A criminal charge for tax evasion is serious, but not every case results in a prison sentence. Many cases can be resolved with probation. For example, the Beanie Babies founder received a probationary sentence. He had pleaded guilty to one count of tax evasion related to Swiss bank accounts, but paid civil penalties, back taxes and interest.
The Newport Beach business owner was not so fortunate. A judge recently sentenced him to serve seven years in California state prison. This came after he pleaded guilty in 2011 to multiple charges of failure to file personal and company returns and filing false personal tax returns.
His former wife also pleaded guilty for failing to file corporate tax returns and failure to provide material information on a tax return. She received three years of probation. Both must also pay restitution
At the time they pleaded guilty, each had been ordered to pay $1.2 million to the California Franchise Tax Board. She had paid approximately $1 million, while her ex-husband had only paid $350,000.
The charges stemmed from allegations that the couple skimmed millions from their power plant refurbishing company between 1998 and 2001 to support a lavish lifestyle that included a Bentley and a down payment on a Learjet. This was at the same time that tax returns showed little reported income.
Prosecutors also alleged that the company took money on a job to refurbish a Huntington Beach power plant, but did little work. When subcontractors went unpaid, a labor union reported the possible fraud that started the investigation.
Paying penalties assessed, back taxes owed and interest is often relevant in sentencing decisions. In this case, the failure to repay the CFTB likely played a role in the prison sentence. The guidance of a seasoned tax defense attorney is important when seeking to resolve criminal tax evasion charges and move on with your life.
Source: Daily Pilot, “Newport Beach businessman jailed for dodging taxes,” Jeremiah Dobruck, September 20, 2014.