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Tax Enforcement Actions

The Internal Revenue Service (IRS) is the United States agency with primary responsibility for enforcing federal tax laws, working with the Department of Justice. Whistleblowers with knowledge of violations of the federal tax laws can submit a claim to the IRS under the IRS Whistleblower Reward Program, and may be eligible to receive a monetary reward.

Below are summaries of recently-announced settlements or successful prosecutions by the IRS or DOJ. If you believe you have information about fraud or wrongful conduct which could give  rise to a claim under the IRS Whistleblower Reward Program, please contact us to speak with one of our experienced whistleblower attorneys.

August 12, 2019

The CEO of a Colorado-based technology company has been sentenced to over 6 years in prison for defrauding the IRS, impeding the administration of tax laws, and stealing money from his employees’ healthcare and 401(K) plans.  As the head of Touchbase USA (TBUSA) and its successor company Touchbase Global Services, Inc. (TBGSI), Riordan Maynard allegedly stole over $50,000 from his employees’ healthcare plan and $68,000 from their 401(K) plans for use on company expenses.  He also caused TBUSA to be closed and TBGSI to be opened in order to avoid paying more than $2.5 million in unpaid payroll taxes.  After running up another $2.5 million in unpaid payroll taxes, Maynard also conspired to work around IRS levies sent to his customers.  USAO CO

July 19, 2019

For not disclosing additional U.S. accounts when a 2015 non-prosecution agreement was signed with the DOJ, Banque Bonhôte & Cie SA, Ltd. (Bonhôte) of Switzerland has signed an addendum, agreeing to pay an additional $1.2 million penalty on top of its $624,000 share of an earlier penalty against 80 Swiss banks totaling $1.36 billion.  The DOJ had executed non-prosecution agreements with the banks in 2015 and 2016 to resolve potential criminal liabilities relating to offshore banking services.  DOJ

June 18, 2019

A New Hampshire man named Imtiaz Shaikh has been sentenced to 1.5 years in prison and ordered to pay $2.8 million to the State of New Hampshire for evading taxes on the sale of certain tobacco products.  According to state law, wholesale distributors of other tobacco products (OTP) must be licensed, file reports on the number of OTP sold, and pay taxes at 65% of the wholesale price.  To avoid paying taxes on his products, Shaikh conducted business through a number of shell corporations, robbing the state of $2.8 million in unpaid taxes.  USAO NH

May 8, 2019

Cosmetics retailer Sephora USA Inc. paid $159,349 to the State of Indiana to resolve claims brought by a whistleblower under the Indiana False Claims Act alleging that Sephora made false statements in connection with failing to collect sales tax on internet sales shipped to Indiana consumers.  IN AG

April 26, 2019

A permanent injunction has been issued barring Michael L. Meyer from in any way marketing the "Ultimate Tax Plan," also referred to as Charitable LLC or Charitable Limited Partnership, or otherwise preparing federal tax returns or advising taxpayers on charitable contributions.  Meyer had sold his bogus tax scheme with claims that taxpayers could reduce taxes by purportedly transferring property to an entity and purportedly donating their interest in the entity to a charity, while retaining complete control over the assets.  Meyer appraised the “donations,” prepared tax forms for participants to claim unwarranted deductions, and controlled the charities used to perpetuate the scheme.  The government alleged that the scheme deprived the U.S. of at least $35 million in tax revenue.  DOJ

April 25, 2019

Zurich Life Insurance Company Ltd and Zurich International Life Limited have entered into a non-prosecution agreement and agreed to a penalty of $5.115 million to resolve allegations that it knew some of its U.S. taxpayer customers were using certain Zurich policies in order to evade U.S. taxes and reporting requirements.  Under applicable law, the increase of the principal in the policies was subject to U.S. taxation, and the policies were required to be disclosed to the IRS, but Zurich knew or should have known that the policies were undeclared.   Zurich reported its finding of these accounts to the government as part of the DOJ Swiss Bank Program.  DOJ

March 1, 2019

The owner of a mental health clinic in North Carolina was sentenced to 5 years in prison for submitting about $4 million in false claims and evading almost $400,000 in unpaid taxes over the course of four years. Using patient information provided to her by co-defendant Haydn Thomas, who was employed as an office manager for an oral surgeon, Catinia Denise Farrington of Durham County Mental Health and Behavioral Health Services, LLC allegedly submitted thousands of false claims to Medicaid for services that were not performed. In addition to her prison sentence, Farrington has been ordered to pay restitution of about $4 million to NC Fund for Medical Assistance and almost $400,000 to the IRS for paying personal expenses out of business accounts into which she has transferred her fraudulently obtained gains. Her co-defendant faces sentencing later this month. DOJ; USAO MDNC

February 14, 2019

Adam Van Pelt of Houston, Texas, who owned Stat Source, Inc., has been sentenced to nearly three years in prison and ordered to pay restitution of $20 million for failing to pay over more than $20 million in employment taxes to the IRS over the course of 18 quarters between 2011 and 2015.  USAO SD TX

February 1, 2019

Brian Gimelson of New Jersey was sentenced to 18 months in prison for tax evasion, after pleading guilty for concealing $1.2 million in income he received as fees for the sale of a painting purportedly by the Italian Renaissance painter Caravaggio.  Gimelson directed the fee income to a company he created in his wife's name, and further directed his wife to make cash withdrawals from the account.  DOJ

December 19, 2018

The U.S. has filed a complaint to bar EcoVest Capital, Inc. and associated individuals from continued activities related to the defendants' allegedly abusive conservation easement syndication tax scheme.  As set forth in the complaint, taxpayers may take a "qualified conservation contribution" deduction equivalent to the fair market value of a conservation easement, but only if certain requirements with respect to the donation of an interest in property for conservation purposes are satisfied. The defendants allegedly have organized, promoted, and sold ownership interests in at least 96 sham “conservation easement syndicates” which lack economic substance.  The syndicates have reported over $2 billion in improper tax deductions, resulting in hundreds of millions in tax underpayments.   DOJ
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