The co-owner and CEO of a California investment firm recently pleaded guilty to federal charges of tax fraud and wire fraud. According to reports, the 66-year-old Diamond Bar man operated a day-trading scheme that took in $49 million from investors from 2005-2011. He was arrested in October and now faces up to 23 years in a federal penitentiary for his tax crimes.
The man allegedly duped investors into thinking that he was a successful day trader who only lost money on one trading day in 2006. The U.S. Attorney’s Office reports that he confessed to issuing false monthly statements to investors that showed their profits. However, he admitted to losing about $15 million in unsuccessful trades. In addition, he purportedly spent $15 million of the investors’ money on cars, jewelry and real estate, only returning $17.7 million to investors out of funds from other investors.
Reports indicate that the man admitted to not reporting $4.9 million in income tax in 2009. Additionally, he purportedly owes the IRS $5 million in back taxes from 2006-2010. When he was arrested in October, authorities seized assets that included expensive jewelry and a luxury car.
This man is expected to be sentenced in June for his crimes, and it is possible that by pleading guilty and owning up to his misdeeds, he may avoid the maximum sentence. Anyone who is accused of tax crimes in California may wish to look at what options are available to bring about the best possible resolution. Whether the charges are a result of a mistake or actual wrongdoing, accused individuals have the right to defend themselves against such allegations.
Source: Contra Costa Times, “Diamond Bar man pleads guilty in $49 million fraud case,” Venusse Navid, Feb. 25, 2013