The question of how much time the government has to pursue tax fraud (also known…
Top 5 tax fraud recoveries in 2022
- By : Parag Patel Date : 11-Feb-23
Tax fraud can take many different forms. Below are the top federal tax fraud cases last year.
- Crypto Seizures: more than $7 billion. In February, 2022, it was announced that IRS Criminal Investigations Cyber Crime Unit led the seizure and recovery of Bitcoin valued at $4.5 billion that had been stolen during a 2016 hack of the Bitfinex virtual currency exchange. Investigators traced the stolen funds through the BTC blockchain and successfully decrypted files obtained through a search warrant.
- Willful failure to file individual income tax returns: $29.5 million, plus 5 years in prison. All U.S. citizens are required to report all sources of income, including overseas earnings. However, oil company CEO Todd Kozel, who worked in Iraq, willfully and criminally disregarded this requirement. He earned over $66 million from his work, but used sophisticated offshore structures, trusts, and bank accounts to conceal that income, and did not file returns for the compensation. Had he done so, he would have had to pay over $20 million in personal income tax. Kozel pled guilty to the charges in January 2022.
- Defrauding the IRS and the Paycheck Protection Program. The government’s financial response to the COVID-19 pandemic has been critical to the stability of the economy – and an attractive target for fraudsters. Not surprising, then, that COVID-19 fraud schemes are attracting the attention of the IRS. In this action, Quin Ngoc Rudin was sentenced to ten years in prison following his conviction on charges that he caused more than $62 million in losses to the IRS and PPP – over $19 million in losses to the IRS, and over $43 million in losses to the PPP. Rudin and a co-conspirator filed a series of false PPP loan applications, with supporting false income tax returns, on behalf of professional athletes, small businesses, shell companies, and other business entities.
- Failure to pay employment and personal income taxes. Employers are required to withhold income and employment taxes from employee compensation and, of course, report and pay those withholdings to the government. Failure to account for and pay employee withholding comes with significant consequences – as trucking company owner Thomas Valdez Rodriguez In managing Tom-E-Lee Trucking and a related company, Rodriguez withheld employment taxes from his employees, but then used those funds to live extravagantly, splashing out on private jets to Dallas Cowboys’ games, where he was a season ticket holder on the 50-yard line. In addition to his failures to meet his businesses’ tax obligations, Rodriguez had not paid personal income taxes since 2011.
- Failure to pay payroll taxes – over $6 million, plus 24 months in prison. The owner of pharmaceutical and medical equipment company Midwest Medical Holdings LLC, Larry Wallace Lindberg, was sentenced in December 2022 for failure to file tax returns and pay taxes on behalf of the company. Lindberg cheated the IRS out of several hundred thousand dollars per quarter in federal payroll taxes, owing more than $6 million in total. IRS collection attempts on the debt began in 2011, and Lindberg entered into several installment agreements, agreeing to make regular payments towards the tax debt. However, he defaulted. Instead of paying as he promised, he evaded collection efforts and sought to hide his assets from the IRS, including by diverting money to other entities and putting assets in the name of his children.
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