Individuals like accounting managers, bookkeepers, and others occupy a trusted role in a business. These individuals typically have access to company money in the form of directing incoming funds, administering payroll, and managing the company’s financial accounts. Over time, some people come to believe that this role places them above suspicion of wrongdoing. They may start to believe that their years of service faithfully carrying out company goals immunizes them from even the slightest amount of doubt regarding their honesty. This belief can lead people to take foolish risks and divert or embezzle money that belongs to the company or client.
Unfortunately, for those individuals who take these actions, events show that they are routinely identified as the source of fraud and neither their years of service nor their previous honesty deflects suspicion in the way they may have believed. Such is the case of a former accounting manager who was accused of embezzling roughly $400,000 from her company. She recently pleaded guilty to the charges.
For years, Amy Hilty was the respected and ostensibly dutiful accounting manager for a manufacturing firm known as Poly-Tech Industrial Inc. However, while to outward appearances she appeared to be handling the company finances prudently, but an IRS audit and then an investigation by the IRS Criminal Investigations Division revealed a different story.
Based on information gathered through the IRS CI investigation, prosecutors alleged that Ms. Hilty conducted a tax and wire fraud scheme from 2008 to 2012. Prosecutors claimed that during this period Ms. Hilty made use of the company’s accounting systems to improperly divert company funds to various bank accounts under her control. In all, she embezzled approximately $400,000 in company money. To conceal the fraud, she falsely reported the nature of the transactions. In some cases, she reported the diverted funds as expenditures for supplies and as withdrawals by the owners. In other instances, she claimed that the funds were used for company travel expenses. Apparently, Ms. Hilty actually used the money to purchase a luxury car and a new home.
Aside from the embezzlement, Ms. Hilty also failed to comply with income tax filing and payment obligations. She failed to file taxes from 2008 through 2011. Her failure to file income taxes means that she failed to report both her legitimate company salary and her illicit gains from the embezzlement scheme. In all, Ms. Hilty failed to report and pay taxes on about $520,000 in income.
For these acts, Ms. Hilty was charged with one count of wire fraud and one count of tax evasion. She recently pleaded guilty to the charges.
The felonies of tax evasion and wire fraud are serious crimes carrying harsh sentences. The crime of tax evasion is defined under 26 USC § 7201. Under the statute, “any person who willfully attempts to evade or defeat any tax imposed by this title or the payment thereof” can be subject to a lengthy federal prison sentence. A $250,000 fine can also be ordered plus the costs of prosecution. Furthermore, an order for restitution to repay the unpaid taxes is also virtually assured.
Wire fraud is defined under 18 USC § 1343. The statute states that any person “having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by…,” electronic means, “for the purpose of executing such scheme” is subject to a prison sentence of up to 20 years. Furthermore, the individual can also be subject to financial penalties. Should the scheme target a financial institution or occur during an emergency, enhanced penalties apply.
In this matter, a sentencing date has not yet been set. The details of her prison term, fines, and restitution will be determined by a federal judge at the sentencing hearing.
If you have been accused by the IRS of committing tax crimes, the stakes are too high to attempt to defend yourself alone. The IRS auditors and prosecutors from the Department of Justice are skilled investigators and litigators. Neither party will hesitate to utilize your relative lack of experience and anxiety about criminal charges against you.
David W. Klasing is both a tax attorney and a CPA. He understands the audit / investigation processes utilized by the IRS and the tactics prosecutors use in criminal tax proceedings. He can provide a buffer between you and the investigating agent or prosecuting attorney to reduce the odds that a misstatement or misunderstanding can be later used against you. Furthermore, he works to anticipate the actions the auditor, criminal investigator and prosecutor will take to prepare a responsive defense strategy. To schedule a reduced-rate consultation call 800-681-1295 or contact the Tax Law Offices of David W. Klasing online. Also, be sure to subscribe to our YouTube channel for insightful videos about a multitude of different tax issues and the services that we provide.