local tax advisor sentenced for tax evasion
St. Louis, MO - FRANK L. "TIGER" ZERJAV, JR., Wildwood, MO, was sentenced to 18 months in prison on charges of tax evasion for 2001 through 2004. United States District Judge Catherine D. Perry concluded two days of hearings as she imposed the sentence today in federal court in St. Louis.
In December 2012, Zerjav plead guilty to four counts of federal income tax evasion relating to the joint income tax returns filed by him (and his wife) for the years 2001 through 2004. The government claimed that he attempted to evade some $183,000 in taxes by running over $850,000 in income through corporate entities and then deducting personal expenses on the tax returns filed by those corporations. In court documents submitted at the time of the guilty plea, there was a listing of expenses that were improperly taken as deductions for those years including: payments for a condominium at the Lake of the Ozarks; a 37-foot boat; two Seadoo water craft; a home entertainment system; payments on Zerjav's student loans; payments for the BMW vehicles driven by Zerjav and his wife and thousands of dollars in fast food and other restaurant expenses. Zerjav did not agree with the tax loss figure alleged by the Government and the two-day sentencing hearing was the result.
In court today, Judge Perry found that the corporations created by Zerjav were "conduits" to receive his income and she also found that the corporations served no legitimate business purpose other than to avoid taxes. She stated that Zerjav's use of the corporations made the scheme especially complex. The judge went on to find that the extensive deductions for personal expenditures were improper as well. She ordered Zerjav to pay restitution to the Internal Revenue Service in the amount of $181,000.
"In today's economic environment, it's more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe," said Sybil A Smith, IRS Criminal Investigation Special Agent in Charge. "Honest taxpayers deserve our vigilance in investigating and prosecuting those who evade the payment of their fair share of taxes."
According to court documents, during 2000-2007, Frank L. “Tiger” Zerjav, Jr., and his father, Frank L. Zerjav, Sr., who is a CPA, were the principals in two entities: Zerjav & Company, PC, a full service accounting firm that primarily prepared business and personal tax returns, and the Advisory Group USA, LC, which offered tax planning and asset protection strategies to clients. Tiger Zerjav managed the activities of the accountants working at the firm and advised existing clients. Through 2003 he also prepared returns and reviewed the returns prepared by firm accountants. Clients of the Advisory Group included many small business owners and self-employed individuals. They were typically advised to create S-corporations into which the income from their businesses would be funneled. Since the net income from an S-Corporation flows through to the owner for inclusion on the owner’s personal income tax return, there is an obvious incentive to maximize deductions on the S-corporation return. Tiger Zerjav used this strategy in preparing his tax returns for the years 2001 through 2004.
In March 2010, Tiger Zerjav and Frank Zerjav Sr., and the Advisory Group entities entered into an agreement with the United States which included the following stipulations: (1) the Advisory Group would cease doing business; (2) Tiger Zerjav would not be involved in tax preparation activities for a three-year period and (3) Zerjav & Company would cease using many of the tax strategies mentioned above.
Tiger Zerjav was released on his bond and will voluntarily surrender to the prison facility when designated.
This case was investigated by Internal Revenue Service-Criminal Investigation. Assistant United States Attorney James E. Crowe, Jr., handled the case for the U.S. Attorney’s Office.