Illinois Man Charged with Tax Fraud Conspiracy

April 13, 2010

Ovidiu Isac, an Illinois man, is facing federal charges accusing him of participating in a conspiracy to claim over $2.1 million in fraudulent federal income tax refunds, of which false refunds totaling more than $1.3 million were actually obtained.  According to the affidavit supporting the criminal complaint, Isac and his co-conspirators allegedly split the proceeds of the tax refunds by withdrawing the funds deposited into co-schemers’ bank accounts. They are accused of knowing that they were not entitled to these refunds. Isac was charged with conspiracy to claim false tax refunds in a criminal complaint that was unsealed in Chicago following his arrest.

According to the affidavit, the IRS Fraud Detection Center identified a scheme for the 2007 tax year involving approximately 251 false tax returns filed electronically. These returns claimed tax refunds totaling more than $1.48 million. All of the returns were based on false W-2s which showed employment income and false deductions for moving expenses submitted in the names of Romanian nationals. The fraud center further identified another identical scheme for the 2008 tax year claiming refunds totaling more than $640,000, and the IRS has since flagged similar returns that have been filed for the 2009 tax year.

According to the government, the vast majority of the taxpayers whose returns generated the tax refunds at issue were people who traveled to the United States on J1 exchange visitor visas for several months in 2006 or 2007. According to the affidavit, these individuals were not in the United States at the times reflected on the tax returns and did not earn wages in the U.S. during those years.

The affidavit further alleges that many co-conspirators withdrew almost the entire amount of the tax refund in cash the same day as the refund appeared in the account or shortly thereafter.

Conspiracy to claim false tax refunds carries a maximum penalty of 10 years in prison and a $250,000 fine.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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Illinois Man Indicted on Mail Fraud Charges

March 15, 2010

An Illinois man who has allegedly represented himself as being a member of the “Chicago Outfit,”  had federal charges brought against him alleging that he and a co-defendant engaged in a contract bid-rigging scheme involving the provision of forklift trucks for trade shows at McCormick Place Convention Center. The men Rudolph Fratto and William Anthony Degironemo, were charged with fraud for rigging a 2006 contract. Degironemo was also charged with lying to federal agents during the investigation.

Fratto of Darien, Illinois was charged with one count of mail fraud. Degironemo was charged with one count of mail fraud and one count of making false statements.

Mail fraud is criminalized at 18 U.S.C. 1341. It states that it is a crime to devise or intend to devise any scheme to defraud, or to obtain money or property by means of false or fraudulent pretenses, representations, or promises, which utilizes the mail or knowingly causes any matter to be sent or  delivered by mail.

The crime of false statements is criminalized under 18 U.S.C. 1001. That statute makes it a crime to, within the jurisdiction of the United States, knowingly and willfully falsifies or conceals a material fact, makes any materially false statement or representation, or create or use any false writing knowing it causes a materially false or fraudulent statement.

A mail fraud count carries a maximum penalty of 20 years in prison and a $250,000 fine, and making false statements carries a maximum penalty of five years in prison and a $250,000 fine.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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Co-Founders of Canopy Financial Charged With Health Care Fraud in Chicago

March 7, 2010

Jeremy Blackburn and Anthony Banas, two of the co-founders of Canopy Financial, a health care transaction software company based in Chicago, Illinois, have been charged with allegedly defrauding investors of approximately $75 million, and misappropriating approximately $19 million from client custodial accounts. Mr. Blackburn was previously charged with alleged investment fraud arising out of activities involving Canopy Financial. Mr. Blackburn and Mr. Banas were each charged with two counts of wire fraud in a criminal information filed in the U.S. District Court for the Northern District of Illinois.

According to the charges, Mr. Blackburn and Mr. Banas are accused of creating phony bank statements to disguise the transfer of approximately $19 million from accounts in which Canopy held funds as custodian to make payments to medical providers to Canopy Financial’s operating accounts. Moreover, in 2008 Mr. Blackburn and Mr. Banas are alleged to have refused Canopy employees to have access to bank statements for certain custodial accounts.

Mr. Blackburn, and Mr. Banas and a third individual co-founded Canopy, which reportedly was one of the country’s fastest-growing privately-held companies prior to entering bankruptcy proceedings last November. Canopy Financial was involved in the development and marketing of software programs for banks and health care payers to administer and process payments involving health-related savings and spending accounts.

The charges further allege that Mr. Blackburn and Mr. Banas fraudulently obtained the investors’ funds by making false representations about Canopy’s financial condition, including its revenues, profitability and total number of client accounts. After making these alleged false representations, Mr. Blackburn and Mr. Banas are accused of causing a phony audit report for 2008, which was used to complete a stock purchase agreement.

The crime of wire fraud is codified at 18 U.S.C. 1343. That statute makes it a crime to devise a scheme or artifice to defraud, or to obtain money or property by means of false or fraudulent pretenses, representations, or promises, and transmit or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice. Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine and restitution is mandatory. The Court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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Chicago, Illinois Man Arrested on Tax Fraud Charges

March 3, 2010

Casey Szaflarski has been arrested for allegedly assisting a criminal organization operate gambling activities as well as for alleged tax fraud. According to the indictment, Szaflarski was charged with conducting an illegal gambling business since 2002. Szaflarski is also accused of failing to report over than $255,000 of business income during the time period of 2004 through 2006. In addition, he is accused of failing to file a federal income tax return for 2007.

These charges were brought in a superseding indictment in United States v. Polchan, et al., a criminal case in which seven other defendants have been indicted on racketeering conspiracy charges for alleged criminal activity, including illegal gambling, obstruction of justice, and arson. Szaflasrki has not been charged in the racketeering conspiracy or arson counts. However, he has been charged with conducting an illegal gambling business with co-defendants Michael Sarno and Mark Polchan.

The counts against Szaflarski  carry  maximum terms of incarceration of five years for operating an illegal gambling business; three years for filing false federal income tax returns; and one year for failing to file a federal income tax return. Each count also carries a maximum fine of $250,000, with the exception of the failing to file count; that count is a misdemeanor and carries a maximum fine of $100,000.

What is most concerning about tax crimes is not only the maximum statutory punishments available but also the costs associated with being convicted of such a crime. Defendants convicted of tax offenses must be assessed mandatory costs of prosecution and remain liable for back taxes, interest, and penalties owed. This serves to make the consequences of these crimes all the more serious.

If you have been charged or believe you may be charged with a tax crime or any federal crime, you should get proactive and contact an experienced federal criminal defense attorney to aid you in defending your freedom. The consequences are too serious to ignore.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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