Elliot Adler, an attorney and founding partner of a boutique San Diego law firm, was sentenced in federal court today to one year and one day in custody for conspiring with former Chabad of Poway Rabbi Yisroel Goldstein to commit tax fraud. He was also ordered to pay a $20,000 fine.
Adler and Goldstein, together with several others, continued their scheme across multiple years with no issue until a recently revamped and highly aggressive IRS caught wind of their evasion and cracked down on them and their co-conspirators hard. With the recent ramping up of audits, criminal tax investigations, and criminal tax prosecutions across the country, others with concerning elements in their tax filing history should take note and reexamine their filings to cure any issues that could raise a red flag with the federal tax agency.
For a defense you can rely on against the federal government, pick up the phone and call the Tax Law Offices of David W. Klasing today at (800) 681-1295. Our Dual Licensed Tax Defense Attorneys and CPAs can provide you with a first-time case evaluation for a reduced rate when you reach out right now.
90/10 Scheme Allegedly Evaded Nearly $500k in Taxes Over Six Years
Beginning at least as early as 2010 and continuing through October 2018, Adler participated in a so-called “90/10” tax scheme with Rabbi Goldstein. Specifically, Adler gave money to Rabbi Goldstein that purported to be a donation to Chabad of Poway.
Goldstein then secretly funneled ninety percent of the funds back to Adler, keeping ten percent of the funds as his fee. None of the donated funds was actually given to the Chabad as a charitable donation. Adler then falsely claimed that the fraudulent donations were tax-deductible on his tax returns, allowing him to reduce his personal income tax liability by approximately $500,000 (cumulatively) for tax years 2011 through 2017.
How the Scheme Worked
Court documents suggest that Adler and Goldstein communicated using coded language to accomplish the scheme. Goldstein would refer to cash as “challah,” the source of the cash as “the baker,” and would invite co-conspirators to “wrap tefillin” when he proposed meeting to receive checks or deliver cash.
For example, on Thursday, January 7, 2016, Goldstein texted Adler, “Good morning I got the challah[.] What time?” That same day, Adler replied via text message, “Monday morning 8am at shul or today before 12pm if you can come to my office.” Goldstein then replied, “Monday @8 is fine.” On Monday, January 11, 2016, Goldstein deposited a check from Adler for $30,000 payable to Chabad of Poway.
In late December of 2017, Goldstein deposited two sequentially numbered checks from Adler, one for $180,000 and the other for $980,000. On Friday, January 5, 2018, Goldstein sent Adler a coded text message proposing that they “get together and wrap teffilin.” A few days later, on January 10, 2018, Goldstein wired approximately $1 million to a wholesale and retail jeweler to purchase 246 Suisse Fortuna 1 oz. rectangular gold ingots, 246 Canadian Maple Leaf 1 oz. gold coins, and 246 American Eagle 1 oz. gold coins. On January 17, 2018, Goldstein sent another allegedly encoded message to Adler, asking him, “[w]hen can you come [i]n for a teffilin wrap? I’m ready for you.” Goldstein delivered the gold to Adler the next day. Adler nonetheless claimed on his 2017 tax returns that he had donated over $1 million to charity, fraudulently reducing his 2017 tax liability by approximately $447,000. Adler was ordered to forfeit the gold coins as part of his sentence.
Adler and Goldstein took additional steps to conceal their scheme from authorities. On or about October 18, 2018, Goldstein told Adler that he was under criminal tax investigation by the IRS and that he had been the subject of an undercover operation relating to tax evasion. Goldstein asked for Adler’s help to prove, falsely, that Goldstein, and not Adler, was in possession of the gold coins purchased with Adler’s purported donation.
Charges and Sentencing
In July 2020, Rabbi Goldstein pleaded guilty to fraud charges, admitting that he participated in a complex, years-long, multi-million-dollar tax-evasion scheme and other financial deceptions involving theft of public money. Rabbi Goldstein’s plea agreement outlined the fraud scheme with Adler.
Adler is the eleventh and final individual to be sentenced for crimes discovered in this investigation. Two additional individuals agreed to deferred prosecution agreements as a result of the investigation.
Adler was convicted of conspiracy to commit tax fraud under 18 U.S.C. § 371 and was sentenced to serve one year and one day in federal custody for his part in the scheme. Adler was also ordered to pay the government $20,000 in fines.
IRS Uses Adler Conviction and Sentencing to Send a Message
In the press release announcing Adler’s sentencing, the Department of Justice, IRS, and District Attorney’s Office took the opportunity to warn others who might consider similar illicit efforts that the IRS would continue to come after them.
“For several years, Elliot Adler defrauded the United States while giving the false appearance of making charitable donations,” said U.S. Attorney Randy S. Grossman. “This investigation and the resulting prosecutions should leave no doubt that the United States takes tax fraud seriously and those who perpetrate these schemes will be brought to justice.”
An aggressive IRS is one to fear, even if you genuinely believe that you have remained compliant. It is always worth a conversation with a seasoned Dual Licensed Tax Defense Attorney and CPA to review your past filings for any red flags that could spark a harmful criminal tax investigation.
Contact the Tax Law Offices of David W. Klasing About Your Tax History Today
When you call the Tax Law Offices of David W. Klasing right now at (800) 681-1295, you can get your initial case evaluation from a Dual Licensed Tax Lawyer and CPA for a special reduced rate.
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 to take you through the voluntary disclosure process. 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!
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.
