Taxpayers who keep up with news of prosecutions and convictions of tax evaders often read the stories that we or other tax professionals post and think to themselves “that could never happen to me” or “the sentences can’t be that harsh”. But the reality is that a criminal tax investigation leading to time in a federal prison can happen to anyone and the punishments can be just as bad or more severe than has been reported. To drive home that point, we have a sentencing update to report with regard to a Minnesota real estate executive that was charged with a slue of tax and other federal crimes last year. You can read our original story detailing the charges here.
According to reports by various news agencies, Bartolomea Montanari was sentenced to spend six and a half years in a federal prison. Furthermore, he was ordered to pay a fine of $1.5 million and restitution of $100,000. The sentence and financial sanctions came as a result of a guilty jury verdict last November. Charges against Montanari included tax evasion and both mail and wire fraud. The federal judge that handed down the sentence blasted the ex-real estate professional by saying that his criminal acts were perpetrated in order to keep up an “incredibly flamboyant lifestyle”.
Court documents reveal that Montanari had failed to pay employment and other excise taxes for the businesses that he owned (St. Croix Development, Emlyn Coal Processing and Montie’s Resources) between 2009 and 2012. The amount of tax evasion was allegedly in excess of $700,000 before any interest or penalties associated with the illegal behavior.
In addition Montanari’s tax evasion activities, he was also found to have committed mail and wire fraud when he stole money from both his business partner and a financing company that extended credit to Montanari for the purchase of a bulldozer. Prosecutors proffered at trial that the defendant produced the financing company with a fake invoice for a piece of Caterpillar construction equipment that listed the price of the unit $100,000 higher than its value. When the seller received a check from the financing company for the fraudulent amount, he notified Montanari of the discrepancy. The defendant requested that the seller write him a check for the difference, which Montanari then used as a down payment for his personal residence.
The IRS Criminal Investigations Division and the U.S. Postal Inspection Service conducted the investigation into Montanari’s criminal activities. When IRS agents questioned him with regard to his failure to pay employment and excise taxes, he made the assertion that he was impoverished and unable to pay any taxes, hiding his extravagant lifestyle all the while.
This story goes to show readers that investigations and prosecutions for tax evasions can happen to anyone. And although it is true that a very small group of taxpayers may be able to escape a serious prosecution after an investigation has been opened, most cannot. Furthermore, taxpayers who attempt to talk their way out of an examination, investigation, or prosecution wind up making incriminating statements to investigators and end up behind bars and financially ruined. The IRS and Department of Justice agents know exactly what questions to ask and how to ask them in order to elicit an incriminating response. An experienced tax attorney can make sure that you say what is necessary to keeping you out of prison and nothing more.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have a plethora of experience in representing taxpayers in all phases of an examination, investigation that occur pre-indictment and will associate in appropriate counsel where a case goes post – indictment. Trying to build a defense of your own when faced with an allegation by the IRS or DOJ is a bad idea and could wind up with you in prison and your family suffering financially. Retaining an experienced tax attorney is the best possible investment that you can make in your future physical and financial freedom. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.