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Appearing in Rhode Island federal court on August 23, 2019, defendant Michael Chaves, 39, pleaded guilty to “two counts of wire fraud and tax evasion” – along with eight other criminal counts, according to a U.S. Department of Justice (DOJ) press release, available here. Along with wire fraud (a violation of 18 U.S. Code § 1343) and tax evasion (a violation of 26 U.S. Code § 7201), Chaves also pleaded guilty to the following charges: aggravated identity theft (a violation of 18 U.S. Code § 1028A); five counts of bank fraud (a violation of 18 U.S. Code § 1344); and the falsification of records (an offense which can be prosecuted under 49 CFR § 1570.5 or 18 U.S. Code § 1519, depending on the situation). The defendant is scheduled to be sentenced by the same judge who originally heard his case, U.S. District Court Chief Judge William E. Smith, late this November. At his sentencing hearing on November 25, Chaves may face substantial penalties due to the number and severity of the offenses involved. Even a single count of tax evasion is punishable, in some instances, by up to five years in federal prison, making effective criminal tax defense imperative for anyone charged with state or federal tax evasion in California.
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Many of Chaves’ crimes involved his East Providence trucking business, CAT Inc., which should make small business owners think twice about the hazards of noncompliance. For example, the defendant was charged with falsification of records after he altered Department of Transportation (DOT) records to conceal prior violations at his business (which included, according to the press release, “allowing drivers to operate without a… license… and allowing drivers to exceed the maximum number of hours of driving allowed under the law”). Though the violations did not go unnoticed by the Federal Motor Carrier Safety Administration (FMCSA), which promptly “ordered [the company] to shut down,” Chaves maneuvered around the issue by using a stolen identity to continue operating the business illegally in defiance of FMCSA directives.
Of greater interest to our readers, perhaps, are Chaves’ tax and financial crimes, namely wire, bank, and tax fraud – all three of which are usually graded as felonies. In addition to scamming “at least six different financial institutions” out of loans totaling, in aggregate, more than $330,000 – an act the defendant achieved, at least temporarily, by submitting fraudulent financial documents to lenders – Chaves illegally obtained another $72,800 by willfully causing a “fraudulent wire transfer between financial institutions.”
The tax evasion charge, which is a felony violation of 26 U.S. Code § 7201 (pertaining to any willful “attempt to evade or defeat tax”), also involved Chaves’ business. According to the DOJ, the defendant not only failed to properly separate personal and business expenses – a common way taxpayers commit fraud – but moreover, spread income across “approximately 15 different bank accounts using at least 5 different company names,” even “creating fraudulent third-party checks,” which he concealed from his banks by using check-cashing services. These sorts of tactics, though seemingly elaborate, are ultimately no match for IRS data analytics, forensic accounting, and the Service’s other investigative strategies. (For proof, simply look to the IRS’ most recent criminal investigation statistics.)
A change of court schedule notwithstanding, Chaves is expected to appear before Judge Smith for sentencing on November 25, 2019. The maximum sentence for tax evasion is 60 months in prison, which may be accompanied by a maximum criminal fine of up to $100,000, in addition to IRS restitution, costs associated with prosecution, and in some instances, supervised release following incarceration. Some of the harshest penalties are associated with the wire fraud charge, with 18 U.S. Code § 1343 establishing maximum criminal penalties of $1 million and 30 years in prison.
Tax evasion can have extremely serious consequences for your business, your finances, and your freedom itself. Get serious about your defense by hiring a trusted and tested tax attorney with a record of defending felony tax cases successfully. No matter how high the stakes or how complex the allegations, the tax evasion defense attorneys at the Tax Law Office of David W. Klasing are prepared to fight tirelessly on your behalf. To arrange a reduced-rate consultation with an IRS tax attorney today, contact the Tax Law Office of David W. Klasing online, or call (800) 681-1295 for immediate assistance.
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