South Florida Doctor Indicted for Tax Evasion and Disability Fraud
Evaded taxes on over $1.6 Million in income while claiming to be disabled
A federal grand jury sitting in Fort Pierce, Florida, has returned an indictment, which was unsealed today, charging a Hobe Sound, Florida, resident with tax evasion, mail fraud, wire fraud, theft of government funds, and Social Security disability fraud announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
According to the indictment, Arthur John Kranz, was a doctor specializing in psychiatry. Beginning in 2002, Kranz allegedly made a claim on his private disability policy that he was unable to work, and began receiving disability payments from his insurance company. The indictment further alleges that in December 2003 Kranz submitted an application to the Social Security Administration (SSA) for disability benefits, which was approved. As part of his application, Kranz agreed to notify the SSA if he returned to work.
The indictment charges that between 2006 and 2013, Kranz worked as a psychiatrist at a hospital in Pennsylvania and earned over $1.6 million in income, but did not report this fact to the SSA or the insurance company. Moreover, Kranz is alleged to have taken steps to conceal his income from the insurance company, the SSA, and the Internal Revenue Service (IRS) by directing that his income be paid to two nominee corporations, and by not reporting the income from his work as a psychiatrist on his personal tax returns.
The indictment further alleges that during the time Kranz was working, he submitted documents to the insurance company on which he falsely stated that he was not working in order to continue to receive disability payments. The indictment alleges that in total, Kranz received over $700,000 in fraudulent disability payments from SSA and the insurance company.
If convicted, Kranz faces a statutory maximum sentence of five years in prison for each count of tax evasion, 20 years in prison for each count of mail and wire fraud, 10 years in prison for theft of public money, and five years in prison for Social Security fraud. Kranz also faces a period of supervised release, restitution and monetary penalties. An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS Criminal Investigation and SSA Office of Inspector General, who conducted the investigation, and Trial Attorneys Charles M. Edgar, Jr., Michael C. Boteler, and Terri-Lei O’Malley of the Tax Division, who are prosecuting the case with assistance from the U.S. Attorney’s Office for the Southern District of Florida.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.