From 2009 to 2012, Michael “The Situation” Sorrentino played a starring role in popular MTV reality show The Jersey Shore, which chronicled the lives of eight roommates sharing a house at the eponymous shore. Capitalizing on the show’s massive success, Sorrentino and his brother, Marc, launched businesses called MPS Enterprises LLC and Situation Nation Inc. Assisted by former accountant Gregg Mark, 51, of Spotswood, New Jersey, the brothers prepared false business and individual tax returns for tax years 2010 and 2011, significantly underreporting income and thus causing a tax loss Mark, who in 2015 pleaded guilty to conspiracy to defraud the United States, admitted to range anywhere from “$550,000 to $1.5 million.” Just over two years later, it looks as though “the situation” has finally caught up to Sorrentino, now 36, who pleaded guilty last month to one count of tax evasion. Marc Sorrentino, 38, pleaded guilty to one count of aiding the preparation of a false tax return. Though the brothers both face lengthy prison sentences, the court’s sentencing decisions will not be handed down until April 25, 2018, when U.S. District Judge Susan D. Wigenton has scheduled sentencing to take place.
Using the momentum of personal celebrity to launch a profitable business, like Situation Nation Inc. or MPS Enterprises LLC, is a sensible plan. What’s not so sensible is to conceal those profits from the Internal Revenue Service (IRS) in order to pay lower taxes – especially not while simultaneously committing a crime known as “structuring,” which involves making a series of bank deposits just below reporting thresholds in order to avoid reporting transactions to the government.
Due to its utility for money launderers, drug lords, and other criminal enterprises, structuring is illegal under federal law, even though most taxpayers have never heard of the term. In fact, it’s fairly common for law-abiding business owners to be investigated for structuring, as our tax crime defense attorneys discussed in an earlier article. However, it’s difficult to imagine that Sorrentino was, like Carole Hinders, unaware of the tax laws he was violating, considering the fact that, according to a Department of Justice (DOJ) press release, the defendant “admitted that in tax year 2011, he earned taxable income, including some that was paid in cash, and that he concealed a portion of his income to evade paying the full amount of taxes he owed. He also made cash deposits into bank accounts in amounts less than $10,000, in an effort to ensure that these deposits would not come to the attention of the IRS.”
While Sorrentino has long been entangled with the Department of Justice – in case you missed it, our Orange County tax evasion attorneys first covered the family’s story, summarized here in an earlier DOJ press release, back in 2015 – last month’s guilty plea represents a new step forward in the tax evasion case – one that could send Sorrentino behind bars for up to five years, the maximum prison sentence established under 26 U.S. Code § 7201 (attempt to evade or defeat tax), the federal statute enumerating legal penalties for income tax evasion. Sorrentino could also receive a criminal fine of up to $100,000, in addition to being ordered to pay restitution to the IRS, which was defrauded of more than half a million dollars, at minimum, by the falsified tax returns.
Principal Deputy Assistant Attorney General Zuckerman took Sorrentino’s case as an opportunity to urge taxpayers not to follow in the defendant’s footsteps, stating, “Today’s pleas are a reminder to all individuals to comply with the tax laws, file honest and accurate returns and pay their fair share. The Tax Division is committed to continuing to work with the IRS to prosecute those who seek to cheat the system, while honest hardworking taxpayers play by the rules.”
The warning was closely echoed by Jonathan D. Larsen, Special Agent in Charge, IRS-Criminal Investigation, Newark Field Office, who said, “As we approach this year’s filing season, today’s guilty pleas should serve as a stark reminder to those who would attempt to defraud our nation’s tax system. No matter what your stature is in our society, everyone is expected to play by the rules, and those who do not will be held accountable and brought to justice.” As the Sorrentinos’ cases make plain – as do the criminal statistics published by the IRS Criminal Investigation Division (CI/CID) – this is not a hollow threat.
The best way to ensure that you are in full compliance with the law, while safely navigating a rapidly changing tax landscape in the wake of recent federal reforms, is to consult with a knowledgeable, meticulous, and experienced tax attorney who is qualified to assist with state income tax, federal income tax, taxes on global income, employment, business and corporate tax, property tax, sales and use tax, cryptocurrency tax matters, capital gains taxes, and other tax needs, including aggressive criminal tax defense for businesses, individual taxpayers, and tax professionals, such as CPAs and tax preparers charged with fraud and related offenses. If you require assistance with an unresolved tax controversy, a criminal tax charge, an audit or egg shell audit, or have a tax preparation question, turn to the Tax Law Office of David W. Klasing for comprehensive guidance.
To set up a confidential, reduced-rate consultation with our award-winning accounting and tax professionals, contact us online, or call the Tax Law Office of David W. Klasing today at (800) 681-1295. Our Los Angeles tax lawyers serve clients located in California, out of state, and abroad.
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