Report to District

US Attorney Report to the District

March 2013,
Issue No 14

As we approach the tax filing deadline of April 15, it is an appropriate time to discuss our nation’s voluntary system of tax collection, which is based on the honesty of taxpayers and those who are in the tax preparation business.  Taxpayers are required to report timely, completely, and honestly all taxes they owe so that they can be collected.  Without the timely receipt of taxes, the government cannot provide necessary and critical services on which we all depend, such as education, social services, financial assistance, military, and public safety.  Paying one’s share in taxes is as important today as ever before in view of the country’s current finances.

Congress has made it a criminal offense for a taxpayer, or anyone who assists a taxpayer, to evade taxes, to file a false return, to file no return, or to conspire to defraud the United States.  Tax offenses are serious, costly, and damaging to our nation’s system of taxation.  Criminal tax laws protect the public interest in preserving the integrity of the nation’s tax system.  The United States Court of Appeals for the Second Circuit aptly noted that a tax evader, is “in effect [stealing] from his fellow taxpayers through his deceptions.”  United States v. Trupin, 475 F.3d 71, 76 (2d Cir. 2007).

Taxpayers are reminded that if they use the services of a tax return preparer who engages in fraud, they are ultimately responsible for the payment of the correct amount of taxes.  Therefore, taxpayers should select reputable tax return preparers who will safeguard their personal identification information and should be wary of return preparers who promise unrealistic refunds.                                          

 The United States Attorney’s Office for the District of Connecticut has a long tradition of enforcing the tax laws and recouping unpaid taxes.  Criminal tax prosecutions serve a vital role in our nation’s tax system because our system of self-reported tax liability depends upon citizens being assured that those who do not honestly report their income and pay their taxes will be appropriately punished. 

Several recent prosecutions, including a case that was tried to a jury earlier this year, shows our Office’s commitment to investigating and prosecuting tax fraud, as well as the seriousness of the crimes and the attendant penalties.  In March, a 62-year-old tax return preparer and former IRS special agent was sentenced to six years in prison based on a criminal conviction for preparing and filing thousands of false returns for his clients, as well as filing false tax returns for himself.  The returns falsely claimed charitable and business deductions.  In addition to the significant term of imprisonment, the defendant was ordered to pay $62,000 in restitution on his back taxes, plus penalties and interest. Also in March, the 62-year-old owner of a construction company was sentenced to 18  months in prison for failing to pay taxes $192,671 in taxes on more than $640,000 in unreported income for 2004 through 2008.  He also faces order of restitution on back taxes, plus penalties and interest.

In February, a 51-year-old business owner pled guilty to filing false tax returns that underreported gross receipts in 2003 and 2004, resulting in his failure to pay more than $64,000 in taxes, and failing to file tax returns for the 2005 and 2006 tax years, resulting in his failure to pay more than $88,000 in taxes.  He is scheduled to be sentenced in May.  Also, two individuals have recently received sentences of 24 months and 27 months for their involvement in a tax fraud and identity theft scheme.  The defendants obtained at least 35 U.S. Treasury income tax refund checks by filing fraudulent tax returns, with false W-2 forms, on behalf of citizens of Puerto Rico without the citizens’ knowledge or consent.  The sentencing court ordered restitution of approximately $200,000.

In January, we commenced a trial in federal court in Hartford at which two shoreline women were charged with operating a pyramid scheme known as “Gifting Tables” over the course of several years and enriching themselves while fraudulently misrepresenting material facts about the Gifting Tables, conspiring to hide their income from the IRS, and filing false federal tax returns.  Over the course of the month-long trial, evidence demonstrated that from approximately 2008 to 2011, the defendants oversaw and profited from this Gifting Tables pyramid scheme.  The defendants recruited individuals to join the scheme, prepared and distributed materials to recruits that contained false representations, and misrepresented to recruits and participants that Gifting Tables was not a pyramid scheme.  Evidence also showed that in May 2010, the defendants attempted to intimidate a participant who had questioned the legality of the Gifting Table scheme.  On February 20, after deliberating for approximately two hours, the jury returned its verdict, finding both defendants guilty of conspiracy and tax and wire fraud offenses.  Sentencing is scheduled for May 23.

The Internal Revenue Service offers free tax return preparation by volunteers.  The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) Programs offer free tax help for taxpayers who qualify.  More information on these programs is available here.

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