Tax evasion is a serious crime. It is an enormous task and undertaking that rarely succeeds unless exorbitant monetary penalties and prison time are the ultimate goal. Taxpayers risk everything when they attempt to conceal any part of their financial portfolio, including any amount of their assets, from the IRS.
In September of 2013, a federal grand jury in Anchorage, Alaska, returned an indictment charging Michael D. Brandner, an Anchorage plastic surgeon, on three counts of tax 
evasion and seven counts of wire fraud. Interestingly, Dr. Brandner’s tax evasion and fraud crimes were not necessarily a product of trying to cheat the IRS. Instead, Brandner purposefully devised his scheme to conceal millions of dollars of assets from his wife of 28 years who was divorcing him. If convicted, Brandner faces a statutory maximum sentence of five years in prison for each of the three tax evasion charges and a statutory maximum sentence of 20 years in prison for each of the seven wire fraud charges. Sentencing is set for March 7, 2016 and Dr. Brandner faces a maximum sentence of 95 years and a fine of up to $1.75 million for his crimes.
According to the indictment, Brandner engaged in multiple activities to evade taxes for three years by filing false tax returns for 2008, 2009 and 2010. In the three false returns, Brandner failed to report foreign interest income of more than $309,000 regarding financial accounts in Panama and Costa Rica where he had signature authority. Allegedly, Brandner attempted to evade more than $600,000 in federal income taxes over the three years as well as making false and misleading statement to IRS special agents.
After the divorce was filed, before his wife could identify and safeguard by court order (injunction) any of his assets, Brandner drove to Central America from Alaska with five cashier’s checks amounting to over $3,000,000. He also hid a thousand ounces of gold in a Costa Rican safe deposit box. and opened another account in Panama under the name of a dummy corporation. By 2008, he had moved $4.6 million into the latter account.
The foreign bank accounts, assets, or related income were never revealed to the divorce court or even Brandner’s divorce attorney. Even more to his detriment, he also did not disclose any of it to the IRS . Brandner explained that he could not convert the assets of his Panamanian dummy corporation into cash until 2013. He also presented a phony promissory note to the divorce court in order to deceive and mislead it into believing he had invested more than $3 million in the sham foreign corporation.
Once his divorce became final in 2011, Dr. Brandner transferred more than $4.6 million of his Central American assets to the United States. Soon after, these assets were seized by federal Homeland Security agents. He then lied to them about his control of the funds, having never reported the money to the IRS. Because of undisclosed earnings on the foreign accounts, the “good doctor” owed the IRS $600,000 in taxes for 2008, 2009 and 2010.
Taxpayers sign their tax returns, like many legal documents, under penalty of perjury. The chance of an audit always exists. Most tax audits are civil and have little risk of criminal liability. Still, most criminal tax cases start with a civil audit. The IRS Code draws a distinction between non-willful and willful acts, with the possibility of greater penalties or even prosecution mostly for the latter.
Ignorance of even complex tax laws isn’t a defense that a taxpayer should rely upon and this is one reason to obtain the assistance of an experienced and knowledgeable tax professional. Relying on a professional may significantly help you avoid penalties. Remember that committing an act of fraud or intentionally making false statements can result in prison time.
If you have questions relating to whether certain assets that you own generate income which must be reported to the IRS, you should contact your expert tax lawyers and CPAs at Thorgood Law Firm www.thorgoodlaw.com For a FREE consultation at 212-490-0704.
