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Justice News

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

Wednesday, February 1, 2017

Richfield man indicted for using business accounts to buy high-end vehicles, underpay taxes by $350,000

A Richfield man was indicted on charges that he illegally failed to pay nearly $350,000 in income taxes by using a business account to pay personal expenses over nearly a decade, said Carole S. Rendon, United States Attorney for the Northern District of Ohio.


James M. Pelagalli, 60, was indicted on one count of attempt to evade or defeat payment of tax. Pelagalli used various business names and entities to conceal income and assets, according to the indictment.


For example, he used business accounts he controlled to pay for personal expenses, including the purchase of a 2008 Lamborghini Gallardo, lease payments on personal vehicles such as a 2010 Cadillac CTS, a 2010 Mercedes-Benz S550 sedan and a 2013 Cadillac XTS, and rental payments for a personal residence.


He failed to pay approximately $348,388 in income tax for calendar years 2002, 2003, 2005 through 2009, and 2011, according to the indictment


If convicted, the defendant’s sentence will be determined by the court after reviewing factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.


The investigating agency in this case is the Internal Revenue Service in Toledo. case is being prosecuted by Assistant United States Attorneys Noah P. Hood and Robert J. Patton.


An indictment is only a charge and is not evidence of guilt. Defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.


Updated February 1, 2017