U.S. Attorney Announces 30-Count Indictment Charging Garment-Manufacturing Executive With Tax Fraud Scheme, Masking Millions In Payroll
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LEWIS STAHL, the owner of a Manhattan medical technology company, was sentenced to 30 months in prison for evading federal income taxes on more than $21 million in business income, which resulted in a loss to the U.S. Treasury of more than $6.3 million in taxes due and owing. STAHL pled guilty to one count of tax evasion on September 27, 2018, before U.S. District Judge Ronnie Abrams, who imposed today’s sentence.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Lewis Stahl flagrantly evaded paying taxes on his business income, denying the federal government more than $6 million in taxes. Knowing full well that he was committing a crime, Stahl will spend time behind bars for his wrongdoing.”
According to the Information to which STAHL pled guilty, court filings, and statements made in public court proceedings:
STAHL is an experienced businessperson who owns and operates a Manhattan medical software company (the “Medical Technology Company”) that develops and sells medical software applications. The Medical Technology Company holds itself out as a provider of “computer ready” and “fully mobile” applications that allow physicians to prescribe medications and to order and view diagnostic information, lab results, and cardiology/radiology images.
Between 2010 and 2014, the Medical Technology Company earned more than $32 million in gross income. Less business expenses, these earnings resulted in over $21 million in business income to STAHL, which he accessed by using business bank accounts and business credit cards. STAHL used this money to fund the purchase of personal items for himself, such as clothing, jewelry, watches, real estate rentals, country club benefits, and a firearms collection. Prior to 2015, despite earning this business income from the Medical Technology Company, STAHL deliberately avoided filing tax returns, and did not report any of the income to the Internal Revenue Service (the “IRS”).
In March of 2015, an IRS revenue agent (the “IRS Revenue Agent”) contacted STAHL regarding his failure to file for the tax years 2010 through 2014, and asked STAHL to address the situation by filing delinquent Forms 1040 for those years (the “Delinquent Returns”). Shortly thereafter, STAHL retained a certified public accountant (the “Accountant”) to file the Delinquent Returns for STAHL. STAHL told the Accountant that he had failed to file tax returns in the past because he had payroll tax problems with the IRS and “stuck his head in the sand.” He also told the Accountant that he did not have any personal bank accounts in his name because he believed the IRS would seize any such accounts. STAHL further stated to the Accountant, falsely, that he was a “W-2” employee only of the Medical Technology Company, that his W-2 income was his only income, and that he had no ownership interest in the Medical Technology Company. In truth and in fact, STAHL had an ownership interest in the Medical Technology Company, and had earned over $21 million in business income from the company, well beyond the income of a few hundred thousand dollars that was reflected on his W-2s.
The Accountant subsequently filed the Delinquent Returns for STAHL, which, as a result of the lies that STAHL told the Accountant, were false and fraudulent. Specifically, the Delinquent Returns falsely claimed that STAHL’s total income was $38,652 in 2010; $7,115 in 2011; $84,615 in 2012; $100,000 in 2013; and $100,000 in 2014. The Delinquent Returns further falsely reported that STAHL did not receive any business income in any of these years, and failed to include a Schedule C detailing the significant amount of business income that STAHL earned from the Medical Technology Company. STAHL’s failure to report over $21 million in business income to the IRS – first by deliberately failing to file returns, and then by causing the false Delinquent Returns to be filed by the Accountant – resulted in a loss to the IRS of over $6.3 million in taxes due and owing.
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In addition to the prison term, Judge Abrams ordered STAHL, 63, of Boca Raton, Florida, to serve three years of supervised release, and to make court-ordered restitution to the IRS.
Mr. Berman praised the outstanding investigative work of the IRS Criminal Investigation Division in this case.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Sarah E. Paul is in charge of the prosecution.