Tax Crimes Least Likely To Be Prosecuted At U.S. Attorney’s Office In Los Angeles

Huffington Post on April 16, 2012 released the following:

“By Kendall Taggart

The U.S. attorney’s office in Los Angeles is less likely to prosecute criminal cases referred by the Internal Revenue Service than its counterparts in the rest of the state, according to a California Watch analysis of five years of data.

The eastern district, which includes Sacramento and Fresno, was the most likely to prosecute IRS referrals, the data shows. But the U.S. attorney in Los Angeles was the only office in the state that fell slightly below the national average of prosecuting criminal IRS cases.

Each U.S. attorney has broad discretion over the priorities for his or her district. They determine which criminal cases referred to them by other law enforcement agencies they want to pursue and which cases to close without prosecuting.

It is difficult to determine why the Los Angeles office lagged behind its peers.

“It’s definitely puzzling,” said Terree Bowers, a former U.S. attorney. Since leaving the Los Angeles office, Bowers said he brought a fraud case to the office’s attention and was surprised that it didn’t act on the case.

The agency did not comment specifically on the findings, but Bruce Riordan, a U.S. attorney’s office spokesman, said: “I have been associated with the Department of Justice and the Central District of California for more 20 years, and based on my experience, the Central District has a longstanding and well-deserved reputation, both locally and nationally, for vigorously and successfully prosecuting criminal tax violations.”

The IRS investigates and refers cases about tax fraud, money laundering, narcotics trafficking, organized crime and public corruption.

Compared with the volume of cases it handles, the IRS refers only a small percentage for federal prosecution. Syracuse University’s Transactional Records Access Clearinghouse, which compiled the data analyzed by California Watch, estimated that the odds of having the IRS refer a case to a federal prosecutor were about 12 per million nationwide last year.

In California, the IRS referred about 540 cases to federal prosecutors in the last fiscal year. When adjusted for population, the odds of having a case referred to a federal prosecutor in the state are 15 per million, slightly higher than the national average.

When they do receive cases from the IRS, three of the state’s four U.S. attorneys prosecute alleged offenders at a rate above the national average, the data shows.

Across the country, close to 54 percent of all IRS referrals are prosecuted. In the eastern district covering Sacramento, that prosecution rate is about 62 percent. For the northern San Francisco and the southern San Diego districts, the prosecution rate is the same: 57.8 percent. For Los Angeles, the rate falls to 51.4 percent.

The IRS has several ways of enforcing tax law, including audits and civil charges.

“The heavy gun of the IRS is criminal enforcement, but it’s a much less frequent event,” said David Burnham, a co-director of the Transactional Records Access Clearinghouse.

The federal tax filing deadline is tomorrow. But in the months leading up to that day, U.S. attorneys sometimes file several tax fraud indictments as a deterrent, Bowers said.

Since January, the U.S. attorney’s eastern district office has announced more than six fraud cases, including charges against three Sacramento women who are accused of trying to claim more than $1.3 million in fraudulent tax refunds. The scheme involved more than 280 false tax returns and numerous identify-theft victims.

According the the U.S. attorney’s office, the women filed fraudulent returns through TurboTax and obtained the tax service’s Green Dot debit cards “loaded with the tax return money.” The actual loss to the IRS was $962,079, out of the $1.3 million claimed by the women using various identities.

And late last month, the Los Angeles office announced that a former Los Angeles Dodgers pitcher, William S. Bene, had signed a plea agreement admitting that he did not pay taxes for an illegal business selling karaoke machines. The U.S. attorney’s office said Bene sold counterfeit karaoke jukeboxes and failed to report $600,000 in sales to the IRS.

As part of his plea agreement, the U.S. attorney said, Bene admitted he had illegally copied and sold karaoke songs on hard drives that each carried about 122,000 songs.

“Intellectual Property crimes are not victimless,” U.S. Attorney André Birotte Jr. said in a statement last month. “As this federal case shows, these crimes of stealth hurt the small businesses that do play by the rules, and they also deprive the federal government of tax revenue that could be put to beneficial use.””


Douglas McNabb – McNabb Associates, P.C.’s
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