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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Friday, July 8, 2016

Disbarred Orange County Attorney Indicted For Mail Fraud, Structuring Cash Transactions, Obstructing The IRS, Tax Evasion, Obstruction Of Justice, And Perjury

Preet Bharara, the United States Attorney for the Southern District of New York, Shantelle P. Kitchen, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation (“IRS-CI”), and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing in White Plains federal court of a six-count Indictment of former Orange County Attorney JOSEPH G. SCALI for mail fraud, structuring cash transactions, obstructing the IRS, tax evasion, obstruction of justice, and perjury.  SCALI was arrested this morning and is expected to be arraigned in federal court in White Plains this afternoon. 

Manhattan U.S. Attorney Preet Bharara said:  “As alleged, Joseph Scali abused his position of trust as a lawyer and officer of the court, by stealing funds entrusted to him, obstructing the work of the IRS, and evading his tax obligations.  We thank the IRS and Postal Inspection Service for their work in this investigation.”

IRS-CI Special Agent in Charge Shantelle P. Kitchen said:  “In the interest of ensuring that everyone pays their fair share of taxes, IRS-Criminal Investigation investigates individuals who allegedly unlawfully exploit the tax system for their own advantage.  We especially take allegations of obstructing IRS officers from performing their lawful duties very seriously.  Law abiding taxpayers will expect no less.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Joseph Scali allegedly violated his ethical responsibilities and lied to the government to avoid taxes and disbarment.  In all of his alleged lies, he underestimated the resolve of law enforcement to protect consumers from scammers whose only intention is to defraud for their personal gain.”

According to the Indictment[1] and other court filings related to this matter:

From January of 2011 through August 28, 2012, SCALI, who represented the seller of two tracts of land in Pennsylvania, schemed to defraud the prospective purchaser of that real estate of the $850,000 the latter had given to him to hold in escrow by misappropriating those funds from his attorney trust/escrow account.  Additionally, the Indictment charges SCALI with structuring approximately $32,000 of cash deposits to that account.

The Indictment also charges that SCALI corruptly endeavored to obstruct the IRS by  (a) providing materially false, incomplete, and misleading information to a Revenue Officer of the Internal Revenue Service, namely, false, misleading, and incomplete information as to the years for which he had filed tax returns in the past, the reasons why SCALI had not filed tax returns for certain years, and the amount of income received by SCALI during tax year 2012; (b) commingling client funds and personal funds in his Attorney Trust Account; (c) paying for personal items directly out of his Attorney Trust Account; (d) structuring cash deposits to his Attorney Trust Account; (e) failing to file U.S. Individual Income Tax Returns, Forms 1040, notwithstanding that he was required by law to file a return for each year (2006 through 2012); (f) failing to file U.S. Corporate Income Tax Returns, Forms 1120, for his law firm, Joseph G. Scali, P.C., notwithstanding that the law firm was required by law to file a return for each year (2006 through 2012); and (g) failing to maintain required records concerning his Attorney Trust Account.  Additionally, the Indictment charges SCALI with income tax evasion for the 2012 year.

Finally, the Indictment charges that SCALI committed obstruction of justice and perjury when, in seeking to set aside his disbarment by the United States District Court for the Southern District of New York, he lied to that court about why, in 2013, he had been suspended from practicing law in New York by the Second Department of the Appellate Division of the New York State Supreme Court (“the Appellate Division”).  SCALI was disbarred by the Appellate Division on July 6, 2016.

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SCALI, 67, of West Hartford, Connecticut, is charged with one count of mail fraud, which carries a maximum sentence of 20 years in prison; on count of structuring cash transactions, which carries a maximum sentence of five years in prison; one count of obstructing the IRS, which carries a maximum sentence of three years in prison; one count of tax evasion, which carries a maximum sentence of five years in prison; one count of obstruction of justice, which carries a maximum sentence of 10 years in prison; and one count of perjury, which carries a maximum sentence of five years in prison. 

Mr. Bharara praised the work of the IRS and the Postal Inspection Service in this investigation.

This case is being handled out of the White Plains Division.  Assistant United States Attorney Elliott B. Jacobson is in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

 

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Topic(s): 
Financial Fraud
Tax
Press Release Number: 
16-181
Updated July 8, 2016