United States Attorney Benjamin B. Wagner
Eastern District of California
Bay Area Resident Arrested for Tax Evasion
|FOR IMMEDIATE RELEASE||
Tuesday, October 16, 2012
Docket #: 1:12-cr-00350 AWI
FRESNO, Calif. — Bay Area resident William James Kennedy, 66, was arrested today in Oakland, Calif. Based on an indictment filed October 11, 2012 in Fresno, charging him with four counts of filing a false tax return and one count of filing a false claim with the IRS.
According to the indictment, Kennedy filed tax returns in 2002, 2003, 2004 and 2005, in which he underreported his taxable income. The indictment alleges that Kennedy, as a financial advisor, touted a variety of tax avoidance schemes, such as the use of corporation soles (a corporate form that enables religious leaders to hold property and conduct business for the religious entity) and debt elimination programs, to his clients in order to allow them to avoid paying income taxes. For his financial services, Kennedy was compensated by his clients but failed to properly report that income on his tax returns. In 2002, he claimed an improper charitable deduction to an entity that was one of his own corporation soles. As a result of Kennedy’s conduct, the United States incurred a tax loss of approximately $600,000.
The indictment also alleges that he filed a fraudulent 2008 tax return in July 2009 with the Fresno Service Center claiming excessive federal tax withholding and investment expenses that he did not incur. As a result, he obtained a $501,806 refund. Upon receipt of the refund, Kennedy allegedly made a series of transfers in an effort to conceal and/or dissipate the refund which included transferring monies to another account he controlled.
This case is the product of an extensive investigation by the Internal Revenue Service, Criminal Investigation. Assistant United States Attorneys Stanley A. Boone and Mark J. McKeon are prosecuting the case.
The maximum statutory penalty for filing a false tax return is three years in prison and a $250,000 fine. The maximum sentence for filing a false claim with the IRS is five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.
The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.