A federal court in San Diego, California, has permanently barred Lawrence Preston Siegel from preparing federal tax returns for others, providing tax advice for compensation or any promise of compensation and working for any business that provides tax advice or prepares tax returns, the Justice Department announced. Siegel is also a fugitive from the State of California, wanted on a 20-count criminal complaint, filed in 2014, charging him with Medi-Cal fraud, grand theft, forgery, identity theft, financial dependent adult abuse and tax evasion.
Judge Gonzalo P. Curiel of the U.S. District Court for the Southern District of California entered the permanent injunction on Nov. 9, after Siegel failed to appear to defend the civil case.
The civil complaint alleges that Siegel impersonated licensed California attorneys and used multiple aliases, including Larry Lave and Yehuda Lave, to falsely represent that he is a licensed attorney and CPA in order to recruit customers and implement his tax fraud schemes. According to the complaint, Siegel resigned from the California bar in 1994 and lost his CPA license in 1997 after he was convicted of federal crimes, including tax evasion. Siegel allegedly never regained either accreditation.
The complaint alleges that among his tax fraud schemes, Siegel falsely advised his customers, typically high earners who own profitable businesses, that they can establish companies in another state, usually Nevada, then treat their California home as an out-of-state corporate office. Siegel claimed that doing so would transform a vast array of non-deductible personal expenses into tax deductible business expenses, according to the complaint. The complaint details how Siegel boasted about this tax fraud scheme in e-mails, including one where Siegel falsely claimed that his customers are entitled to free housing as tax-free compensation from their out-of-state companies and that “[t]he housing can [b]e luxurious and cost thousands a month” because “[t]here is an assumption that corporations don't waste money.”
In conjunction with his tax fraud schemes, Siegel allegedly prepared customer tax returns. In some instances, Siegel filed tax returns without reviewing them with his customers or obtaining their permission to file them, according to the complaint. Siegel is alleged to have fraudulently claimed customers' personal purchases as deductible business expenses on tax returns he prepared. For example, the complaint states that Siegel deducted on one couple's tax returns purchases at Tiffany & Company, Royal Caribbean Cruise Lines, Louis Vuitton and Princess Cruise Lines. Siegel allegedly attempted to conceal these fraudulent deductions from the Internal Revenue Service (IRS) by lumping them together and reporting them as large expenses for “supplies” or “medical records and supplies.”
According to the complaint, Siegel also attempted to delay and obstruct IRS examinations of his customers who entered into Siegel's tax fraud schemes. Siegel allegedly provided false corporate documents to the IRS in order to deceive auditors, produced bogus contracts to IRS auditors and lied to IRS officials during U.S. Tax Court litigation when asked to confirm information on behalf of his customers.
Return preparer fraud is one of the IRS's Dirty Dozen Tax Scams for 2014. The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Updated November 13, 2015
Southern District of California DOJ / 15-1406 / November 13, 2015