Multiple Businesses, Multiple States Multiple Prison Sentences

Vincent Celentano, the owner of several businesses in Florida and Michigan, has been indicted for tax evasion, employment tax fraud and other tax crimes. Celentano is accused of using more than $360,000 from his businesses’ bank accounts to pay for personal expenses, including credit card payments and fuel and sundry items for his yacht. That same year Celentano sold ownership in entities under his control for approximately 2.7 million dollars and asked for payment in a way that kept his accountants from accurately reporting the sale to the IRS. In addition, Celentano failed to file his individual tax returns from 2013 to 2016.

 

From 2013 to 2018 Celentano and others conspired to withhold payroll taxes from his employees and not pay the taxes to the IRS. The money was used to pay for business and personal expenses. When the IRS tried to collect, Celentano and his co-conspirators attempted to thwart their efforts and made false statements to the IRS about who was responsible for paying the taxes. Per the indictment Celentano failed to pay $217,000 in payroll taxes.

 

If convicted, Celentano faces a statutory maximum sentence of five years for each tax evasion and conspiracy charge, three years in prison for each count of failure to pay employment taxes, and a statutory maximum sentence of one year on each count of willful failure to file his personal tax returns.

 

At Loggerheads with the IRS

For more than 20 years, Denver resident, Lawrence Martin Birk, failed to pay federal income taxes. It wasn’t until the IRS began collection efforts that the owner of Terryall River Log Homes, which built and sold log homes, hired a tax firm to prepare eight years of returns. However, Birk left out a lot of information on the returns,  including over $400,000 in retirement distributions that he funneled through a shell company.

 

After filing the returns Birk refused to pay the money due and instead sent the IRS threatening letters citing the “We the People” foundation and the “Tax Honesty” movement.

 

In his ongoing efforts to keep funds from the IRS, Birk purchased cashier’s checks as soon as he deposited money into his account in order to reduce the balance the IRS could have access to.

 

By the time Birk went to trial his tax liability was more than 3.5 million dollars. He was sentenced to five years in prison and ordered to pay restitution in the amount of $1,858,826

Unspeakable Lack of Vision

Robert Lawrence Gazdick, Jr., the owner of an audio-visual equipment rental business in Virginia pleaded guilty to tax fraud for failing to pay payroll taxes for his employees from 2013 to 2018. Gazdick deducted the taxes from his employees’ paychecks but failed to pay the funds to the IRS. In total he pocketed 5.35 million dollars in payroll taxes.

 

As part of the plea agreement Gazdick will pay over $200,000 in restitutions for premiums he failed to pay for health insurance provided to his employees. In addition, he pleaded guilty to willful failure to collect, account for and pay over taxes. He faces up to ten years in prison.

CPA Gambled Using Rich and Famous Client’s Money

A gambling addiction led Los Angeles CPA Jonathan Schwartz, the business manager for Alanis Morissette and other well-known performers and athletes, to steal more than seven million dollars from his clients’ accounts.

 

Schwartz had access to his clients’ bank accounts to pay their bills and get cash for them, but instead, frequently got cash for himself. He concealed the embezzlement by not sending bank statements to his clients. Instead, he sent his clients a prepared statement from GSO Business Management, the firm Schwartz worked for, which contained a false ledger of expenses submitted to the bookkeepers by Schwartz.

 

Schwartz admitted that between 2010 and 2014 he stole almost five million dollars from Morissette by falsifying records and claiming the expenses were for “sundry/personal” items. He stole more than a million dollars from another client and embezzled $737,500 from yet another client.

 

Schwartz admitted that he failed to file a tax return in 2012 and failed to report nearly one million dollars in income that year. He owes the IRS almost 1.7 million dollars in federal income taxes. Schwartz was sentenced to six years in prison followed by three years of supervised release. He was ordered to pay $8,657,268 in restitution.

Your IRS Questions Answered Here…

Question: I own a small business and in order to keep afloat, I did not pay the IRS for my employee’s withholding taxes for a few years.  How much trouble will I be in?

 

Answer: Owing 941 payroll taxes is very different than owing personal 1040 income taxes. Not only can the IRS shut down your business, they can come after you personally, levy your bank accounts, take your receivables and seize your property including your house.  Scarier still is that it could turn into a criminal matter.  Why? Because the money has already been deducted from your employee’s payroll checks; so it’s not your money to begin with! The IRS looks at this as if you stole their money.

 

You need to get help fast from an experienced professional who deals with the IRS every day.  We can assess your situation and figure out the best way to help you, and will take over all dealings with the IRS so you don’t have to.  Don’t let them take over your life and manage your cash flow; call us today!

 

Our clients generally NEVER meet or speak with the IRS. We handle everything for you so you don’t have to take time away from your job or business. We know the law.  We know your rights. We can help!

 

We at MLO Tax are experts in tax resolution and help taxpayers like you with their IRS Problems every day.  Call us at 610-388-4474

Your IRS Questions Answered Here…

Question: I received a notice from the IRS because I did not have the funds to pay the tax I owed on my 2017 income tax return.  I also was late in filing my tax return. Not only is the IRS demanding the tax I owe, but they have slapped on these huge amounts for penalties and interest.  I had extenuating circumstances that caused all of this. This isn’t fair…what can I do?

Answer: A Tax Resolution Specialist can request a removal (abatement) of penalties 2 ways:  1) “First Time” Penalty Abatement and 2) a Reasonable Cause Argument. The IRS writes off billions of dollars in penalties each and every year, but you must know how to do it correctly.

A First Time Penalty Abatement (FTA) can be requested if you have a “clean” compliance record, meaning you have not incurred a Failure to File or Failure to Pay penalty for the 3 years preceding the year you are requesting abatement on.

If you don’t qualify for FTA, there are another 9 “Reasonable Cause” arguments to get your penalties removed.  They are: 1) Death, Serious Illness or Unavoidable Absence 2) Fire, Casualty or Natural Disaster  3) Unable to Obtain Records (common issue with couples going through a divorce)  4)  Mistake was made by the taxpayer or tax preparer  5)  Erroneous Advice or Reliance on a tax preparer  6)  Written/Oral Advice from the IRS  7)  Ignorance of Tax Laws  8)  Reasonable Cause/Ordinary Business Care and Prudence  9)  Undue Economic Hardship.

If you think your reason(s) or excuse falls within one of the above, let us know so we can guide you through the process and see to it that the IRS reduces or removes these penalties in full once and for all. Our clients generally NEVER meet or speak with the IRS. We handle everything for you so you don’t have to take time away from your job or business to deal with all of the IRS’s paperwork. We know the law.  We know your rights. We can help!

Easy Come Easy Go

A 29-year-old Florida man submitted a false tax return to the IRS in 2016 and got a refund check for $980,000. Ramon Christopher Barnett claimed $18,497 in income, $47,357 in deductions, and one million dollars in income tax credit withholding. His return included a fictitious attachment that contained information on wages and taxes withheld from a nursing home. Thinking ahead, he requested the IRS withhold $20,000 from the refund for the following year’s estimated taxes.

In reality Blanchett had barely made $4000 that year and had paid no taxes.

When the $980,000 check arrived he deposited it in his account at Sun Trust Bank. The bank promptly contacted the IRS, put the check in a vault and closed the account. A year later the check was cleared and Blanchett asked that the check be reissued. He took the new check to a new bank and claimed the money came from an inheritance.

Blanchett bought a Lexus with the money for $51,617 and by the time the IRS came knocking he still had $917,641 in the bank. The car was confiscated and in a plea agreement Blanchett agreed to pay the IRS $59,768 in restitution plus any taxes, fees, penalties and interest accrued over the last three years. He faces up to 10 years in prison.

Temp Agency Owner May Find Himself Temporarily in Jail

California business owner, Luis Perez, has been charged with tax evasion for failing to pay almost 30 million dollars in wages he withheld from employee paychecks. Perez, the owner of four staffing agencies, deducted the taxes from his employees’ paychecks but failed to pay the money to the IRS. These taxes, often called ‘trust fund taxes’ include income taxes and FICA taxes that fund Social Security and Medicare. Perez did not pay the taxes for seven years and the money he owes includes interest and the Trust Fund Recovery Penalty.

The IRS came to collect in 2007 but Perez kept them in the dark for almost a decade by concealing the purchase of luxury items, including several cars and a boat. He did this by placing the ownership titles in the names of other individuals or his companies. His purchases included a $135,000 Ferrari, a $224,000 Rolls Royce Phantom and a $340,000 Lamborghini Aventador.

Perez is also accused of underreporting his income and making other false statements to the IRS in order to evade their collection efforts.

This is not the first time Perez has been charged with a crime. Last year the Orange County District Attorney filed charges against Perez and two associates for workers comp fraud for failing to report wages to the Employment Development Department, withhold payroll taxes or pay employment taxes for 36 employees.

If convicted on the tax evasion charges Perez could face up to five years in federal prison.

Credit Union CEO Credited with Shutting Down CBS Credit Union

Longtime CEO of the CBS Employee Credit Union, Edward Rostohar, was sentenced to 14 years in prison for embezzling 40 million dollars over a 20-year period. Rostohar left the credit union insolvent, and it was absorbed by University Credit Union, which took over all 2,800 accounts.

Rostohar claimed that most of the money was either gambled away or put into failed business ventures. Prosecutors painted a different picture and said that Rostohar also spent a large sum on luxury cars, watches and private jets to exotic locations, where the married Rostohar wined and dined women who were half his age.

The fraud was perpetrated in two ways, through online payments Rostohar set up, which directed money into his accounts, or by forging the signature of an employee at the credit union on checks payable to himself. An employee discovered the fraud when she saw a check made out to Rostohar for $35,000. The employee then went back a few months and discovered payments made to Rostohar for nearly four million dollars in that time frame.

Before joining the CBS Credit Union, Rostohar was an administrator for the National Credit Union Administraton, a position he says enabled him to avoid detection for a long time because he knew what examiners looked for when studying a credit union’s finances. The judge gave Rostohar a longer sentence than both the government and the defense had requested.

With a Middle Name Like Prosper…

A Nigerian national living in Missouri was sentenced to four years and three months in prison without parole for filing false tax returns and for his part in various Internet scams that defrauded victims.

Segun Prosper Otaru, 27, was ordered to pay $26,056 in restitution and the same amount to the government. He entered the US on a student visa in 2013 but never took any classes. Since arriving in the US, he has worked with an organized crime network, has had 13 aliases and numerous bank accounts with fake identities. Otaru admitted to fraud through various Internet scams. Among them were listings on Craigslist for rental property that Otaru and his co-conspirators did not control. When victims responded they were asked to send a deposit to hold the property.

Otaru also filed as many as 167 false income tax returns that included stolen identities, false employers, wages and employment taxes paid. He and a partner received $24,356 in illegal tax refunds.