Manhattan-Based Attorney Charged In Tax Fraud Scheme With Failing To Report Over $3 Million In Fee Income
The Defendant Allegedly Directed Clients To Pay Legal Fees In Cash, Some Of Which Was Stashed In A Safe Deposit Box, And By Wiring Money To Pay His Personal Credit Card Bills
Preet Bharara, the United States Attorney for the Southern District of New York, and Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that STANLEY L. COHEN, a Manhattan-based attorney, was charged in a six-count Indictment filed today with failing to report to the Internal Revenue Service (“IRS”) over $3 million in income paid to COHEN in the form of legal fees between 2005 and 2010. COHEN was also charged with scheming to defraud the New York State Tax authorities of taxes due to New York State as a result of COHEN’s failure to report, and affirmatively taking steps to hide, his income. He is expected to be presented in Manhattan federal court before U.S. District Judge Paul A. Engelmayer next week.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Stanley Cohen instructed his clients to pay him in cash, and then stockpiled the money he received in legal fees in order to avoid paying his fair share in taxes. Today’s charges underscore our commitment to pursuing and prosecuting individuals who seek to circumvent this nation’s tax laws.”
IRS-CI Special Agent-in-Charge Weirauch said: “IRS-Criminal Investigation is committed to ensuring that everyone pays their fair share. We will thoroughly investigate those who are wilfully violating the income tax laws and we will work with our partners at the Department of Justice to see that they are prosecuted. However, while prosecuting violators is essential to making the tax system work, such prosecutions also reassure the confidence of honest taxpayers in their tax system.”
According to allegations contained in the Indictment filed in Manhattan federal court today:
Between October 2005 and 2011, STANLEY L. COHEN performed legal services for dozens of clients in proceedings in federal and state courts in New York State and elsewhere. The services COHEN provided – through an entity he set up in New York called “Stanley L. Cohen & Associates, LLC” – included the representation of clients at various stages of criminal proceedings, such as arraignments, bail and other pre-trial hearings, guilty pleas, and sentencings. In exchange for those services, COHEN was paid in excess of $500,000 in fee income for each of the years 2005 to 2010.
COHEN, however, failed to file tax returns with the IRS or the New York State Department of Taxation and Finance for each of the years 2005 to 2010, as he was required to do. In addition, COHEN took steps to evade his tax obligations, including: directing clients to pay legal fees in cash; storing portions of the cash legal fees in a safety deposit box rather than depositing the fees in a bank account; directing clients to pay legal fees by sending wire transmittals that were routed directly to pay COHEN’s American Express card bills; depositing legal fees in one or more personal bank accounts; and paying personal expenses, such as credit card bills, with client fees that had been deposited in personal and other bank accounts.
COHEN, 63, of New York, New York, is charged with five counts of failing to file U.S. Individual Income Tax Returns, each of which carries a maximum sentence of one year in prison, and one count of wire fraud, which carries a maximum sentence of 20 years in prison.
Mr. Bharara praised the outstanding investigative work of the IRS.
The case is being prosecuted by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Stanley J. Okula, Jr. 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.