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North Carolina Tax Advisor Sentenced to Three Years in Prison for Evasion Scheme

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North Carolina Tax Advisor Sentenced to Three Years in Prison for Evasion Scheme

 

Joseph Octave, the head of a Charlotte tax preparation operation, was recently handed a stiff sentence of over three years in federal prison and ordered to pay back roughly $2.5 million in ill-gotten gains from an illicit and fraudulent tax evasion scheme, of which he was allegedly the “mastermind.”

Using multiple methods, Octave allegedly falsified his clients’ tax returns to obtain deductions and credits, and also trained his employees on how to utilize these methods. Prosecutors alleged that Octave hid his behavior from his clients deliberately by instructing employees not to send them copies of their filed tax returns.

Octave did not escape punishment for his conduct, but his clients also paid the price in civil fines and reassessed tax debts. To avoid this happening to you, we urge you to contact the Tax Law Offices of David W. Klasing at (800) 681-1295 or online here to schedule your first-time case evaluation for a reduced rate.

Charlotte Tax Executive Convicted of Tax Fraud, Faces Prison and $2.5 Million in Restitution

A press release from the U.S. Attorney’s office announced on July 13th that Joseph Octave had been sentenced to 41 months in prison for conspiring to defraud the United States government by preparing and filing false tax returns.

Background

According to court documents and statements made in court, Octave, 49, of Charlotte, was the leader of a multi-year, multimillion-dollar tax fraud scheme involving hundreds of fraudulent tax returns. Octave was the owner and operator of Kapital Financial Services, a tax preparation business with two offices in Charlotte. From 2014 through 2019, Octave used his tax business to orchestrate a criminal conspiracy in which he directed his employees to prepare and file fraudulent tax returns.

Octave’s Fraudulent Scheme

Octave instructed his employees to use several methods to falsify clients’ tax returns, including claiming false deductions, business losses, American Opportunity credits, education credits and earned income tax credits. Octave also trained his employees on how to create the fraudulent returns to avoid IRS detection and provided them with scripts and cheat sheets. To further conceal the fraud, Octave instructed his employees not to give clients copies of their own tax returns and not to share with the clients any details beyond the total refund amount.

According to filed documents and information presented in court, the falsified tax returns and false deductions resulted in reduced tax liabilities and inflated tax refunds for Octave’s clients. Furthermore, because the majority of the time the tax preparation fees were taken directly from the clients’ fraudulently inflated tax refunds, in many instances the clients were unaware of how much they were being charged. As a result of the tax scheme, Kapital Financial Services earned at least $700,000 in fees for preparing the fraudulent tax returns, and, as the owner, Octave received the largest share of this income. The conspiracy caused a total federal tax loss of more than $2.5 million.

Sentencing

On January 12, 2021, Octave and alleged co-conspirator Vonyeda Carson entered guilty pleas for the charges against them. Melissa Greene, Natisha Holloman, Kimberly Joline, Whitney Vargas-Medrano, and Wendia Courtois, the other defendants indicted on conspiracy charges, had already pled guilty earlier in 2020.

Octave entered a guilty plea on the charge of conspiracy to defraud the United States by preparing and filing false tax returns. Separately from the other defendants, Octave also pled guilty to one count of aiding and assisting in the filing of false tax returns.

Notably, the U.S. Attorney’s office indicated when the pleas were entered that four of the seven defendants had been cooperative, but that Octave was not among them, despite entering a guilty plea. Prosecutors described Octave as the “mastermind” of the scheme.

U.S. District Judge Max O. Cogburn, Jr. sentenced Octave to 41 months in prison. In addition to the term of imprisonment, the court ordered Octave to serve two years of supervised release and to pay approximately $2.5 million in restitution to the government.

Be Careful When Choosing a Tax Advisor

When you submit your federal tax return, it is your name that goes on the form, under penalty of perjury. This is true even if you entrust the preparation of your filings to someone claiming to be an expert in tax affairs. Therefore, even if you never knew what was going on and did nothing wrong, you could get caught up in a costly, invasive government action for the conduct of your tax preparer.

For this reason, it is important that you take several factors into account when deciding where to go for your tax needs. If a tax advisor is promising you savings that seem too good to be true, they probably are. The tax system applies to everyone equally, so when you hear about savings that are much larger than what you’ve seen previously, this should serve as a red flag.

You will also want someone who has experience in both accounting and tax law. There are unique benefits to having a dual licensed Tax Lawyer & CPA work with you in your preparation, such as a much more favorable level of confidentiality through attorney-client privilege than what is provided by the relationship with a regular accountant. If you get caught up in legal issues such as government audits or criminal tax investigations, you will want a dual licensed Criminal Tax Defense Attorney & CPA to assist you through such a trying process, but legal representation can also work to prevent this situation from ever arising in the first place.

Our Dual Licensed Tax Attorneys and CPAs Can Help You Today

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.

Note:

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 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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