Avoiding Tax Evasion Charges

[Slipky]

 

AVOIDING TAX EVASION CHARGES

Credit goes to TurnBull, a user of another forum, for writing this.

 

Income tax evasion has put more mobsters away for more years than RICO and drugs combined.  It’s easy: the Feds don’t have to prove that you made your money through crime—all they have to do is to show that you’re living beyond your means.  Even a weak tax evasion case has a good chance of bringing in a conviction.  While some jurors might have some empathy for the defendant, they all think of themselves as “tax drones.”  So, if the prosecutor points to the defendant and tells the jurors, “The reason you’re paying high taxes is because guys like him are cheating on theirs…” the jurors are ready to believe him.  

Mafia guys are slam-dunk prospects for tax evasion.  They’re all greedy, and they regard paying taxes on the same level as being cuckolded.  Aniello (Mr. Neil) Dellacroce, the feared and respected Gambino caporegime, went away for five years because he lost $100k in a Puerto Rican casino at a time when he declared income of only $10k on his tax return.  He was still in prison when Carlo Gambino was on his deathbed, which probably was why Gambino named Paul Castellano, rather than Mr. Neil, as his heir.

 

But, if a mob guy is smart and careful (big ifs), he can avoid getting nailed on tax evasion.  Here’s now:

Let’s say you’re a captain in a NYC mob family.  Your main source of income is an electrical wholesale firm that actually sells electrical supplies.  But the supplies are most often stolen from others and sold to mob-connected contractors.  It’s also a front for your loansharking, fencing and drug operations, which your subordinates operate for you at careful arms-length.  You earn between $3 million and $5 million annually, all of it illegal.  You’re smart enough to know that you need to live modestly and inconspicuously.  You live in the same Brooklyn home you occupied when you started out.  It’s now worth about $550k--modest by NYC standards.  You could have paid it off years ago.  But, to bolster the fiction that you’re just a workin’ stiff, you’ve taken out second mortgages to pay for your kids’ colleges.  You drive a three-year-old Cad, your wife a four-year-old Lexus.  You both wear off-the-rack clothes and costume jewelry.  

Your accountant tells you that, to maintain that lifestyle and keep the Internal Revenue Service off your back, you need to show and pay taxes on $90k annual household income.  So you arrange for the associate who’s the nominal “owner” of your electrical wholesale business to put you and the Mrs. on his payroll—you as a “salesman” at $50k/yr., she as a “bookkeeper” at $40k.  You pay your taxes scrupulously.

Now, you aren’t busting your coglioni and putting your life at risk in the mob just to live like a wage-slave cafone.  How do you enjoy your money without attracting the IRS? 

 

It seems that the electrical firm (meaning you) owns a $10 million “retreat” in Glen Cove, Long Island—right on the Sound, complete with 60-foot yacht.  The firm lists it as a “guest house and entertainment center” for wooing clients, and as a “rest and recreation” facility for employees.  To maintain the façade, part of the home’s basement is equipped as a “showroom” with displays of electrical equipment that the firm sells.  A smaller “showroom” space is laid out on the boat. You and your wife spend a lot of time there because you’re the firm’s “top salesman.”    You meet with your associates at the Glen Cove house and list them as “clients” in your business logbook. 

 

You and your wife also own Armani suits, Givinchy gowns, Bally and Jimmy Choo shoes, Cartier jewelry, Louis Vuitton luggage, etc.  But there are no sales receipts in your name.  They’re stored at your non-mobbed-up cousin’s home in a modest neighborhood in Queens.  Anytime you and the Mrs. go out on the town (often), you and she visit the cousin’s place to get dressed and decked out.  The cousin calls a limo for you, which pulls into his garage to avoid surveillance.  You and your wife jump inside and hunker down behind the tinted windows.  You pay for everything in cash.   When you travel to Paris on vacation, you fly Tourist class and reserve a room in a modest pension.  But a Family associate in Naples secretly booked you into the Ritz under phony names, using  phony Italian passports, and has made reservations for you in all the Michelin 3-star restaurants, where you pay cash.  For your jaunts around France, you rent a chauffeured limo, using the phony passport as I.D, when required.  It’s all prepaid—in cash.

 

Now, the NYC police and the FBI know good and well that you’re a capo in a mob family, and have a pretty good idea of how you’re earning your money.  But, like all government employees, they don’t want to work any harder than necessary to earn their paychecks.  You’ve hidden your criminal activities and your spending well enough so that it won’t be easy for them to gather up enough evidence and witnesses to bring you to trial.  With the new priority for tracking down terrorists, law enforcement has a good excuse not to spend a lot of time, money and personnel trying to convict you—especially since there are plenty enough dumb mobsters who are easy pickings compared with you.  

 

So they take the lazy-cops’ out—turn the investigation over to the IRS to see if they can nail you for tax evasion.  But IRS investigators don’t want to work any harder than their law enforcement brethren.   The IRS clerk who gets your case is looking for a slam-dunk—and there isn’t one in your case because she finds that you’ve filed returns and paid taxes punctiliously every year.  She kicks your file back to her supervisor, who hands it to an investigator.  He’s got a huge caseload because the Administration has been in a budget-cutting mode and no taxpayers—and their Congressmen—are anxious to see funding restored to the IRS.  

About two years after getting your file, the IRS investigator finally picks it up and drives out to look at your Brooklyn home.  One glance tells him what your accountant told you: yours is a $90k income home—and you’ve been paying taxes on $90k every year.  He heads for the Glen Cove “business retreat” listed as the electrical wholesale firm’s property, rings the doorbell, shows his badge, and asks the caretaker if he can look around the property.  You’ve already instructed the caretaker to let him in.  The investigator sees the showrooms in the basement and on the boat, and the business cards and sales literature you’ve carefully planted in other spaces.  He suspects it’s a front, but he can’t prove it—easily.  Of course the IRS could put serious resources into checking out your “employer” in surveilling the Glen Cove mansion, looking at your travels abroad, etc.  But that costs time and money—and anyway, since law enforcement wasn’t willing to do it, why should they?  So, their conclusion is, “insufficient evidence for prosecution.”  

 

Sooner or later, your own greed is going to trip you up.  But until then, as Jackie Brown, the gun dealer in “The Friends of Eddie Coyle” said: “It’s a great life—as long as you don’t weaken.”

[BranHUN]

A great, interesting, important, and easy read! Nice!

[Gangstafary]

I'd add buying winner lottery tickets. If a person wins the lottery and he knows someone who's looking for ways to money laundering, he can sell that person the ticket.

Example: George wins 3 million dollars in the lottery. He knows a shady guy who handle dirty money and he might be interested. That shady guy has 3 million dollars which cannot be declared cause they come from illegal business. The shady guy pays George 3.1 million dollars for the ticket. The shady guy has lost $100k, but made his $3 millions clean.