People generally drink a glass of wine to unwind after a long day or to compliment a fancy meal. But for former WineTasting Network executive Martin Christopher Edwards, it is a delicacy that he won’t be enjoying for a long, long time. For Edwards, it wasn’t the wine that got him in trouble; it was over two years of tax evasion and embezzlement.
It appears as if Martin Edwards had a pretty cushy job. He was the Vice President and General Manager of the WineTasting Network, a former subsidiary of 1-800-Flowers.com. But apparently the perks of working for a company devoted to wine were not enough and Edwards wanted more. He created a fictitious entity called Dufrane Compliance Trust that was, according to Edwards at the time, providing tax compliance services to various wineries and distributors. There was only one problem; Dufrane was not a real company and did not provide any tax advice. Its sole purpose: to be a bottomless bank account for Edwards.
According to a Department of Justice press release, between mid-2010 and the end of 2012, Edwards directed employees of the WineTasting Network to cut checks payable to Dufrane. After those checks were deposited, Edwards would use the money in the account at the fictitious Dufrane entity to take luxurious vacations, buy an automobile and pay for expensive meals. It is probably not surprising to hear that Edwards did not claim any of the income that was diverted on his tax returns, which gave rise to yet another charge: tax evasion.
To make matters worse, when Edwards was faced with the embezzlement and tax evasion charges, he fled to Mexico in an attempt to evade authorities. He was caught in January of this year and returned to the United States to plead guilty. As part of the plea arrangement, there was a recommendation of a 36-month sentence and the payment of nearly 1.2 million dollars in restitution to the IRS and 1-800-Flowers.com. His sentence was handed down last week and he will be dreaming of wine from a federal prison cell for the next 33 months.
There are several lessons to be learned from Martin Edwards. The first is the obvious: don’t create a fake corporation that is no more than a trust for your embezzled money. But the second is most important. When you are being investigated for a federal tax crime by the IRS and their Criminal Investigation Division, do not take the situation lightly. As we learned with Mr. Edwards, your liberty (both physical and financial) is on the line. The audits that the IRS will subject you to are scary and when IRS criminal investigators show up at your home or business, you should be prepared or else you may end up in the slammer.
If you are a taxpayer who has received a notice of audit, understand that if an experienced tax attorney does not represent you, things can spiral downward very quickly. IRS auditors and criminal investigators are like bloodhounds, they can sense fear and once they feel like they have a lead, they will stop at nothing until they have what they are looking for and more. Furthermore, they know that you are probably not well versed and experienced in the world of tax or the criminal procedure. That’s where we come in.
At the Tax Law Offices of David W. Klasing, our team of tax professionals is here to help you through any rough tax situation you may be in. Whether you are facing an audit, criminal investigation or are scared because you have an offshore bank account that you haven’t declared to the government, we can help and ensure that you sleep well knowing that your case is in the best possible hands.
The outcome of your situation is at least in some sense up to you. It isn’t possible to determine if Martin Edwards would have made any decisions differently had he known the consequences of his actions, but one thing is certain: if you are represented by the professionals at the Tax Law Offices of David W. Klasing, we will do everything in our power to minimize potential criminal and civil penalties while giving you peace of mind that your livelihood is in extremely competent hands. Contact our office today for a reduced-rate consultation.