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A cautionary tale: California developer sentenced for tax fraud

On Behalf of | Dec 29, 2011 | Audits, IRS, Tax Crimes |

It likely isn’t surprising to Sacramento readers that cautionary tales regarding compliance with California and federal tax laws abound. One such tale came closer to its end recently, when a California real estate developer was sentenced to 30 months in prison after he was convicted of tax fraud. Reportedly, the man was also fined $50, 000 and will be forced to pay $1.9 million in restitution.

The developer was alleged to have filed false tax returns in 2000, 2001 and 2002. He was also charged with obstructing the efforts of the IRS. A federal indictment claimed that he did not report selling four properties in San Francisco and one property in Las Vegas. Also included in the indictment were allegations that the man failed to include as income certain payments received by his corporation. Additionally, prosecutors alleged that the real estate developer had given a lender invoices from a tax service that didn’t exist. Apparently, he also never reported owning more than $400 million of artwork.

Something to keep in mind: for each count of filing a false tax return, the maximum statutory penalty is a three-year prison term and a fine of $250,000, in addition to restitution.

Reportedly, the court’s ruling came after a complicated legal battle during which the developer pled guilty twice but later attempted to alter his plea. The judge denied the accused man a change of his plea, noting that he had allegedly threatened to kill witnesses shortly before the beginning of his trial.

Of course, tax controversies are generally not handled in such a dramatic manner. However, given the potential complexity of California and federal tax laws, sometimes very creative thinking is necessary to ensure that the rights of individuals accused of tax crimes are protected. If Californians are going through an audit or wondering about the details of their own tax law compliance, the best way to avoid a fraud allegation may be to become fully aware of the rights and protections afforded by California and federal laws.

Source: Gilroy Dispatch, “Developer gets 30 months in prison for tax fraud,” Jonathan Partridge, Dec. 28, 2011


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