Tax Lawyer Blog

A Blog written by the Tax Attorneys for Individuals and Businesses

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.

18 Months in Prison for Cashing Client Checks and Not Reporting the Income to the IRS

A man who provided landscaping and snowplowing services to residential and commercial customers in Hartford, Connecticut is serving 18 months in jail for underreporting his income.

The facts

Don Biagi of Don Biagi Landscaping liked to cash his client’s checks – from 2008 to 2010, he cashed 574 checks ranging from $10.52 to $15,604, for a total of $848,750. That, in and of itself, is legal, but Biagi never informed his tax preparer of that income, nor did he disclose another $472,555 that he had deposited into his business account. The result was $1,321,305 of unreported business receipts during those years, resulting in a substantial underreporting of Biagi’s taxable income – 62% of his gross receipts were missing from his 2008 tax return, 47% from his 2009 return, and 60% from his 2010 return.

The consequences of underreporting income

It is crucial that you report all of your reportable income on your tax return, including but not limited to, freelance income, income from the sale of property, interest and dividends. The IRS is well aware of non-compliance by individual filers, particularly small business owners, whom statistics show are the most frequent tax evaders. In 2006 alone, this group underreported $235 billion in income (more than half of the tax gap), and $122 billion of that amount was attributed to underreported income on individual income tax returns.

The IRS can identify missing income without much difficulty. Usually, through a matching system. For instance, when a business or other organization makes a payment to a taxpayer, it is required to file an information return (Form W-2, Form 1099, etc.) to the IRS. The IRS compares the amounts on these informational returns with the taxpayer’s tax returns – if they don’t match, the IRS generally sends a notice to the taxpayer regarding the difference. Other methods of identifying missing income are through audit, investigation, tips, and more.

Biagi faced a maximum term of five years imprisonment and a fine of up to $250,000 for tax evasion – the judge gave him 18 months followed by one year of supervised release. He also agreed to pay $445,579 in restitution to the IRS for his unpaid taxes, interest that has accrued on all his unpaid taxes, and hefty penalties.

California civil and criminal tax attorneys

A criminal tax investigation is a difficult process, and is usually followed by civil proceedings. The seasoned tax attorneys at Moskowitz, LLP can explain your options and help you establish a defense. Contact our San Francisco office today for a consultation.