Former Hialeah, Florida mayor Julio Robaina pleaded not guilty to tax fraud charges during a formal arraignment last Friday.
Robaina and his wife, Raiza Robaina, are charged with conspiring to evade their taxes, creating false returns and lying to federal agents.
Robaina and his wife made their first appearance in federal court last week, where a judge set Julio Robaina’s bond at $250,000 and Raiza Robaina’s bond at $100,000.
A 10-page indictment released Thursday claims the couple, who own a loan company, made six-figure transactions between 2005-2007 but reported small five-figure losses. Over those two years, officials allege the Robainas’ taxable personal income was falsely understated, while Mr. Robaina’s business tax forms showed inflated losses.
The alleged incidents took place while Julio Robaina was earning a salary of more than $200,000 as mayor. Prosecutors say that when questioned in 2010 the couple lied to federal agents about Julio Robaina’s involvement in his wife’s lending business.
Robaina served as Hialeah’s mayor from 2005-2011 before resigning to run for mayor of Miami-Dade, an election he lost to Carlos Gimenez.
The U.S. Department of Justice charged Mohammad Jafar Nikbakht, a used car wholesaler who operated several lots in the San Diego area, with tax evasion, subscribing to a false income tax return, and failure to file income tax returns.
In March 2011, Nikbaht pleaded guilty and admitted that he had concealed a substantial amount of the earnings he made through his auto dealerships and small businesses. As part of his plea he admitted guilt to additional tax crimes of failing to file tax returns and tax perjury and admitted to various aggregating circumstances such as, operating under another’s name/license to conceal income from the IRS.
Presiding Southern California U.S. District Court Judge John Houston found that Nikbaht failed to pay an estimated $200,000 in back taxes. In addition to ordering $124,454 in restitution, he was also sentenced to 15 months in prison.
This is just the criminal side of the case. The civil case comes next. Besides the federal and state income tax assessments for the under-reported income being assessed, there will likely be additions of civil fraud penalties of 75% of the underpayment (IRC § 6663). Nikbaht has pled guilty to tax evasion; therefore, he is barred from re-litigating the amount of income unreported that would be taxable because the government has already established the amount in the criminal tax case.
If for some reason the civil fraud penalty is not assessed, the government has another opportunity with the failure-to-file tax return penalty. Nikbaht “further admitted that he willfully failed to file his personal tax return.” This may indicate that the failure to file the tax return will fall under the fraud umbrella which will increase its penalty from a maximum of 25% of the tax due to 75% of the tax due (IRC § 6651).
From a tax attorney’s perspective, the above description of the potential civil penalties is oversimplified and there are nuances not explained here that only an experienced tax attorney can navigate. For instance, there may be potential advantages for advocating for one penalty over the other during the civil tax matter that will follow this criminal tax matter.
Luckily the fear of being prosecuted for tax evasion is much greater than the actual rate of cases pursued by the government. However, it does happen, and you should know where to turn in such a situation. The team at the Tax Law Office of David W. Klasing can help you find the right resolutions for your tax debts.
The best way to avoid criminal charges is to have a solid tax plan in place. Our criminal tax attorneys like to see clients long before they are indicted with criminal charges. We offer a wide variety of tax attorney services to keep you current with your taxes. Tax codes can be difficult to make sense of. You may think you’ve been in compliance only to find out you’ve been doing it wrong.
If you have found yourself the subject of a criminal tax investigation or if you are worried about under-reporting income, failing to file tax returns, submitting false tax documents to the government, or failing to report an offshore bank account, we can help. The attorneys at the Tax Law Office of David W. Klasing bring years of experience defending clients against the government in criminal tax and civil tax cases. Our team of tax attorneys, CPAs, and other tax professionals enables us to assemble a comprehensive team to defend you and bring your case to the best possible outcome. Contact us today.