News

Used Car Dealer Indicted for Tax Evasion And Failure to File Taxes


Failed to Pay Over $137,000 in Taxes Due

FOR IMMEDIATE RELEASE
APRIL 9, 2008

Baltimore, Maryland - A grand jury indicted Gino M. Jones, of Camden, South Carolina, formerly of Mt. Airy and Denton, Maryland, for tax evasion and failure to file taxes, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

According to the four count indictment, from 2000 to 2002, Jones operated a used car business under different names including Citywide Public Auto Auction, Inc. and Deals On Wheels, Inc. and maintained used car lots at different locations in the Baltimore metropolitan area, including Baltimore City and Howard County, and on the Eastern shore in Denton, Caroline County. Both businesses were Subchapter S corporations in Maryland and Jones was the majority shareholder and president of both corporations. Jones used eBay to sell his used cars, which he purchased from auction sales and charitable organizations, refurbished and detailed, and then resold for a profit.

The principal of a Subchapter S corporation is required to file an information return reporting its gross income, expenses, and net income to the Internal Revenue Service each year and the shareholder of such a corporation must report income realized by the corporation on his personal income tax return. According to the indictment, for calendar years 2001 and 2002 Jones had taxable income of $324,708 and $162,023, respectively. Jones did not file income tax returns or pay taxes for either of those years.

In addition, the indictment alleges that Jones paid individuals in cash to assist him in operating his used car business, including tow truck drivers, mechanics, painters, and car detailers, and failed to withhold any money for taxes or issue any statements, including IRS Forms W-2 or 1099, that documented these payments. Jones allegedly used the names of friends and associates to set up his trading accounts with eBay and required buyers of his used cars to pay with either money orders or cashier checks. According to the indictment, rather than deposit these payments in a business bank account, Jones used a check cashing service to avoid a record of his income. Jones also allegedly structured cash deposits into his commercial bank account in amounts below $10,000 so that the bank was not required to file a currency transaction report. Jones used income from his business to make mortgage payments on homes in Mt. Airy, Maryland in 2001; and in Denton, Maryland, which were both titled in his wife’s name. Finally, Jones allegedly caused the creation of IRS tax forms to support residential loan applications when no such documents were filed with the Internal Revenue Service.

Acting Special Agent in Charge Don Fort, IRS Criminal Investigation stated, "Tax evasion is not a victimless crime. Honest, hardworking Americans pay the price when others choose to evade their tax obligations. Paying employees in cash to evade taxes is a crime and those who do so will be prosecuted."

Jones faces a maximum sentence of five years in prison and a fine of $100,000 for tax evasion and a maximum of one year in prison and a fine of $25,000 for failing to file tax returns. No court appearance has been scheduled.

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 Investigation for their investigative work. Mr. Rosenstein commended Assistant United States Attorney Stephen M. Schenning, who is prosecuting the case.

 

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