Worldly Tax Evader Gets to See the World From a Jail Cell

Florida businessman Dusko Bruer pleaded guilty to tax evasion and failure to file a Report of Foreign Bank or Financial Account. Bruer owned a company that bought U.S. made agricultural machinery and parts and sold them throughout the world. From 2003 Bruer did not receive a salary, but he used millions of dollars from the company’s bank accounts to pay his personal expenses, including the purchase of a yacht for $1,350,000, a waterfront home in Florida for $1,650,000, a home for an employee and real property in Serbia.

From 2007 to 2011 Bruer transferred 5.8 million dollars of the company’s profits to foreign financial accounts in Croatia, Germany, Serbia and Switzerland. Between 2007 and 2014 Bruer failed to report more than 7.7 million dollars in income and did not pay taxes of more than 2.7 million dollars.

Bruer’s company never filed a corporate tax return and never paid any taxes. The company had a number of employees but never filed employment tax returns, and did not withhold and pay over payroll taxes.

From 1999 to 2014 Bruer didn’t file a personal tax return and didn’t pay any taxes on his income. In 2015 Credit Suisse closed his account in Switzerland, which at one point had a value of $6,177,586, and advised Bruer to enter the IRS’s Offshore Voluntary Disclosure Program, by which taxpayers could avoid criminal prosecution by making a voluntary disclosure to the IRS. Instead, Bruer filed a ‘quiet’ disclosure that involved filing several delinquent tax returns.

Bruer faces a maximum sentence of five years in prison for each charge, three years supervised release, restitution and monetary penalties.

A Prime Example of What Not to Do

Igor Fleyshmakher, co-owner of Prime Aid Pharmacy in New York and New Jersey, pleaded guilty to tax evasion and violation of the federal anti-kickback statute in a scheme that included bribing doctors and their staff to direct prescriptions to his pharmacies. Bribes included designer bags, expensive meals, and payments by cash, check and wire transfers.

Between 2012 and 2014 Fleyshmakher diverted 33.9 million dollars into a bank account concealed from pharmacy tax preparers and did not report the funds on his personal tax return. This resulted in a 5.8-million-dollar tax loss to the IRS.

“Bribing doctors to line your own pockets and using secret accounts to evade taxes are both very serious offenses, motivated by one thing: greed,” said John Tafur, Special Agent in Charge.

The conspiracy and tax evasion charges each carry a maximum penalty of five years in prison and a fine of up to $250,000.

Warranty Fraud Got this Texan a Warrant for his Arrest

Vaughn Simon, from Pearland, Texas, was charged with filing a false tax return, tax evasion, and mail and wire fraud for a scheme involving manufacturers’ warranties. Simon obtained serial numbers for products sold by Cisco, Neat, iRobot and APC and then submitted false warranty claims. Simon claimed the products had defects he knew could not be solved and the respective companies sent him replacement products, for items he never purchased in the first place. Simon then sold the products on eBay and Amazon.

Simon attempted to obtain more than five million dollars worth of products and was successful in getting more than three million dollars’ worth of products from Cisco alone.

Simon filed false tax returns for 2014 and 2016, where he underreported his income by $95,000 and $212,000, respectively. He evaded taxes altogether in 2015 by failing to file a return and storing the proceeds of his fraud in bank accounts and PayPal accounts in the names of his co-conspirators. He also hid cash at home, paid his living expenses with cash, used false domain names, prepaid gift cards and false identities.

He faces a maximum sentence of 821 years in prison, five years of supervised release and a fine of $8,250,000.

 

Nothing Smart About This Tax Offender

Two tax preparers in Texas, Smart Ajayi and JoAnn Villarreal, were charged with filing fraudulent tax returns and have been permanently barred from operating a tax return preparation business and preparing tax returns for others.

The complaint against the two, Ajayi and Villareal, states that they repeatedly understated their customers’ tax liabilities by making up non-cash charitable deductions and creating false Schedules C with inflated or fraudulent business losses. In one instance Ajayi falsely reported that a customer with an adjusted gross income of $34,027 made $19,759 in non-cash charitable contributions. During the years 2016 to 2018 Ajayi and Villareal filed hundreds of tax returns, causing the US to lose substantial tax revenue.

Beware of Scammers on the Hunt For COVID-19 Stimulus Checks

The IRS is urging citizens to be on high alert for scams related to the COVID-19 economic impact payments. While more than 80 million taxpayers who opted for direct deposit should have already received the payment, millions more will receive the stimulus via a check in the mail.

US Attorneys around the country expect these payments to coincide with a surge in scam calls, emails and text messages as criminals attempt to leverage the payout as an opportunity to defraud individuals. Particularly vulnerable are seniors and the disabled, who don’t normally file tax returns and whose stimulus payment will be sent automatically with no further action required to receive it.

“Our office is on the lookout for scam artists who try to steal these much-needed economic impact payments from the pockets of our citizens,” said U.S. Attorney Michael Bailey. “Educate yourself about common scams, be vigilant in protecting your information, and report any attempted fraud.”

The IRS will not contact anyone to request additional information via email, text, call, or in-person to issue an economic impact payment. Any contact asking for information regarding an economic impact payment should be considered suspicious. If contacted, the IRS recommends people hang up the phone, ignore the email, or shut the door, and report the scam to the IRS or the National Center for Disaster Fraud hotline at 1-866-720-5721 or e-mail at disaster@leo.gov.

Facebook Faces the IRS in Court to the Tune of Nine Billion Dollars

The IRS is claiming that social media giant Facebook grossly undervalued its intellectual property when it sold it to a subsidiary in Ireland in 2010 in order to avoid taxes.

Facebook’s subsidiaries pay a royalty to the U.S. parent company for its user base, platform technologies and trademark, among other elements. Facebook Ireland paid its US counterpart more than 14 billion dollars from 2010 to 2016.

The IRS claims that the valuation Facebook gave its intellectual property is too low and should be taxed accordingly. Facebook claims the low valuation reflected the risk involved with its international expansion, since the sale happened before its IPO and the development of its advertising systems.

According to Facebook spokeswoman Bertie Thompson, at the time of the 2010 valuation, Facebook, “Had no mobile advertising revenue, its international business was nascent, and its digital advertising products were unproven.”

The process of setting up a subsidiary in Ireland to take advantage of low tax rates is a common accounting maneuver for large corporations, with companies like Apple doing the same thing.

If the IRS wins, Facebook would have a tax liability of up to nine billion dollars, plus interest and penalties.

Did You Know?

Federal tax returns were not always due on April 15. March 1 was the due date in 1913 and it was changed to March 15 in 1918. The current tax date was established in 1954.

Leaving the Art House for the Big House

Philip Righter has pleaded guilty to the sale of paintings he claimed were created by artists such as Keith Haring, Andy Warhol and others, and admitted to lying on his income tax returns.

Righter attempted to bilk victims out of six million dollars by forging authenticity papers for paintings he claimed were legitimate. He caused losses of at least $758,265 and his fraudulent tax returns cost the United States more than $100,000.

One victim loaned Righter $24,000 based on a painting by Jean-Michel Basquiat that Righter put up as collateral. The victim discovered the painting was a fake when  Righter defaulted on the loan and he tried to sell it.

On his 2015 tax return Righter submitted a false W-2 and a false donation of fraudulent art to a charity, which resulted in a tax refund of $54,858. He later filed an amended 2015 return and claimed a loss of $2,575,000 for artwork he said was stolen and had no value. The amended return resulted in false carry back refunds  totaling $52,485.

Righter faces a maximum of 25 years in prison.

How Many Scientific Calculators Does It Take to Send an Executive Assistant to Jail?

Kristen Martin, an executive assistant from Denver, pleaded guilty to mail fraud and federal tax evasion for a scheme that cost her employer $846,441.

From 2013 to 2016 Martin used her employer’s Staples accounts to purchase unauthorized items she either kept for herself or sold online through eBay and other companies. Due to changes in assignment within the company, Martin came to have access to 23 different Staples accounts, making her nefarious activities easier to hide.

According to court documents, Martin fraudulently ordered 4790 scientific calculators, 250 iPads/tablets, 440 Apple TVs, 178 Kindles, 159 headsets and five cameras. She resold the goods for a total of $571,725 and used the company’s Federal Express account to ship the items to her buyers. Shipping charges cost her employer an additional loss of $7896.

When questioned by management about some of the purchases, Martin lied and  said that the items were purchased for a project in a different division of the company.

Martin hid her earnings from the sale of the illegally obtained items from the IRS by filing false federal income tax returns for the years 2013 – 2016. She has agreed to pay restitution up to $872,337 to her employer and in the amount of $161,864 to the IRS.

Not a Lot of Compassion for this Office Manager

Alicia Raynor, the business manager for Compassion at Home in Buffalo New York, has been charged with wire fraud and filing a false tax return for diverting $238,871 of company funds to personal accounts.

Raynor was in charge of the company’s accounting and covered her tracks by disguising entries in Quickbooks to make it appear that payments were going to Capital One, Bank of America or other company employees when they were going into her accounts. In one instance she claimed a payment of $2978.19 was intended for Bank of America, but the automatic wire transfer was directed into a personal checking account she shared with her husband.

In addition, for tax years 2013 – 2016, Raynor failed to report more than $1,214,444 in payments she received from Compassion at Home on her tax returns. The IRS estimates she owes more than $370,000 for those tax years. Raynor faces a maximum sentence of 20 years in prison and a $250,000 fine.