We represent clients from all U.S. and International locations regarding Federal Tax and California Issues.
Success can be found in many forms. Part of the beauty of the United States is that the “American Dream” is a personal one that can take many forms. For some, their American Dream is to achieve financial and business success. For others, their goals might be more aligned with public service and giving back to society. Individuals whose goals align with this track will often find being elected to the U.S. Congress as one of the highest honors and achievements they can reach.
Unfortunately, some people who set out to give back to their community and country may take a wrong turn along the way. They may forget that their status as an elected representative is a privilege and does not place them above the law. Furthermore, they may come to believe that their status and accomplishments will provide cover for white collar crimes like fraud, tax obstruction, and tax evasion. Following a recent conviction for tax fraud and other crimes, this unfortunately appears to be the case for former U.S. Representative Corrine Brown.
In 1992, Corrine Brown was elected to serve as a U.S. Representative in Florida’s then-newly created 3rd District. While Brown would be involved in litigation over alleged gerrymandering affecting her district, she was able to win reelection several times and served for nearly 25 years until she was successfully primaried in 2016. However, during her more than 20-year career as a Congresswoman, Ms. Brown engaged in a great deal of constituent service and ostensible constituent service.
Unfortunately, it appears that Brown directed and engaged in improper transactions with one of the charities she was associated with. The charity, One Door for Education, was intended to raise money to help pay for scholarships and the college education of children and promising young teens. While prosecutors did note that the foundation awarded and paid one scholarship to an unidentified Florida resident, it appears that the vast majority of the funds were used by Brown for campaign events, events in her honor, and other luxury expenses.
According to evidence presented by prosecutors at trial, Brown’s charity brought in at least $800,000 between 2012 and 2016. However, rather than spending the funds on scholarships – as promised to donors – Brown and her associates engaged in numerous improper transactions.
Brown’s former chief of staff testified that on “dozens” of occasions he complied with Brown’s requests to withdraw cash from the charity’s accounts. In one particular instance, he says he was ordered to withdraw $800 from the charity’s accounts – the maximum withdrawal limit at this ATM – and deposit a substantial amount of the cash into Brown’s personal accounts. In other instances, cash was used to pay for travel expenses and luxury goods.
Aides also testified that they supplied the former Congresswoman with blank checks on a regular basis. The Congresswoman would write checks to a public relations agency owned by a staffer. This staffer would then, in turn, write checks out to “CASH” and deposit them in Brown’s account. Neither Brown nor her staffers reported the illegal income improperly funneled from the charity on their taxes.
Davis faced 22 charges stemming from the conduct described above. Following a jury trial, Brown was found guilty on 18 of the 22 charges she faced.
Count 21 of the charges Brown faced was corruptly endeavoring to obstruct and impede the administration of IRS and tax laws in filing her tax returns for tax years 2008 – 2014. Under Section 7212(a) of the U.S. Tax Code, any individual who “corruptly” endeavors to obstruct or obstructs the administration of the Internal Revenue Code is subject to punishment. If convicted, a taxpayer can face up to a three-year prison sentence, monetary penalties, and other consequences. While Brown is currently free on bail, she is expected to face sentencing within the next 90 days.
It is only human nature for some people to push the envelope or stake out overly aggressive tax positions when they believe that others aren’t looking or that their past contributions to society entitle them to special treatment. If a former U.S. Congressperson could not escape charges or conviction, it is unlikely that others will be able to do so. To address your tax concerns before you face an audit or criminal tax charges, contact the tax lawyers and CPAs of the Tax Law Offices of David W. Klasing. To schedule a confidential, reduced rate consultation please call our Los Angeles or Irvine locations at 800-681-1295 or schedule online today.
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