Frederick County Business Owner Pleads Guilty to Underreporting His Business Income on Federal Tax Returns

January 27, 2012

Baltimore, Maryland - Shan Peter Stanley, age 47, of Knoxville, Maryland, pleaded guilty today to subscribing to false tax returns, resulting in a tax loss of over $370,000.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Acting Special Agent in Charge Eric C. Hylton of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.

“Taxpayers thinking about participating in fraudulent tax schemes, including failing to report all forms of income, should stop in their tracks and look at the consequences of taking the next step,” said Eric Hylton, Acting IRS Special Agent in Charge. “Those consequences include going to prison, being branded a convicted felon, and paying back all the taxes owed plus steep penalties and interest.”

According to Stanley’s plea agreement, during the years 2004 through 2006, Stanley owned and operated Advanced Paving, a paving and road repair business located in Knoxville. Customers of Advanced Paving generally paid by checks which were deposited in one of two business accounts, controlled by Stanley and his wife. During 2004 through 2006, Stanley and his wife withdrew large sums of money from the business accounts to pay for personal items including, mortgage payments on their residence and Florida vacation home, car payments for a 2008 Corvette, a custom built boat, remodeling expenses and annual trips to Florida and Myrtle Beach, South Carolina, among other things.

Stanley admitted that he provided a business ledger to the accountant who prepared his joint tax return which grossly underreported the business’ gross receipts. The accountant was not given any bank statements and was told by Stanley that the information in the ledger was accurate, so relied on the figures in the ledger to derive the business’ gross income and expenses. As a result, Stanley underreported the business’ gross receipts on his tax returns for years 2004 through 2006 by a total of $1,079,873. The total amount of taxes due as a result of the underreporting of the business’ gross receipts is $373,820.

Stanley faces a maximum penalty of three years in prison and a $100,000 fine. U.S. District Judge Ellen L. Hollander has scheduled sentencing for May 4, 2012 at 2:00 p.m. As part of his plea agreement Stanley has agreed to pay restitution of at least $373,820.

United States Attorney Rod J. Rosenstein commended IRS-CI for its work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Martin J. Clarke, who is prosecuting the case.

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