She’s Not Smiling Anymore

44969068 - office work and filling in tax returns close up

Dentists specialize in smiles. (They can turn a frown upside down with a variety of options that usually cost a lot of money and are not covered by your dental insurance plan.) A Cordova, Tennessee dentist who owned two dental practices made a lot of money off her patients, but neglected to pay Uncle Sam his cut of her success. She enjoyed a lavish lifestyle while committing tax fraud, but after being convicted of tax evasion, she’s not smiling anymore.

To her credit, the deceptive dentist did file her personal income tax returns over five separate years, but failed to pay income and self-employment taxes in the amount of $113,781 to the Internal Revenue Service (IRS) as required by law. She also withheld employment taxes from her employees’ paychecks, but neglected to pay the IRS for multiple quarters over a decade. (Do you get where I’m going here? Compounding interest owed on taxes due is not this fraudster’s friend and she is going to owe big.)

Interested in knowing where all the money went? Personal expenses including private school tuition, expensive houses and luxury cars. But, when the IRS assessed trust fund recovery penalties of more than $160,000 and made her personally liable for the unpaid employment taxes, she shifted her tactics. (Instead of paying the taxes, she hid her fraudulent acts by enlisting others to help her continue her devious acts.)

 The dentist stopped using her personal bank accounts and started using her business accounts to pay for her personal expenses. (At that point, she was scrambling to pay for her lavish lifestyle, hoping she would not be caught.) Before her home was foreclosed on, she transferred $130,000 to a nominee buyer, or someone who acted on her behalf. She went as far as to create a fake explanation as to how the funds got transferred to the nominee’s bank account and how that person was able to repurchase her home for her. (That’s kind of like lying about eating too much candy and not flossing.) She later used the same person in addition to others to purchase and lease a Dodge Viper and a Porsche Panamera for her.

 The 45-year-old woman pleaded guilty to tax fraud, admitting she caused a tax loss of $528,882.07. (Just like a cavity, this woman’s greed was embedded deep.) She was probably wishing she had a shot of Novocain to numb the effects of her sentence, which includes one year in prison, three years of supervised release and restitution of $653,116.78 payable to the IRS. (Just like regular brushing and flossing can prevent a host of issues, let’s hope this sentence will correct her greedy attitude and prevent future attempts at fraud.)

Today’s “Fraud of the Day” is based on an article entitled, Lessons From Dentist’s Tax Evasion: Cover-Up Is Worse Than Crime,” published by Forbes on October 17, 2017.

No one wants to be accused of tax evasion. And most people who end up in the situation probably did not think a criminal prosecution, much less a criminal conviction, was a serious or even a remote possibility. Recently, a Tennessee dentist named Andrea M. Henry pleaded guilty to tax evasion. Dr. Henry, 45, owned The Henry Polk Dental Group D.P.C. and The Smile Spa LLC. These dental practices were located in Cordova, Tennessee. Dr. Henry filed personal income tax returns for 2005, 2006, 2008 and 2010 to 2013, but did not pay $113,781 in income and self-employment taxes due to the IRS.

Dr. Henry also failed to pay over the employment taxes withheld from her employees’ paychecks for numerous quarters between 2006 and 2015. Given this failure to pay employment taxes, the IRS assessed over $160,000 in trust fund recovery penalties against Dr. Henry, making her personally liable for the unpaid employment taxes. Up to now, these were serious tax problems, but here is where things truly went off the rails. Instead of paying the taxes owed, Dr. Henry spent hundreds of thousands of dollars on personal expenses, including private school tuition, expensive housing and luxury cars.

Previous articleBack Door Fraud
Next articleFraud from A to Z

Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.