Tax partner at major international firm charged with tax crimes

A Newark, NJ, federal grand jury has returned an indictment charging Stephen A. Favato, a resident of Point Pleasant Beach, NJ, and a partner at a major international accounting firm, apparently, BDO Seidman, with tax charges for attempting to assist one of his clients evade income taxes, the Justice Department and Internal Revenue Service (IRS) announced Wednesday.

Favato, a partner in the accounting firm's Woodbridge, NJ, office, was charged with tax evasion regarding the federal income taxes of Daniel Funsch and his spouse. Funsch (the client) is the president of a corporate client of the accounting firm, a fragrance manufacturer with its headquarters in Norwood, NJ. Favato was also charged with one count of corruptly endeavoring to obstruct and impede the administration of the Internal Revenue laws and one count of willfully aiding and assisting in the preparation and filing of the client's false 2002 tax return.

According to the indictment, from Fall 2001 through April 2005, Favato attempted to obstruct the IRS by, among other conduct, advising the client on how to include false items on the client's 2002, 2003, and 2004 joint income tax returns. Additionally, Favato knowingly prepared and signed false joint tax returns for the client for these years.

According to the indictment, Favato advised the client to significantly reduce the salary payments that the client was receiving from the corporation and to instead have this compensation paid to the client's limited liability company, Great Escape Yachts LLC, in the form of purported lease payments for the client's yacht. However, the corporation had not leased the yacht. This recommended course of action enabled the client to fraudulently deduct personal yacht expenses as business expenses. In addition, the indictment alleges that Favato advised the client on how to fraudulently eliminate a portion of the gain on property that the client sold in 2002 and 2004. Finally, the indictment alleges that Favato advised the client to report inflated charitable contributions on the client's 2003 tax return.

 

You may like these other stories...

IRS audits less than 1 percent of big partnershipsAccording to an April 17 report from the Government Accountability Office (GAO), the IRS audits fewer than 1 percent of large business partnerships, Stephen Ohlemacher of the...
Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.