What Not to Do

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Hand pulling out file in filing cabinet with tax forms and papers with words Refund and Taxes 2018 handwritten on file folder conceptual dollar signs images and light bulb for ideas on tax refund conceptual financial planning photography

I hate to say it, but tax time will be here before you know it. Consider today’s fraud case to be a prime example of what not to do when it comes to filing your taxes. Jordan Sudberg, a pain management doctor from Long Island, N.Y., pled guilty to tax evasion for the years 2015 – 2017. He claimed false deductions related to his issuance of hundreds of business checks. (These checks falsely represented payments for business services, which he traded for cash to a black market money exchange network.)

As a medical professional, one could say that the pain management doctor should have been in the business of caring for people, not causing pain or evading taxes. Sudberg made up false business expenses to conceal large portions of his income earned from his medical practices. He falsely claimed more than $1 million in deductions that should have been reported to the IRS as taxable income.

Sudberg owned two S-corporations through which he operated a medical practice, specializing in pain management. These locations were in Manhattan, Long Island and Queens. He issued hundreds of checks made payable to companies, falsely purporting to be business services payments. (But they weren’t. None of the businesses had performed any business services for the S-Corporations.)

Sudberg received cash from the value of the checks less a small fee. He incorrectly reported to the IRS that the checks were for legitimate business expenses and claimed deductions in the check amounts. (This definitely reduced his tax burden.)

The tax evasion scheme supported an unlicensed money services network operated by co-conspirators. This network generated a false and nominally legitimate source of funds, including the laundering of narcotics proceeds. (So much for taking care of patients. He was using their addictions to make money. What a nice guy.)

Sudberg pleaded guilty to one count of tax evasion for carrying out this complicated ruse that involved more than $1 Million in fraudulent tax deductions. When sentenced in February 2022, he could receive five years in prison. Sudberg agreed to pay $551,660 in restitution to the IRS and forfeit another $243,257.

Today’s Fraud of the Day comes from a Department of Justice press release, “Long Island Pain Management Doctor Pleads Guilty To Tax Evasion,” dated November 23, 2021.

Damian Williams, the United States Attorney for the Southern District of New York, Thomas Fattorusso, Special Agent in Charge of the Internal Revenue Service – Criminal Investigation (“IRS-CI”) New York Field Office, and Keith Kruskall, Acting Special Agent in Charge of the New York Office of the Drug Enforcement Administration (“DEA”), today announced that defendant JORDAN SUDBERG pled guilty to tax evasion for the calendar years 2015 through 2017, in connection with false deductions from a scheme involving his issuance of hundreds of business checks falsely purporting to be payments for business services, which he provided in exchange for cash to a black market money exchange network.  As part of his plea SUDBERG agreed to pay $551,660 in restitution to the Internal Revenue Service (“IRS”), and forfeit an additional $243,257.  SUDGERG pled guilty today before U.S. District Judge Paul A. Crotty.

U.S. Attorney Damian Williams said: “As he admitted in court today, Jordan Sudberg engaged in a years-long pattern of fabricating false business expenses to conceal from the IRS large portions of his substantial income earned from his medical practices.  He fraudulently claimed more than $1 million in deductions that should have been reported to the IRS as taxable income, and allowed other individuals to create purportedly legitimate origin for their illicit cash in the process.  Now Sudberg awaits sentencing for his crime.”

 

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Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.