Tax Lawyer Blog

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Tax Return Preparer Sentenced to 27 Months for Tax Evasion

Tax evasion carries severe penalties, even in cases in which no one else has been defrauded.

The facts

From 2005 through 2011, Semere Tsehaye owned more than 20 Instant Tax Service (ITS) franchises in Illinois, Kansas and Missouri, under the names A&S Tax Service LLC and ERI Enterprises LLC.

In 2010 and 2011, Tsehaye evaded $581,264 in taxes by generating fraudulent financial summaries for A&S and ERI. He provided these summaries to his tax preparer, who in turn used them to prepare Tsehaye’s federal income tax returns. The 2010 summary understated his gross receipts by $547,895, and the 2011 summary understated his gross receipts by roughly $1.03 million.

Charges and sentence

Tsehaye was charged and convicted of two counts of tax evasion. The case was investigated by special agents of the Internal Revenue Service Criminal Investigations Division.

On January 23, 2017, Tsehaye was sentenced to 27 months imprisonment and three years of supervised release. He was also ordered to pay $298,178 restitution to the IRS.

Although in this case Tsehaye’s crimes related only to his own tax returns and not to those of his clients, the fact that Tsehaye was a tax preparer – who was clearly aware of what he was doing and who consciously tried to cheat the system – clearly had a strong effect on his sentence.

Note that many tax return preparers who are convicted of tax evasion not only face greater penalties but are often barred from ever working as a tax professional again.

California criminal tax defense attorneys

The criminal defense attorneys at Moskowitz, LLP assist individuals and companies with a wide variety of financial criminal matters, including but not limited to those relating to tax crimes, bank secrecy act violations, currency crimes, and tax preparer defense. If you are being investigated for a tax or other financial crime, call our San Francisco office without delay.

San Antonio Businessman Sentenced To Four Years in Prison for Defrauding Personal Injury Clients, the Bankruptcy court, and the IRS.

From 2009 through 2014, Elpidio Gongora (aka “Pete Gongora”), operated a number of personal injury law offices in Texas, Arkansas and New Mexico. The lawyers in these firms apparently obtained settlements on behalf of their clients, but Gongora did not deliver the money to their clients nor to the medical providers who treated them. Instead, he fraudulently endorsed the settlement checks and took the cash. Some of it was paid to insurance and tow truck companies in order to obtain information on accident victims. The rest was used to purchase luxury items for himself and his wife.

One of the lawyers was part of the scheme. Attorney Ronald Higgins permitted Gongora and Juan Rodriguez, another co-conspirator, to use his law license to further their fraudulent activities. Bookkeeper Rosa Ramirez was also in on it. The other lawyers were apparently unaware of what was going on.

More fraud

The story doesn’t end there. In 2013, Gongora and his wife filed for bankruptcy, and decided not to disclose some of their property to the bankruptcy court – including a 33-foot cabin cruiser, a 29-foot boat, a Ford F-150 truck, a residence, and some other real property in Texas. They also evaded more than $1.6 million in federal income taxes payable from 2003 through 2005, and from 2007 through 2013.

Any of Gongora’s actions could have triggered the investigation, which was conducted by the Internal Revenue Service – Criminal Investigation Division, the Federal Bureau of Investigation (FBI), and the Office of the U.S. Trustee.

Charges and sentencing

On July 28, 2016, Gongora plead guilty to conspiracy to commit mail fraud, bankruptcy fraud, and tax evasion. On April 4, 2017, he was sentenced to imprisonment. He was also ordered to pay $3,490,000 in restitution to the IRS.

Gongora’s three co-conspirators in the personal injury matter all plead guilty to conspiracy to commit mail fraud. Higgins he was sentenced and was ordered to pay $1,490,000 in restitution (liability for that restitution payment was joint and several with Gongora). As of the date of this writing, the June 13, 2017 sentences for Ramirez and Rodriguez have not yet been published.

San Francisco financial crimes attorneys

If you are being investigated for a tax and/or other monetary crime, you need a law firm knowledgeable about the complexities and interworking of both criminal law and tax law. The comprehensive approach of Moskowitz, LLP can help you. Contact our California office today.