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Torrance California Man Sentenced to Prison for Tax Evasion and Health Care Fraud

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    Earlier this year, one of several co-conspirators in a wide-ranging health care system scheme received a sentence that included prison time as well as monetary restitution. The stiff sentence resulted despite the defendant having only pled guilty to one charge of tax evasion.

    Not only are these charges serious, but they are already becoming far more frequent than ever before. The IRS has more financing and manpower, and now has a mandate to pursue unpaid taxes and close the tax gap. As a result, it is likely that even honest taxpayers will get caught in the crossfire.

    To shield yourself from the potential consequences of the inevitable surge of IRS activity, call (800) 681-1295 to get the Dual Licensed Tax Lawyers and CPAs at the Tax Law Offices of David W. Klasing on your side.

    South Bay Man Gets 12 Months Prison Time for Tax Evasion Charges

    On February 28, Jeffrey (a.k.a. “Jey”) Lawrence of Torrance, CA was sentenced to 12 months and one day in prison by United States District Judge R. Gary Klausner. The court also ordered Lawrence, 59, to pay restitution to the IRS of $100,919. This sentencing comes after Lawrence pled guilty last year to one count of tax evasion.

    Fraudulent Prescription Referral Scheme

    Lawrence faced criminal prosecution as a result of his participation in a concealed kickback scheme involving medication prescriptions in 2015. According to court documents, Lawrence allegedly agreed with a pharmacy owner to refer compounded medication prescriptions to the pharmacy in exchange for payment. As part of the agreement, Lawrence allegedly directed the pharmacy owner, Thu Van Le, to pay the referral fees to a bank account under another person’s name so that Lawrence could cover up the fact that he was receiving income.

    Lawrence failed to file his annual tax return for 2015. While it is difficult to say how the government got wind of the larger scheme, failure to file a tax return for a given year would certainly constitute a classic red flag for the IRS. Lawrence’s taxable income from the prescription referral fees alone would amount to $280,000, creating a tax balance of over $100,000.

    Lawrence and Le were not the only ones to be targeted in the government’s investigation of the alleged health care fraud scheme. A federal grand jury handed down indictments to four other defendants when the case officially began on June 21, 2018.

    Lawrence was sentenced on February 28 of this year, less than six months after co-conspirator Le was sentenced for the same scheme, but for additional charges. Le received 70 months in federal prison and was ordered to pay over $11 million in restitution to the victims of the fraud, which included Tricare and Amtrak’s health care benefit plan.

    Government Using Sentence to Send a Message

    According to statements made by Kristi Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, in the IRS’ press release, this is but one instance of the IRS cracking down on tax evasion schemes involving the health care system.

    “Mr. Lawrence was a marketer for a compounding pharmacy that had an illegal kickback arrangement with marketers to pay a percentage of prescription claim reimbursements to marketers in exchange for the referral of compounded medication prescriptions,” explained Johnson. “The FBI devotes resources to detect and hold accountable those who defraud the health care system. This is just the latest example.”

    This case is also an example of when the government agencies that are usually involved in these types of cases solicit the help of other agencies, such as the California Department of Insurance and the Amtrak Office of the Inspector General. “We’re very proud of our joint efforts with the cross-agency team of investigators and the U.S. Attorney’s Office who helped move this case forward,” said Tom Hopkins, Special Agent in Charge of Amtrak OIG’s Western Field Office. “Our office will vigorously investigate and help bring to justice those who engage in such criminal activity as we work to protect Amtrak funds, American taxpayers, and the traveling public.”

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    The IRS is Ramping Up Criminal Tax Investigations and Audits

    Lawrence’s actions were clearly a violation of tax law and warranted punishment. However, the federal government is not just stopping with clear and blatant fraudulent behavior. They have more pressure than ever before to search out tax noncompliance, especially where there are indications that the taxpayer might have acted willfully to skirt their tax obligations.

    The Biden administration provided the IRS with an additional $80 billion in funding as part of their attempt to provide more tools to the federal tax agency. Though updated software, increased staffing, and a substantial budget to fund litigation, the administration hopes that the IRS’ Criminal Investigations Division (IRS-CI) can close the ever-widening tax gap, which is the difference between what the government should receive annually in tax revenue and the total that they actually collect from taxpayers.

    This is significant when you consider that the increased funding essentially functions like an investment. The White House put up the money for the IRS in hopes that they would earn that back and more. Therefore, the only way that the IRS can justify the federal government’s increased funding is by increasing their own action. This means more audits, more criminal investigations, and more prosecution.

    You would be wise to have concerns about how the increase in government tax action and enforcement that is already happening will impact you. Fortunately, our Dual Licensed Tax Lawyers and CPAs stay on top of developments in IRS activity so that our clients never get caught off-guard.

    The Tax Law Offices of David W. Klasing Can Get to Work for You Today

    To find out more about what benefits you could get from the assistance of our Dual Licensed Tax Lawyers and CPAs, call us at our offices today at (800) 681-1295.

    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.

    Note: 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 disclosurebefore 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, KovelCPAs 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!

    Contact Our California Tax Fraud Defense Attorneys for Help

    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.

    If you failed to provide accurate information to the IRS, you may be facing tax fraud charges if you do not come into compliance through a domestic or offshore voluntary disclosure. Our experienced dual licensed California Tax Fraud Defense Lawyers and CPAs are here to help. Call the Tax Law Offices of David W. Klasing at (800) 681-1295 to arrange a consultation with our team or schedule a reduced rate initial consultation directly HERE.

    Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.

    In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento.

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