Tax Law Blog | IRS Tax Attorneys

The head of an Orthodox Jewish group was handed a  two-year prison sentence today in Los Angeles for his part in what prosecutors said was a decade-long tax fraud and money laundering scheme.

The 61-year-old rabbi, Naftali Tzi Weisz, pleaded guilty last August to  criminal conspiracy charges before U.S. District Judge John F. Walter.

“I’m embarrassed beyond words,” Weisz told the judge. “My remorse is  deep and heartfelt.”

Prosecutors said Weisz and other sect members helped donors avoid paying  federal income taxes by having them make contributions to charitable groups  run by Spinka, a Brooklyn, N.Y.-based Orthodox Jewish group led by the rabbi.

An assistant, Gabbai Moshe Zigelman, 62, pleaded guilty last year to  conspiracy and was also sentenced to a two-year federal prison term.

The operation, according to the government, had two goals: to obstruct  the Internal Revenue Service and to further an unlicensed money-transmitting  business.

Although Weisz had faced up to five years in federal prison, Walter  imposed the lesser penalty, determining that the rabbi did not undertake the  fraud to enrich himself.

“I’m convinced he never took a penny for himself,” the judge said.

Weisz, several associates and five charitable organizations associated  with Spinka were indicted by a federal grand jury in late 2007.

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The Internal Revenue Service’s investigation into Americans who use foreign banks to evade taxes has all the elements of a Hollywood thriller.

Criminal indictments that have come from the investigation detail complex financial deals, complete with secret communications and people traveling to Hong Kong, Switzerland and the Cayman Islands to have secret meetings with their bankers. In turn, Swiss bankers traveled to the United States, posing as tourists, to advise clients on how to avoid tax laws.

The aggressive investigation by the IRS has turned up the heat on thousands of people who allegedly used the foreign banks to hide their money so they wouldn’t have to pay taxes.

In the middle of its investigation, the IRS gave people a chance at leniency. As USA Today recently reported, 7,500 people have applied for the program, which ended Thursday. They undoubtedly rushed to the IRS after UBS, the largest Swiss bank, agreed to turn over information on nearly 4,500 people who held an estimated $18 billion at the bank, out of the view of the IRS.

The leniency program, lawyers say, has helped people who were not intentionally evading taxes make things right. In the meantime, the IRS has been right to aggressively pursue charges against those who manipulated the system.

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More than 150 UBS AG clients in the U.S. are under investigation for concealing income and assets offshore at the bank, a prosecutor said in a court filing.

The scope of the investigation was disclosed today in a memo recommending that former UBS banker Bradley Birkenfeld serve 30 months in prison for conspiring to help wealthy Americans evade taxes. Birkenfeld, who faces as long as five years, will be sentenced Aug. 21 in Fort Lauderdale, Florida.

Birkenfeld, 44, pleaded guilty in June 2008 to conspiracy, saying he helped U.S. clients evade taxes through Zurich-based UBS. He seeks leniency for helping a worldwide tax-fraud probe. UBS agreed Feb. 18 to pay $780 million to avoid prosecution for helping wealthy Americans evade taxes. The bank gave account data on 250 clients to the U.S. Internal Revenue Service.

“Ultimately, based upon information obtained from UBS as part of the deferred-prosecution agreement, the United States is criminally investigating more than 150 Americans across the country who are believed to have concealed income and assets at UBS, in violation of United States law,” acting U.S. Attorney Jeffrey Sloman said in the filing.

Three UBS clients pleaded guilty since the agreement to filing false tax returns, and a fourth was charged last week with failing to file a tax report for an offshore account.

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NEW ORLEANS — The Terrebonne Parish assessor has filed a multimillion dollar lawsuit against two wholly-owned subsidiaries of ConocoPhillips, the third largest oil company in the world.

And the case may be the first of many similar lawsuits accusing big oil companies of skirting their tax obligations.

The lawsuit, filed in federal court around 11 a.m. Thursday, alleges that Burlington Resources and Louisiana Land and Exploration have been defrauding the people of coastal Terrebonne Parish for generations.

The assessor claims that the companies have been undervaluing their offshore equipment and facilities used for oil production. That property is subject to being taxed by the parish, but the lawsuit accuses the companies of hiding it in order to avoid taxes.

“The defendants in the case falsely and fraudulently under-reported, misreported and failed to report the ownership of movable property (and) personal property within the jurisdictional limits of the parish of Terrebonne,” said the plaintiff’s attorney, Don Richard.

Terrebonne Parish Assessor Gene Bonvillain hired a national firm to survey all 1,546 wells and production facilities in the parish to determine what was being reported and what was being left out. His attorneys say this is just two of 50 cases that will ultimately be filed against Burlington Resources and Louisiana Land and Exploration.

The parish is seeking payment of delinquent taxes with penalties that could eventually total tens of millions of dollars.

For more information on the lawsuit, visit paytaxesoil.com.

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Four current and former partners of the Ernst & Young accounting firm were found guilty Thursday of fraud involving tax shelters that helped wealthy people evade income taxes.

Federal prosecutors charged the four in May 2007, contending that from 1998 to 2006 they defrauded the I.R.S. by creating, marketing, using and defending tax shelters.

The shelters were meant to help people with taxable incomes of more than $10 million avoid or reduce income taxes, according to the indictment.

The jury in United States District Court in Manhattan returned the verdict of guilty on all counts after a two-month trial.

Two of the men on trial, Robert Coplan and Brian Vaughn, were former partners. The others were Martin Nissenbaum and Richard Shapiro, both of whom are on administrative leave from Ernst & Young, a spokesman for the firm said.

The spokesman declined to comment on the verdict.

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A Charlotte minister has been indicted for income tax fraud, mail fraud and lying to federal agents.

According to the IRS Criminal Investigation Division in Charlotte, Anthony L. Jinwright was charged on April 21, with five counts of tax evasion, five counts of tax perjury, one count of lying to federal agents, and three counts of mail fraud.

According to the indictment, Jinwright attempted to evade his federal tax obligations by failing to report more than $800,000 in taxable income, including at least $75,000 in income earned by his wife between 2001 and 2006.

The IRS also alleges that Jinwright owes between $200,000 and $400,000 in additional taxes for those years alone.

Jinwright has been the Senior Pastor at the Greater Salem Church in Charlotte since 1981.  He also owns and operates AL Jinwright Funeral Services in Charlotte.  He is also the founder of AL Jinwright Ministries.

The federal indictment says Jinwright has lived a lavish lifestyle.  WBTV discovered he’s been living in a Cornelius mansion once owned by NFL legend Reggie White.  The indictment says Jinwright has been leasing the home for $21,000 a month.

Jinwright owns another big home nearby in Cornelius.  It’s not occupied and has a for sale sign.  Neighbors say when Jinwright and his wife lived there, they kept to themselves and wouldn’t even wave at them when they drove by.

The indictment says Greater Salem Church gave Jinwright tens of thousands of dollars a year to rent fancy cars.  In all he received an average of over half a million bucks a year in salary and perks for six years.  The indictment says his wife also received over $800,000 from the church during the same period.

While Jinwright is the head of a church in Charlotte, he grew up in Wilmington where much of his family still lives.

Family said faith is a huge part of their upbringing and the Jinwrights believe faith is what will get them through these allegations.

Ruby Jinwright Jacobs is an elder in her congregation and was a pastor for many years.  She was shocked to hear the news that her relative has been indicted for tax evasion.

“He’s always worked in the church and he knows what is good and what is bad and I just don’t believe that he would have done things that way,” said Ruby.

Ruby and the rest of Jinwright’s extended family say they are praying for him.

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With tax season in full bloom, a little reminder to avoid making false or fraudulent claims on your tax return is in order.

If you want to see what a criminal tax case looks like, the IRS makes it easy - here are the fact patterns and sentencing results of over 50 criminal tax cases from the last six months - business owners, physicians, public officer holders, ministers, and accountants included.

A primary purpose of criminal investigations is to protect the integrity of the tax system - like those listed, you will be exposed to deter others.

Overall, the IRS does not undertake a significant amount of criminal investigations - in 2008, there were 3,749 investigations initiated.  But make no mistake, this is serious territory.  Once the IRS digs in, there is a 75% chance you will be referred for prosecution.  You do not want to go there.

Having two IRS criminal investigators make an unannounced visit to you, flash a badge and request to sit down and ask you questions will make your world spin.

If an IRS Special Agent contacts you, stop.  State that you do not wish to answer any questions without retaining professional representation.  There is a right time and way to properly respond to this type of IRS investigation, and answering alone, on the spot, without understanding the implications of what is transpiring is dangerous.  The IRS may know more than you think at this point. There is no benefit to letting them compare notes.

An IRS criminal investigation can bring financial and social ruin, loss of career and incarceration.  The perceived gain from the act is simply not worth it.

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Octuplet mom Nadya Suleman is causing furor this week in California .

A number of reports appear to confirm that the hospital where the octuplets were born has requested reimbursement from Medi-Cal, the state’s Medicaid program, for care of the premature babies. While no numbers were officially disclosed, experts in the care of premature births estimate the cost of care for the octuplets at $1.3 million. California is already struggling with significant budget problems and taxpayers are likely to balk at being asked to pay up for such a controversial procedure.

But Suleman isn’t even the biggest tax newsmaker in this story: Michael Kamrava, the doctor responsible for implanting the six embryos (yes, there were eight babies, two embryos split), has been fingered as a tax evader.

Shirin Afshar is one of two former employees who have filed suits against Kamrava. In Afshar’s suit, which was apparently settled, she alleged that Kamrava engaged in systematic insurance and tax fraud. Among the detailed allegations in the suit was that patients at Kamrava’s clinic were required to pay in cash. The cash was given to Kamrava’s wife, and recorded on a separate set of books, for the primary purpose of avoiding paying federal income tax. The amount of income allegedly unreported totaled about $400,000. The IRS has not commented on the matter, which is not unusual, as civil tax matters are not generally made public.

Looks like the summoning of a good tax lawyer.