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Former law partner Keila Ravelo, 52, of Englewood Cliffs, New Jersey, is facing maximum prison terms of five years and 20 years, respectively, for tax evasion and conspiracy to commit wire fraud. Ravelo, who is scheduled to be sentenced on March 5, 2018, pleaded guilty to the charges on November 20, 2017 in Newark federal court before U.S. District Judge Kevin McNulty. Ravelo’s husband, 51-year-old Melvin Feliz, pleaded guilty to the same charges and is currently awaiting a sentencing date. The couple’s financial scheme involved creating false invoices to obtain payments, which were then used for personal expenses, for legal services that were never rendered.
According to a Department of Justice (DOJ) press release, court records indicate that from 2008 through July 2014, Ravelo and Feliz conspired to defraud two law firms: “Law Firm 1,” where Ravelo served as a partner from July 2005 to October 2010, and “Law Firm 2,” where Ravelo was a partner from October 2010 through November 2014.
In 2008, the couple initiated their years-long scheme to defraud the firms where Ravelo worked. Together, Ravelo and Feliz created two limited liability companies (LLCs), referred to as “Vendor 1” and “Vendor 2,” which billed both firms for “litigation support” despite neither providing products nor rendering services.
Ravelo and Feliz, who controlled both LLCs’ bank accounts, put the funds toward personal expenses after “Ravelo, in her capacity as a partner at the law firms, approved payments to Vendor 1 and Vendor 2.” In aggregate, the payments received totaled $7.8 million, approximately. The couple concealed these illegally-obtained funds from the Internal Revenue Service (IRS) by intentionally failing to report the income on their personal income tax returns, resulting in an IRS criminal investigation and subsequent charges of tax evasion.
Feliz was convicted approximately two years before Ravelo, pleading guilty to one count of tax evasion and one count of conspiracy to commit wire fraud in Newark federal court on August 25, 2015. At that juncture, “Feliz admitted that from 2008 through July 2014, he and Ravelo controlled the Vendor 1 and Vendor 2 bank accounts and submitted invoices to Law Firm 1 and Law Firm 2 for work that was never performed for the law firms or their clients.” Feliz also confirmed that Ravelo exploited her position as law partner to approve the payments issued to Vendors 1 and 2.
Willful tax evasion and wire fraud are federal felony offenses. Federal crimes are typically subject to harsher penalties than crimes charged at the state level, while felonies are likewise subject to greater maximum penalties than misdemeanors or lesser offenses. Thus, federal felonies are subject to some of the harshest sentencing guidelines used within the justice system, making skilled and aggressive representation by a tax defense attorney absolutely imperative for defendants faced with such charges.
Felony tax evasion may result in a prison sentence of up to five years, while wire fraud is punishable by a maximum 20-year prison term – sentencing outcomes for which Feliz and Ravelo are now at risk. These criminal penalties are established by 26 U.S. Code § 7201 and 18 U.S. Code § 1343, respectively, which provide the following:
Willful failure to file or pay taxes, report income, or maintain certain records can result in criminal prosecution and debilitating penalties, even in cases where the taxpayer has a clean criminal history with no prior convictions or arrests. If you fail to report income on your personal income tax return, underreport how much income you earned, fail to pay income tax, or fail to file a tax return, you could be facing civil penalties, criminal fines, incarceration, or all three.
If you are being audited by the IRS, are under investigation by the IRS Criminal Investigation Division (CID), have been charged with a tax crime, need help filing back taxes, or are concerned about the accuracy and completeness of previously filed tax returns, it is of the utmost importance that you immediately discuss your situation with a knowledgeable tax evasion defense lawyer, unfiled tax return lawyer, or IRS tax audit lawyer, depending on your needs. To arrange a reduced-rate consultation with a trusted and experienced tax attorney, CPA, or EA, contact the Tax Law Office of David W. Klasing online, or call today at (800) 681-1295. Our Irvine tax lawyers serve taxpayers in California, throughout the United States, and overseas.
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Here is a link to our practice video on warning signs than an audit has gone criminal.
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