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BUSINESSMAN SENTENCED IN TAX SCHEME

January 4, 2011

Evaded Taxes and Helped Norwood Asbestos Company Lie to the IRS

BOSTON, Mass. - A New Hampshire businessman was sentenced today in federal court in Boston for filing false tax returns that hid the profits of a Norwood-based asbestos removal company.

JAMES T. ESPINOLA, 62, of Pelham, New Hampshire, was sentenced by U.S. District Judge Nathaniel M. Gorton to 15 months imprisonment to be followed by three years of supervised release on charges of tax evasion and assisting in the filing of false tax returns.

From 2001 to 2005, Espinola engaged in a scheme to evade income tax payments along with Darrell Maclean and Charles Smith, owners of Suburban Middlesex Insulation (SMI), a Norwood-based asbestos removal business. SMI used teams of trained laborers that were supplied by temporary employment agencies to perform asbestos abatement work in industrial and public buildings in various cities including New Bedford, Fall River and Brockton. Among others, Espinola supplied temporary laborers to SMI. In exchange for this service, SMI paid Espinola by check, usually each week in an amount based on the number of hours worked by its employees. Espinola ordinarily picked up these checks at SMI’s Norwood office.

Each week, either Maclean or Smith would hand Espinola a second check, made payable either to Espinola or his company, ranging in amounts from $5,000 to $15,000, purportedly for payment for temporary employment services. Espinola deposited the checks into his bank account, and later withdrew the funds in cash. He then delivered the cash, minus a cut for himself, to Maclean and Smith.

On SMI’s tax returns, Maclean and Smith characterized these checks to Espinola as business expenses, instead of as income to themselves personally, even though they knew that the funds in the second set of checks were returned to them by Espinola. For the years 2001 to 2005, Maclean and Smith willfully omitted to report their respective shares of the cash from Espinola on their personal tax returns as taxable income. For the tax years 2001 to 2005, Maclean and Smith, who already have been prosecuted, deprived the U.S. Treasury of approximately $981,880 and $538,571 in tax payments, respectively.

 

Espinola hid approximately $372,410 of additional tax revenue by falsely understating his income for the same years to his tax preparer, knowing that the tax preparer would rely on his statements in preparing his income tax returns.

United States Attorney Carmen M. Ortiz and William Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation – Boston Field Office, made the announcement today. The case was prosecuted by Assistant U.S. Attorney Jonathan F. Mitchell of Ortiz’s Economic Crimes Unit.

 

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