South Florida Doctor Sentenced to Prison for Tax Evasion and Disability Fraud
Evaded Paying Taxes on Over $1.6 Million in Income Earned While Claiming to be Disabled
A South Florida doctor residing in Hobe Sound, Florida, was sentenced to 51 months in prison yesterday for tax evasion, wire fraud, and Social Security disability fraud, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida.
According to court documents and information provided to the court, Arthur John Kranz was a doctor specializing in psychiatry. Beginning in 2002, Kranz made a claim on his private disability policy that he was unable to work, and began receiving disability payments from his insurance company. In December 2003, Kranz submitted an application to the Social Security Administration (SSA) for disability benefits The SSA approved his application. Kranz then began receiving SSA disability payments, in addition to the private disability insurance payments. Because of the disability payments, Kranz was required to notify his insurance company and the SSA if he returned to work.
From January 2006 to March 2013, Kranz worked as a psychiatrist at a hospital in Pennsylvania and earned over $1.6 million in income. Kranz did not report his employment to either the SSA or his insurance company. Rather, in order to continue collecting disability benefits, Kranz took steps to conceal his income from the insurance company, the SSA, and the Internal Revenue Service (IRS). He directed that his income be paid to nominee individuals and sham corporations he had created to receive his payments. Kranz also filed false personal tax returns that did not report the income from his work as a psychiatrist, and provided .
fraudulent documentation to his insurance company that falsely stated that he was not working.
In addition to the term of imprisonment imposed, Kranz was order to serve three years of supervised release and pay restitution of $1,013,284.
Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS-Criminal Investigation and the SSA Office of Inspector General, who conducted the investigation, and Assistant Chief Charles M. Edgar, Jr. and Trial Attorneys Michael C. Boteler and Terri-Lei O’Malley of the Tax Division, who prosecuted 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.