It has been said that there isn’t anything quite as strong as a bond between a parent and their children. Generally, those bonds involve love, spending time with one another, and most importantly, making long-lasting memories together. That is the case for a Pennsylvania family that gathered at the federal courthouse in Allentown, yesterday. But this family outing would likely not produce any laughs, smiles, or fond storytelling, as a father and his three sons were sentenced to a collective six and a half years in a federal prison for tax fraud.

According to a press release by the Department of Justice, Chester A. Bitterman Jr. and his sons, Craig L. Bitterman, C. Grant Bitterman and Curtis L. Bitterman, were all convicted of being a part of a conspiracy to defraud the United States. In addition to the conspiracy charge, Chester Bitterman Jr. was convicted on a count of obstruction of justice.

The Department of Justice said in their statement that the Bitterman’s had been involved in a complex tax avoidance scheme spanning from 1996 to 2005. The illegal activity involved Bitterman Scales, LLC, the family businesses. In order to avoid paying taxes, Chester Bitterman and his three sons contacted representatives from the Commonwealth Trust Company, an entity that specialized the establishment of trust accounts that were used to keep the Bitterman’s personal and business assets out of the view of the IRS. Additionally, the family shifted money between trust accounts and categorized the payments to be for management fees or leases. When Bitterman Scales filed its entity tax return, those sham transactions were included as deductions, effectively nearly eliminating the taxable income of Bitterman Scales.

As the IRS began to levy the business’s bank account, Chester Bitterman instructed the clients of Bitterman Scales to pay for products indirectly and to not funnel any money through the business. Furthermore, he placed phony mortgages on business and personal property in an attempt to prevent the IRS from getting their hands on it. Even after the IRS Criminal Investigation Division had looked into the matter and the DOJ had issued the family members subpoenas, Chester Bitterman made efforts to hide evidence by shipping them to various southwest states.

Serious Tax Offenses Can Result In Serious Prison Sentences

Federal District Court Judge James Knoll Gardner handed down the sentences to the four family members yesterday and it wasn’t pretty. Craig Bitterman, 55, received three years in prison, followed by three years of supervised release, and 1000 hours of community service. C. Grant Bitterman, 53, and Curtis Bitterman, 61, both received 21 months in federal prison, followed by supervised release, and community service. The judge allowed Chester Bitterman, 81, to avoid jail time, but sentenced him to three years of supervised release, with six months of the sentence being served under home confinement. Finally, fines were imposed upon all four of the family members.

The Bottom Line: Contact an Experienced Tax Attorney

This story goes to show that the Department of Justice and the federal courts will not look the other way simply because you are older. All of the defendants in this case were over 50 and will likely have a very tough time in a federal prison. Their outcome may have been different if they would have consulted with an experienced tax attorney at the first sign of trouble. Much of the evidence proffered at trial involved activities that were meant to cover up the original wrongdoing. The Department of Justice and IRS will be much less open to working out a deal when a taxpayer takes active steps to conceal their behavior, even after they have been caught red-handed.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have a plethora of experience in assisting taxpayers with every variety of tax issue. Whether it is an audit, an investigation, or full-blown litigation, walking into an IRS meeting without the presence of a skilled and experienced tax attorney is asking for trouble. Ensure that you have effective representation that will zealously advocate for your personal and financial interests. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.  We work aggressively to protect our clients, and to keep them from being sent to prison for tax fraud.