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Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of California

FOR IMMEDIATE RELEASE
Wednesday, December 14, 2016

Bay Area Doctor Pleads Guilty To Tax Evasion

SAN FRANCISCO – Dr. John Compagno pleaded guilty today to tax evasion announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.

According to the plea agreement, Compagno, 70, of Napa, Calif., is a medical physician specializing in Pathology.  Compagno is the owner and operator of three corporations located in Hercules, Calif., including John Compagno, M.D., Inc., West Coast Pathology Laboratory, Inc., and Histopathology Reference Laboratory, Inc.  In his plea agreement, Compagno admitted he submitted both corporate and individual tax returns that understated his liability to the IRS.

For the tax years 2005 through 2011, Compagno caused a corporate tax return preparer to overstate the amount of expenses on the corporate tax return by including non-deductible expenses.  Because the amounts of non-deductible expenses were overstated, the amount of income taxes due were understated.  Compagno approved and signed the corporate tax returns.  The amounts of non-deductible expenses included during each year are as follows:

 

Tax Year

Amount of

Non-Deductible

Expenses Included

 

 

Additional Tax Due

 

2005

$407,714

$138,623

2006

$722,644

$248,814

2007

$1,712,621

$601,235,

2008

$2,511,211

$737,848

2009

$2,640,726

$916,547

2010

$1,090,799

$646,063

2011

$1,593,365

$569,930

Total

$10,679,080

$3,859,060

 

In addition, Compagno omitted constructive dividends from his 2006 through 2011 individual income tax returns.  This resulted in additional tax due as follows:

 

Tax Year

Amount of

Constructive Dividends Omitted

 

 

Additional Tax Due

2006

$706,736

$118,812

2007

$1,657,324

$264,449

2008

$2,359,000

$307,732

2009

$2,411,547

$345,827

2010

$1,833,674

$287,558

2011

$1,536,810

$242,801

Total

$10,505,091

$1,567,179

 

In sum, Compagno acknowledged in his plea agreement he owes over $5.4 million in unpaid taxes.  Compagno was charged by Information filed November 16, 2016, with one count of tax evasion, in violation of 26 U.S.C. § 7201.  In today’s plea agreement, he pleaded guilty to knowingly and willfully filing with the IRS a false 2010 corporate tax return. 

Compagno is scheduled to be sentenced on March 28, 2017, at 2:00 p.m., before the Honorable William Alsup, U.S. District Judge.  The maximum sentence for tax evasion, in violation of 26 U.S.C. § 7201, is five years in prison and a fine of $250,000.  However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

Assistant U.S. Attorney Thomas Moore is prosecuting the case.  The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.

Topic(s): 
Tax
Updated December 27, 2016