Charlotte Man Sentenced to Prison for Conspiring to Defraud the Government
Set Up Straw Companies to Hide Client’s Income
A Charlotte, North Carolina, man was sentenced to 46 months in prison today for conspiracy, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney R. Andrew Murray for the Western District of North Carolina.
In September 2018, a jury convicted Arthur Joseph Gerard, III, of conspiring to defraud the United States. According to the evidence presented at trial, between October 2007 and May 2016, Gerard conspired with his client, Reuben DeHaan, to hide from the Internal Revenue Service (IRS) over $2.7 million in gross receipts DeHaan earned through his holistic medicine business.
To conceal DeHaan’s income from the IRS, Gerard helped DeHaan funnel his income through multiple layers of straw companies and bank accounts held by nominees. Gerard devised the scheme, caused the organization of straw companies in several states, recruited his friend to serve as a nominee on DeHaan’s bank accounts, and at times, cashed checks for DeHaan. Gerard charged DeHaan a fee of between $1,000 and $2,500 for each straw company.
Gerard also assisted DeHaan in preparing and filing false documents with the IRS. Gerard helped DeHaan file false 2005 and 2006 tax returns that fraudulently reported more than $200,000 in withheld federal income taxes. Gerard also assisted DeHaan in creating and filing false liens against DeHaan’s property to give the appearance that there was no equity in DeHaan’s property for IRS debt collection purposes. In total, Gerard’s conduct caused a tax loss to the IRS of approximately $560,000.
In addition to the term of imprisonment imposed, Gerard was ordered to serve three years of supervised release and to pay restitution in the amount of $567,665 to the IRS.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Murray commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney William Miller and Trial Attorney Mara Strier of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.