Las Vegas Couple Sentenced for Failing to Pay Income Tax on Monies Earned from the Sale of Bootleg Compact Discs
Las Vegas, Nev. - Daniel G. Bogden, United States Attorney for the District of Nevada announced that a Las Vegas couple, ALI MOGHADAM and KATJA S. CROSBY, husband and wife, were sentenced yesterday before United States District Court Judge Roger Hunt in Las Vegas for conduct relating to their failure to pay income tax for monies earned from the illegal distribution and sale of bootleg compact discs (CD's) throughout the 1990's. MOGHADAM was ordered to serve six months in federal prison and six months and one day of home confinement, and ordered to pay $64,444 in restitution to the IRS. CROSBY was ordered to serve three years of probation and ordered to pay $64,444 in restitution to the IRS. MOGHADAM will be permitted to self-surrender to the Federal Bureau of Prisons in 45 days to begin serving his period of imprisonment.
The couple was originally charged in a 26-count Indictment returned in September 1999 with Making and Subscribing False Tax Returns, Aiding, and Assisting in the Preparation of a False and Fraudulent Tax Return, Money Laundering, and Forfeiture Relating to Money Laundering Activities. In August, 2001, MOGHADAM pled guilty to Count Two of the Indictment, Making and Subscribing a False Income Tax Return, a Felony, and CROSBY plead guilty to an Information charging her with Conspiracy to Deliver a Fraudulent Tax Return, a Misdemeanor.
MOGHADAM, a resident of Las Vegas since 1995, admitted in his Plea Agreement that he had been engaged in the business of illegal trafficking of "bootleg" CD's since the early 1990's, and that most of his illegal activity was conducted in the Los Angeles area. In 1992, the Glendale, California Police Department executed a search warrant at MOGHADAM's apartment, and seized more than 7,800 bootleg CD's, inserts containing the song and artist information, plastic cases, blank discs, and electronic duplicating equipment. In 1994, MOGHADAM formed a corporation in Nevada named K.K.R., Inc., which he claimed was in the business of graphic design, and used the corporation to conceal funds generated by the bootleg compact disc business. The accounting records of the business reflected gross receipts substantially in excess of the amount reported on the corporate tax return. The Plea Agreement states that MOGHADAM then falsely under-reported his true income on his jointly-filed 1995 individual federal tax return, and the Court determined at sentencing that the "tax loss" to the Government was $64,444.
CROSBY'S Plea Agreement indicates that she assisted her husband in the business by handling financial affairs, packaging the illegal compact discs, and delivering the discs to customers, and that she signed the joint individual 1995 tax return knowing that the total income reported was false.
Byram Tichenor, Special Agent-in-Charge of IRS Criminal Investigation for Nevada, reported that these type cases are a reminder that all income, including that from illegal sources, is taxable to the recipient, and that "while most income tax cases are based on legally derived income, it is important that the public know we aggressively investigate any activity where proper taxes are not paid on income. This ensures that honest, tax-paying citizens are not paying the way for someone else, and fosters confidence in our taxation system."
The case was prosecuted by Assistant United States Attorney, Ray Rukstele of the United States Attorney's Office for the District of Nevada in Las Vegas. The prosecution is the result of a lengthy investigation by special agents of the Criminal Investigation Division of the IRS.