Baltimore Business Owner, Son and Accountant Indicted on Tax Fraud Charges
Allegedly Diverted Over $1,900,000 from Family Owned Business for Personal Expenses
Baltimore, Maryland - A Baltimore City business owner, his son and their accountant were indicted today on tax fraud charges arising from a six year scheme to file false individual tax returns, announced United States Attorney for the District of Maryland Rod J. Rosenstein.
According to the 10 count indictment, from 1998 to October 2004, defendants Stilianos (Stan) Mavroulis, age 63, and his son, Kyriakos (Kirk) Mavroulis, age 26, both of Baltimore, diverted at least $1,900,000 from Fidelity Home Mortgage Corporation (FHMC) to pay for personal family expenses. Stan Mavroulis owned FHMC and Kirk Mavroulis worked as head of the company’s accounting department, functioning as its chief financial officer. They classified such personal expenses as “other expenses” on FHMC’s books to diminish the company’s gross income and cause members of the Marvroulis family to underpay their federal individual taxes by at least $540,000.
“The indictment alleges that the defendants took money from their business and used it for personal purposes without reporting it as income. Business owners who fail to pay income taxes cheat honest taxpayers and gain an unfair advantage over their competitors,” said U.S. Attoney Rod J. Rosenstein.
Acting Special Agent in Charge Don Fort, IRS Criminal Investigation stated, "The prosecution of individuals who intentionally conceal income and evade taxes is a vital element in maintaining public confidence in our tax system. All Americans have a duty to pay their fair share."
Stan Mavroulis is alleged to have used FHMC’s funds to: make personal investments in the stock market, including $100,000 to fund, among other things, personal investments through E-Trade; finance the operations of Fidelity Promotions, a company he owned and established in connection with a personal musical venture in Greece; and pay air fare and hotels in traveling to Greece.
The indictment further alleges that Joseph Poole, age 62, of Graysonville, Maryland, who worked for an accounting firm headquartered in Annapolis, Maryland, prepared individual tax returns signed by Stan Mavroulis that contained materially false information for the tax years 2000 through 2003, including returns which claimed the Earned Income Credit despite the fact that Stan Mavroulis did not qualify for such credit. Additionally, although FHMC’s books reflected that FHMC had paid substantial amounts in “shareholder draws,” Stan Mavroulis and Joseph Poole allegedly agreed that such shareholder draws would not be reported as taxable income on Stan Mavroulis’ individual tax returns.
Stan and Kirk Mavroulis are also alleged to have caused FHMC to pay Kirk and the four other Mavroulis children who worked at FHMC “under the table,” to avoid paying personal income taxes on the income they received. The three defendants also allegedly caused FHMC to underreport the children’s earnings on W-2 forms issued to the children for the tax year 2003.
All three defendants face a maximum sentence of five years in prison and a $250,000 fine for conspiracy to defraud the United States. Additionally, Stan Mavroulis faces a maximum sentence of three years in prison on each of the four counts for making and subscribing false tax returns; Kirk Marvroulis faces the same maximum sentence on one count of making and subscribing a false tax return; and Joseph Poole faces a maximum sentence of three years in prison on each of the four counts for aiding in the preparation of false tax returns. The defendants are expected to have their initial appearances and arraignments in federal district court in Baltimore on March 14, 2008.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Rod J. Rosenstein thanked the Internal Revenue Service - Criminal Investigations for their investigative work. Mr. Rosenstein commended Assistant United States Attorneys Stephen M. Schenning and Jonathan Biran, who are prosecuting the case.