Most of us have little desire to mess with the IRS. Filling out your annual tax return honestly, completely and timely is the best way to keep the agency from poking around in your business.
But some folks just can’t help trying to pull the wool over Uncle Sam’s eyes. And when they get caught, they often pay a heavy price.
Recently, the IRS released a list of the agency’s “most prominent and high-profile investigations” that ended with federal prison sentences in 2023.
Following are some examples of people who tried to cut corners on taxes or commit similar fraud, and who ended up paying a heavy price for doing so.
1. Businessman who promised immunity to fuel plant operators and took millions from the IRS
Name: Lev Aslan Dermen of California; brothers Jacob and Isaiah Kingston, their mother (Rachel) and Jacob’s wife (Sally), of Utah
Sentenced on: April 7, 2023
- Lev Aslan Dermen: 40 years in federal prison. The court also ordered Dermen to pay more than $442 million in restitution to the IRS and a monetary judgment of more than $181 million.
- Jacob Kingston: 18 years. He was also ordered Kingston to pay $511 million in restitution and a $338 million judgment.
- Isaiah Kingston: 12 years. He was also ordered to pay $511 million in restitution.
- Rachel Kingston: 7 years
- Sally Kingston: 6 years
Found guilty of:
- Lev Aslan Dermen: Conspiracy to commit mail fraud; money laundering and conspiracy to commit the same
- Jacob Kingston: Conspiracy to commit mail fraud; filing false claims with the IRS; money laundering and conspiracy to commit the same; obstruction by concealing and destroying records and conspiracy to commit the same; witness tampering
- Isaiah Kingston: Conspiracy to commit mail fraud; aiding and assisting in the filing of false partnership tax returns; money laundering and conspiracy to commit the same; obstruction by concealing and destroying records and conspiracy to commit the same
- Rachel Kingston: Conspiracy to commit mail fraud; money laundering and conspiracy to commit the same; obstruction by concealing and destroying records
- Sally Kingston: Conspiracy to commit mail fraud; conspiracy to commit money laundering
According to the IRS, Dermen conspired with members of the Kingston family to fraudulently claim more than $1 billion in refundable renewable fuel tax credits. The scheme resulted in the IRS paying out more than $511 million in tax credits to the Kingston brothers’ biodiesel company, Washakie Renewable Energy.
2. The former CFO who hid millions in undisclosed income overseas
Name: Mark Anthony Gyetvay of Naples, Florida
Sentenced on: Sept. 21, 2023
Sentenced to: 86 months in federal prison. The court also ordered him to serve three years of supervised release, and to pay a $350,000 fine and about $4 million in restitution to the U.S.
Found guilty of:
- Failing to file a Report of Foreign Bank and Financial Accounts
- Making a false statement to the IRS
- Willfully failing to file tax returns
The former CFO of Novatek, a large Russian natural gas company, and certified public accountant hid more than $93 million in Swiss accounts to avoid paying millions in taxes. He used his then-wife to cover up his involvement with the accounts.
3. The cryptocurrency co-founder behind ‘one of the largest fraud schemes ever’
Name: Karl Sebastian Greenwood, a citizen of Sweden and the United Kingdom who was arrested at his home on the Thai island of Koh Samui and extradited to the U.S.
Sentenced on: Sept. 12, 2023
Sentenced to: 20 years in federal prison. The court also ordered Greenwood to pay approximately $300 million in forfeiture.
- Wire fraud
- Conspiracy to commit wire fraud
- Conspiracy to commit money laundering
Greenwood cofounded OneCoin, which sold a fraudulent cryptocurrency by the same name through multi-level marketing. OneCoin was based in Bulgaria and garnered $4 billion in investments from victims worldwide.
According to U.S. Attorney Damian Williams, “As a founder and leader of OneCoin, Greenwood operated one of the largest fraud schemes ever perpetrated.”
The rest of the top 10
Here are the rest of the top 10 cases on the IRS’ 2023 list:
- New Hampshire man who laundered money from online romance scams (Ian Freeman)
- New Jersey man who led a multi-million dollar piracy scheme (Bill Omar Carrasquillo)
- Father and sons who claimed more than 14,000 fraudulent winning lottery tickets and laundered millions in proceeds (Ali, Yousef and Mohamed Jaafar)
- Georgia man who stole about 50,000 Bitcoin on the dark web (James Zhong)
- Cryptocurrency founder who caused the price of his own cryptocurrency tokens to plummet (Amir Bruno Elmaani, aka Bruno Block)
- Los Angeles man who fraudulently obtained millions in pandemic-related employment benefits (Edward Kim)
- The French man who filed 1,701 false tax returns in an international scheme (Ayodele Arasokun)
Remember, if you commit a crime and profit from it, the IRS still expects you to pay taxes on that income, as we detail in “5 Things Criminals Have to Pay Income Taxes on.”