Leon Benzer Indicted by a Federal Grand Jury of Tax Evasion By Alleging He Was Evading Federal Income and Employment Taxes

May 15, 2013

The Federal Bureau of Investigation (FBI) on May 14, 2013 released the following:

“Former Construction Company Owner Indicted in Nevada for Income Tax Evasion

WASHINGTON—A federal grand jury in Nevada today returned an indictment against a former construction company owner for evading federal income and employment taxes, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber, FBI Acting Special Agent in Charge William C. Woerner of the Las Vegas Field Office, and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.

Leon Benzer, 46, of Las Vegas, was charged in U.S. District Court in the District of Nevada with two counts of tax evasion.

In January 2013, Benzer was indicted in a related case on charges of wire fraud and conspiracy to commit wire and mail fraud. According to court documents, from approximately August 2003 through February 2009, Benzer orchestrated a scheme to direct construction defect litigation and repairs at condominium complexes to a conspiring law firm and Benzer’s construction company, Silver Lining Construction (SLC). As a result of this scheme, the indictment alleges that SLC was awarded a contract worth over $7 million for work at the Vistana Homeowner’s Association (Vistana HOA) in Las Vegas. The case is pending.

According to the indictment returned today, in August 2006, Benzer filed five years’ worth of personal tax forms and business tax returns without any payments accompanying those returns. As of April 2007, Benzer had allegedly failed to pay his personal tax liability of approximately $459,000 and SLC’s employment tax liability of approximately $687,000 and unemployment tax liability of approximately $18,000. In May 2007, the IRS issued a notice of intent to file a levy; Benzer subsequently appealed this process and indicated that he wanted to enter into an “offer-in-compromise” with the IRS to pay a portion of what was owed in full satisfaction of all his tax liabilities. According to the indictment, during this offer-in-compromise process, the IRS requested detailed financial information from Benzer.

Between March 2005 and January 2008, the indictment alleges that Benzer and SLC received over $7 million from the Vistana HOA contract, including a wire transfer of over $1 million on September 21, 2007, to a personal U.S. Bank account that Benzer opened in August 2007. The indictment alleges that when Benzer filed certain IRS forms related to the offer-in-compromise process on September 25, 2007, he failed to disclose this personal U.S. Bank account or the assets contained in it.

The maximum prison sentence for each count of tax evasion is five years in prison and a maximum fine of $100,000.

The charges and allegations against the indicted defendant are merely accusations, and the defendant is considered innocent unless and until proven guilty.

The case is being prosecuted by Senior Deputy Chief Kathleen McGovern, Deputy Chief Charles La Bella, and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section. The case is being investigated by IRS-CI, the FBI, and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions; and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit http://www.stopfraud.gov.”

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Douglas McNabb – McNabb Associates, P.C.’s
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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Robert D. Falor Indicited by a Chicago Federal Grand Jury for Alleged Federal Tax Evasion

September 2, 2011

The U.S. Attorney’s Office Northern District of Illinois on September 1, 2011 released the following:

“FORMER CONDO-HOTEL DEVELOPER ARRESTED ON FEDERAL CHARGES ALLEGING EVASION OF MORE THAN $1.75 MILLION IN INCOME TAXES

CHICAGO — A former real estate developer who attempted to convert hotels in Chicago, Miami Beach and elsewhere into condominium-hotels was arrested today on federal tax evasion charges alleging that he failed to pay more than $1.75 million in taxes covering three years between 2004 and 2007. The defendant, Robert D. Falor, who was the chief operator and manager of The Falor Companies, Inc. (TFC), was charged with three counts of federal income tax evasion in an indictment that was returned by a federal grand jury on Tuesday and unsealed today following his arrest.

Falor, 43, of Chicago and formerly of Glencoe, pleaded not guilty at his arraignment this morning before U.S. District Judge Virginia Kendall, who scheduled a detention hearing for 10 a.m. tomorrow in Federal Court in Chicago.

The arrest and charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Alvin Patton, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The investigation is continuing, they said.

According to the indictment, Falor was an owner of multiple businesses, including limited liability companies, that he and others created to own and manage the affairs of various TFC condohotel properties. In converting hotels to condo-hotels, individual guest rooms would be sold to investors as separately titled condominium units and rented by a TFC-related hotel management company to guests when the owner was not in residence, with the owner receiving a percentage of the rental fee.

Falor operated multiple condo-hotel ventures in the mid-2000s, including the Blake Hotel, located at 500 S. Dearborn St., in Chicago, and the Tides Hotel on Ocean Drive in Miami Beach, but TFC ceased business operations in 2006, according to the indictment.

The tax evasion counts allege that Falor failed to pay the following amounts in federal income taxes: $189,246 for calendar year 2004; $494,261 for calendar year 2006; and $1,091,216 for calendar year 2007, resulting in a total of $1,774,723 in unpaid taxes. For 2006 and 2007, Falor allegedly evaded taxes, in part, by failing to file federal individual income tax returns. For 2004, he filed a tax return in October 2007 that allegedly under-reported his income and the amount of taxes he owed.

During 2007, the indictment alleges that Falor had two sources of unreported taxable income: more than $2.3 million from the Blake Hotel and more than $2.9 million in capital gains resulting from the dissolution of certain limited liability companies. Falor allegedly deposited the $2.3 million of income from the Blake Hotel into various bank accounts through a series of more than 200 banking transactions. During 2007, he had taxable income of approximately $4,837,308, on which he owed income tax of approximately $1,091,216, the indictment charges, adding that he failed to file a return or pay any taxes by the deadline.

During 2006, Falor allegedly received taxable income of more than $1.25 million from the Blake Hotel. In addition, more than $1.65 million in loans from TFC became taxable income to Falor in 2006 because he failed to repay the loans when TFC ceased operations. The loans had accrued to Falor between 2003 and 2006 when he directed TFC employees to pay his personal expenses from company accounts and to record the payments as loans, the indictment states. During 2006, he had taxable income of approximately $1,825,326, on which he owed income tax of approximately $494,261, the indictment charges, adding that he failed to file a return or pay any taxes by the deadline.

During 2004, the indictment alleges that Falor had three sources of unreported taxable income: approximately $1,294,424 in capital gains from the sale of certain interests in limited liability companies; approximately $472,955 in capital gains from a distribution from a limited liability company that participate din the management of the Tides Hotel; and at least $201,485 from certain companies that he deposited into a bank account he controlled. During 2004, he had taxable income of approximately $1,332,391, on which he owed income tax of approximately $189,246, the indictment charges. On Oct. 3, 2007, Falor allegedly filed an income tax return for 2004 that reported no capital gains and under-reported his income from various companies, resulting in a tax due of only $2,102, when he actually owed the greater amount of approximately $189,246.

The government is being represented by Assistant U.S. Attorneys Ryan S. Hedges and Barry Jonas.

Each count of tax evasion carries a maximum penalty of five years in prison and a $250,000 fine. In addition, defendants convicted of tax offenses face mandatory costs of prosecution and remain civilly liable to the Government for any and all back taxes, as well as a civil fraud penalty of 75 percent of the underpayment plus interest. If convicted, the Court, must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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