Even a rags to riches story cannot protect against tax evasion charges

For Raul Sosa, his story seemed to represent the American dream. He came into the nation as a refugee from Cuba and within a few decades had founded a successful and highly lucrative business. However, this success did not come before some serious brushes with the law including one incident where Sosa allegedly pointed a gun at a Miami police officer. However, Sosa seemed to overcome these early struggles and, in 2003 or 2004, founded Accion 1 Auto Sales. The company would grow to be highly successful and Sosa and his wife raked in tens of millions. The salvage and recycling arm of the company would take used, junked, or non-functional cars and trucks and sell off the valuable parts to dealers in the auto-parts markets or to recyclers and others with a need for scrap metal. Then, the auto dealership would sell these vehicles at significant profit.

If the story ended here, this story would rival and perhaps surpass those told Horatio Alger, the original popularizer of the rags to riches tale. Unfortunately, success seemed to catch-up to Sosa and less than ten years following the founding of his company, Sosa and his wife faced federal tax charges.

The tax charges faced by the Sosa’s

While Accion 1 Auto Sales brought in nearly 30 million in revenues from, roughly, 2004 to 2008. Federal prosecutors charged that the Sosa’s only reported a fraction of that income on their annual income tax filings. The IRS suspected that Sosa and his wife concealed much of these profits. In time, federal prosecutors would charge the Sosa’s with reporting just 14% of these profits or roughly $3.9 million.

The Sosa’s faced seven counts of tax charges. The first count charged them with conspiring to defraud the IRS during the time period from January 1, 2004, until February 3, 2011. The Sosa’s also faced six counts of criminal charges relating to false statements made on personal and corporate income tax returns.

According to court records, Sosa came under criminal tax investigation sometime in early 2008 or 2009. In February 2009 three agents from the IRS appeared at Accion 1 unannounced. While the agents were dressed professionally in business attire, the court record makes clear they were carrying concealed weapons due to the nature of the investigation. Upon arrival, the agents informed Sosa of the investigation, read him his “Non-Custody Statement of Rights”, and proceeded to interview Sosa. During the interview Sosa authenticated his and his wife’s signature on 1040 tax returns from the period spanning 2003 to 2007. Shortly thereafter, Sosa called his lawyer and terminated the meeting.

However, at this point the damage was, largely, done regarding the authentication. Furthermore, since Sosa and his wife spent significantly more than they reported earning, red flags were raised. For instance, in 2008, the amount the Sosa’s spent on luxury expenses including cars, jewelry, real estate and credit card payments was more than $900,000 more than they reported earnings.

Mitigating evidence presented on Sosa’s behalf

While Sosa had a number of scrapes with the law, he found a way to become what some have termed a “junkyard millionaire.” Drawing from his real-world education as a teen who managed to make a living in the often difficult world of scrapyards, scrap-metal dealings, and towing work he has able to build and consolidate an empire. However, Sosa claimed that success did not come without a price and he was soon a target in what his lawyer described as the “essentially mafia-controlled” industry. His attorney claimed that at least several of Sosa’s arrests were caused by incidents where rivals carried out a drive-by shooting and then a “firebombing of Sosa’s junkyard. Sosa’s attorney attempted to characterize him as an individual with a difficult past who had turned things around.

Hialeah Police Chief Sergio Velasquez testified on Sosa’s behalf. He spoke regarding the extraordinary positive relations that Mr. Sosa enjoys with the city of Hialeah and its police department. Likewise the town’s mayor’s chief of staff also wrote to the judge. However, the judge was not convinced and, reportedly, mockingly called Sosa “quite the model citizen.” Furthermore, the judge stated that the character testimony was largely irrelevant because the evidence showed that the Sosa’s were “tax cheats.” Sosa was sentenced to 6.5 years in prison, at least partially due to his prior run-ins with the law. His wife was sentenced to serve four years for her involvement in the tax evasion scheme.