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New York Businessman Sentenced to Three and a Half Years in Prison for Tax Evasion and Wire Fraud

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    According to a Department of Justice press release, a New York man was recently sentenced to serve three and a half years in federal prison after being convicted of tax evasion and wire fraud. This story is an example of the repercussions that can flow from failing to file annual individual and business tax returns. If you have failed to file a federal or state income tax return for one or more years, or have taken a position on a filed tax return that could not be substantiated upon audit, you should consult with an experienced tax defense attorney to determine the best strategy to bring you into tax compliance without facing criminal tax prosecution.

    Defendant Misled Investors Out of Millions and Failed to Report Any Income to the IRS

    Court documents reveal that Joseph Smith, 57, of Fishkill, New York, was the owner and operator of New York Bagel Enterprises Inc. From 2014 through 2016, the defendant attempted to garner interest in New York Bagel franchise opportunities. He had conversations with multiple potential investors where he made false statements about financing and potential returns on investment. Smith charged prospective franchisees between $7,500 and $44,500 as an initial fee to open New York Bagel stores. After learning of the multiple factual misrepresentations made at the outset of discussions, investors demanded a return of their franchise fees. Smith refused to return any of the fees paid by investors.

    During the three tax years Smith was attempting to sell New York Bagel franchises, he earned $2.1 million. During the same period, he failed to file business or individual income tax returns. Instead, he spent the ill-gotten funds on personal expenses, such as rent, travel, and personal vehicles.

    Smith pleaded guilty to tax evasion and wire fraud earlier this year. In addition to being sentenced to 42 months in federal prison, Smith was ordered to serve three years of supervised release to commence upon the completion of his physical incarceration. Lastly, Smith was ordered to pay over $2.1 million in restitution to the IRS, representing the tax loss that he caused.

    Tax Noncompliance Can Come with Serious Civil and Criminal Consequences

    While most taxpayers do not find themselves engaged in a multi-million-dollar franchise fee scheme, there are many who fail to file individual or business income tax returns each year. There is a plethora of civil and criminal consequences that can result from failing to file a tax return. Likewise, filing a tax return with false information (such as inflated deductions or understated income) can result in serious criminal tax charges.

    If you have failed to file a tax return for one or more years, or have filed a tax return with knowingly false information, it is in your best interest to contact an experienced tax defense attorney. Together, you will work to understand the pertinent facts of your case. Then, you will jointly decide on a path forward to bring you into tax compliance. While you are being represented by a seasoned tax attorney, you will not have to go up against the IRS or Department of Justice alone.

    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.

    In addition to our main office in Irvine,  the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad, and Sacramento.

    Our office technology allows clients to meet virtually via GoToMeeting. With end-to-end encryption, strong passwords, and top-rated reliability, no one is messing with your meeting. To schedule a reduced-rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client.

    Concerned About Criminal Tax Charges? Call the Tax Law Offices of David W. Klasing

    If you are dealing with serious tax matters, you deserve tax assistance that you can rely on. Schedule your first reduced-rate case evaluation with our Criminal Tax Defense Lawyers by calling (800) 681-1295 today or schedule online here.

    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.


    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!

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