Tax Attorney And CPA Indicted For Tax Evasion And Diversion Of Tax Shelter Fees From Major Manhattan Law Firm
Tax Attorney Also Charged with Making False Statements to IRS, and Causing Another Person to Lie to the IRS
Preet Bharara, the United States Attorney for the Southern District of New York, and Shantelle P. Kitchen, Special Agent In Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that HAROLD LEVINE, a Manhattan tax attorney, and RONALD KATZ, a Florida certified public account, were charged today in Manhattan federal court in an eight-count Indictment with engaging in a multi-year tax evasion scheme involving the diversion of millions of dollars of fees from a Manhattan law firm and the failure to report that fee income to the Internal Revenue Service.
Mr. Bharara said: “As tax professionals and partners at professional firms, both Harold Levine and Ronald Katz knew better. But as alleged, they engaged in a multi-year scheme to divert and evade taxes on millions of dollars of fee income.”
IRS-CI Special Agent in Charge Shantelle P. Kitchen said: “Tax and accounting professionals who conceal their incomes, evade income taxes, and otherwise obstruct the Internal Revenue Service simply have no excuse for violating the very laws their professions are centered on. IRS-Criminal Investigation works hard to ensure that everyone pays their fair sure and we take particular interest in allegations involving professionals who should simply know better.”
According to the allegations in the Indictment returned today in Manhattan federal court:
HAROLD LEVINE, a tax attorney and former head of the tax department at a major Manhattan Law Firm (the “Law Firm”), schemed with RONALD KATZ, a certified public accountant, to divert from the Law Firm over $3 million in fee income from tax shelter and related transactions that LEVINE worked on while serving as a partner of the New York Law Firm. In addition, LEVINE failed to report that fee income to the IRS on his personal tax returns during the period 2005-2011. For his involvement in this scheme, KATZ received and failed to report to the IRS over $1.2 million in fee income.
As part of the fee diversion scheme, for example, LEVINE caused tax shelter fees paid by a Law Firm client to be routed to a partnership entity he co-owned with KATZ and thereafter used those fees – totaling approximately $500,000 – to be used to purchase a home in Levittown, New York. LEVINE caused the home to be purchased as a residence for a Law Firm employee (the “Law Firm Employee”) with whom he carried on a close personal relationship. Although LEVINE allowed the Law Firm Employee to reside in the Levittown house for over five years without paying rent, LEVINE and KATZ prepared tax returns for the entity through which the home was purchased to claim false deductions as a rental property.
In or about 2013, LEVINE was questioned by IRS agents concerning his involvement in certain tax shelter transactions and the fees received for those transactions. During that questioning, LEVINE falsely represented that the Law Firm Employee paid him $1,000 per month in rent while living in the Levittown home. In addition, when the Law Firm Employee was contacted by the IRS and summoned to appear for testimony, LEVINE urged the employee to represent falsely to the IRS that she had paid $1,000 per month in rent to LEVINE.
LEVINE, 58, of New York, New York, and KATZ, 59, of Boca Raton, Florida, are scheduled to be arraigned in magistrate’s court on Monday, October 31. The case was assigned to United States District Judge Jed S. Rakoff, and a conference was set before Judge Rakoff for Tuesday, November 1, 2016, at 11:00 a.m.
LEVINE, who was charged with one count each of obstructing the IRS, conspiracy, tax evasion, and wire fraud, and two counts of making false statements, faces the following penalties, if convicted:
Number of Counts
26 U.S.C. ' 7212(a)
Corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue Laws
Three years in prison
26 U.S.C. ' 7201
Five years in prison
18 U.S.C. ' 1343
20 years in prison
18 U.S.C. ' 371
Five years in prison
18 U.S.C. ' 1001
Five years in prison
KATZ is charged with one count each of obstructing the IRS (maximum penalty three years in prison) and conspiracy (five years in prison), and two counts of tax evasion (five years).
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the Court.
Mr. Bharara praised the outstanding investigative work of the IRS.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Special Assistant United States Attorneys Stanley J. Okula and Assistant United States Attorney Daniel Noble are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.