North Carolina Financial Advisor Sentenced to Serve More Than 5 Years in Prison

A “financial professional” was recently sentenced to serve 65 months in prison for his role in blatantly stealing money from those who trusted him. According to a press release by the Department of Justice, Michael Rowan, 46, was sentenced last month on charges of wire fraud and filing a fraudulent tax return. Rowan, a resident of North Carolina, was the co-owner of Capital Management Wealth Advisors Inc. and APS Management LLC. Court documents alleged that Rowan’s two companies offered various services to athletes that had been drafted by an NFL team. Services offered included bill paying and financial and wealth management guidance.

 

Prosecutors accused Rowan of gaining access of his clients’ bank accounts and funneling money into his own bank account without authorization. Although he told his clients that he would only make transfers out of their accounts when consent was given, prosecutors estimate that $1.4m was embezzled without his clients’ knowledge.

 

Wire fraud is obviously a crime. Another lesser-known point of tax law is that gross income includes income “from whatever source derived”. Thus, even income from wire fraud (or any other type of crime) is includible in a taxpayer’s gross income for the year it was acquired. In this case, the IRS and Department of Justice estimated that Rowan’s failure to report his illegally-acquired income created a tax loss of over $479,000 that was properly due to the IRS.

 

Federal law enforcement agencies will typically notify the IRS if they believe an individual has profited from an illegal activity. The IRS will determine whether the illegally-acquired income was reported and fraudulent return charges will be filed, if appropriate. Typically, criminals do not report illegal source income on their tax returns, so this is particularly low-hanging fruit for the Treasury Department when profit-generating illegal activity is identified.

 

In addition to Rowan’s 65-month federal prison sentence, he will be subject to supervised release for one year after he is discharged from physical incarceration. Rowan was also ordered to pay over $2.9 Million Dollars to the victims of his scheme and over $479,000 in restitution to the IRS.

 

Federal Agencies Help Each Other Out and Communicate

 

Although the IRS does not rely solely on other federal agencies to provide it with leads, cases like this should be taken as a warning to taxpayers: if you are involved with illegal activity that you think is unrelated to tax evasion or fraud, you’ve also got the IRS to worry about. You may be committing a tax crime without even knowing it. Another important point to note is that the IRS returns the favor. If a revenue agent comes across information in your civil tax examination that indicates potential criminal wrongdoing, the IRS will not hesitate to tip off the relevant federal or state law enforcement authorities. Suddenly, your tax examination could potentially land you in prison even without having cheated on your taxes.

 

How do you avoid such a scenario? That’s simple. Hire an experienced criminal tax attorney at the first sign of an audit or criminal tax investigation. Your criminal defense tax attorney will ensure that you provide investigators what the law requires and nothing more. When taxpayers go into an audit alone, they tend to give up documents or make statements that can subsequently be used against them in a subsequent criminal prosecution for tax crimes. Don’t let this happen to you.

 

Contact an Experienced Criminal Defense Tax Attorney Today

 

The tax and accounting professionals at the Tax Offices of David W. Klasing have extensive experience representing taxpayers of all walks of life in varying criminal tax investigations / audits. Whether you are facing an eggshell audit or you believe that your tax examination has gone criminal, our professionals are standing by to zealously advocate for your best interests.  When the IRS or state taxing authorities come knocking, they do so with agents and attorneys that are out gunning for a conviction. Answer with a team that has developed a personalized strategy designed to mitigate or eliminate their threats. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

 

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Here is a link to our practice overview video on warning signs than an audit has gone criminal.

 

Here is a link to our practice overview video on criminal tax evasion defense.