Former Pelham Resident Sentenced to Two Years in Prison for Tax Evasion Scheme
For Immediate Release
U.S. Attorney's Office, District of New Hampshire
CONCORD, N.H. - Gary Peter Borak, 50, formerly of the Pelham, New Hampshire area, was sentenced to two years in prison for participating in a tax evasion scheme, Acting United States Attorney John J. Farley announced today.
According to court documents and statements made in court, Borak filed a legitimate federal income tax return for 2007 – prepared by his accountant -- that established that he had an outstanding tax debt of more than $50,000. In response to IRS efforts to collect that debt after Borak failed to pay it, Borak engaged in a series of ploys in an attempt to defeat the payment of the tax and the assessment of new income taxes for future tax years.
Among other things, in 2011, Borak filed an amended return for 2007 and an original, but delinquent, tax return for 2008 in which he made bogus claims that he had large amounts of Original Issue Discount (often abbreviated “OID”) income and large amounts of corresponding withholding from a so-called non-existent “straw man” financial account. He claimed that the withholding not only satisfied his outstanding tax debt from 2007, but also qualified him for large tax refunds. To support his false claims, Borak created fake IRS forms purportedly prepared and issued by a particular bank and sent the IRS volumes of correspondence and other documents containing highly unconventional and meritless claims about the tax laws. Borak persisted in pressing his bogus claims even after the IRS and his accountant told him that they were frivolous. He also attempted to satisfy his tax debt by submitting sham financial instruments to the IRS.
Finally, until about two weeks before entering his guilty plea, Borak failed to file any tax returns for tax years 2009 through 2016, even though he earned substantial amounts of income in at least several of those years. Borak’s conduct resulted in an actual tax loss to the U.S. Treasury of about $168,147.
Borak previously had pleaded guilty to one count of tax evasion two counts of making false statements on his tax returns. After serving his two-year prison sentence, he will serve three years of supervised release. He also was ordered to pay full restitution to the United States Treasury.
“This case shows that there are substantial penalties for those who attempt to use fraudulent techniques to avoid their tax obligations,” said Acting U.S. Attorney Farley. “The defendant’s scheme of creating false documents in order to try to mislead the IRS was unlawful and he has been held accountable for his actions.”
“Our voluntary system of self-reported tax liability depends upon people to honestly report their income and timely pay their taxes,” said Joel Garland, Special Agent in Charge of IRS Criminal Investigation. “Those who willfully file false tax returns and obstruct the IRS in their collection efforts damage our nation’s system of taxation. Violators will be prosecuted, punished, and obligated to repay their taxes along with applicable penalties and interest, which are substantial.”
This matter was investigated by the Manchester office of Criminal Investigation of the Internal Revenue Service and the Treasury Inspector General for Tax Administration. They were assisted by the Rockingham County and Hillsborough County Sheriff Departments and the Atkinson, Hudson, Salem, and Pelham police departments. The case is being prosecuted by Assistant U.S. Attorneys Seth Aframe and Bill Morse.
Updated December 15, 2017