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Disbarred new jersey attorney admits failing to report tax preparation income, resulting in over $1.1 million in tax losses

August 17, 2011


CAMDEN, N.J. – Joseph Gallagher, a tax preparer and disbarred New Jersey lawyer, admitted today to submitting false tax returns or failing to file returns for five years, resulting in a tax loss to the government of more than $1.1 million, U.S. Attorney Paul J. Fishman announced.

Gallagher, 68, of Rutherford, N.J., pleaded guilty to one count of an Information charging him with tax evasion. Gallagher entered his guilty plea before U.S. District Judge Noel L. Hillman in Camden federal court.

“With experience as both an attorney and a tax preparer, Joseph Gallagher tried to use his expertise to dodge over a million dollars in tax obligations,” said U.S. Attorney Fishman. “Our tax system requires everyone to follow the rules, and we will use prosecution where necessary to ensure fair play.”

“IRS – Criminal Investigation is very serious now and throughout the year in enforcing the laws directed at those who attempt to defraud our nation’s tax system,” said Victor W. Lessoff, Special Agent in Charge, IRS – Criminal Investigation, Newark Field Office. “This case reinforces that return preparers and professionals who derive their living through the tax system are subject to the same rules as everyone else and will pay a high price if they intentionally defraud the IRS.”

According to the Information to which Gallagher pleaded guilty and statements made in court:

For at least 15 years, Gallagher used a consulting company – established at Gallagher’s direction and purportedly operated by another person – to evade income taxes, having his income from working as a tax preparer deposited into the company’s bank account. Gallagher filed income tax returns with the IRS which failed to report approximately $590,513, $600,157, and $682,373 for the calendar years 2004, 2005, and 2006, respectively. Gallagher failed to file any income tax return at all for calendar years 2007 and 2008, failing to report approximately $715,694 and $770,445 for those years. In total, Gallagher admitted failing to report approximately $3,359,182 in taxable income to the IRS, resulting in a tax loss to the government of approximately $1,198,196.

Though Gallagher pleaded guilty to the charge in the Information specifically related to tax year 2008, the terms of his plea agreement state that the tax loss for all five years will be taken into account at sentencing.
The count to which Gallagher pleaded guilty, Count Five of the Information, carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Judge Hillman released Gallagher on a $50,000 bond pending sentencing, which is currently scheduled for December 1, 2011.

U.S. Attorney Fishman credited special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Lessoff, with the investigation that resulted in today’s guilty plea.

The government is represented by Assistant U.S. Attorney Jacob T. Elberg of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.


Defense counsel: Brian Neary Esq., Hackensack, N.J.

Gallagher, Joseph Information

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