Taxable Talk

Sometimes you read a story and wonder how in the world it can be true. How can people be so gullible and how can someone do such a stupid scheme and expect to get away with it.

Robert Doyle of Oakland had an interesting means of making a living. He would ask random individuals he’d meet on the street if he could prepare their tax returns. He’d then do so, making up a phony return and then pocketing a goodly portion of the refund. (You didn’t think he’d make up a return with a large balance due, did you?). The “Tax Man” (yes, that was really his nickname) pleaded guilty to one count of filing a false tax return and will be sentenced this Fall to spend some time at ClubFed. Mr. Doyle practiced his trade from 2000 – 2005, so it’s likely that the loss to the government was quite substantial.

Meanwhile, Fatai Onevai of Pittsburg, California told his clientele that he could fix any and all IRS problems. And he did by a similar method—in total, he bilked the government out of $1.3 million. He pleaded guilty to one count of filing a false tax return and was sentenced in late June to 18 months at ClubFed.

As usual, if it sounds too good to be true it probably is.

Perhaps it was the holiday weekend, or perhaps it’s the start of summer, but the tax evaders weren’t that busy last week. Still, there are some amusing tales of evasion gone wrong.

First, we head to White Plains, New York. Yahezkel Elia and David Elyaho were accused of tax evasion. The IRS alleged that their business were far more profitable than they showed on their tax returns. And when the government found a logbook showing the 12,000 money orders that the two men used to conceal their true income the jury had no problem finding them guilty of tax evasion. Given that the evasion apparently involved millions of dollars the two men will likely soon be boarding at ClubFed.

Next, we journey to Mesa, Arizona. Last week John Stacey was indicted on tax evasion charges. The government alleges that he hid income and assets from his paving businesses by putting money into his mother’s bank account, using phony social security numbers and employer identification numbers, and filing false bankruptcy financial disclosure statements. That’s a trifecta of problems that could send Mr. Stacey to ClubFed if he’s found guilty.

Finally, Michael Kyereme won’t be scamming the City of Newark, New Jersey or Cisco Systems anymore. Mr. Kyereme pleaded guilty to mail fraud and tax evasion. Mr. Kyereme was a systems administrator for the City of Newark. When a Cisco part went bad he was supposed to use Cisco’s online “SMARTNet” system to order a replacement part, and then have the bad part shipped back to Cisco. He may have done that a couple of times. More often, though, he just ordered “replacement” parts so that he could sell them to another individual and pocketed the money. He would ship other less expensive parts back to Cisco.

The indictment shows that the loss to Cisco is estimated at $4,179,667. That alone is enough to get Mr. Kyereme a stay at ClubFed. But there was an additional problem: tax evasion. Mr. Kyereme profited from his nefarious dealings but didn’t report them on his tax returns. In 2006 his gains from this scheme totaled $1,242,483, or an additional $429,846 in tax.

Interestingly enough when Mr. Kyereme was taken into custody $3 million worth of Cisco equipment was found in his home and automobile. Mr. Kyereme remains out on bail until his sentencing later this Fall.

If you get a bright idea make sure it’s a legal one, and make sure you pay your taxes. It’s always a lot easier to pay them now then to find yourself paying them later…and possibly having to make a journey to ClubFed.

I’m not particularly familiar with the Australian Taxation Office and how they compare to the IRS. Yet I suspect that telling them, “Come and get me, you miserable bastards,” is not the way to their hearts. But that’s exactly what Australian actor Paul “Crocodile Dundee” Hogan said. The TaxProf Blog, AP, and Don’t Mess with Taxes have more.

As I’ve said before it seems that strip club owners and tax evasion go together hand-and-hand.

Curt D. Kosow owned Bare Elegance, a gentlemen’s club in Pittsburgh’s “Strip District.” (No, I’m not making that up. The Pittsburgh Post-Gazette story uses that name.) He was tried for allegedly distributing cocaine (he was acquitted of that charge) but he was found guilty of failing to pay income taxes. He represented himself after going through 11 attorneys.

Mr. Kosow received some bad news during sentencing. His motion to reduce his sentence for diminished mental capacity was denied but his sentence was extended for obstructing justice during his trial. He’ll spend 41 months at ClubFed—but things could have been worse. Mr. Kosow attempted suicide at the end of the trial but survived.