Davood Haghighi, 59, of Kent, Ohio was sentenced to prison earlier this month after pleading guilty to multiple tax and financial crimes, including one count of conspiracy to engage in money laundering (18 U.S. Code § 1956) and two counts of willfully making or subscribing a false return (26 U.S. Code § 7206(1)). Both are federal felony offenses, which are frequently subject to longer sentences than similar state crimes. Like many federal tax offenders, Haghighi received a stiff prison sentence and costly criminal fines – plus court orders to repay the IRS more than half a million dollars in restitution. Like many profiled in our tax law blog, the outcome of this case, in the words of William Cheung, IRS Criminal Investigation, Acting Special Agent in Charge for the Cincinnati Field Office, “sends a clear message: pay your taxes or pay the price.” If you’ve filed tax returns or other documents containing inaccurate information, you should contact the LA tax defense attorneys at the Tax Law Office of David W. Klasing for further guidance immediately.
The Department of Justice (DOJ), whose Tax Division prosecutes federal criminal tax cases, regularly publishes press releases concerning tax convictions and sentences. The DOJ’s first press release concerning Haghighi was issued September 2017, at which point the defendant had only been indicted: a pre-trial process, early in the course of a criminal case, by which the defendant is formally accused of an offense. Being indicted on tax charges is not the same as being found guilty of a crime; but it does set the stage for the rest of the case, and should, therefore, be taken extremely seriously. For more information on this subject, see our article discussing what the IRS includes in an indictment for a tax case.
Haghighi later pleaded guilty, admitting to conspiring to launder money and willfully filing false tax returns for 2011 and 2012. Haghighi, formerly the owner of an auto dealership, reported income of $202,213 and $171,236 for those years respectively, despite earning substantially more. In a search of Haghighi’s home, investigators discovered more than $650,000, explaining that Haghighi derived income not only from his car dealership but also payments from drug traffickers.
In an effort to conceal these large transactions – which, in accordance with federal law, should have been reported to the IRS using Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business), which must generally be filed whenever a business receives a single payment greater than $10,000 – Haghighi transferred funds between various accounts held with Chase Bank. See our article on structuring laws to learn more about the requirements for reporting large transactions.
Appearing in court in June 2019, Haghighi was fined $25,000 and sentenced to 30 months in prison. He was also ordered to pay IRS restitution totaling $615,712, bringing the total cost above $640,000.
“Mr. Haghighi is paying the price,” Cheung told reporters, “not only with the loss of his freedom but the forfeiture of his ill-gotten gains.”
The crime of willfully making or subscribing a false return, which is prohibited by 26 U.S. Code § 7206(1), occurs when a taxpayer knowingly files a return that he or she “does not believe to be true and correct as to every material,” or significant, “matter.” If the taxpayer, for the purpose of avoiding the payment of taxes, deliberately reports earning significantly less than he or she actually does, he or she is at high risk for being audited, investigated, and criminally charged with tax fraud. Owners of cash-based businesses (such as used car dealerships) are particularly vulnerable as the IRS regards large cash transactions as a major red flag or risk factor for tax evasion.
If you are concerned about a car dealership tax audit, an audit of your cash-based business, another type of tax audit, or a criminal tax investigation, you need to take immediate action to begin protecting yourself and your business. Do not return to your original tax preparer or accountant, as they are likely to be forced to be a witness against you which could expose you to more danger, until you have discussed your situation with a competent and experienced IRS tax attorney. To schedule a reduced-rate, completely confidential legal consultation with our award-winning tax evasion lawyers in Orange County, contact the Law Office of David W. Klasing online, or call (800) 681-1295.
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