In April 2017, our criminal tax defense lawyers profiled the case of the Panousos family, three of whose members – 65-year-old Theodora Panousos, 67-year-old husband William Panousos, and 39-year-old son Konstantinos Panousos – were arrested and charged with obstruction of justice. Charges were filed after members of the family were caught “removing items,” later found to be hundreds of thousands of dollars in cash, “from a safe deposit box following the execution of federal search warrants.” At the time, Theodora and Konstantinos were also being investigated for tax fraud, including filing false returns. In the year and a half since we published our original article, each member of the family, which operated Giovanni’s Roast Beef & Pizza in Peabody, Massachusetts, has pleaded guilty to an assortment of tax and financial crimes, which include aiding and assisting in filing false corporate tax returns, aiding and assisting in filing false individual tax returns, and conspiracy to defraud the United States.
At the time of our initial article, pizza shop owners Theodora and Konstantinos Panousos had recently been placed under arrest and charged with obstruction of justice, as recounted in this press release from the U.S. Department of Justice (DOJ). More specifically, the pair was accused of “corruptly concealing a record… with the intent to impair the object’s integrity or availability for use in an official proceeding.”
As our tax evasion defense lawyers noted, Konstantinos and Theodora were each under investigation for tax crimes at the time of the obstruction offense. On February 15, 2017, both were served with subpoenas demanding records related to the “payment, receipt, transfer or storage of money” and assets.
After federal investigators “seized, among other things, safe deposit box keys” from Theodora’s home – executing, on the same date, a search warrant for the family’s pizza shop – mother and son responded by promptly visiting a bank, where they retrieved (and practically emptied) a safe deposit box. They then proceeded to “a second bank where [Theodora] had another safe deposit box.” However, before the pair could retrieve its contents, they were intercepted by investigators – who discovered “approximately $415,000 in cash.” In addition, a second box was discovered containing nearly $225,000. The pair’s attempts, spurred by a tightening tax investigation, to recover these boxes (or rather, the cash within) culminated in their arrests for obstruction of justice.
At the time of our first article, neither defendant had been convicted, with the initial press release making no mention of father William Panousos. However, we now have updates. A second press release shows that in November 2017, all three family members “pleaded guilty… to skimming cash receipts from Giovanni’s and failing to report the cash on their tax returns, thereby avoiding the payment of more than $550,000 in taxes.” William pleaded guilty to one count of conspiracy and three counts of aiding and assisting in the filing of false returns; Theodora pleaded guilty to one count of conspiracy and four counts of aiding and assisting in the filing of false returns; and Konstantinos pleaded guilty to one count of conspiracy and two counts of aiding and assisting in the filing of false returns.
The reference to “skimming,” which is also called “cash skimming,” describes a process by which business owners utilize revenue suppression software, colloquially called “zappers,” to create the illusion of earning less cash than the business actually did. By concealing cash income from the Internal Revenue Service, the users of zapper software hope to avoid their income tax liabilities – which gets to the heart of how tax evasion, or the willful attempt to “evade or defeat any tax,” is defined. (Unsurprisingly, federal and state taxing authorities are cracking down on zappers in an effort to curb tax fraud.) According to the second press release, “During tax years 2013 through 2015, the defendants skimmed approximately $1.5 million in cash receipts from Giovanni’s and did not deposit them into the business’ bank account or report them to their tax preparer.” Additionally, the defendants:
A third and final press release reveals that in August 2018, all three members of the family were sentenced by U.S. Senior District Court Judge Douglas P. Woodlock, who ordered each defendant to serve a three-year probationary term – for 18 months of which they must remain in Peabody – and further, to pay $150,000 fines. Judge Woodlock also ordered the family to pay the IRS restitution in the amount of approximately $550,000.
Cash-based businesses, such as restaurants and convenience stores, are frequent targets for tax audits. If the auditor assigned to handle the audit of a cash-based business determines that you have deliberately underreported business income, used zappers to skim cash, or paid workers under the table, your case may be referred to the IRS’ Criminal Investigation Division (IRS-CI), leading to a deeper probe and greater legal risks.
Take action to protect your rights by working with an experienced tax lawyer who has a record of obtaining favorable outcomes in challenging cases. For a reduced-rate consultation, contact the Tax Law Office of David W. Klasing online, or call our tax firm at (800) 681-1295 right away.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
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