The IRS publishes hundreds of reports every year, covering all sorts of topics. You’ll find routine statistical summaries, like the always-popular “Number of Individual Income Tax Returns, Income, Exemptions and Deductions, Tax, and Average Tax.” You’ll find page-turners worthy of a Tom Clancy thriller, like last summer’s “Actions Can Be Taken to Better Address Potential Noncompliance for Roth Individual Retirement Arrangement Conversions.” But the most entertaining report of all is the Criminal Investigations unit’s annual business report summarizing their work for the previous year.
On November 29, CI released their annual report for FY 2015. As is typical in government, budget cuts colored the story — the unit hired just 45 investigators over the last three years, and attrition has reduced staffing to its lowest levels since the 1970s. And, as usual, you’ve got to be a really bad guy to find yourself in CI’s crosshairs. For 2015, the unit initiated just 3,835 investigations, down from 4,297 in 2014. But if CI does take you on, they’ve usually got you dead to rights: the unit won 93.2% of the cases they prosecuted.
Dig behind the dry statistics, though, to read about the actual offenders that CI targets, and you’ll find one sorry smorgasbord of human greed, frailty, arrogance, and downright stupidity. Here are three of the more entertaining stories:
- Happy Asker grew his company, Happy’s Pizza, from a single Detroit-area location in 1994 to a 95-store chain. But paying taxes didn’t make him happy. (Sorry, couldn’t resist.) So he conspired with four of his franchisees and employees to skim $6.1 million in cash from the books and divvy it up in weekly “profit splits.” The group also underreported wages to evade $2.39 million in payroll taxes, because why not? Now Happy will spend the next fifty months eating bland microwaved pizza at the Morgantown Federal Correctional Institution.
- Xavier Franklin Lewis was pastor of the Holy Ghost Praise and Deliverance Ministries outside Savannah, Georgia. But he behaved more like a mobster than a minister. He submitted false tax returns to the IRS, stole refunds out of the mail, and used bank accounts he set up in the church’s name to cash 92 IRS checks totaling more than $250,000. As investigators closed in, Lewis visited at least one potential witness and told her she needed to change her story, “or else.” Now he’s looking at 119 long months in purgatory to read his bible and repent for his sins.
- Michael Spitzauer launched a company called Green Power, Inc., and told investors he had found a way to convert municipal waste into biofuel. But what he’d really found was a way to convert demand for cutting-edge green energy into a classic Ponzi scheme. Spitzauer used his investors’ money on a million-dollar mansion, private schools for his children, Seattle Seahawks tickets, and paying back previous victims. Oh, and somehow he “forgot” to pay taxes on the $10 million he stole. Now he gets to spend four years in a northern California prison and pay the IRS $2,585,177 in restitution.
Crime really doesn’t pay — especially when it comes to taxes! Fortunately, there’s no reason to learn that lesson the hard way! We can help you help manage your taxes the right way, with a comprehensive menu of court-tested, IRS-approved strategies and tactics. We’re committed to helping you pay less, no matter what the New Year brings!
AND Speaking of Bad Boys: 2016’s Scandal of the Year
The gist? Wells Fargo employees opened up roughly 2 million checking and credit accounts without customer’s knowledge.
During the financial crisis 8 years ago, WF came off looking the cleanest – it had few bad loans and maintained relatively strong lending standards that kept it out of the crisis and allowed it to acquire the troubled Wachovia.
In 2016, however, Wells Fargo and CEO John Stumpf found themselves in the middle of the perfect storm of Wall Street scandals. After the Senate hearings, it became clear that with an easy-to-understand issue, a political firestorm, and missteps by the bank that exemplify Americans’ worst notions of Wall Street, everything that could go wrong for Wells Fargo did.
It’s an easy-to-understand scandal
Since the financial crisis, which focused America’s microscope squarely on Wall Street, there have been a number of scandals, but Wells Fargo’s is different. For Wells, the transgressions are simple, and its an easy line for Americans to draw directly to their own financial situations.
For instance, it may be hard for people without a reasonably intimate knowledge of the financial system to understand JPMorgan’s “London Whale” trading scandal in 2012 or the Barclays Libor-rigging scandal in 2014. Even the most popular explainer in recent years of the financial crisis — “The Big Short” — had to employ non sequiturs with celebrities explaining ideas like mortgage-backed securities and credit default swaps to communicate how it happened.
On the other hand, Wells Fargo’s scandal deals with checking accounts and credit cards — financial instruments that nearly every American has. When people understand how the scandal affects them, it makes them less likely to ignore the problem.
Millions of people in the US have had to get a credit check for a mortgage, so when senators suggest that Wells Fargo employees opening and closing a credit card without a customer’s knowledge may affect a credit score and lead to a higher interest rate, it’s simple to understand the direct ramification.
It’s a Main Street scandal with a Wall Street face.
To read the entire article at Business Insider, click here.
Scandals such as these, which get significant political attention, are one of the reasons the new DOL rulings for the financial services industry are attempting to turn brokers, banks and insurance agents into fiduciaries. Whether this will be successful or not, stay tuned!