Former Alderman Ed Vrdolyak
In November 2016, a federal grand jury charged former Chicago Alderman, Edward R. Vrdolyak with one count of impeding the IRS (a 3 year felony under IRC 7212) and an additional count of income tax evasion (a 5 year felony under IRC 7201). Vrdolyak faces an 8-year maximum prison sentence for allegedly trying to help his co-defendant, Attorney Daniel Soso (of Alsip firm) dodge Federal income taxes in connection with the State of Illinois $9.3 billion tobacco settlement, of which $188.5m was to be paid to outside law firms that helped with the litigation. Washington Attorney Steven Berman struck a secret deal with Soso and Vrdolyak to collect a percentage of the fee.
In May 1999, Berman allegedly sent Vrdolyak a letter on his letterhead indicating that Vrodlyak stood to collect $65m, and Vrdolyak agreed in writing to give a portion of it to Soso. The IRS served Vrodlyak with a levy in 2005 and 2006 demanding that any money he owed to Soso be paid to the IRS. Vryodlyak response to the IRS was that he owed Soso nothing and he stopped paying Soso. Berman eventually paid Soso directly and he hid the money in accounts belonging to his relatives and girlfriend.
In 2010 and 2011, Vrdolyak directed $170,242 to Soso and an unnamed recipient in connection with the tobacco settlement, which conflicted with Vrdolyak’s statement that he owed Soso nothing.
Vrdolyak was to be arraigned November 22, 2016 and his defense attorney indicated he would plead not guilty.
The tax crimes committed by Vrdolyak appear to be for payments he directed to Soso on which Soso failed to declare as income or pay tax. Although there were only two counts alleged (income tax evasion, impeding the IRS), the same facts appear to support a third tax crime (conspiracy to commit tax evasion, 18 USC 371, in which two or more parties conspire to evade federal income taxes). However, conspiracy may be more difficult to prove under the government’s burden of proof (i.e. beyond a reasonable doubt) since it requires proving the party’s intent (i.e. Scienter). In these types of cases, the government seeks to indict taxpayers on cases with a high win rate probability with conspiracy often being more difficult to prove.
For more info see Former Alderman Vrdolyak Pleads Not Guilty To Tax Evasion
Attorney Darryl W. Genis
Darryl W. Genis, a Santa Barbara based criminal defense attorney, pled guilty in October 2016 to 3 counts of willfully failing to file tax returns and unpaid taxes of $679,958 for tax years 2009, 2010, and 2011 (federal misdemeanors). Genis admitted that he made enough money in his law practice to require that he file tax returns in those years but that he knowingly and intentionally chose to not file his tax returns despite his legal obligations. Genis admitted that he did not pay the full amount of taxes he owed for the years 2005-2012. As part of his plea agreement, Genis agreed to pay restitution to the IRS in the amount of $679,958 representing unpaid taxes for the years 2005-2012. Genis also agreed to the IRS’s assessment of the civil penalties applicable to all 8 tax years in issue.
US Attorney Eileen M. Decker stated: “As an attorney this defendant had a heightened responsibility to follow the law, and instead he cheated the IRS and every law-abiding taxpayer in the country. Today’s guilty pleas will deprive the defendant of the fruits of his crimes and send a message that everyone must pay their taxes.”
Anthony J. Orlando, Special Agent in Charge/IRS Criminal Investigation Division stated: “This case is a reminder that no one is above the law. Each of us is responsible for filing a tax return when required and for paying the correct amount of tax due. Mr. Genis chose to ignore his duty to file and pay taxes and will now face severe consequences, which may include imprisonment and substantial fines.
For more information see, Santa Barbara Criminal Defense Attorney Pleads Guilty to Willfully Failing to File Tax Returns