Former Kentucky Private Investigator and Legal Consultant Sentenced to Prison for Tax Fraud
Failed to File Tax Returns for Four Years and Lied to the IRS about His Financial Condition
A former Russell Springs, Kentucky investigator and legal consultant, was sentenced to three years in prison and three years of supervised release, following his June 2015 conviction for tax fraud, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Kerry B. Harvey for the Eastern District of Kentucky announced today.
James S. Faller II, 54, was convicted after a two-week jury trial of one count of corruptly endeavoring to obstruct the Internal Revenue Service (IRS), four counts of evading federal individual income taxes, one count of falsifying a document submitted to the IRS under penalties of perjury and four counts of failing to timely file his federal individual income tax returns. In addition to his prison sentence, the court ordered restitution to be determined at a later date.
According to the evidence admitted at trial, from 2006 through 2009, Faller received annual income of approximately $126,000 to $289,000 per year from his work as a private investigator and legal consultant. However, Faller did not timely file any individual income tax returns for that period. Instead, Faller took steps to conceal his income from the IRS in several ways, including arranging for his income to be made payable to a nominee and using nominee bank accounts. Faller owes additional federal income taxes of $112,065 for the 2006 through 2009 tax years.
“When individuals submit false information in an effort to obstruct the IRS and evade the payment of tax due and in doing so, steal from the American public, the Tax Division stands ready to prosecute,” said Acting Assistant Attorney General Ciraolo. “Today’s sentence sends a message that this conduct will not be tolerated, and those lying to the IRS and hiding their income to avoid paying their tax liabilities will pay a heavy price.”
In March 2010, Faller signed and submitted a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to an IRS revenue officer as part of the IRS’s efforts to collect his unpaid taxes. A Form 433-A is used by the IRS to obtain financial information from a taxpayer to determine his ability to pay an outstanding tax liability. On this form, which the taxpayer signs under penalties of perjury, the taxpayer must disclose information about his income and expenses. On the Form 433-A that Faller submitted to the IRS revenue officer, Faller falsely reported that he had no income even though he had earned $23,000 in the preceding month alone.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Harvey thanked special agents of the IRS Criminal Investigation, who investigated the case, and Trial Attorney Thomas Voracek of the Tax Division and Assistant U.S Attorney Thomas Lee Gentry of the Eastern District of Kentucky, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.