that he diverted from his business for personal use, has been sentenced to three years of probation, the first year to be served in home confinement.
Marino’s practice relied mostly on money derived from insurance company payments for bodily injury claims submitted by law firms on behalf of many of his patients. He devised various schemes to cash many of the law firms’ checks and divert the proceeds for his own use.
Marino previously admitted in 2017 that he failed to report $531,408.38 in gross income, which would have resulted in federal tax due of some $236,945. He also admitted that from 2016 through 2108, he failed to report income totaling $1,061,000. He told the government that he spent unreported income at, among other places, Whole Foods and strip clubs, and that he used some of the funds to purchase drugs.
Marino also claimed that he paid some $2,000 a week in extortion money to an individual named M.B., a known associate of organized crime, and that he made between 10 and 20 payments per week to “runners” to bring him clients. Neither claim of payments could be corroborated by the government.
Marino was ordered to pay penalties and interest owed to the IRS; his federal back taxes have been paid. He was also fined $75,000.
Tuttle, Oklahoma: Christa Dawn Jackson has been sentenced to four years in prison for embezzling more than $1.2 million from her employer through wire fraud and to two years in prison for signing a false federal income tax return.
Jackson, who pleaded guilty in October, worked as an office manager at AllPoints Pipe Service, where she had access to company checks and accounting systems. The United States alleged that from February 2010 to June 2017, she made company checks out to herself and her husband and forged the signature of the company’s owner on those checks. It also alleged she initiated electronic transfers from company bank accounts to third parties for her own benefit and created false invoices to conceal her embezzlement.
The government also charged her with signing a false 2014 federal income tax return on which she reported that her income was only $96,496 when she knew it was substantially higher.
Jackson was ordered to pay a total restitution of $1,477,872.10 to the IRS, to the victim company and to an insurance company. She was also sentenced to a total of four years of supervised release. She will serve the sentences concurrently.
Frankfort, Kentucky: Lesley Wade has pleaded guilty to money laundering and filing a materially false return.
Wade was a long-time employee of the Franklin County Board of Education, most recently serving as its financial director. In Wade’s guilty plea agreement, she admitted that starting in February 2011 and continuing through about June 2019, she wrote unauthorized checks of FCBOE money to herself, then falsified the necessary FCBOE records and invoices to cover up her crimes.
Wade also served as treasurer of Leestown Gospel Church in Frankfort, where she essentially had control over its financial management with little oversight or internal controls. Wade also admitted to periodically using her control over the church’s finances to launder money she had stolen from the FCBOE, using the church’s account before writing checks to herself, attempting to avoid detection and making the checks appear legitimate.
Her theft, which took place over years, resulted in the FCBOE losing $1,624,593.
Wade also admitted that she willfully filed false individual income tax returns for 2011 through 2018 by intentionally failing to report the income from her fraud. The tax loss totaled $315,677.
Sentencing is Sept. 17. For the tax charge, she faces up to three years in prison and a maximum fine of $250,000. For money laundering, she faces up to 20 years in prison and a maximum fine of $500,000.