Dallas Attorney Charged with Promoting Illegal Tax Shelter
Allegedly Helped High-Income Clients Qualify for Fraudulent Tax Deductions
An indictment returned by a federal grand jury in Dallas was unsealed today charging a Texas lawyer with wire fraud, conspiracy to commit wire fraud, and helping his clients file false tax returns based on an illegal tax shelter that he promoted.
According to the indictment, from approximately 2012 to 2021 Joseph Garza, of Dallas, promoted a tax shelter that allowed high-income clients to claim fraudulent tax deductions that reduced the taxes they owed to the IRS. Garza and his co-conspirators allegedly directed the clients to transfer funds into shell companies, then returned this money to the clients, untaxed, for their own personal use. To conceal the circular flow of funds, Garza and the co-conspirators allegedly commissioned fictitious business valuation reports, created invoices for fake business expenses, and drafted sham contractual agreements. According to the indictment, Garza’s scheme allowed clients to hide approximately $1 billion dollars from the IRS and caused a total tax loss to the IRS exceeding $200 million.
Garza is scheduled to make his initial appearance tomorrow before U.S. Magistrate Judge Irma Ramirez of the U.S. District Court for the Northern District of Texas. If convicted, he faces a maximum penalty of 20 years in prison for each of the 18 counts of wire fraud, 20 years in prison for conspiracy to commit wire fraud, and three years in prison for each of 22 counts of aiding and assisting in the filing of false federal income tax returns. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Chad E. Meacham for the Northern District of Texas made the announcement.
IRS Criminal Investigations and the FBI are investigating the case.
Assistant U.S. Attorneys Renee Hunter, Katherine Miller, and Marty Basu, and Trial Attorney Robert A. Kemins of the Tax Division are prosecuting the case.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.