On March 25, 2014, dentist Gary Anusavice of North Kingstown, Rhode Island pleaded guilty yesterday to health care fraud and tax evasion offenses stemming involvement in a $20 million Medicaid fraud scheme. Anusavice (also known as “Gary Andrews,” “Gary Andrus” or “Gary Francis,” depending on who you ask) faces extremely serious penalties — and if you’re being investigated for tax crimes, so could you. In this cautionary blog post, our Irvine tax attorneys explain some of the penalties for convicted defendants like Anusavice.
Even though Anusavice was banned from participating in Medicaid and other federal programs after being convicted of health care fraud back in 1998, that didn’t stop his criminal activities. On the contrary, he continued to bill these programs by hiding his involvement through the use of elaborate schemes.
From 2008 through April of 2011, Anusavice owned and operated several Connecticut dental practices, but evaded detection by using a licensed dentist to act as the nominal head of the clinics. Anusavice and the licensed dentist jointly provided false Medicaid Provider Enrollment Applications which failed to disclose Anusavice’s controlling interest in the clinics — or his disciplinary history. As a result of the pair’s fraud, the Connecticut Medicaid program reimbursed Anusavice’s dental practices with nearly $21 million.
Anusavice used several strategies in an attempt to conceal his involvement. In addition to establishing multiple nominee entities, he also instructed his employees and business partners to make checks payable to nominee entities. Anusavice then deposited the checks into bank accounts he opened specifically for the entities, and finally, used the funds to purchase assets for his personal use — including a 33-foot yacht, a new Mercedez Benz, and a residence in North Kingstown.
Anusavice received a total of $3,325,272 in income from his dental clinics, but failed to file tax returns for 2008 through 2011. The result? A tax loss to the government of more than $1.2 million.
Anusavice ultimately pleaded guilty to one count of health care fraud, which carries a maximum term of 10 years in prison, plus one count of tax evasion, which carries a maximum prison term of five years. He has also agreed to forfeit his property, yacht, and Mercedes Benz, as well as nearly $100,000 seized from his residence on May 24, 2012. Anusavice has also has agreed to pay back taxes in the amount of $1,894,258.71, plus applicable interest and penalties. The tax loss figure includes more than $600,000 in federal taxes which the dentist failed to pay from 1990 to 2003.
Meanwhile on the opposite coast, Chico resident Randy Barker was sentenced in a Sacramento federal court to three years and 10 months in prison for tax fraud. Barker was originally convicted in February on three counts of filing false claims against the government. Barker and his wife, Tamara, were both indicted in July of 2013 for a 2008 income tax return that claimed $1.4 million in interest income, leading to a refund of $987,900. The Barkers reportedly spent most of the money within a matter of weeks, paying $495,000 for a house near Canyon Oaks Country Club and another $81,000 for home furnishings.
In an interesting twist, court documents connect Randy Barker with the Tax Challenger community which, according to a Department of Justice press release, is “a group of individuals who believe that the tax laws are unconstitutional or otherwise invalid.” Unfortunately, holding those beliefs won’t necessarily protect you from your tax obligations. As some fine print from the official IRS appeals form clearly states, “Appeals will independently consider the reason(s) why you disagree, except for moral, religious, political, constitutional, conscientious objection, or similar grounds.”
The actions you take during the course of an IRS tax audit can turn a minor dispute into a sprawling tax fraud case like the stories noted above. Trying to delay, lying, and even giving evasive answers to IRS investigators are all indicators of tax fraud to IRS agents, who are specifically trained to detect such issues.
Experienced Irvine IRS audit lawyer David W. Klasing can help you navigate the choppy waters of IRS audits, including helping you formulate an effective strategy that will lead to a fair settlement while reducing the risk of fraud penalties: 75% of any additional tax found owed, or 5 years of jail time per felony.
If you think you may be the target of an IRS criminal investigation, you should consult with our criminal tax attorneys immediately. The sooner you do, the better off you will be for avoiding any escalation of the problem into something beyond your control. Our dedicated legal team brings years of tax, legal, and accounting experience to help guide you in the right direction, so call (800) 681-1295 to get started.