Daily Banking News

Tax Fraud Blotter: Down the drain

Very inventive; that’s Sick; sweet charity; and other highlights of recent tax cases.

Washington, D.C.: Texas attorney and former member of the Idaho legislature John O. Green and his client, Texas inventor Thomas Selgas, have been sentenced for conspiracy to defraud the U.S. and for tax evasion.

Selgas was sentenced to 18 months in prison and Green to six months.

Selgas conspired with Green, an attorney licensed to practice in Texas, to obstruct IRS efforts to assess and collect Selgas’s taxes. Selgas and his wife owed approximately $1.1 million in taxes that Selgas refused to pay.

Selgas concealed, with the assistance of Green, substantial funds by using Green’s Interest on Lawyers Trust Account, rather than using financial accounts in Selgas’s name. (An IOLTA is an escrow bank account used by a lawyer to hold money in trust for clients.) From 2007 to 2017, Selgas deposited proceeds from the sale of gold coins and other income into Green’s IOLTA. At the direction of Selgas, Green would then use that escrow account to pay the personal expenses of Selgas and his wife, including their credit card bills.

Selgas and Green also filed a false return on behalf of MyMail Ltd., an intellectual property development and licensing partnership Selgas co-founded, omitting a substantial portion of the partnership’s income.

Selgas was also ordered to serve three years of supervised release and pay some $1,323,776.92 in restitution to the U.S, Green was ordered to serve three years of supervised release and pay some $679,501.50 in restitution to the United States.

New York: Business owner Sergei Denko, of Queens, has been sentenced to 20 months in prison for failing to collect and pay over to the IRS $732,462 in employment taxes.

He owned and operated Denko Mechanical and Independent Mechanical, contracting businesses that specialized in plumbing. From 2010 through 2014, Denko cashed more than $5 million in checks made out to companies he owned and operated to fund an off-the-books cash payroll. He did not report the cash wages to the IRS, filed false employment tax returns and did not pay to the IRS the employment taxes arising from the cash payroll. Denko admitted to causing a total tax loss of $732,462.

He was also ordered to serve a year of supervised release. He has already paid $366,231 in restitution.

Rockford, Illinois: A federal court has permanently enjoined tax preparer Gretchen Alvarez, a.k.a. Gretchen Trejo, from preparing returns for others and from owning, operating or franchising a tax prep business in the future.

The order requires that Alvarez, both individually and doing business as Sick Credit Repair, Tax and Legal Services, send notice of the injunction to multiple individuals and, during the filing season, advertise the injunction where she conducts business.

The civil complaint alleged that she prepared federal income tax returns for area taxpayers that significantly understated tax liabilities by fabricating business losses. It also alleged that Alvarez falsely claimed that some of her customers attended higher education institutions to fraudulently claim education credits.

Alvarez consented to entry of the injunction, which permits the government to monitor compliance.

San Diego: Retired pediatric dentist Dr. Bruce Baker has been sentenced to 15 months in custody for evading more than $644,000 in taxes as part of a decades- long tax evasion with former Chabad of Poway Rabbi Yisroel Goldstein.

Until around 2018, Rabbi Goldstein was the director and head rabbi at Chabad of Poway, a tax-exempt religious organization. Starting as far back as the mid-1990s, Dr. Baker engaged in various ploys with Rabbi Goldstein to cheat on his taxes. On most occasions, Dr. Baker purported to donate money to the Chabad of Poway, got a receipt for a charitable deduction then received back 90 percent of his “donation” from Rabbi Goldstein.

In this fashion, Dr. Baker paid for his child’s private school tuition, his son’s…

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