In December 2017, our criminal tax lawyers published an article discussing the case of Ohio defendant James Wright, owner of a fourth-generation family business, B&P Company Inc., which began producing skincare products (most notably celebrity-endorsed “Frownies”) during the late 1800s. In his capacity as B&P’s owner, Wright created a string of entities which, according to the U.S. Department of Justice (DOJ), were “used to divert money from B&P to Wright and members of his family.” For example, rather than receiving income directly from B&P, Wright instead created a company called The Remnant Inc. to collect “fees” from B&P. Going a step further, Wright then “caused the preparation of false corporate tax returns for The Remnant.” Wright also caused B&P to direct money into his own non-profit organization, Fore Fathers Foundation, spending over $170,000 of the organization’s funding on “high school and college tuition for all five of his children.” Our tax evasion attorneys now have new updates on Wright, who was convicted of seven counts of filing false returns by a federal grand jury last November.
33 Months in Prison & Over $146K Restitution Ordered in Ohio Tax Fraud Case
A series of press releases issued by the DOJ – the first in April 2016, the second in November 2017, and the final in October 2018 – paints a picture of a convoluted, long-running scheme by the defendant to systematically defraud the United States government by avoiding various tax liabilities across multiple years.
In fact, Wright’s record of noncompliance with tax laws – and subsequent run-ins with the IRS – date all the way back to 1997, when he began forming the first of the entities that would be used to funnel income from B&P to himself and various relatives. Compared to his later schemes, Wright’s early crimes were apparently quick to unravel: in 1998, only a year later, he pleaded guilty to tax evasion charges. (In that instance, the charges arose from Wright’s use of “trusts to conceal income from the IRS.)
Judging by his later actions, Wright’s early brushes with the justice system failed to dissuade him from engaging in additional crimes. Roughly a decade after the tax evasion case of 1998, Wright again found himself in court on tax-related charges; this time, for “filing false corporate, individual, and private foundation tax returns,” respectively for The Remnant and B&P, himself, and Fore Fathers Foundation, which he established in 2003. According to the press releases, Wright:
- Caused false corporate income tax returns to be prepared for The Remnant, “fraudulently deducting personal expenses, including rent, utilities, and pool and lawn care for his residence”
- Caused false corporate income tax returns to be prepared for B&P for 2008 and 2009
- Filed false personal tax returns, underreporting income on his 2008, 2009, and 2010 tax forms
- Failed to indicate, on its 2008 and 2009 tax returns, that Fore Fathers Foundation “made payments for his children’s educational expenses”
He was also untruthful in his dealings with federal investigators. In 2010, while B&P’s income tax returns were being audited, Wright falsely told an IRS agent he had not been in contact with the Service – a puzzling decision, since there would be ample records documenting not only Wright’s guilty plea to tax evasion in 1998, but further, multiple audits “in both the 1990s and early 2000s.”
At the time our original article was published, Wright was still awaiting sentencing, for which a date had yet to be set by U.S. District Judge Walter H. Rice. However, a DOJ press release issued in October, which can be viewed by following the link near the beginning of this article, offers updates. On October 15, 2018, approximately one year after his November 2017 conviction, Wright was ordered to pay the IRS restitution in the amount of $146,404. He was also sentenced to serve 33 months in federal prison, which equates to just under three years. His sentence will not technically “end” upon his release from prison, but rather, begin a yearlong term of supervised release, which is similar to parole or probation in that strict, court-ordered conditions apply – as do stiff penalties for failing to comply.
Criminal Tax Defense Lawyers and IRS Audit Representation in California
Failure to report income and pay taxes in a complete and timely fashion places you in extreme jeopardy – not only of fines, interest, and auditing, but worse, possible threat of criminal prosecution. If you have been chosen for an IRS tax audit, or believe that you are in danger of an IRS criminal investigation, do not wait another day to seek counsel from an experienced tax attorney. For a reduced-rate consultation concerning unfiled tax returns, failure to file or pay taxes, or tax preparer fraud, call the Tax Law Office of David W. Klasing at (800) 681-1295, or contact us online right away.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
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