Earlier this week, an emergency room Doctor and his wife were sentenced in a criminal tax evasion case. According to tax lawyers following the prosecution, the allegations were that Dr. Mark E. Hopkins, a former E.R. Doctor at Carlsbad Medical Center, and his wife Sharon, had not filed an accurate tax return since 1997. Evidently the couple used several different fraudulent schemes to avoid paying over a million dollars in back taxes between 1996 and 2007. In fact, even many tax attorneys were surprised to hear Doctor Hopkins made $3 million dollars in income and only paid $21.25 in federal income taxes when he really owed $1.3 million in back taxes.
One of the alleged schemes involved a fake religious entity (Shalom Enterprises) created by the couple to hide their income. The money was sent to Shalom Enterprises, enabling the couple to assert a claim the money was a charitable donation, but Shalom was really a front for the couple to launder the money to pay the couple’s mortgage, their credit cards and their time-share in Mexico. Tax attorneys watching the case note the couple also titled their bank accounts and their home in the name of “pure trusts” in another attempt to shield income and assets.
If that weren’t bad enough, when they were at trial, tax lawyers observed the couple claimed Dr. Hopkins’ income was not taxable because it was simply “an exchange of labor for time.” This was despite a previous warning by the IRS against asserting frivolous arguments and the use of tax evasion schemes.
The Doctor and his wife have been sentenced by U.S. District Court Judge Christina Armijo to ten (10) and eight (8) years in a federal prison respectively. They’ve also been ordered to pay the IRS $1.7 million in back taxes, penalties, interest and fines. In addition, upon their eventual release from jail, the couple will be required to make monthly payments to the agency and to cooperate with the IRS in paying current and back taxes. The Hopkins’ were also directed to reimburse the IRS $965.84 for the cost of a videotaped deposition conducted during the course of the agency’s prosecution.
Tax attorneys and the IRS can certainly agree on at least one thing. Specifically, taxpayers who don’t like with tax laws are not at liberty to unilaterally ignore them, or find creative ways to break them. So if you are a disgruntled taxpayer and you’ve got the notion to ignore and/or violate the law, IRS tax attorneys suggest you think again. To do otherwise, is obviously very costly.
Segal, Cohen & Landis 9100 Wilshire Blvd. Ste. 601E Beverly Hills, CA 90212 (310) 285-3999