Shocking behavior; mother's day; Ferrari mad; and other highlights of recent tax cases.
Parkersburg, West Virginia: Business owner Brian E. Drake has pleaded guilty to tax evasion.
From at least 2008 through 2021, Drake owned and operated River City Chem Dry, which provided general building and specialty contracting services. He admitted that he had a legal responsibility to collect and pay over to the IRS payroll taxes withheld from his employees' wages and complete and file 941s. He also admitted that he knew that after he reorganized River City as a C corporation in 2012 he was required to pay corporate income taxes on earned income and complete and file an 1120 every year.
Beginning no later than 2005, Drake amassed a significant tax debt due to unpaid personal income taxes; his tax problems later extended to his company. Drake's tax delinquencies grew exponentially from 2005 through 2016 despite IRS attempts to collect his outstanding balances and work with him to help him attain compliance.
Drake admitted that he willfully evaded payment of $299,765 in payroll taxes for reported wages paid to employees from at least 2016 through 2019. He also admitted that he evaded the assessment of $347,054.87 in payroll taxes by routinely paying employees substantially in cash from at least 2017 through 2021.
Drake failed to report money earned by River City for tax year 2016 and continuing through tax year 2021 and did not file corporate income tax returns for 2019 to 2021 to dodge corporate income taxes.
The tax loss exceeds $646,819.87.
Sentencing is May 2, when Drake will face a maximum of five years in prison, three years of supervised release and a $250,000 fine. He also owes restitution.
Fairfax, Virginia: Dr. Jasser Thiara has pleaded guilty and agreed to pay $3.1 million in taxes and $2.2 million to insurance companies for obstructing the IRS by underreporting his income and filing false returns in connection with his medical practice.
Thiara owned and operated an obstetrics medical practice, d.b.a. Mid-Atlantic Ob-Gyn, and another doctor's office specializing in pain management, Fairfax Pain Clinic. To reduce his taxable income for the 2017 to 2020 tax years, Thiara filed returns for Mid-Atlantic that claimed bogus business deductions. He then filed individual income tax returns that did not fully report his income from Mid-Atlantic and he failed to report hundreds of thousands of dollars a year in gross receipts generated by Fairfax Pain Clinic.
From 2014 through about 2016, Thiara also received payments for prescriptions referred to certain local pharmacies owned by Mohamed Abdalla even though some of Mid-Atlantic's contracts with insurers expressly prohibited such arrangements. To increase profits in some instances, Abdalla billed insurance companies for these prescriptions but did not send the medications to patients. In total, Thiara received approximately $2.2 million from the scheme and did not report the income or pay taxes on it.
For the 2017 to 2020 tax years, Thiara used a business called NTMT to receive payments for medical services billed out of network, principally from Aetna and United Healthcare, even though Thiara was an in-network provider for both insurers. Thiara then filed returns that falsely reported that NTMT had received minimal to no business income when in fact it had received millions of dollars from insurance companies.
In total, Thiara did not pay the IRS $3,172,001 in taxes owed for 2015 to 2020. He used the money to buy a $3.5 million residence and a $340,000 Ferrari and spent hundreds of thousands more on credit cards and luxury items.
Sentencing is March 15. Thiara faces a maximum of three years in prison and has agreed to pay $3,172,001 in restitution to the IRS and another $2,214,830 to third-party victims.
Adballa was sentenced in 2021 to four years in prison for his role in the kickback scheme.
Nanticoke, Pennsylvania: Business owner Robert Luksh has pleaded guilty to criminal tax evasion.
Luksh, owner of Luksh Electric, admitted that during 2019 and 2020 he operated his business in cash to evade federal business-related taxes that he owed from previous tax years.
He acknowledged that the monetary loss from his conduct was $100,000 to $250,000 and agreed to make restitution to the IRS of $237,146.98.
The maximum penalty is five years of imprisonment, a term of supervised release following imprisonment and a fine.
Altamonte Springs, Florida: Dentist Frantz Brignol has been sentenced to two years in prison for tax evasion.
Brignol amassed more than $600,000 in tax liabilities to the IRS between 2014 and 2020 and evaded tax payments on his income by hiding hundreds of thousands of dollars in his mother's bank accounts, for which he had signatory authority, trading funds overseas in his mother's name and making materially false statements to the IRS on financial disclosure forms.
Brignol, who was found guilty in August, was also ordered to pay the IRS $896,588.89 for his outstanding tax liabilities.
Orlando, Florida: Restaurateur Manuel Tato has been sentenced to 57 months in prison for failing to pay employment taxes.
Tato owned and operated multiple area restaurants from at least 2010 to 2017 and owned and operated Core Food Group, an affiliated company for Tato's restaurants that was responsible for processing payroll for the employees. Tato employed some 645 restaurant workers between 2010 and 2017.
While he withheld employment taxes from his employees' paychecks and informed employees that he was doing so on their pay stubs, he never paid those taxes to the IRS; from July 2016 to March 2017, Tato failed to pay the IRS $93,690.66. Throughout the entire time that Core Food Group existed, Tato failed to pay over $2 million in taxes that he had withheld from his employees. He used a complex corporate structure, different FEINs and numerous bank accounts to hide his criminal activity.
He also maintained a lavish lifestyle, sending his children to private school and living in a million-dollar mansion with a private tennis court. In 2020, after being informed that he was under investigation for failing to pay employment taxes, Tato and his family purchased a beach house.
Tato, who pleaded guilty in April, was also ordered to pay a $250,000 fine and $93,690.66 in restitution.
Orchard Park, New York: Tech exec Julie Dotton has been sentenced to four years of probation and ordered to perform 100 hours of community service after being convicted of failure to account for and pay over employment taxes.
Dotton was president, CEO and majority shareholder of Applied Sciences Group, a technology business that largely developed software. She was also the founding partner of the partnership KRP Holdings.
For all of 2018 and three quarters of 2019, she failed to pay over the trust fund taxes to the IRS on behalf of the employees of both companies, resulting in a loss of some $1,100,837 to the IRS. Dotton also admitted that she obtained an undeserved Paycheck Protection Program loan from the federal government of $117,277.
Dotton was also ordered to pay $1,585,538 in restitution to the IRS and $117,277 to the U.S. Small Business Administration.
Orlando, Florida: Businessman Francis Galen Dulac has pleaded guilty to one count of tax evasion.
From 2016 through 2022, he filed taxes with the IRS each year showing a total income of $12,000 to $20,000; he was actually earning $275,000 to $366,000 annually. Dulac avoided paying more than $500,000 in income taxes over seven years.
He was operating a nutrition and supplements business and derived more than $10,000 from the sale of illegal steroids. He made extensive use of cash in his business, and purchased numerous Mercedes, Lamborghini, and Ferrari cars worth hundreds of thousands of dollars, which he financed by claiming annual incomes of $125,000 and $480,000.
Dulac faces a maximum of five years in prison.
