Oct 18th 2013
Pennsylvania Lawyer Indicted on Tax and Identity Theft Charges
Randolph Scott of Doylestown, Pennsylvania, an attorney whose practice included estate and probate matters, was charged by Indictment on October 3, 2013, with defrauding a client's estate of more than $1.7 million. Scott maintained a law office - Randolph Scott Associates - in Warrington, Pennsylvania. He is charged with one count of mail fraud, two counts of aggravated identity theft, one count of tax evasion, one count of attempting to interfere with administration of internal revenue laws, and three counts of failure to file income tax returns.
According to the indictment, between December 2005 and October 2011, while representing the estate of John C. Bready, Scott diverted approximately $1,758,193 of estate funds to his law office accounts. Because the estate was valued at more than $6 million at the time of Bready's death in 2005, federal law required that a federal estate tax return be filed which would have resulted in approximately $520,351 being paid to the IRS. The indictment alleges that Scott purposefully failed to file the required form in order to maintain sufficient money in the estate to pay its beneficiaries and to avoid detection of the theft.
The indictment further alleges that after the estate's executor died in 2009, Scott failed to disclose the death so that the investment account manager would continue to send the executor's checks to Scott's law firm. Scott would then allegedly forge the executor's signature and deposit the checks into his law firm's account.
It is further alleged that Scott has the successor executor sign a document renouncing the position of successor executor so that Scott could continue to forge the signature of the deceased executor and divert money belonging to the estate. In addition to the charges, the indictment contains a notice of forfeiture seeking $1,758,193.
If convicted of all charges, Scott faces a mandatory minimum of two years in prison, consecutive to any other term of imprisonment imposed on the mail fraud count, resulting in thirty-one years' maximum incarceration, possible restitution to the IRS in the amount of $520,351, possible restitution to the estate in the amount of $1,758,193, three years of supervised release, a $1.4 million fine, and a $500 special assessment.
Source: US Attorney's Office – Pennsylvania
New Jersey–Based Financial Advisor Sentenced to Twenty-Seven Months in Prison for Defrauding Elderly Investors
A Somerset County, New Jersey–based financial advisor was sentenced September 25 to twenty-seven months in prison for stealing $138,000 from two elderly investors and funding his lavish lifestyle with money he claimed to be investing in conservative securities and his business.
Ralph A. Saviano of Bridgewater, New Jersey, previously pleaded guilty before US District Judge Freda L. Wolfson in Trenton federal court to an information charging him with wire fraud.
According to documents filed in this case and statements made in court, Saviano, an investment advisor who had worked in the financial industry for more than forty years, targeted clients through his association with Centaurus Financial Inc., and later through Saviano Financial Group (SFG), from as early as July 2007 through October 2012.
During this time, Saviano had approximately 300 clients, many of whom were unsophisticated investors between the ages of sixty and eighty-five, whom he had known for many years and who trusted his financial experience and advice. Saviano admitted he targeted clients he knew were about to receive significant amounts of cash, such as maturing certificates of deposit (CDs), and proposed that they invest those funds in low-risk investments or in his business, SFG. Saviano said he would use these "business loans" solely for business expenses.
Saviano admitted that in May 2012, an eighty-five-year-old client gave him approximately $63,000 from a mature CD that she was told would be invested in two investment funds. Saviano accompanied the client to her bank to redeem the CD and instructed her make the proceeds from the CD payable to him. In June 2012, another of Saviano's clients – eighty years old and suffering from cancer – gave Saviano approximately $75,000 she inherited from a recently deceased relative, making the check payable to "cash" with the words "financial investment" in the memo field.
Instead of doing as he claimed, Saviano used the funds to repay prior "loans" from other clients in Ponzi-scheme fashion and to pay for various personal expenses, including at least $33,000 for granite countertops and other home improvements; $18,000 in cash payments to himself and family members; $10,000 in personal mortgage and rent payments; thousands more in jewelry, clothing, a family vacation to Aruba; and a theater donation.
At the plea hearing on June 5, Judge Wolfson entered a consent judgment and order of forfeiture in the amount of $699,926.51, which constitutes the proceeds Saviano obtained from his known investor victims as a result of his offense.
In addition to the prison term, Judge Wolfson sentenced Saviano to three years of supervised release and ordered restitution of $699,926.51.
In a parallel investigation, the US Securities and Exchange Commission on September 6, 2013, issued an order instituting settled administrative proceedings against Saviano. In its order, the SEC barred Saviano from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. It also barred him from participating in any offering of a penny stock, including acting as a promoter, finder, consultant, agent, or other person who engages in activities with a broker, dealer, or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.
Source: US Attorney's Office – New Jersey
Additional Charges Brought against Tax Return Preparers Previously Charged with Helping Clients Hide Millions in Offshore Israeli Banks
David Kalai and Nadav Kalai face additional charges after a federal grand jury in the Central District of California returned a second superseding indictment October 17. The superseding indictment charged each with two counts of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR). In June 2012, the grand jury charged David Kalai, Nadav Kalai, and David Almog with conspiring to defraud the United States, the Department of Justice, and IRS announced October 18.
As alleged in the June 2012 superseding indictment, David Kalai and Nadav Kalai were principals of United Revenue Service Inc. (URS), a tax preparation business with twelve offices located throughout the United States. David Kalai worked primarily at URS' former headquarters in Newport Beach, California, and later at URS' location in Costa Mesa, California. Nadav Kalai, who is David Kalai's son, worked out of URS' headquarters in Bethesda, Maryland, as well as URS locations in Newport Beach and Costa Mesa. David Almog was the branch manager of the New York office of URS and supervised tax return preparers for URS East Coast locations.
The superseding indictment further alleged that the coconspirators prepared false individual income tax returns which did not disclose the clients' foreign financial accounts nor report the income earned from those accounts. In order to conceal the clients' ownership and control of assets and conceal the clients' income from the IRS, the coconspirators incorporated offshore companies in Belize and elsewhere and helped clients open secret bank accounts at the Luxembourg locations of two Israeli banks referred to as Bank A and Bank B in court documents. Bank A is a large financial institution headquartered in Tel-Aviv, Israel, with branches worldwide. Bank B is a midsize financial institution headquartered in Tel-Aviv, with a worldwide presence on four continents.
The indictment also alleged the coconspirators incorporated offshore companies in Belize and elsewhere to act as named account holders on the secret accounts at the Israeli banks. The coconspirators then facilitated the transfer of client funds to the secret accounts and prepared and filed tax returns that falsely reported the money sent offshore as a false investment loss or a false business expense. The coconspirators also failed to disclose the existence of, and the clients' financial interest in, and authority over, the clients' secret accounts and caused the clients to fail to file FBARs with the Department of the Treasury.
In addition to the earlier charges, the superseding indictment alleges that David Kalai and Nadav Kalai each failed to file a FBAR for calendar years 2008 and 2009 concerning a foreign account held at Bank A in Luxembourg. The second superseding indictment alleges that both David Kalai and Nadav Kalai had a financial interest, signature, or other authority over a foreign financial account that had an aggregate value of more than $10,000 during 2008 and 2009.
If convicted, each defendant faces a maximum of five years in prison for each count and a maximum fine of $250,000 for each count.
Source: US Department of Justice