In this episode of Adam Talks, IRA Financial’s Adam Bergman Esq. discusses the Top 10 tax cheats of 2022 as per the IRS, along with details about a law change regarding business meals.
Top Ten Tax Cheats of 2022 Plus No More Free Lunches
Hey everyone, Adam Bergman here, tax attorney and founder of IRA Financial. I got a really, really fun podcast for you today. We are going to go through, as per the IRS, this is not for me, their, their top ten tax cheats of 2022. I love doing this stuff. It’s super fun to kind of go through the list and kind of go through who they think are the top ten worst tax cheats. And I’ll go through the information; they even give names and kind of what these folks did. I believe they do this to really scare us, right? They don’t want to end up on this list, trust me. So, I’m going to spend the first part of the podcast on this, and then I’m going to talk about a law, a rule, in the tax code that has changed regarding business meals, which is pretty, pretty significant, and no one’s talking about it. So, if you’re a small business owner, you’re going to want to pay attention because it’s disappointing and also material to your bottom line.
So, I’m going to start at number ten. Why not let’s go ten, and we’ll end up one. So, the number ten, drum roll, D.C. man sentenced to ten years in prison for attempting to steal more than $31 million from COVID-19 funds. So, clearly we all knew we were going to get one of these COVID-19. This person’s, Elias Eldabbagh, got $31 million, tried to steal $31 million in COVID-19 relief funds; got ten years in jail. He succeeded in stealing $2.4 million from the PPP and the EIDL programs. He used a stolen identity to disguise ownership of his company and same stolen identity to submit most of the PPP and the EIDL applications. He used the money to buy Tesla and pay for personal expenses ranging from hotels to attorney fees. Well, he’s going to need more money for attorney fees. He also converted hundreds of thousands of dollars into cryptos. He had to forfeit his Tesla and 21 bank accounts, and liquidated all his cryptos and give it all back to the U.S. government; and he gets to spend ten years in jail.
Number nine, Las Vegas tax preparer sentenced to prison for multiple fraud schemes. This person, King Isaac Umoren, he was sentenced to 13 years and three months in jail for filing false tax returns, aggravated identity theft, wire fraud, money laundering, and even, for good measure, impersonating an FBI agent. He’s ordered to pay almost $10 million in restitution. He owned and operated a universal tax service as a tax prep business, and he basically used it to engage in all kinds of fraud. He prepared false tax returns, false deductions, fictitious businesses, all that good stuff, and he basically prepared these returns; he also requires clients to use a refund anticipation check program, and then he utilized the money stolen. So, he used his tax preparation business as a vehicle to engage in fraud. And believe it or not, he was able to steal tax and personal information from 12,000 taxpayers and even succeeded in inducing a victim to purchase the company for him for $3.8 million, a lot more than it was worth. So wow.
Next one. San Bernardino man he was sentenced to 14 years in jail for multi-million dollar investment fraud, cheating on his taxes. Christopher Burnell, he’s a former sheriff’s deputy, sentenced 168 months in a federal prison. In order to pay $7.6 million in restitution, he falsely claimed to have accumulated tens of millions of dollars from lawsuits. And as part of the nearly seven-year scheme, he encouraged victims to invest with him, offering exclusive investment opportunities that promised rates of return as high as 100%. And he then lost most of the money gambling and spending on luxury items, including private jets, designer merchandise, luxury cars, all that fun stuff. He reported income from gambling in 2011-2012, more than a million dollars, all of which was offset by losses. And he’s going to jail for 14 years.
Seven. Serial tax fraudster sentenced to more than 19 years in prison. Michael Dexter Little, sentenced to more than 19 years in prison forfeited $12 million, filed a series of false tax returns claiming massive bogus fuel tax credits. He filed the false returns in his own name and the names of his co-conspirators. What they did with the money; they obtained about $12.3 million in fraudulent tax refunds and they attempted to obtain at least $27 million more. And then obviously, wanted to launder their gains and used significant portions of their refunds to purchase real estate and other assets.
Television personality is sentenced to years in federal prison for fraud and tax evasion. You may have heard this; I saw this actually in People magazine. My wife was reading the magazine, I saw this. The “Chrisley Knows Best” couple was found guilty of tax evasion and conspiracy to fraud the IRS in June, resulting in Todd Chrisley being sentenced to twelve years in prison, with three years of supervised release for eight federal felonies, and his wife Julie is being sentenced to seven years in prison, three years supervised release for ten federal felonies. Their accountant was also sentenced to three years in jail. Throughout the conspiracy, the Chrisleys operated a loan-out company to evade collection of half a million dollars in delinquent taxes. The Chrisleys opened and operated corporate bank accounts only in Julie’s name. Once the IRS requested information about the bank accounts, the Chrisleys transferred ownership of the corporate bank account to a relative to further conceal their income from the IRS. He also failed to file tax returns or pay any tax from ’13 to ’16. So, public figures.
Number five. Two promoters of nationwide tax scheme sentenced to prison. Mehef Bey and Iran Backstrom sentenced to eleven years and eight years, respectively, in prison. Additionally, Eurich Griffin III was sentenced to 57 months. The men conspired to promote a nationwide tax fraud scheme to more than 200 participants in at least 19 states, causing more than $64 million in false tax refund claims. Their scheme involved recruiting clients, preparing false tax returns on the client’s behalf, and convincing them their mortgages and other debts entitled them to tax refunds. They use seminars across the country and publicized their scheme, and they were required to pay $1.6 million in restitution, plus they’re heading off to jail for a good amount of time.
Number four. Calabasas man sent 17 and a half years in prison for scamming cannabis vaping business investors out of more than $35 million. So former decathlete for the Philippines, David Bunevacz was sent to 17 and a half years in prison for fraudulently raising more than $45 million from investors; ordered to pay $35 million in restitution going back to 2010. Mr. Bunevacz created various business entities he claimed were involved in the cannabis industry and the sale of vape pens containing cannabis products. Instead of using the funds to finance the business, he misappropriated most of the funds to pay for his own lifestyle, including nice homes, trips to Vegas, jewelry, designer handbags, lavish birthday parties for his daughter. Love all that stuff! Operating through his cannabis company, he raised more than $45 million from 100 victims. Sucks!
Three. D.C. Solar owner sentenced to over eleven years in prison for billion dollar Ponzi scheme. Paulette Carpoff was sentenced to eleven years and three months for her role in the biggest criminal fraud scheme in the history of the Eastern District of California. Carpoff served as Chief Operating Officer of D.C. Solar, where she controlled Ponzi-like payments that hid the company’s lack of third-party lease revenue, caused fake engineering reports that the company sold but never actually built, and helped fool investors into thinking the company was successful.
Number two. Sarasota man sentenced to 23 years in prison for running an $80 million “oasis” FOREX Ponzi scheme. Michael daCorta, he was sentenced to 23 years in prison. As part of the sentence, the court also entered an order of him forfeiture of nearly $2.82 million of proceeds. Nearly eight years, daCorta ran an investment company called Oasis. This company persuaded 700 victims to invest in this, in promissory notes and other means and causing victims to lose over $80 million. daCorta and his conspirators then used a balance of the funds to make Ponzi-style payments to perpetrate the scheme and fund lavish lifestyle, including luxury cars and million dollar homes.
We’re getting number one. Here we are, everyone knows this guy. Lawyer Michael Avenatti sentenced to 14 years in federal prison for stealing millions of dollars from clients and tax fraud. Michael Avenatti, we remember him, he was Stormy Daniels’ attorney; we all remember him with President Trump, he was on CNN, literally, every night and looks like he is going to jail for quite some time. He also has to pay $10.8 million in restitution to his clients and to the IRS. 14-year sentence will be served consecutively to sentences he’s already serving in Southern California, where he’s convicted of stealing proceeds from Stormy Daniels. And he also, obviously had a claim against him for trying to extort millions of dollars from Nike. The latest sentence follows his guilty plea in June. The tax-related charges of four counts of wire fraud. So, he’s our number one tax crook of 2022. Congratulations lawyer Michael Avenatti! Shows living in the limelight isn’t always so much fun. Who knows if he just kind of kept quiet, wasn’t on CNN every night, who knows if he ever would have been caught?
But, what’s the theme? The theme, most of these folks are either filing fake tax returns, PPP fraud, or running Ponzi scheme, like businesses. The IRS will, not only will you go to jail for your crimes, but the IRS will also come after you for failure to file or failure to disclose any income, which most of these folks end up doing. So, this is a “beware” list. You do not want to be on this list. They publish this every year. If you’re interested, you can go on the IRS website. It’s part of their criminal investigation department. And I kind of always summarize these every year. I did it for ’21. It’s always interesting what some of these folks are doing, but again, the same stuff every year. It’s fraud, Ponzi schemes, and either fraud against the government or investors, and then spending the money lavishly and trying to hide the money from the IRS. So, not only are you getting free money by stealing, but you don’t want to pay your taxes. So, maybe a lesson learned, if you’re going to engage in a Ponzi scheme or fraud, pay the IRS, at least you’ll probably reduce your sentence. No, no, no, in all seriousness, don’t do anything illegal. You always get caught. It’s the bottom line. Whether it’s Bernie Madoff or anyone else, you ultimately always, always, always get caught. The Ponzi scheme always, always, always falls apart, so there’s just no point. Why do it? You’re just going to get caught. It’s really not worth it.
That’s the first part of today’s podcast. The second part, I wanted to just briefly mention that the allowance for full deductions for business meals provided by a restaurant has expired. Section 274(n)(2)(d) expired on December 31, 2022. So, as part of COVID, there was extra incentives put in the tax code to allow businesses to write off meals at restaurants, to obviously encourage people to go eat and spend money in restaurants and help the industry. Well, that provision has expired. Now, it could always be extended by Congress and signed into law by the President, but as of January ’23, you are only able to receive a 50% deduction on business meals, not 100%.
So, that’s pretty significant, right? If you do a lot of entertainment, taking out clients, buying lunches for employees, or just going out and eating during work, you’re now only going to get a 50% deduction instead of 100%, which you were able to get in 2022. Again, that could be expanded, or extended, I should say, but as of now, only get a 50% deduction. It’s very strange; I have not heard anything about this. Actually, an accountant told me about this and I researched it. And this is part of the Joint Committee on Taxation that released it. This was the only thing; I actually went through their whole publication and most of the other stuff that expires relates to railroads, solar energy stuff, nothing to do with small businesses, things that would be relevant today, to any podcast that I do, including retirement accounts. But this is, and as a business owner, that’s something that we all should be aware of, that the business deduction is no longer 100%, but it’s 50%. And that’s significant, right? If you’re doing a lot of entertaining and spending $20, $30, $40 grand on meals, you’re only going to be able to deduct half of that, which matters. It’s still a deduction that you were able to use, and now you’re only able to use a 50% deduction.
So, that’s today’s podcast. I hope you enjoyed it. It’s fun going through the top ten list; always enjoy it. I just wanted to do a quick summary. Don’t want to spend too much time on each of the ten cases, but if you want to read more about them, you can go on the IRS website and learn all you want about these top ten cases. Please, please, if you are watching or listening, please do not be on this list. It’s not fun, you do not want to go to jail. And, whether it’s fraud, Ponzi schemes, or the like, you’re going to get caught. So, don’t do it. Do the right thing. You’re going to spend the same amount of time figuring out your fraud or Ponzi scheme, allocate it to something positive and pay your taxes. Get a good accountant, get a good lawyer. Work with a good self-directed retirement company if you’re in the IRA space, and you’re going to be fine and going to be able to sidestep any of these potential criminal and tax fraud IRS investigations.
So, thanks again for watching. If you’re listening, obviously appreciate it. It’s a weekly podcast; it drops every Wednesday and feel free to leave a comment. Obviously, thumbs up would be much appreciated and subscribe to our YouTube channel if you’re watching on YouTube because it is a great way to get updated content. We drop three to four videos a week, three podcasts, so if you’re bored, you can’t sleep and you want to just listen to me talk about self-directed retirement topics, well, this is the place to be. So thanks again. Have a great, great day and talk to everyone again next week. Take care.