Joseph M. Tages Indicted for Engaging in an Alleged Health Care Fraud Scheme and Federal Income Tax Fraud

August 13, 2011

The Federal Bureau of Investigation (FBI) on August 12, 2011 released the following:

“CHICAGO— An Aurora physician was indicted for allegedly engaging in federal tax and health care fraud in connection with operating a medical clinic he owned, federal law enforcement officials announced today. The defendant, Joseph M. Tages, was charged in a 12-count indictment returned yesterday by a federal grand jury. Tages allegedly diverted more than $750,000 in cash receipts from his medical practice and failed to report the income on both corporate and individual federal income tax returns for the years 2004-06, thus avoiding payment of more than $260,000 in taxes he owed on that income. He also allegedly defrauded various health insurance providers, including labor union health and welfare funds, by submitting reimbursement claims falsely stating that he regularly saw patients for follow-up office visits on Mondays, two days after performing such outpatient procedures as removing genital warts.

Tages, 65, of Plainfield, will be arraigned at a later date in U.S. District Court in Chicago. Tages owns West Suburban Medical and Surgical Associates S.C., and operates the Aurora Health center (AHC) on Weston Avenue in Aurora. He was charged with six counts of filing false corporate and individual income tax returns, two counts of mail fraud, and four counts of making false statements involving a health care benefit program. The indictment also seeks forfeiture of at least $10,000.

The charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, together with Robert D. Grant, Special Agent in Charge of the Chicago Office of Federal Bureau of Investigation; Alvin Patton, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and James Vanderberg, Special Agent in Charge of the U.S. Department of Labor Office of Inspector General in Chicago.

The tax charges allege that Tages diverted a total of $765,593 in cash receipts from AHC and under-reported the business’s income on its corporate tax returns for 2004-06. As a result, AHC failed to pay approximately $267,956 in corporate taxes owed to the IRS. At the same time, he allegedly failed to report the diverted cash on his personal income tax returns by a total of $766,772 during those three years. As he result, he failed to pay approximately $282,787 in personal taxes owed to the IRS.

Between 2006 and 2009, Tages allegedly defrauded various health insurance providers by falsely claiming reimbursement totaling at least $10,000 for services that he did not provide. According to the indictment, between 2001 and 2009, Tages diagnosed genital condyloma on numerous male patients at his affiliated Latino Institute of Surgery, and generally performed wart removal procedures on Saturdays. That same day, he allegedly falsely noted in some patients’ files that he had already seen the patient in his office on the upcoming Monday. Subsequently, Tages submitted insurance claims falsely stating that patients were seen in his office when they were not, the indictment alleges.

Between 2006 and 2009, the indictment alleges that Tages diagnosed gastro esophogeal reflux disease, also known as GERD or acid reflux, in numerous patients and caused others to perform an esophagogastroduodenoscopy, or EGD, procedure on Saturdays in which a bendable tube with a camera is inserted through a patient’s mouth to examine the esophagus, stomach and small intestine. Again, that same Saturday he allegedly falsely noted in some patients’ files that he had already seen the patient in his office on the upcoming Monday. Tages then submitted insurance claims falsely stating that patients were seen in his office when they were not, the charges allege. The government is being represented by Assistant U.S. Attorney Kaarina Salovaara.

The charges in the indictment carry the following maximum penalties on each count: mail fraud—20 years and a $250,000 fine; making false statements involving health care programs—five years in prison and a $250,000 fine; and filing false corporate and individual income tax returns—three years in prison and a $250,000 fine, and restitution is mandatory. 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, however, the court must determine a reasonable sentence to impose under the advisory United States Sentencing Guidelines.

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 List 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.

Bookmark and Share


Theodore L. Freedman, a Lawyer, Indicted in Manhattan Federal Court with Four Counts of Tax Fraud in Connection with Alleged False and Fraudulent Statements to the IRS

July 15, 2011

The U.S. Attorney’s Office Southern District of New York on July 14, 2011 released the following:

“FORMER PARTNER AT MAJOR INTERNATIONAL LAW FIRM CHARGED IN MANHATTAN FEDERAL COURT WITH TAX FRAUD VIOLATIONS

PREET BHARARA, the United States Attorney for the Southern District of New York, and CHARLES R. PINE, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal investigation Division (“IRS-CID”), announced that THEODORE L. FREEDMAN, a former senior partner at a major international law firm (the “Law Firm”), was charged yesterday in Manhattan Federal Court with four counts of tax fraud in connection with false and fraudulent statements he allegedly made on his tax returns that resulted in more than $1 million in losses to the IRS. Among other things, FREEDMAN, 63, misrepresented his partnership income at the Law Firm by approximately $2 million, and fraudulently claimed over $500,000 in expenses for a sole proprietorship law practice that did not exist. FREEDMAN voluntarily surrendered to authorities this morning, and will be arraigned before U.S. Magistrate Judge JAMES C. FRANCIS IV later today.

Manhattan U.S. ATTORNEY PREET BHARARA stated: “As alleged, Theodore Freedman, an accomplished and well-compensated attorney, abdicated his legal and ethical responsibilities by cheating on his taxes. Just like every ordinary citizen, privileged professionals have to pay their taxes too, and we will continue working with our partners at the IRS to ensure that they do.”

IRS Special Agent-in-Charge CHARLES R. PINE said: “To build faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share. The IRS-Criminal Investigation Division, together with the Department of Justice will investigate and prosecute those who violate our tax system.”

According to the Indictment filed yesterday:

FREEDMAN was a senior partner in the New York office of a major United States law firm, where he was a member of the Law Firm’s restructuring group. In that capacity, FREEDMAN received income that was calculated as a percentage of the Law Firm’s partnership income for a given year. The Law Firm issued FREEDMAN, the IRS form that reports an individual partner’s share of income or loss from the partnership. According to the form, FREEDMAN’s aggregate income for calendar years 2001 through 2004 was approximately $5,388,699.

As charged in the Indictment, FREEDMAN self-prepared, signed, and filed tax returns for calendar years 2001 through 2004. Rather than reporting the true and correct amount of partnership income he received from the Law Firm for the years in question, FREEDMAN falsely and fraudulently under-reported his income in the aggregate amount of approximately $2,097,211.

In addition, FREEDMAN also attached to each of his tax returns for those same years a Schedule C, which is supposed to report the amounts of income and expenses, and the resulting net profit or loss, for a taxpayer’s self-owned business. On each of the Schedules C for these tax years, he falsely and fraudulently claimed to have sustained significant losses for a fictitious sole proprietorship — a legal practice — in the total aggregate amount of approximately $542,358. That sole proprietorship was fictitious.

In total, FREEDMAN’s false statements on his self-prepared returns resulted in a tax loss to the IRS of more than $1 million.

FREEDMAN faces a maximum sentence of three years in prison on each of the tax fraud counts, for a total maximum of 12 years in prison.

Mr. BHARARA praised the work of the Internal Revenue Service, Criminal Investigation Division.

This case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney E. DANYA PERRY is in charge of the prosecution.

The charges contained in the Indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.”

To find additional federal criminal news, please read The 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 List 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.

Bookmark and Share


James E. Moss, Who Owned and Operated “Flash Tax,” was Federally Indicted with Four of His Employees By A Federal Grand Jury Sitting in Montgomery, Alabama

June 16, 2011

U.S. Department of Justice on June 16, 2011 released the following press release:

Five Alabama Tax Return Preparers Charged with Tax Fraud

WASHINGTON – A group of five tax return preparers were indicted in the Middle District of Alabama on tax fraud charges, the Justice Department and Internal Revenue Service (IRS) announced today. James E. Moss, who owned and operated “Flash Tax,” was charged with four of his employees by a grand jury sitting in Montgomery, Ala. Moss along with Lutoyua N. Thompson, Chiquita Q. Broadnax, Avada L. Jenkins and Melinda M. Lambert were each charged with one count of conspiracy to defraud the United States and 27 counts of assisting in the preparation of false tax returns.

According to the indictment, the group conspired to knowingly place false information on taxpayers’ returns in order to obtain higher tax refunds from the IRS. The indictment further alleges that the group sought at least $129,266 in fraudulent tax refunds from the IRS.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, each defendant faces a maximum of 86 years in prison.

The case is being investigated by IRS-Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Todd Brown and by Tax Division Trial Attorneys Charles M. Edgar, Jr. and Michael Boteler.”

To find additional federal criminal news, please read The 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 List 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.

Bookmark and Share


Several Indicted for Alleged Participation in $50 Million Aircraft Scheme

September 9, 2010

The owner of an aircraft leasing company, who was indicted earlier this year on commercial bribery charges, his corporation, and five new individual defendants are facing an expanded federal indictment alleging that they engaged in a fraudulent financing scheme that raised more than $50 million. Several defendants, including one additional defendant not charged in the fraud scheme, were charged with obstructing a Securities and Exchange Commission (SEC) lawsuit against the leasing company and its owner based on the allegedly fraudulent aircraft investment deals.

In all, seven individuals and a corporation were charged in a 21-count superseding indictment returned today by a federal grand jury. An eighth man, who is cooperating with the government, pleaded guilty last month to fraud and tax evasion, admitting that he accepted more than $400,000 in bribes as part of the scheme.

Typically, when someone is cooperating with government officials, that individual is providing information to the government in regards to the alleged scheme in order to get a plea arrangement or reduced sentence. Under this cooperation, the individual usually must provide all the information he knows regarding the alleged scheme. This usually results in the investigation and indictment of others based on the individuals’ information about the alleged scheme and those involved.

Brian Hollnagel, 37, of Chicago, the owner, president and chief executive officer of the defendant corporation, BCI Aircraft Leasing, Inc., was charged with 12 counts of wire fraud, two counts each of tax fraud and obstruction of the SEC lawsuit, and one count of bribery. Hollnagel has remained free on a $1.7 million secured bond since he was arrested last March on one count of wire fraud in connection with the commercial bribery scheme alone.

BCI Aircraft Leasing, Inc., which buys, sells and leases commercial airplanes and operated first in Naperville and later Chicago, was charged with 11 counts of wire fraud, two counts of obstructing the SEC lawsuit, and one count of bribery.

A corporation may be indicted for alleged illegal behavior, even though technically it is not a “person.” The law is clear that a corporation may be held accountable for alleged illegal acts, in addition to those individuals running the company.

Several others were indicted as well, including: Craig Papayanis, 49, of Moorpark, Calif., who held various positions at BCI, including managing director and chief financial officer, who was charged with six counts of wire fraud; Jason R. Hyatt, 37, of Winfield, Ill., an owner of Hyatt Johnson Capital, LLC., an investment company that offered and sold to its customers investments totaling more than $20 million in BCI aircraft financing deals; two counts of wire fraud and one count of obstructing the SEC lawsuit; William Hatamyar, 55, of Edmond, Okla., president of AirBanker, a division of Chicago-based Bridgeview Bank Group, where he acted as the loan officer on bank loans and a credit line to BCI totaling more than $30 million; two counts of wire fraud, and one count each of false statements to a financial institution and bribery; Jeffrey Meyer, 52, formerly of suburban Lake Zurich, who was BCI’s controller from 2003 to 2006; two counts of wire fraud; Martin Collier, 64, of Chicago and Woodland Hills, Calif., who was the chief financial officer, among other positions, at BCI; two counts of wire fraud and one count each of obstructing the SEC lawsuit and perjury; and Robert Carlsson, 41, of Chicago, a licensed securities broker who raised money for BCI from outside investors; At various times, he was a managing director for BCI, was chief executive officer of BCI Capital Management, and owned 21 Capital Group, Inc., a registered securities broker-dealer; two counts of obstructing two separate SEC examinations of him and his company, 21 Capital Group.

According to the indictment, beginning no later than early 2000 and continuing through at least early 2009, Hollnagel, BCI, Papayanis, Hyatt, Hatamyar, Meyer, Collier, and others allegedly fraudulently obtained and retained financing and other funds for BCI and enriched themselves to the detriment of investors, lenders and others. It is also alleged that the individuals concealed the scheme by providing false testimony and information in connection with the SEC’s lawsuit, misleading and attempting to mislead BCI’s investors and independent auditors, and creating phony accounting records.

If these individuals proceed with a trial, the government does not have to prove every crime beyond a reasonable doubt. Legally, as the long as the government can convince a jury of one of the crimes, the individual(s) will be found guilty. Unfortunately at sentencing, the judge will be able to consider every bad act, which includes the alleged crimes that the individual was not found guilty of, when determining the length of the sentence. Meaning, even though the individual was not found guilty of those alleged crimes in a court of law, the judge may still consider those when determining the sentence. Such practice is extremely unfair to the individual, since they were not found guilty by a jury, however, it is legal and it occurs every day in federal sentencing.

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.

Bookmark and Share


Missile Defense Engineer Charged With Accepting Bribes

May 30, 2010

A Scottsboro man, Steven Earl Bryant, has been charged with accepting bribes while working as an engineer with the U.S. Army Space and Missile Defense Command in Huntsville. Furthermore, he was charged with evading payment of taxes on the income derived from the bribes. The two-count information charged Bryant with being a public official accepting bribes relating to Space and Missile Defense Command contracts with private companies for the provision of material for missile defense research.

According to the information, Bryant was a public official for 8 years while he worked as an engineer with the missile defense command. In that capacity, he served as a Technical Representative for Contracting Officers on Space and Missile Defense Command contracts. These contracts were for material used in missile defense research and were supplied by private businesses. Bryant monitored contracts between the missile defense command and companies owned by Maurice Subilia, Dennis Darling and Paul Hurlburt, all of whom have since plead guilty on other charges.

Subilia and Hurlburt pleaded guilty in 2009 to conspiracy charges in connection to procurement fraud in contracts with the missile defense command in Huntsville. In addition, Subilia pleaded guilty to money laundering and bribery charges, admitting that between 2000 to 2007 he paid more than $1.2 million in bribes to two missile defense command employees, Michael Cantrell and Douglas Ennis. Cantrell was the director and Ennis the deputy director for the Joint Center for Technology Integration at the missile defense command. Both men pleaded guilty in 2008 to various charges related to the procurement fraud scheme.

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.

Bookmark and Share


New York City Man Accused of Bid Rigging Conspiracy

April 1, 2010

An indictment has been unsealed in Manhattan charging a former contractor of participation in a bid-rigging conspiracy pertaining to contracts at New York Presbyterian Hospital (NYPH). In addition, he is charged with filing a false tax return.

The three-count indictment charges David Porath with engaging in a conspiracy to rig bids on NYPH contracts for re-insulation services. Porath and his co-conspirators are accused of creating the false appearance that NYPH awarded contracts based on competitive bids by submitting fraudulently high bids by competitor companies, thereby allowing Porath’s company to appear as the lowest bidder and thus win the contracts.

It is further alleged that Porath and a co-conspirator, Andrzej Gosek, attempted to defraud the IRS. It is alleged that Gosek, the owner of an asbestos abatement service company, received checks made out to companies in Brooklyn, N.Y., purportedly for work done at NYPH by those companies as sub-contractors to Porath’s company. However, the government contends that these companies had not performed such work. Moreover, based upon these checks, Porath is accused of taking false deductions on both his company’s and his personal federal tax returns, thereby fraudulently reducing his taxable income.

According to the FBI press release pertaining to this indictment, the bid-rigging violation that Porath is charged with carries a maximum penalty of 10 years in prison, and a $1 million fine. The tax fraud conspiracy violation that Porath and Gosek are charged with carries a maximum penalty of five years in prison, and a $250,000 fine. Finally, Porath’s alleged false subscription on his tax return carries a maximum penalty of three years in prison and a $100,000 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.

Bookmark and Share


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.

Bookmark and Share