Before engaging with any professional for tax preparation services or for other purposes, taxpayers should always engage in careful due diligence regarding the attorney or CPA. In some instances, it may be obvious that something isn’t quite right. Unfortunately in other cases, some determined individuals will engage in extreme measures to give the appearance of credentialed authority or authorization to practice law or prepare taxes.
Unfortunately for those impacted by a tax preparer who is something other than what he or she purports, the taxpayer is ultimately responsible for the contents of his or her court filings. Further compounding the concerns of a taxpayer who has been taken in by an unlicensed tax preparer is the fact that unlicensed individuals often do not have the same training and experience as legitimate tax professionals. Alternatively, the individual may be an attorney or accountant who lost his or her license due to malpractice or ethical reasons.
San Diego Federal Court Issues Injunction Against Man Who Impersonated California Attorneys
According to a civil complaint filed against Lawrence Preston Siegel, he is a former attorney and CPA who lost his licenses to practice in 1994 and 1997, respectively. His loss of these professional licenses was due to a federal tax evasion conviction. According to court filings Siegel would not be deterred and would present potential clients with various identities and aliases including the use of the identities “Larry Lave” and “Yehuda Lave.” It is important to note that these identities do not appear to return a result when using the attorney search feature provided on the State Bar of California’s website. If a potential client had performed his or her due diligence and verified the attorney’s bar registration, the scam would have become apparent. Unfortunately this due diligence was not performed and Mr. Siegel was allowed to draw others into his tax scheme.
The Tax Scheme Also Involved Unsound Tax Advice and Abusive Tax Shelters
Mr. Siegel would typically target high-earners and others with significant amounts of income by making outlandish promises regarding potential tax savings. Unfortunately for the taxpayer, many of the methods advanced by Mr. Siegel constituted tax fraud, tax evasion, or abusive tax structures. The complaint against Mr. Siegel alleges that his promises to potential tax clients include:
- Siegel incorrectly claimed that Californians could establish a business entity in another state and then treat their California home as an out-of-state office for the Nevada company to secure substantial tax savings by transforming personal expenses into tax deductible business costs.
- In one e-mail regarding the same scheme, he stated that individuals are entitled to receive tax-free compensation in the form of housing from their out-of-state-company. He further encouraged his clients to secure luxurious properties because “there is an assumption that corporations don’t waste money.”
- In one particularly egregious situation Siegel attempted to conceal personal expenditures by the taxpayer at various cruise lines, Louis Vuitton, and Tiffany’s by reporting them as aggregated expenses for “medical records and supplies.”
Other acts by Siegel allegedly include preparing customer returns without reviewing the completed return with the taxpayer and submitting it without authorization. Siegel is also accused of attempting to thwart and delay the investigation into his activities by presenting fraudulent documents and making false statements to IRS agents.
Aside from these acts, Siegel is also a fugitive from the law in California. He is wanted to answer for 20-criminal counts against him stemming from alleged Medi-Cal fraud and other fraudulent activities. Siegel did not appear for his proceeding regarding the tax matter and a permanent injunction was entered against him prohibiting him from providing any further tax advice, preparation services, or guidance. However, if the prosecutor’s claims are accurate, it is certainly possible that Mr. Siegel is operating under a new alias and with a new scheme. Taxpayers seeking guidance regarding a suspected tax scam advanced by a tax preparer should consult the Department of Justice’s page on tax schemes and scams.
Rely on Our Experience when Addressing Tax Preparer Fraud
The tax professionals of the Tax Law Offices of David W. Klasing are proud to help taxpayers address the consequences of being taken in by an unscrupulous tax preparer. We can work to address any IRS concerns or a tax audit as you come back into compliance with the U.S. Tax Code.
Furthermore, the IRS and DOJ aggressively pursue tax preparers who appear to be involved in compromising positions or situations. While such action is necessary to protect the public trust in the tax system and licensed professionals, there are some innocent tax preparers who can get swept up in the fervor to root out fraud. We can also defend CPAs and tax attorneys accused of wrongdoing or other improprieties.
To schedule a reduced-rate tax consultation with an experienced tax professional call our firm at 800-681-1295 today or contact us online. We have offices in Los Angeles, San Diego, & Irvine and are proud to also serve the surrounding communities in Los Angeles and Orange County.
