According to a Department of Justice press release, a Massachusetts man admitted to engaging in fraudulent activities that concealed income from the IRS and deceived a bank into approving a mortgage under false pretenses. This case highlights the severe tax penalties that can result from an IRS criminal tax investigation and a Department of Justice prosecution. If you have engaged in behavior that could be considered criminal, such as underreporting income or failing to file a tax return altogether, it is in your best interest to work with a seasoned tax defense attorney to rectify your situation before it escalates into criminal tax charges. Our firm has a way to bring you back into compliance without facing prosecution as long as you are willing to knock on the IRS’s door before they bang down yours.
Defendant Engaged in Fraud and Tried to Obstruct the IRS
Court documents and statements made in court reveal that Kent Pecoy owned and operated Kent Pecoy & Sons, Construction Inc., a West Springfield-based commercial and luxury home construction company. From 2009 through 2016, Pecoy conspired with others to conceal income from the IRS by dealing in cash. He received $1,116,900 in cash payments from Kevin Kennedy, who was sentenced to prison last month for tax crimes, for the purchase and construction of custom-built homes in East Longmeadow and on Cape Cod (see our reporting of that case, here). Instead of depositing the cash into the business’s bank accounts, Pecoy distributed the cash directly to vendors and subcontractors, using approximately $135,700 to pay subcontractors under the table.
In addition to concealing income, Pecoy created and maintained separate ledgers documenting Kennedy’s cash payments, false contracts, and cover sheets, and false entries in the company’s accounting system to conceal the cash payments. For the East Longmeadow home, Pecoy and Kennedy created two contracts—one with the agreed-upon purchase price and one with a deflated purchase price that was $160,000 lower. This deflated contract was submitted to the bank to induce it to provide Kennedy a mortgage for part of the home, effectively defrauding the bank.
Pecoy’s fraudulent activities caused a loss to the IRS of more than $250,000. When the IRS opened an investigation, Pecoy obstructed the process by failing to turn over dozens of subpoenaed documents, which were later found during a search warrant execution at his construction business.
Pecoy is scheduled to be sentenced later this year. He faces a maximum penalty of five years in prison for conspiring to defraud the United States and 30 years in prison for making a false statement to a bank. Additionally, he may be sentenced to serve a period of supervised release. Lastly, he may be ordered to pay restitution, representing the tax and other monetary losses that he caused.
Importance of Tax Compliance and Seeking Tax Legal Assistance
The case of Kent Pecoy serves as a serious reminder of the severe penalties associated with activities that could constitute tax evasion. If you are facing tax compliance challenges or have been involved in activities that could be considered fraudulent, it is crucial to seek the assistance of an experienced tax defense attorney. A knowledgeable lawyer can help you navigate the complexities of the tax laws, help identify the pertinent information inherent in your case, and help develop a roadmap to get you right with the government.
Avoiding Criminal Tax Prosecution.
If you are under audit or criminal tax investigation and have a history of blatantly cheating on your taxes, we at best can help you avoid criminal tax prosecution. At worst, we can achieve damage control.
If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
We Are Here for You
Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.
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