In March 2018, our tax evasion attorneys wrote about the case of Olean, New York-based CPA Joseph Stevens. At the time of our original article, Stevens had recently pleaded guilty to tax evasion and bank fraud – crimes for which the defendant was facing a prison term of up 30 years, in addition to a fine of up to $1 million. We now have updates on the outcome of Stevens’ sentencing hearing, which took place in August 2018.
The timeline of Stevens’ case begins in September 2017, when he was placed under arrest and charged with bank fraud. However, the underlying criminal activities stretched back several years to August 2012, when, according to a press release from the Department of Justice (DOJ), Stevens, a CPA, “was hired by a business owner to handle all of the bookkeeping responsibilities for” the company.
It was in this capacity that Stevens – who was expected to carry out duties such as personal income tax preparation, business tax preparation, payroll, and business transactions with vendors – was granted access to the bank account which would eventually give rise to the fraud charges filed in 2017.
Though Stevens began working for the business in 2012, it was not until “early 2016” that red flags began to appear. For example, it was at this point when Stevens “began to notify the business owner that the business was not doing well financially.” Stevens used the same excuse to explain, claiming the business was failing to produce the necessary revenue, why a line of credit worth $30,000 had been maxed out – without the business owner’s approval.
It was also during 2016 when the business owner received an unexpected notice from the IRS. While there are many reasons the Internal Revenue Service may contact a business owner, not all of them necessarily cause for alarm, this particular letter raised serious concerns: according to the IRS, the business owner had failed to pay taxes owed for 2015. When confronted, Stevens again claimed that the company was failing to generate the revenue needed.
The scam began to unravel around March 2017, when the business owner, spurred by a realization that financial statements were no longer arriving when or where expected, personally visited the bank “to review the business accounts activity.” Closer scrutiny confirmed any business owner’s worst fears, revealing that, over a period of just under five years, Stevens withdrew, in total, “approximately $342,700” from the account – again, without the business owner’s authorization. The funds from the business account were deposited into Stevens’ “personal accounts.”
In addition to secretly withdrawing money from the account he was trusted to manage, Stevens also “forged approximately 39 checks, made payable to himself, in the amount of $87,800.”
It was these actions which gave rise to the bank fraud charges against Stevens. The defendant was also accused of committing tax evasion, charges which arose from the defendant’s failure to file income tax returns for tax years 2014 and 2015. These two failures to file respectively resulted in tax losses of $29,186 and $53,296 – in total, $82,482.
Appearing in August 2018 before U.S. District Judge Elizabeth A. Wolford, Stevens was sentenced to 33 months in prison. He was also ordered to pay the IRS and defrauded business owner restitution totaling $512,982.
The maximum sentence for tax evasion is five years (60 months) in prison, in addition to a criminal fine not to exceed $100,000. These are the maximum statutory penalties established by 26 U.S. Code § 7201, the federal tax evasion statute. For more information about tax evasion, readers may be interested in our articles about:
Taxpayers can be hit with substantial civil and/or criminal penalties for failing to file returns or pay taxes, depending on whether such failure was negligent or willful. In criminal tax cases, financial penalties are not the only consequences at stake. The taxpayer can also be incarcerated, sentenced to supervised release, and, if he or she is a CPA, stripped of professional licenses and certifications.
If you have unfiled tax returns, owe tax debts to the IRS, need help preparing business tax returns, are under investigation for tax fraud or tax preparer fraud, or are facing other personal or business tax issues in California, ask the experienced California tax lawyers at the Tax Law Office of David W. Klasing how we can help. We have extensive experience with civil and criminal tax issues and working with individuals and business entities, we are amply prepared and thoroughly qualified to handle your case. From courtroom defense to financial planning, our team is here to provide support. Contact us online for a reduced-rate consultation or call the Tax Law Office of David W. Klasing at (800) 681-1295 today.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
Helpful Q and A libraries: