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Rhode Island Man Indicted on Tax Charges Related to Ponzi Scheme

According to a Department of Justice press release, a Rhode Island businessman was recently indicted on tax charges, along with other charges that resulted from a discovered multi-million dollar Ponzi scheme. Taxpayers should be aware that although inflated or false deductions and underreporting income do not rise to the level of a scheme to defraud investors of millions of dollars, the IRS and state taxing authorities vigorously investigate and prosecute tax cheats, no matter the shape or size.

Man Tricked Investors, Indicted on Several Counts

Court documents reveal that Thomas Huling, 55, or West Warwick, Rhode Island, masterminded a scheme that was used to defraud numerous investors. Through the promotion of several to-good-to-be-true investment opportunities, such as offshore high-yielding bond trading platforms, car emissions reduction technologies, and an online marketing and advertising business, Huling convinced investors to trust him with over  $14 million. Although Huling promised investors that their capital was subject to little or no risk, he used nearly half of the money that he raised to maintain a lavish lifestyle similar to those seen in the movies.

Prosecutors allege that Huling used investor funds to purchase high-end luxury cars, maintain memberships in elite country clubs, purchase extravagant clothes, and travel the world on luxurious trips. Additionally, the fraudulently obtained funds were used to improve his Rhode Island residence.

When investors inquired about their money and the operation, he often lied or refused to return correspondence, altogether. Common in many Ponzi schemes, Huling used funds from later investors to pay off those who were becoming suspicious that had invested early on.

Indictment Included Tax Evasion Counts

Even though Huling was maintaining a lavish lifestyle, he claimed that he had no income and paid no income tax. Prosecutors allege that between 2009 and 2018, Huling failed to reflect his true income and in took affirmative steps to evade the assessment of tax in most of those years, resulting in tax evasion charges.

If convicted of wire fraud and money laundering (related to the Ponzi scheme) and the tax-related counts, Huling could spend decades in a federal prison. Huling also faces a term of supervised release, commencing after his release from federal incarceration. Finally, if convicted, a federal judge would likely order Huling to pay restitution to the federal government and to the victims of the investment scam.

Knowing When to Ask For Help

Getting yourself into tax trouble is easier than it may initially sound. Most of those who find themselves in hot water with federal or state taxing authorities came to a point where they realized that they had fallen out of tax compliance. They, as many taxpayers do, chose to continue the behavior instead of getting right with the government. Oftentimes, the taxpayer will need to continue to engage in fraudulent tax behavior to cover up their past wrongdoings, and the cycle continues. Before they know it, they have knowingly filed false tax returns and have possibly committed tax evasion for several years. The key is to know when to seek help.

A tax defense attorney who is also a Certified Public Accountant can provide a multi-faceted approach to helping you come into compliance with your taxes.  First and foremost, they will assist in the development of a technical strategy based squarely on established tax law. Additionally, they will utilize their extensive legal training and experience to ensure that your interactions with state taxing authorities and investigators, as the situation may warrant, are efficient and do not yield potentially-incriminating statements that can be used against you at a later date.

Contact an Experienced Tax Attorney Today

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing taxpayers from all walks of life with a diversity of backgrounds. Whether you are a wage-earner who has been selected for a federal or state tax examination or are a business owner concerned about worker classification or sales tax compliance, our team of zealous advocates are available to assist in crafting a strategy that puts you and your well-being at the forefront. Do not let the threat of an IRS or state tax audit or investigation cause you to lose sleep. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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