WASHINGTON – Lawrence Cohen, a resident of Las Vegas and a former employee of the now defunct Freedom Books, pleaded guilty today to a tax charge before U.S. District Judge Kent J. Dawson in Las Vegas, the Justice Department and Internal Revenue Service (IRS) announced.
Cohen pleaded guilty to one count of aiding and assisting in the preparation of a false 2000 Form 1040 for a client of Freedom Books. Cohen has agreed to pay restitution for the taxes owed. The plea agreement lists an agreed tax loss of $92,530, most of which is based on the taxes not paid by several Freedom Book clients for whom Cohen prepared false income tax returns.
According to the plea agreement and court documents, from approximately late 2000 or early 2001 until at least 2003, Cohen worked with Irwin Schiff and Cynthia Neun at Freedom Books in Las Vegas. As part of his employment at Freedom Books, Lawrence Cohen promoted the filing of "zero returns" with the IRS.
"Those who intentionally file false and frivolous income tax returns or fail to file tax returns or fail to pay all taxes legally due risk criminal prosecution," said Ronald A. Cimino, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division. "The Tax Division’s National Tax Defier Initiative is focused on those who intentionally refuse to comply with our laws. The punishment for such willful criminal defiance of our tax laws includes imprisonment and substantial fines."
Paul Camacho, Special-Agent-in-Charge of the Las Vegas Field Office of the Criminal Investigation Division of the Internal Revenue Service, emphasized the importance of this prosecution to deter others from adopting and using these frivolous arguments. "Many taxpayers from Nevada, as well as customers from all over the United States, were duped by the fraudulent advice of Schiff, Neun and Cohen, and then were later forced to pay substantial penalties and interest."
Cohen faces a maximum prison sentence of three years and a $250,000 fine. His sentencing hearing was set for Sept. 16, 2009. As part of the plea agreement, the government will dismiss the other charge against Cohen, tax evasion for his 2000 individual income tax return, at sentencing.
In September 2005, Cohen, along with Irwin Schiff and Cynthia Neun, was tried on conspiracy and tax fraud charges. Schiff and Neun were convicted on the conspiracy charges and other tax fraud counts and sentenced to prison. Cohen was acquitted of conspiracy and other tax counts, but was convicted of aiding and assisting in the preparation of one false 2000 Form 1040 (the same count to which he is pleading guilty).
In December 2007, Cohen’s conviction was reversed by the Court of Appeals for the Ninth Circuit. The Ninth Circuit vacated Cohen’s conviction because the district court failed to allow the defendant’s expert psychiatrist to testify about Cohen’s alleged narcissistic personality disorder. The Ninth Circuit said the testimony, if allowed, would have assisted the jury in making a decision about whether Cohen had acted willfully when preparing the false income tax return.
Acting Deputy Assistant Attorney General Cimino commended the IRS-Criminal Investigation special agents who investigated the case, as well Tax Division trial attorneys Lori A. Hendrickson and Christopher S. Strauss who prosecuted the case.