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IRS investigation of Maryland man leads to tax evasion charges

| Nov 30, 2018 | tax crimes

Reports from multiple casinos about the spending of a public official in Montgomery County alerted the Internal Revenue Service to the possibility of unpaid income taxes. The subsequent IRS investigation eventually uncovered the fraudulent activities of the chief operating officer for the county’s economic development department. The 58-year-old man has entered guilty pleas as part of a plea agreement on charges of tax evasion, wire fraud and theft of county funds.

The man used his authority within the economic development department to approve invoices submitted by the fake company that he had set up. He created an entity called Chungbuk Incubator Fund LLC and used it to funnel county funds through the false business accounts and then into his personal accounts.

The large amounts of money that he gambled in casinos caused the IRS to compare those spending reports to his tax returns. The discrepancy between spending and reported income led to the unraveling of his fraudulent scheme. His fake LLC performed no services for the county but issued 14 invoices between 2010 and 2016 that resulted in 12 payments totaling approximately $5.5 million. After his guilty pleas, a circuit court judge released him on his own recognizance.

A person accused of tax crimes could face serious consequences such as jail time and payment of taxes and penalties. To understand options within the criminal justice system, a person might want the insights of an attorney. Legal advice could allow the person to understand the strength of the evidence in the case. An attorney might propose defense strategies that reduce or dismiss charges. This effort could include the negotiation of a plea agreement that limits penalties.