26 U.S.C. § 7201 defines what is tax evasion.  It states in relevant part that any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.

Federal prosecutors might also add additional charges beyond tax evasion. Those charges could include conspiracy charges, under 18 U.S.C. § 371, or tax fraud under 26 U.S.C. § 7206.  The United States Sentencing Commission (USSC) recently released its Tax Fraud Report for fiscal year 2023. It states that off the 64,124 cases reported to the Commission in fiscal year 2023, 363 involved tax fraud (down 27% since FY 2019).  It is unclear if this downward trend will continue.

Recently, a man in New Jersey plead guilty to tax evasion. According to the Department of Justice, “for tax years 2015 and 2016, Matthew Tucci, of West Long Branch, NJ, filed tax returns that stated he owed more than $2 million in taxes for both years. Despite admitting that he owed those taxes, Tucci did not fully pay them when they were due. Instead, Tucci purchased real estate and engaged in a series of transactions designed to conceal his interest in those properties.

In 2017, the IRS sent notices to Tucci that he owed taxes, interest, and penalties for 2015 and 2016. After receiving these notices, Tucci transferred multiple properties to an entity owned by another individual, but he continued to exert control over at least two of them. Of the two properties Tucci continued to control, he sold one and refinanced the other. Tucci used the proceeds from these transactions to pay his personal expenses rather than his tax debts. In 2019, Tucci submitted documents to the IRS that falsely claimed that he had no connection to the entity that owned the 12 properties.

He faces a maximum penalty of five years in prison as well as a period of supervised release, restitution, and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.”

In another case, a Florida businessman was sentenced to prison for tax evasion.  According to the  Department of Justice, “David Albert Fletcher, of Deltona, Florida owned and operated furniture liquidations businesses, including Century Liquidators. For tax years 2004 through 2013, Fletcher did not timely file his federal income tax returns or pay the taxes he owed. After an audit, the IRS assessed a total of $1.7 million in taxes, interest, and penalties against him.

To evade collection of these taxes, Fletcher concealed his income and assets from the IRS. For example, Fletcher used nominees to hide his purchases of luxury vehicles, including Rolls Royces. Fletcher also filed false income tax returns that understated his income by several million dollars, and when an IRS special agent interviewed him, Fletcher falsely represented the amount of income he earned.

In addition to his prison sentence, U.S. District Judge Wendy Berger for the Middle District of Florida ordered Fletcher to serve three years of supervised release and to pay approximately $7,112,689 in restitution to the United States.”

Recently, Meg Strickler was able to ensure that no tax evasion charges were filed against her client.  Contact us if you think you might be facing tax evasion or tax fraud charges.  We are here to help.

In investigating PPP loan fraud, the government first looks at the application itself.  How many employees does the company have?  Does that number match their payroll tax filings?  Are the 941‘s the same as what is on file at the IRS?  Has the owner(s) been convicted of or pled guilty to a felony with the past 5 years?  Do the bank statements submitted on the PPP loan application match the actual bank statements? Are there business expenses on the bank statements?  Was the bank account in a business checking account? When was the entity created?  Did the company apply for more than one loan?  Does the individual owner have multiple entities and apply for multiple loans?  Any inaccurate statements on the application can result in a charge under Under 18 U.S.C. § 1344 (bank fraud) – making false statements to an FDIC-insured financial institution, or making false statements to the SBA.  In addition, the CARES Act also has requirements for how companies use, and account for the use of, PPP loan funds.  Some of the more outrageous PPP loan fraud prosecutions have resulted due to individuals buying Range Rovers, Lamborghinis and rolex watches with PPP loan proeeeds, i.e. converting PPP loan funds for personal use.  Also, when seeking forgiveness for loans, companies must be very careful in what they submit.  Any false documentation submitted can result in prosecution.

So, should the government be inquiring about your PPP loan(s) or EIDL loans or any disaster relief funds, it is important to contact us immediately.  Being evasive or being unable to produce documentation of PPP Compliance will only increase issues that you will be facing.  Allow Conaway & Strickler, PC to help you with expert advice from experienced federal counsel. We are very familiar with the federal criminal investigative process with the SBA-OIG, IRS and the DOJ.

Conaway & Strickler, PC handles PPP loans nationwide. Meg Strickler has 25 plus years experience fighting federal criminal cases in the district courts across the country.

What is a Suspicious Activity Report (SAR)?

A Suspicious Activity Report (SAR) is a document that financial institutions are legally required to file with the Financial Crimes Enforcement Network (FinCEN) when they detect potentially suspicious behavior involving financial transactions. Once filed, these reports are sent to FinCEN, a division of the U.S. Department of the Treasury, which shares the information with law enforcement agencies for further investigation if necessary.

Why Do Banks File SARs?

Banks must comply with a variety of regulations designed to prevent financial crimes. One of the core elements of these regulations is monitoring customer transactions for anything that might indicate illegal or suspicious activity. A SAR is typically filed when a bank suspects that a transaction, or series of transactions, might involve:

• Money laundering: Attempting to disguise the origins of illegally obtained money by passing it through a legitimate banking system.
• Fraud: Including wire fraud, identity theft, and other deceptive financial activities.
• Structuring: Breaking down large sums of money into smaller deposits to avoid triggering reporting requirements (also known as “smurfing”).
• Unexplained large transactions: Transactions that don’t align with an individual’s or business’s typical activity or appear inconsistent with known financial patterns.

Common Triggers for SARs

Financial institutions are trained to spot red flags, and there are a number of scenarios that could trigger a SAR filing. Here are some of the most common:

1. Unusually Large Transactions: If an individual or business is suddenly moving unusually large amounts of money, especially in cash, this can raise red flags. Large deposits, withdrawals, or transfers that don’t align with normal activity patterns may prompt the bank to investigate further.
2. Frequent Cash Deposits Below $10,000: To avoid the $10,000 threshold that triggers an automatic Currency Transaction Report (CTR), some individuals break down larger sums into smaller deposits (a practice called structuring). If a bank detects this behavior, it will likely file a SAR.
3. Wire Transfers to High-Risk Countries: International wire transfers to or from countries that are known for terrorist activity, money laundering, or lacking robust financial regulations may result in a SAR filing.
4. Multiple Accounts Under One Name: Using multiple accounts to shuffle money back and forth—especially if the accounts seem unrelated to legitimate business or personal activities—can appear suspicious.
5. Account Activity Inconsistent with Known Business Practices: If a company typically processes small, regular transactions and suddenly starts handling large, irregular amounts, it might trigger suspicion. Likewise, if a personal account shows business-level activity, this could raise alarms.
6. Use of Shell Companies: Banks scrutinize accounts associated with shell companies that lack a clear purpose or business activity, as they are often used in money laundering schemes.
7. Unexplained Source of Funds: If the origin of deposited funds is unclear, or if large amounts of money are transferred without any legitimate explanation, the bank may file a SAR.

The Impact of a SAR Filing

When a bank files a SAR, it is confidential. The individual or business subject to the report is not directly informed; However, the bank may decide to take action based on its findings, which can include:

• Account closures: If the bank believes the activity is risky or potentially illegal, it may close your account or freeze any available funds.
• Increased monitoring: Your account may come under closer scrutiny, with more restrictions placed on transactions.
• Law enforcement involvement: If the behavior in question warrants it, the SAR could lead to a broader investigation by federal or state law enforcement agencies.

What to Do if You Believe a SAR Has Been Filed Against You

While you won’t be directly informed if a SAR has been filed, you may suspect something is amiss if your bank account is frozen, closed, or you’re contacted by law enforcement regarding your financial activity. If you find yourself in this situation, here are some steps to take:

1. Seek Legal Counsel: The most important thing you can do is consult with an experienced criminal defense attorney. A SAR filing could be the beginning of a serious investigation, and you’ll want legal guidance to protect your rights and interests.
2. Gather Financial Records: Be prepared to provide your attorney with all relevant financial records. This can help explain the nature of your transactions and demonstrate that they are legitimate.
3. Do Not Attempt to Explain Yourself to the Bank: Anything you say to the bank could be misinterpreted or used against you in a later investigation. Your attorney will be able to navigate these communications appropriately.

A Suspicious Activity Report can be a precursor to serious legal trouble, but it’s important to remember that it is not an accusation of a crime. Banks are required to report anything that appears suspicious, even if the behavior is ultimately lawful. If you find yourself facing consequences related to an SAR filing, don’t wait—contact us today for a consultation and take control of your situation before it escalates. If you are facing financial crime allegations, our skilled team of criminal defense attorneys is here to help.

On March 10, 2022, Garland announced Associate Deputy Attorney General Kevin Chambers as the Director For Covid-19 Fraud Enforcement.

In August, 2022, President Biden signed laws that give the Department of Justice and other federal agencies more time to investigate and prosecute Covid-19 fraud. It extended the statute of limitations for fraud charges involving PPP and EIDL fraud to ten years.

And on September 14, 2022, the DOJ announced the establishment of three Strike Force teams created to enhance the Department’s existing efforts to combat and prevent COVID-19 related fraud. The Strike Force teams will operate out of U.S. Attorney’s Offices in the Southern District of Florida, the District of Maryland, and a joint effort between the Central and Eastern Districts of California.

Concerned about PPP loan or EIDL loan fraud investigations? Our firm has represented both companies and individuals facing questions from the bank or investigators. Please contact us before interacting with any investigators or agents.

With all of this going on, the US Attorney’s office increased its prosecutions of individuals of white collar crimes in the year 2021. White collar charges like fraud, theft, corruption, bribery, environmental crime, tax fraud, health care fraud, procurement fraud, money laundering, PPP loan fraud, etc will continue to get more attention from the Department of Justice.

What does this mean? It means that investigations of any sort need to be taken seriously and that you should contact a lawyer immediately if any wrongdoing is alleged.

Conaway & Strickler, PC has a long history of handling fraud cases of all varieties and is well equipped at fighting the DOJ in their overzealous prosecutions. Please feel free to contact us so that we can help you avoid future headaches.