United States Attorney's Office District of Connecticut
Press Release

FORMER LITCHFIELD RESIDENT SENTENCED TO FEDERAL PRISON FOR EVADING TAXES, STRUCTURING CASH DEPOSITS

Nora R. Dannehy, United States Attorney for the District of Connecticut, announced that EUGENE CAPPELLO, 57, of Carmel, New York, formerly of Litchfield, Connecticut, was sentenced today by Chief United States District Judge Alvin W. Thompson in Hartford to 24 months of imprisonment, followed by two years of supervised release, for failing to pay more than $237,000 in federal taxes and structuring cash deposits.  Judge Thompson also ordered CAPPELLO to pay a fine in the amount of $5000.  On August 4, 2009, CAPPELLO pleaded guilty to one count of income tax evasion and one count of structuring currency transactions to evade the statutory reporting requirements.

According to court documents and statements made in court, in August 2000, CAPPELLO was contacted by the Collection Division of the Internal Revenue Service for non-payment of taxes related to his 1997, 1998 and 1999 individual income tax returns.  During the next several years, CAPPELLO made only nominal payments toward his total balance due and, in May 2004, he submitted a signed document to the Collection Division documenting his purported inability to pay the more than $237,000 in taxes and interest that he owed for his 1997 through 2003 tax returns.  Specifically, on one occasion he told the IRS that he only had approximately $500 in his bank account.  He continued to make these representations to the IRS and, on July 31, 2006, CAPPELLO’s case was closed by the Collection Division as “currently not collectible” for his alleged inability to pay the assessed amount.  However, during this period, CAPPELLO hid cash from the IRS and made significant personal expenditures, including $34,781 for a country club membership and $91,000 for a yacht.  In addition, CAPPELLO had a house built in Goshen, Connecticut, by making more than $350,000 in cash payments to building contractors.

To help hide his assets from the IRS, CAPPELLO had his paychecks issued in the name of another individual.  Further, he directed this person to structure cash deposits into two different bank accounts.  On at least four occasions in 2005, CAPPELLO filled out deposit slips for approximately $9900, and directed the individual to deposit the cash into a bank.

“This defendant repeatedly lied to the IRS about his financial situation while enjoying a comfortable lifestyle,” stated acting U.S. Attorney Dannehy.  “The message here is clear: Evading the payment of taxes may very well result in a felony conviction, time in prison, and financial penalties that far exceed your original tax obligation.”

In addition to his prison term, CAPPELLO has paid to the IRS approximately $403,000 in back taxes, penalties and interest.  CAPPELLO also has been ordered to forfeit to the Government $39,500, which constitutes the amount of structured funds.

This matter was investigated by the Internal Revenue Service – Criminal Investigation Division.  Assistant United States Attorney Ray Miller prosecuted the case.

CONTACT:

U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
thomas.carson@usdoj.gov