Long Island Legislator Pleads Guilty to Tax Evasion Years After Bribery Scandal

If you happen to be reading this article from Long Island, you may already be familiar with the name of Fred Towle Jr., a longtime Suffolk County legislator who in 2003 pleaded guilty to taking over $10,000 in bribe money. In 2006, Towle – one of more than a dozen politicians ensnared in a county-wide corruption probe – was sentenced to six months in prison. While his cooperation in the probe was praised as “invaluable” by prosecutors, Towle’s criminal activity apparently continued. Appearing in Central Islip federal court before United States Magistrate Judge A. Kathleen Tomlinson during August 2018, Towle pleaded guilty to one count of filing a false return, a felony violation of 26 U.S. Code § 7206 (fraud and false statements). On the falsified return, which was filed in 2012, Towle “underreported business income in order to avoid paying the proper tax owed,” according to a press release from the Department of Justice (DOJ). Like all taxpayers who deliberately violate the tax code, Towle now faces dire legal consequences – including restitution, criminal fines, and more prison time.

New York Man Hides $1.2M from IRS, Faces 3-Year Prison Sentence

The aforementioned press release explains that, during the period when the tax crimes occurred, Towle owned a business called East Coast Marketing. Towle used the company for two purposes: providing political consulting services, and helping homeowners speed up the process of obtaining assorted permits.

However, Towle failed to report all of the income the business generated, in some instances reporting none at all. In 2012, for example, Towle reported zero business income, when in fact East Coast Marketing earned nearly a quarter of a million dollars. The press release further noted that “between tax years 2012 and 2014, Towle failed to declare approximately $1.2 million in income,” indicating there must have been an additional $954,000 he failed to report beyond the unreported $246,000 earned in 2012. Ultimately, the resulting tax loss to the federal government was calculated to be approximately $307,427. (Our criminal tax defense attorneys have previously discussed how tax losses are determined, for those interested in the mathematics of the process.)

“By his guilty plea,” said Richard P. Donoghue, U.S. Attorney for the Eastern District of New York, “Fred Towle, Jr., has admitted cheating the United States out of hundreds of thousands of dollars owed in taxes by filing a false tax return that concealed a considerable amount of income he had earned from his businesses. This Office,” he continued, “together with our partners at the FBI and the IRS, recognizes that tax evasion victimizes every law-abiding, taxpaying American and we will vigorously prosecute those like the defendant who believe they’re above the law.”

Indeed, the Internal Revenue Service frequently coordinates with the FBI – not to mention other government agencies, like the SEC (which regulates securities markets), DEA (which regulates controlled substances), and a medley of state agencies (such as the California Franchise Tax Board) – making it nearly impossible for noncompliant taxpayers to evade detection. As recent tax crime statistics make plain, almost 600 people were federally prosecuted for tax fraud in 2017 – and among them, the average sentence was 17 months. (On an interesting side note, the Eastern District of New York, where the Towle case was tried, ranked fifth among U.S. jurisdictions for the number of tax crimes prosecuted.)

While 17 months is the average, Towle is facing a longer sentence: up to three years in prison, the maximum permitted by the statute. He may also be fined up to $250,000. Finally, he has agreed to pay approximately $307,427 in restitution to the federal government to account for the tax loss caused.

Criminal Tax Defense and IRS Audit Representation in California

No one is impervious to an IRS criminal investigation – even if they are policymakers, political consultants, or legislators. If you or your business is chosen for an IRS tax audit, you could be at risk.

Whether you require an aggressive criminal tax lawyer to advocate for you in court, need help preparing for an upcoming tax audit, or need assistance reentering compliance after failing to file tax returns or pay taxes owed, turn to the award-winning team at the Tax Law Office of David W. Klasing for reliable, in-depth guidance. Proudly serving Northern and Southern California, we have more than 20 years of experience assisting taxpayers with civil and criminal tax matters and are prepared to fight vigorously on your behalf. To discuss your tax issue confidentially in a reduced-rate consultation, contact the Tax Law Office of David W. Klasing online, or call today at (800) 681-1295.

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 BernardinoSanta BarbaraPanorama CityOxnardSan DiegoBakersfieldSan Jose, San FranciscoOakland and Sacramento.

 

Helpful Q and A libraries

https://klasing-associates.com/topics/audit-representation-faq/

https://klasing-associates.com/topics/assisting-cpas-with-client-criminal-tax-exposure-faq/

https://klasing-associates.com/topics/criminal-tax-representation-faq/