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U.S. Department of Justice
Office of the United States Attorney
Middle District of Tennesse

Craig S. Morford
United States Attorney

William M. Cohen
Assistant U.S. Attorney

TWO BUSINESSMEN PLEAD GUILTY IN SCHEME TO DEFRAUD IRS

Nashville, TN – February 2, 2007 – Craig S. Morford, U.S. Attorney for the Middle District of Tennessee, announced that Bryan H. Wolf, 46, of Severna Park, Maryland, and Harold R. Strong, 42, of Annapolis, Maryland, pled guilty on January 30, 2007 before U.S. District Judge Aleta A. Trauger. Both will be sentenced on April 30, 2007.

An Information was filed on December 21, 2006, charging Wolf and Strong with conspiracy to defraud the United States. According to the information, Wolf and Strong were partners and stockholders in InSite Services, Inc., a Maryland corporation, and attempted to send money belonging to InSite Services outside the United States in an attempt to avoid reporting it on their federal income tax returns, thus fraudulently lowering their personal income tax liabilities.

Wolf and Strong admitted during their plea hearing that in October 2001, Wolf wrote a $100,000 check from InSite Services to a company owned by another individual involved in the scheme. This individual subsequently issued an $80,000 check to a fourth individual involved in the scheme. Most of the $80,000 was to be sent to a foreign bank account. Insite Services was supplied with a false invoice showing that a company provided research and development work for InSite Services to support a fraudulent $100,000 tax deduction on Insite’s federal corporate tax return.

Wolf and Strong were later told that there were problems in setting up the offshore accounts due to increased restrictions following the events of September 11, 2001. Instead, two business accounts were opened at Community Bank and Trust in Kingston Springs, Tennessee, and a small amount of the money from Insite Services was deposited into each account. Wolf and Strong were provided with debit cards to withdraw the funds. No other money was deposited into their accounts. Neither Wolf nor Strong reported the loss of this money to law enforcement authorities or attempted to recover the remainder of the money due to the illegal nature of their arrangements with these other individuals.

Wolf and Strong admitted that the $100,000 was shown as a deduction on InSite Services’ corporate tax return, thus reducing the taxable income which flowed directly to their personal tax returns. Wolf and Strong filed 2001 individual income tax returns that understated their income by $40,000 and $60,000, respectively. The scheme resulted in a $39,570 tax loss to the government.

This investigation was conducted by IRS Criminal Investigation. Assistant U.S. Attorney William M. Cohen and U.S. Department of Justice, Tax Division, Trial Attorney Michael Boteler represented the government.

 

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