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Individuals occupying positions of trust where they handle client money, provide financial and other advice, and generally ensure that their clients’ best interests are represented are generally extremely trustworthy and faithful individuals. However, in some circumstances, it seems that people who occupy these positions begin to believe that they are beyond suspicion and reproach. In these circumstances, the agent or other trusted individual begins to siphon client money or engage in other practices that unjustly enrich the individual at the expense of the client. In most cases, the individual also fails to report the unlawful or unethical income on their taxes to conceal their plan or scheme.
Unfortunately, for these individuals, tax and financial investigators are not deterred or swayed by one’s reputation or occupation. Auditors from the IRS and other organizations simply follow the money and paper trail when they are notified of improprieties or when they come across questionable numbers during the course of an audit. Your name, profession, occupation, and reputation will not protect you from potential criminal prosecution should you be found to have embezzled or inappropriately handled client funds.
Paul Disidoro, 64, of Georgetown, Massachusetts ran a successful insurance sales business for a number of years. In addition to the insurance business, Mr. Disidoro also served as a financial advisor for clients from 2007 through 2010. During that period, Mr. Disidoro likely cultivated a relationship of trust among clients allowing him to secure access to or control over certain client assets in his dual role as an insurance sales agent and as a financial advisor. Unfortunately, this trust was misplaced.
Over the course of this relationship, prosecutors charged that Mr. Disidoro was actually stealing from his clients. They stated that over the course of this relationship that he stole, at least, $470,000 from his clients. Some sources place the extent of the embezzlement at more than $500,000.
As is the case in many of these schemes, prosecutors charged that Mr. Disidoro utilized the funds to cover personal expenses and luxury expenses. One of the most noteworthy expenditures of client money was through Mr. Disidoro’s alleged gambling habit. Prosecutors claimed that Mr. Disidoro spent more than $100,000 on online horse betting.
The charges against Mr. Disidoro focused on his tax reporting failures connected to the theft. Mr. Disidoro failed to report the amounts stolen from clients on his tax returns and took steps to conceal this income from his tax preparer. Through these measures, Mr. Disidoro failed to pay $144,000 in taxes to the U.S. government. Mr. Disidoro pleaded guilty to the tax evasion charges.
Mr. Disidoro was convicted on tax evasion charges. He was recently sentenced by U.S. District Judge William G. Youngin U.S. District Court in Boston for his acts.
The tax evasion charge can be imposed against any individual who, “willfullyattempts in any manner to evade or defeat any tax imposed by this title or the payment thereof.” Under the 26 U.S.C § 7201 any attempt to evade or defeat tax can be punished with a prison sentence of up to five years, a fine of up to $100,000, and other penalties.
Here, Mr. Disidoro was sentenced to serve 18 months in prison for his tax evasion. Following his release from federal prison, Mr. Disidoro will serve three years of supervised release. In additional to these penalties, Mr. Disidoro is ordered to pay $613,806 in restitution for his acts.
If you are concerned about a potential criminal tax issue that may arise during a routine or other tax audit, the time to secure representation is now. The auditor or investigator will not be swayed by your reputation or community standing and will simply follow the evidence that arises through the course of the audit.
Working with an experienced tax lawyer can help mitigate the circumstances you face. David Klasing of the Tax Law Offices of David W. Klasing is a former public auditor who understands audit practices and strategies employed by IRS agents. He can work to anticipate the course the audit will take and develop responsive and strategic strategies to avoid a potential worst-case scenario. To schedule a tax consultation with an experienced tax lawyer, call 800-681-1285 today or contact us online.