Houston Attorney and Former VA Fiduciary Convicted of Conspiracy and Tax Fraud
|Sept. 4, 2012|
HOUSTON - Joe B. Phillips, 73, has been convicted of conspiracy to make false statements, misappropriation by a fiduciary and signing a false income tax return, United States Attorney Kenneth Magidson announced today. Set to begin trial today, Phillips entered his plea just moments ago.
Phillips admitted he was an attorney who owned and operated a small law office in Houston and that his co-defendant and wife, Dorothy Phillips, 72, served as his legal assistant and office administrator. Joe Phillips admitted he was either appointed by the Department of Veterans Affairs (VA) to serve as a fiduciary or appointed by the courts to serve as a guardian for a number of incompetent military veterans. In that role, he opened and maintained bank accounts for these veterans to receive benefit payments from the VA to pay their debts and living expenses. He was required for submitting annual accountings to the VA and the courts detailing expenses paid on behalf of his veteran client for the period covered in the accounting statement. He admitted that federal fiduciary received for his services 4% of the VA benefits paid to the veteran client and a 5% commission from the disbursements and income excluding VA and Social Security Administration benefit payments for whom he served as court appointed guardian.
Phillips admitted to submitting false accounting statements to the VA in Houston, which included fraudulent verification forms for bank information for a number of his veteran clients. He also admitted that on numerous occasions he and his wife unlawfully transferred money from bank accounts he maintained for his veteran clients on at least three occasions to accounts in his and his wife’s name. He further admitted that he did not file a proper accounting with the court or VA for the transfer of these funds. He admitted that his wife had gambled extensively at casinos in Louisiana between 2003 and 2007.
Phillips also admitted that he signed a tax return for the year 2007 filed with the Internal Revenue Service that contained a false Schedule C, concealing unreported receipts.
Dorothy Phillips previously pleaded guilty on April 18, 2012, to conspiracy and making a false statement on an income tax return. Her sentencing is set for Dec. 11, 2012.
Other than the tax fraud charges, which carry a maximum punishment of three years in prison, all the other offenses carry a maximum punishment of five years in prison and a fine not to exceed $250,000. Both may also be required to pay restitution.
The case was investigated by the United States Department of Veterans Affairs - Office of inspector General, United States Social Security Administration - Office of Inspector General and Internal Revenue Service - Criminal Investigation. Assistant United States Attorneys John Braddock and Quincy Ollison prosecuted the case.