Massachusetts Man Arrested On Tax Obstruction & Other Charges
Had Previously Been Enjoined By Court From Promoting Tax Fraud
WASHINGTON - Kevin P. Mahoney, a stockbroker and insurance agent who lives in Attleboro, Mass., was arrested by Special Agents of Internal Revenue Service (IRS) Criminal Investigation, the Justice Department and the IRS announced today. Mahoney faces one count of corruptly endeavoring to obstruct the administration of the Internal Revenue laws, eight counts of criminal contempt of court and eight counts of filing false tax returns.
According to the indictment, Mahoney committed criminal contempt by violating a permanent injunction issued by the U.S. District Court for the District of Massachusetts on July 12, 2002. In the course of a lawsuit filed by the Justice Department's Tax Division, the court found that Mahoney had interfered with the enforcement of the Internal Revenue laws. The court then permanently enjoined Mahoney from, among other things, further interfering with the administration of the Internal Revenue laws.
The indictment alleges that Mahoney violated the injunction against him by assisting in the preparation and submission to the IRS of, among other things, income tax returns for other people that falsely claimed hundreds of thousands of dollars in refunds and an IRS Form 1099-C falsely reporting $300 million in debt purportedly owed to a third party by an IRS employee.
The indictment alleges that Mahoney attempted to pay his tax-related debts by using fake financial instruments called Bills of Exchange and checks drawn on closed bank accounts totaling more than $1 million. The indictment further alleges that Mahoney submitted to the IRS false individual income tax returns for the years 2000 through 2006 which he knew failed to report taxable income that he received from various financial institutions. Along with his tax returns, Mahoney submitted altered Forms 1099-MISC in which he changed to zero the amount of non-employee compensation that the financial institutions reported paying him. For instance, Mahoney attached to his 2005 tax return an altered Form 1099-MISC in which he claimed that a life insurance company paid him non-employee compensation of zero when it had actually paid him approximately $170,000. The indictment further alleges that Mahoney filed a false 2007 Nonresident Alien Tax Return in which he falsely claimed a refund of almost $389,000.
This case is being investigated by IRS Criminal Investigation. Tax Division Trial Attorneys Kenneth Vert and Jeffrey McLellan are prosecuting the case.
More information about the Justice Department's Tax Division and its enforcement efforts is available at www.justice.gov/tax/.