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California Economist Found Guilty On All Counts In Manhattan Federal Court Of Tax Evasion And Mail Fraud Charges

FOR IMMEDIATE RELEASE
Wednesday, January 23, 2013

Preet Bharara, the United States Attorney for the Southern District of New York, announced that DAVID GILMARTIN, a Ph.D. economist, was found guilty today in Manhattan federal court of tax fraud charges stemming from his failure to file income tax returns, report more than $1.7 million in income, and pay over $1.5 million in taxes, penalties, and interest for the years 1989 through 2010. GILMARTIN was convicted after a one-week jury trial before U.S. District Judge Miriam G. Cedarbaum.

Manhattan U.S. Attorney Preet Bharara stated: “David Gilmartin repeatedly and systematically flouted the tax laws, and during his journey through the criminal justice system he got to see other people’s tax dollars at work, all the way through his conviction. With his conviction today, he trades his status as tax evader for tax felon. This Office will continue to prosecute tax cheats of all stripes and will not tolerate those who think the laws do not apply to them.”

According to the Indictment and the evidence presented during the trial:

GILMARTIN, who has a Ph.D. in economics, worked from 1989 to 2010, as an economist, performing computer analysis for a variety of companies, some of which were located in New York. Despite being paid compensation for every tax year during that 22-year period, GILMARTIN failed to file tax returns with the IRS as required, and evaded paying more than $1.5 million in taxes, penalties, and interest. GILMARTIN claimed that he did not have to file income tax returns or pay income taxes. He based his views in large part on the conduct of others who evaded paying taxes, and who are currently in prison on various tax charges.

GILMARTIN took various steps to evade his tax obligations and obstruct the IRS’s ability to collect back taxes. He used a false Social Security Number, submitted IRS forms to certain employers fraudulently claiming to be exempt from taxes, and caused checks that were paid to him as compensation to be cashed against a personal bank account rather than be deposited. GILMARTIN also caused checks paid to him as compensation to be made payable to a finance company, in order to pay down a personal line of credit and to prevent the IRS from seizing, pursuant to bank levies, the funds paid to him as compensation. GILMARTIN also engaged in a scheme to defraud New York out of state income taxes.

Over the years, GILMARTIN ignored many warnings and statements of courts, the IRS, and New York tax authorities, and associates who told him that he was required to file and pay income taxes. GILMARTIN admitted to an undercover agent earlier this year that he “may be living in prison next year.”

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GILMARTIN, 69, of Phelan, California, faces five years’ incarceration on the tax evasion and charge and 20 years’ incarceration on the mail fraud charge. GILMARTIN also faces three years’ incarceration on the tax obstruction charge, and one year each on the failure to file and pay taxes charges.

United States District Judge Miriam G. Cedarbaum set April 30, 2013 as the sentencing date for GILMARTIN.

Mr. Bharara praised the work of the New York Field Office of the Internal Revenue Service, Criminal Investigations.

The prosecution was handled by Assistant United States Attorney Stanley Okula, and Nanette L. Davis, Assistant Chief with the Northern Criminal Enforcement Section of the Tax Division of the Department of Justice.

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U.S. v. David Gilmartin S1 Indictment(PDF)

 

 

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