Reisterstown Couple Sentenced for Filing False Tax Returns
Failed to Report Over $875,000 in Income for Tax Years 2006 through 2009
Baltimore, Maryland – U.S. District Judge Richard D. Bennett sentenced Alexsander Korotitsky, age 54, of Reisterstown, Maryland today to six months in prison followed by six months of home detention as part of one year of supervised release, for filing false income tax returns. Judge Bennett sentenced Alexsander’s wife, Luba Korotitsky, age 50, also of Reisterstown, to one year of probation on the same charge. Judge Bennett also ordered the Korotitskys to pay restitution of $272,268.67.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Special Agent in Charge William P. McMullan of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division.
According to their plea agreements, the Korotitskys each received income from separate sources that they deposited into their jointly held personal account, as well as other accounts, and failed to disclose that income to their income tax return preparer. As a result, the Korotitskys filed false income tax returns for tax years 2006 through 2009.
Luba Korotitsky is a 50% owner of a hair salon business. She diverted gross receipts from the hair salon business into the couple’s joint bank account, as well as an account in her name. Luba Korotitsky admitted that she provided the return preparer with the business bank account statements, but not with her personal bank statements.
Alexsander Korotitsky failed to report income he received from an installment sale contract related to the sale of his business, A&A Medical Supply, in 2006. He also failed to report substantial income he received from an associate through an account the associate controlled in the name of A&A International. Alexsander Korotitsky invested money in A&A International for the purchase and subsequent sale of vehicles abroad, and kept the profits of the sales. He also received income in the A&A International bank account from foreign owned businesses, wrote himself checks from the A&A International account, and used the account to pay personal expenses, such as the couple’s mortgage.
The investigation of the Korotitskys began during an investigation of an arson at the home of Saleh Fakhoury, when law enforcement learned that Korotitsky was a possible business partner of Fakhoury in a local pizzeria business. Korotitsky’s name appeared as an owner on the bank account for Fakhoury Enterprises. Over $215,000 was deposited in the Fakhoury Enterprises account from June 3, 2008 to February 2009, mostly checks from or for the benefit of the Korotitskys.
A search of the Korotitskys home on May 5, 2010, recovered over $70,000 in cash, as well as their 2008 and 2009 tax returns, which reflected that they had only $4,192 in taxable income in 2008 and no taxable income in 2009. A financial investigation by the IRS followed for tax years 2006 through 2009.
Investigation showed that the Korotitskys lived a lavish lifestyle, which was inconsistent with their reported income. The Korotitskys took cruises to Europe in 2006 and 2007; purchased expensive jewelry, including a $29,000 Patek Phillipe watch; and purchased luxury automobiles including a BMW and two Lexus. Alexsander Korotitsky used other people’s personal and business bank accounts to pay for his living expenses, cars, jewelry and vacations, and during the investigation maintained some level of control over at least eight companies’ business checking accounts.
A bank deposit analysis indicated that the Korotitskys had a total of $875,382.48 in unreported income for tax years 2006 through 2009. In April 2013, the couple filed amended tax returns for those years, which included checks totaling $66,184 as restitution to the IRS. However, the amended tax returns reflected that Alexsander Korotitsky earned the income from his wife’s beauty salon, not from any of the businesses which he was associated with, so the amended returns were also false.
The federal tax loss is approximately $230,688 and the Maryland tax loss is $41,580.67, resulting in a total of $272,268.67 owed by the defendants.
United States Attorney Rod J. Rosenstein praised the IRS-CI and ATF for their work in the investigation and thanked Assistant U.S. Attorney Sandra Wilkinson, who prosecuted the case.