Former Virgin River Casino Executive and Dealers Sentenced for Conspiracy to Defraud the IRS
Las Vegas, Nev. - Daniel G. Bogden, United States Attorney for the District of Nevada, and Byram Tichenor, Special Agent-in-Charge of IRS Criminal Investigation for Nevada and Utah, announced that DALE L. SEIPP, BELINDA G. MOSDELL, LEVEDA TAYLOR, and LEO SHAN HOW were sentenced in federal court in Las Vegas today to six months in prison for their convictions on Conspiracy to Deliver False Documents to the IRS, a violation of Title 18 United States Code Subsection 371. The defendants entered into a group plea agreement and pleaded guilty on June 24, 2002.
According to the court records, MOSDELL, TAYLOR, and HOW were dealers, and defendant SEIPP was the Comptroller at the Virgin River Hotel & Casino in Mesquite, Nevada. In July 1992, the IRS and the Virgin River Hotel and Casino entered into a Tip Compliance Agreement, which provided that an hourly tip rate of $4.50 per hour would be paid by the dealers to the IRS in addition to their salary. The tip rate was to remain in effect through December 31, 1993, at which time the parties could review and revise the tip rate annually. Dealers at the Virgin River Hotel & Casino pooled all tips received during a 24-hour period and split tips equally among the dealers who worked in that period. Between July 1992 and December 1995, the defendants created and submitted fabricated tip records to the IRS falsely indicating that their tip rate was $5.50 per hour in order to avoid paying their true tax liability. The dealers and the Virgin River Casino were to report taxes, to include payroll taxes, to the IRS based on that hourly tip rate. The United States contended that the evidence and tip diaries maintained by Virgin River dealers reflected that during the period January 1, 1994, through March 31, 1995, the hourly tip rate for Virgin River dealers was $7.05 per hour to $10.46 per hour.
All four defendants were sentenced to six months of imprisonment, and they must report to the federal corrections facility by November 7, 2002. Defendant SEIPP was also ordered to pay a fine in the amount of $1,388; defendant MOSDELL must pay restitution to the IRS in the amount of $1,148; defendant TAYLOR must pay restitution to the IRS in the amount of $1,532; and defendant HOWE must pay restitution in the amount of $1,428.
Special Agent-in-Charge Tichenor stated, "this is the first criminal prosecution regarding IRS tip compliance in the country, and its consequences apply to all tip-earning employees everywhere, not just Nevada casino dealers. Throughout the years, the courts have consistently ruled that tip income is taxable. Today's sentencings should send a message that there are serious consequences when one evades or under-reports income tax liability."
U.S. Attorney Bogden said, "this case is not simply about Nevada casino workers who fail to report tip income. These defendants pleaded guilty to a conspiracy to deliver false documents to the IRS. The defendants admitted to fabricating records which underestimated their tip income, and admitted to producing the fabricated records to the IRS. The conspiracy also included the submission of false federal tax returns to the IRS (for the Virgin River Hotel & Casino), as one of the defendants was the controller for the casino and the other defendants were members of the "casino toke" committee. Because of these false reports and submissions, the defendants were able to avoid paying thousands of dollars in taxes to the United States. Furthermore, as a result of the defendants' conduct, the tax paid by every dealer at the Virgin River Casino was affected. The United States will continue to prosecute individuals who commit such offenses."
The case was investigated by Special Agents of IRS Criminal Investigation in Las Vegas and prosecuted by Assistant United States Attorney Ray Rukstele.