McHenry County Blog

A press release from the U.S. Attorney’s Office:

CHICAGO LEADER OF ROMANIAN-BASED CONSPIRACY THAT OBTAINED $1.6 MILLION IN FALSE TAX REFUNDS SENTENCED TO 85 MONTHS IN PRISON

CHICAGO — The leader in Chicago of a Romanian-based international conspiracy to fraudulently obtain millions of U.S. tax dollars was sentenced to just over seven years in federal prison.

The defendant, OVIDIU ISAC, oversaw and directed nearly two dozen co-defendants in the United States who used their bank accounts to receive fraudulent federal income tax refunds after overseas co-conspirators filed hundreds of false tax returns claiming refunds in the names of Romanian citizens who had visited the United States on exchange student visas.

At least 470 false tax returns, typically claiming refunds between $4,000 and $7,000, were filed and resulted in a loss of more than $1.6 million to the U.S. Treasury during the conspiracy that spanned three tax years between 2007 and 2009.

The returns were filed in the names and social security numbers of individuals who had previously traveled to the United States on temporary student visas and had filed tax returns in the past, but who were likely no longer living in the U.S. nor filing a real return in their own name.

Isac led and organized the co-conspirators in Chicago and controlled the flow of money to his co-conspirators in Romania.

On one occasion, Isac led a group of co-conspirators in physically attacking a group of individuals who were associated with someone who refused to pay Isac his cut of the proceeds.

Isac, 31, a Romanian citizen who lived in Skokie, was sentenced on Friday to 85 months in prison and ordered to pay restitution totaling $1,641,209 by U.S. District Judge Charles Norgle.

Isac pleaded guilty in January to conspiracy to defraud the United States and theft of government funds.

He will be subject to deportation after completing his sentence.

Isac was arrested in April 2010 and was among 24 defendants who were indicted in July that year for their roles in the conspiracy. Nineteen of the defendants have been convicted and sentenced, while five remaining co-defendants are fugitives.

Evidence in two companion cases showed that the fraudulent returns typically claimed large deductions for moving expenses, and the fraud was concealed by electronically submitting false wage and tax statements.

The returns were filed in the names of real individuals and employers who likely were unaware that their identities and information were being misused.

At least 200 bank accounts in the names of more than 75 individuals were used to receive and obtain the tax refund money triggered by the fraudulent returns.

Gary Shapiro

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division; and Gary Hartwig, Special Agent-in-Charge of Homeland Security Investigations (HSI) in Chicago.

The government was represented by Assistant U.S. Attorneys Matthew Burke, Jennie Levin and Julie Porter.

A press release from State Rep. David McSweeney:

Dave McSweeney

Springfield –State Representative David McSweeney (R-Barrington Hills) marked tax day by announcing House Resolution 241; a measure to oppose a graduated income tax in Illinois. An opposing constitutional amendment has also been filed in the House calling for a progressive income tax which McSweeney calls “disastrous for a modern economy”.

“Under a graduated income tax, income tax rates would increase as family income rises,” said McSweeney. “We need to be incentivizing work effort, investments and entrepreneurship and not punish families when they make more money.”

Illinois’ income tax has been levied at a non-graduated rate since its inception in 1969. The current flat rate structure is a commitment from the Constitution of the State of Illinois. Resolution 241, if passed in its current form, would show strong opposition to an attempt to pass a progressive tax in Illinois as outlined in HJRCA2.

Representatives David Harris, Joe Sosnowski and Ron Sandack are lead co-sponsors of McSweeney’s resolution.

Representatives Ed Sullivan, Dennis Reboletti, Brad Halbrook, David Reis, Pam Roth, Jeannie Ives, C.D. Davidsmeyer, Charlie Meier, Darlene Senger, Barb Wheeler, Jim Durkin, Tom Morrison , Jill Tracy, Dwight Kay, Mike Tryon, John Cabello, Kay Hatcher, Patti Bellock, Renee Kosel and Tom Demmer have also signed on as supporters of McSweeney’s effort to get this resolution adopted.

Just talked to Fox River Grove Republican Precinct Committeeman Andrew Gasser and he told me that his hosting service has had to take his web site down because there had been 20,000 attempts to break into it.

Since he is featured in the Chicago Tribune article today in opposition to the 377 tax hike referendum, which gives voters the opportunity to raise their taxes $60-90, I thought I put up his latest article.

But, first, here’s what the Sunday Tribune said,

“Critics of the proposal have been outspoken, if few in number. Andrew Gasser, an Air Force Veteran and a Republican precinct committeeman in Fox River Grove, said the tax will hurt poor and middle-class homeowners struggling to survive the recent housing bust and recession.

“Gasser said he has compassion for those with disabilities but questioned why they warrant a special tax, when many families also face financial strins while caring for loved ones with a host of other ailments.

“‘There’s a responsibility we have as a society,’he said, ‘but at the same time, government cannot do it all. People just can’t afford it.’”

Gasser’s latest article–with a table of the high tax counties that has been downloaded 15,000 times–points out that McHenry County is the 19th highest taxed countie in the United States of America.

Here it is:

McHenry County 29th Most Expensive County… in the United States

So it only makes sense that we raise taxes more so we can be number one.

McHenry County homes are the 26th highest in the country.

McHenry County is the 29th worst county in America to live when it comes to taxes.

Why on earth are people wanting to raise them higher?

No one in our state denies our government is broken, badly broken.  So why on earth would we raise taxes more?  Fear not McHenry Lake, DuPage, and Kendal counties are worse than us but Kane is nipping at our heals.

How many of our senior citizens who live in Fox River Grove, Cary, Huntley, Lake in the Hills, Crystal Lake, McHenry, Marengo, Spring Grove, or Woodstock can afford another tax hike?

How can the struggling poor and the over burdened middle class afford another tax hike?

But it gets better!  Tax day, April 15th, right?  Wrong.

Do you wonder why hard working people are fleeing Illinois?
We have to work longer to pay our tax bill.

Citizens who reside in Illinois have to work until April 25th to pay off their tax burden.  Compare that to all the neighboring states:

- Wisconsin April 20th
- Indiana – April 13th
- Iowa – April 9th
- Missouri – April 8th
- Kentucky – April 6th

And just as a side note I would point out that Illinois has more taxing bodies than any other state around us.  Heck, even California is better than Illinois.  Are we not paying attention to the economic reality we are facing in Illinois?  Are we just living in some fantasy world where we think we can tax and spend our way to prosperity?

Just look how bad our sales tax is here in Illinois:

Yep – Illinois leads the way in sales tax too.

Yep – Illinois leads the way in sales tax too.

Illinois is the 10th highest income tax rate at 8.2 percent.  Now look at our surrounding states:

- Missouri is 14th at 7.49 percent
- Indiana is 20th at 7 percent
- Iowa is 25th at 6.81 percent
- Kentucky is 36th at 6 percent
- Wisconsin is 41st at 5.43 percent

Tell me, where would you want to open a business?  Where would you want to live?  Where would you want to raise a family?

We are in a financial crisis.  Not just in the United States, not just in Illinois, but in McHenry County.  So many of us complain about our taxes going up every year.  How many of you know someone who has left the state?

I have one (former) constituent who left the state because she could not afford the taxes on her house she owned outright in Fox River Grove.  How is that right?  Her American dream is shattered.  She had to sell her home.

There aught to be no shame in voting NO against this proposition.  There aught to be no anxiety over what other people might think of a NO vote.  How much is enough?  How much does the poor and the middle class have to pay to satisfy political correctness?  Vote NO on Tuesday.

Finally – while everyone plots political strategy quietly in emails and phone calls, while everyone likes to run around calling themselves “tax cutters” and “reformers”, all the counties on the first graphic above are run by “Republicans”.

Go figure.

From a press release issued by the U.S. Attorney’s Office:

FEDERAL TAX PROSECUTIONS SERVE AS REMINDER TO TAXPAYERS TO COMPLY WITH TAX OBLIGATIONS AS APRIL 15 DEADLINE APPROACHES

CHICAGO – Three tax return preparers, a salesman, and the owner of a psychic reading business are among seven Chicago and suburban defendants who are facing federal prosecution in separate cases for alleged federal income tax crimes. These cases, along with others recently charged, are typical of federal tax prosecutions that occur throughout the year, but they also serve as a reminder to taxpayers of the importance of voluntary compliance with their tax obligations as the April 15 filing deadline approaches, federal law enforcement officials announced today.

“The IRS Criminal Investigation Division is committed to ensuring that all taxpayers pay their fair share,” said James C. Lee, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago. “We are aggressively serving the American people by investigating criminal violations of the Internal Revenue Code. Tax fraud does not know a season – IRS special agents pursue criminals year round, not only at tax time. Taxpayers who might be thinking about cheating with this month’s filing deadline looming should think twice or they will risk the consequences.”

Gary Shapiro

Gary S. Shapiro, United States Attorney for the Northern District of Illinois, noted that in addition to criminal penalties, including incarceration, fines, and the costs of prosecution, convicted defendants remain responsible for any taxes and interest due, as well as civil penalties of up to 75 percent of the tax owed. Those making false claims against the government may be required to pay restitution or may be sued civilly for an amount greater than the fraudulent claims.

[One of those listed in the press release is from McHenry.  That information is seen below.]

TOWANA VIRAMONTES, 37, of McHenry, has pleaded not guilty after being indicted in January on 15 counts of making false claims for tax refunds in 2008 and 2009. Viramontes, who was the principal of a telemarketing business that operated under various names, including American Creative Solutions, Inc., Apple Leasing, Inc., and Leads 2 Guaranteed Loans, allegedly prepared false Forms W-2 that she provided to at least 15 individuals, some of whom worked for her business and some who did not.

The charges allege that Viramontes caused these individuals to file false claims for income tax refunds, typically a few thousand dollars each, using the false W-2s that she provided and then to pay her a substantial portion of the tax refunds they obtained. (AUSA Dylan Smith.)

Assisting in the preparation of false tax returns or filing a false tax return carries a maximum sentence of three years in prison and a $250,000 fine on each count. Making a false claim upon the United States carries a maximum sentence of five years in prison and a $250,000 fine. Failing to file an income tax return, a misdemeanor, carries a maximum sentence of a year in prison and $100,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The public is reminded that criminal charges are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

A press release from the U.S. Attorney’s Office:

FORMER CONDO-HOTEL DEVELOPER ARRAIGNED AFTER BEING EXTRADITED FROM ITALY ON FEDERAL TAX EVASION CHARGE

CHICAGO — A former real estate developer who attempted to convert hotels in Chicago, Miami Beach, Fla., and elsewhere into condominium-hotels was arraigned today on federal tax evasion charges following his extradition from Italy.

The defendant, DAVID R. FALOR, who was a principal in The Falor Companies, Inc., was charged with

• two counts of federal income tax evasion
• one count of filing a false federal income tax return

in an indictment that was returned by a federal grand jury in December 2011 when Falor was living in Modena, Italy.

Falor, 73, formerly of Chicago and the Miami area, was returned to the United States on Friday after Italian courts ordered him extradited on one count of income tax evasion. He remains in federal custody after pleading not guilty this morning before U.S. District Judge Matthew Kennelly in Federal Court in Chicago.

According to the indictment, The Falor Companies, which ceased operating in 2006, attempted to convert hotels to condo-hotels by selling individual guest rooms to investors as separately titled condominium units, and renting them through a related hotel management company to other guests when the owner was not in residence, with the owner receiving a percentage of the rental fee.

The companies operated multiple condo-hotel ventures in the mid-2000s, including

• the Blake Hotel, located at 500 S. Dearborn St., in Chicago
• the Tides Hotel on Ocean Drive in Miami Beach

Falor was extradited on a tax evasion count alleging that he failed to pay income tax of approximately $341,093 on taxable income of approximately $1,048,802 during calendar year 2006.

During that year, Falor allegedly converted approximately $779,096 in payments that were recorded as loans from The Falor Companies, but which became taxable income when the companies went out of business and Falor used the funds for personal expenses. Falor allegedly failed to file a federal income tax return for 2006 or to pay any taxes.

The indictment also charged Falor with tax evasion and filing a false federal income tax return for 2005, but the government indicated in court today that those two counts will likely be dismissed at a later time because of the terms of Falor’s extradition.

In separate cases, Falor’s two sons also face federal tax charges in Chicago. Christopher Falor, a consultant to the condo-hotel projects, is awaiting sentencing after pleading guilty to mail fraud and tax counts, and Robert Falor, who was the chief operating officer of The Falor Companies, is in custody awaiting disposition of tax charges.

Gary Shapiro

The developments were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.

The government is being represented by Assistant U.S. Attorneys Ryan S. Hedges and Barry Jonas.

Tax evasion carries a maximum penalty of five years in prison and a $250,000 fine. In addition, defendants convicted of tax offenses face mandatory costs of prosecution and remain civilly liable to the Government for any and all back taxes, as well as a civil fraud penalty of up to 75 percent of the underpayment plus interest. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

It must be income tax preparation time, as one can see from this press release from the US. Attorney’s Office:

FORMER CHICAGO BEARS PLAYER AND COOK COUNTY SHERIFF’S DEPUTY CHARGED SEPARATELY WITH FAILING TO FILE FEDERAL TAX RETURNS

CHICAGO — A former Chicago Bears football player and a Cook County sheriff’s deputy who worked part-time as a collegiate and professional sports referee were charged separately today with misdemeanor federal offenses for allegedly failing to file federal income tax returns over a period of four years.

One defendant, CHRISTOPHER ZORICH, 43, of Chicago, who played for the Chicago Bears from 1991 through 1996 and for the Washington Redskins in 1997, was charged with four counts of failing to file federal income tax returns for calendar years 2006 through 2009 when he allegedly had gross income totaling more than $1 million.

Through his attorney, Zorich authorized the government to disclose that he is cooperating with the Internal Revenue Service and will plead guilty to the misdemeanor charges.

The other defendant, STEPHEN R. PAMON, 61, of Elk Grove Village, a Cook County sheriff’s deputy who officiated college basketball, football, and baseball games, as well as Arena Football League games, was also charged with four counts of failing to file federal income tax returns for calendar years 2006 through 2009 when he allegedly had gross income totaling nearly $325,000.

Charging documents were filed today against both defendants in U.S. District Court. They will be arraigned separately on dates still to be determined.

According to the charges against Zorich, he graduated from the University of Notre Dame in 1991 and from its law school in 2002. He was employed by a Chicago law firm from 2002 through 2006, and by the University of Notre Dame from 2008 through 2010.

In 1993, Zorich founded and served as the executive director of the not-for-profit Chris Zorich Foundation, which was established to help disadvantaged families in the Chicago area and provide scholarships for disadvantaged students to attend Notre Dame.

The Foundation paid Zorich rental income for the use of property of approximately $3,000 per month.

In 2004, the Foundation’s registration with the Illinois Attorney General’s Office was cancelled after the Foundation failed to submit an annual report for calendar year 2002, making the Foundation ineligible to solicit, receive, or hold funds in Illinois.

However, the Foundation continued to receive contributions and make rental payments to Zorich during the years 2006 through 2009, despite failing to file tax forms reporting the payments to Zorich during those four years.

The charges allege that during those years, Zorich received

• deferred compensation from the Chicago Bears, as well as
• rental income from the Foundation
• income from
  • the law firm
  • Notre Dame
  • personal appearance fees

He allegedly received gross income of at least

• $331,625 in 2006
• $70,996 in 2007
• $372,448 in 2008
• $242,298 in 2009

but failed to file federal income tax returns for each of those years.

According to the charges against Pamon, in addition to working for the Cook County Sheriff’s Department, he worked for a private security company from 2005 through 2008, and from 1973 through at least 2010, he worked as a referee officiating collegiate games, including for the Big Ten Conference, and since 2000 as a referee in Arena Football League games.

The charges allege that Pamon received gross income of at least

• $102,657 in 2006
• $87,474 in 2007
• $59,082 in 2008
• $75,525 in 2009

but failed to file federal income tax returns for each of those years.

Gary Shapiro

The charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

Failure to file a federal income tax return is a federal misdemeanor and carries a maximum penalty of one year in prison and a $100,000 fine on each count. In addition, a defendant convicted of tax offenses faces mandatory costs of prosecution and remains civilly liable to the government for any and all back taxes, as well as a potential civil fraud penalty of up to 75 percent of the underpayment plus interest. If convicted, the Court must determine a reasonable sentence to be imposed under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented in both cases by Assistant U.S. Attorney William Hogan.

The public is reminded that an information contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

David McSweeney

A press release from State Rep. David McSweeney:

McSweeney Fulfills First Campaign Pledge on Day One

SPRINGFIELD – On his first day serving in the 98th General Assembly, State Representative David McSweeney (R-Barrington Hills) honored one of his campaign pledges by filing legislation to repeal the 67% tax increase which was signed into law nearly two years ago. If passed, the legislation (HB 91) will end the largest tax increase in Illinois history.

“It might be a novel concept for many here in the General Assembly, but I came here to do what I said I was going to do,” said McSweeney.

“These tax increases have devastated hard working families and job creating small businesses and I will be pushing hard for its expiration.”

The 98th General Assembly was inaugurated today at the University of Illinois Springfield campus as McSweeney was joined by dozens of incoming legislators from across the state.

McSweeney highlighted HB 91 and his additional campaign pledges of not accepting a legislative pension or benefits, taking a 10% pay cut and reducing his legislative allotment for office operations by 10%.

“It is a privilege to serve the residents of the 52nd district and I pledge to fight for meaningful fiscal reforms to get our state back on track,” added McSweeney.

“With Illinois’ future obligations estimated to exceed $200 billion, it’s time to make the hard decisions and do what is right and necessary for our state.”

Will Illinois income taxpayers finally notice that they are paying two more percentage points to their government?

It took long enough, but Illinois wage earners will start seeing the extra two percent taken out of their checks this month.

At the same time the Democratic Party’s income tax hike went into effect two years ago, the Feds cut the Social Security tax by two points.

One cancelled out the other, so people in Illinois can be excused for not noticing what Illinois Democrats did to them.

Now with the reinstatement of the Federal payroll tax, Illinois employees might just notice the 67% state income tax of two years ago.

Then, again, maybe they won’t.

A press release from the U.S. Attorney’s Office:

BARBADOS MAN SENTENCED TO 9½ YEARS IN PRISON FOR USING STOLEN IDENTITIES TO FRAUDULENTLY OBTAIN TAX REFUNDS

CHICAGO — A Barbados national who lived in cities across the United States was sentenced today to 9½ years in federal prison for using stolen identities to file approximately 645 false federal income tax returns in the names of deceased individuals and seeking refunds totaling more than $120 million.

The defendant, Andrew J. Watts, was ordered to pay restitution of more than $1.6 million that he actually obtained and used from the scheme.

Watts, 35, whose last known residence was in Los Angeles, was sentenced to 7½ years for mail fraud, followed by a mandatory consecutive term of 2 years in prison for aggravated identity theft. U.S. District Judge Joan Gottschall, who imposed the sentence in Federal Court in Chicago, also ordered Watts to pay $1,676,399 in restitution and ordered forfeiture of the same amount.

Watts, a permanent resident alien who resided previously in Chicago, New York, and Beverly Hills, Calif., was arrested in April 2011 in Kansas City. He pleaded guilty in July 2012.

Gary Shapiro

The sentence was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; Kathryn Keneally, Assistant Attorney General, Department of Justice, Tax Division; Richard Weber, Chief of the Internal Revenue Service Criminal Investigation; and Thomas Jankowski, Acting Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago.

“IRS-Criminal Investigation has made investigating refund fraud and identity theft a top priority and we will vigorously pursue those who undermine the integrity of the U.S. tax system,” Mr. Weber said. “Individuals who commit refund fraud and identity theft of this magnitude deserve to be punished to the fullest extent of the law.”

Watts fraudulently obtained more than $19 million in tax refunds by filing hundreds of bogus tax returns claiming refunds between 2007 and 2011.

Watts prepared and submitted false federal tax returns using the names and social security numbers of actual taxpayers who were deceased and in the names of deceased individuals who were falsely represented to be alive at the time the returns were filed.

He then directed that the false tax refunds be mailed to addresses he controlled and electronically deposited into bank accounts under his control, including an address and a bank account in Chicago.

According to court documents, Watts used more than $1.6 million in tax refunds

• to rent apartments in various cities,
• to purchase luxury automobiles, jewelry, airline tickets between California and New York, as well as
• for gambling and
• to provide cash to his girlfriend.

Approximately $17 million that Watts obtained in fraudulent refunds was frozen in various accounts and recovered by the IRS.

The government is being represented by Assistant U.S. Attorney Patrick J. King, Jr., and Michelle M. Petersen, Trial Attorney in the Justice Department’s Tax Division.

Dee Beaubien

David McSweeney

McHenry County Blog commenters are repeatedly posting that David McSweeney is not telling the truth in his mailings when he says the following:

“Calling a 67% tax increase ‘fair.’

“Beaubien has said that the 67% income tax hike has led to a ‘fair’ rate for out working families.”

Here is an enlargement of the use of the word “fair” by David McSweeney to characterize the opinion of opponent Dee Beaubien’s about the 67% income tax increase.

After urging from one, I wrote Tribune Editorial Page Editor Bruce Dold and asked about it:

“Dee is being cited in a footnote by McSweeney that Dee used the word ‘fair’ to describe the income tax hike.

“I can’t find the interview online or a transcript.

“Anyway I can get access to one or the other?

“Look at the bottom left of the attached mailing for the quote and footnote number.”

I sent the following mailing, which I call the “scratch out” postcard:

Fact checking with the Chicago Tribune revealed that Dee Beaubien did use the word “fair” to describe the huge income tax increase. (See bottom left of text. Click to enlarge.)

Here is the enlargement of the footnotes I sent the Tribune:

The footnote to the “fair” quote of Dee Beaubien is seen to be to the Chicago Editorial Board interview of Dave McSweeney and Dee Beaubien.   It has been confirmed by the Editorial Page Editor Bruce Dold.

Here’s the answer I received from Dold:

“Cal,

“We don’t have a transcript or audio/video, but Kristen McQueary recalls that Dee did say that.”

Active commenter Dave, who does not want his last name used, also reached out to Dold and got the following response, which is found in a comment below, but which deserves to be seen in conjunction with the response I got from Dold:

“Dee Beaubien and Dave McSweeney appeared together for an endorsement interview with members of the editorial board.

“Both candidates said they would roll back the income tax increase. They were asked how they would replace the revenue and whether they thought the individual income tax rate was in line with other states.

“Beaubien said: “That’s right. I think it’s fair. So there we are.” But she did make it clear she wanted to roll back the tax increase.

“I did not attend this interview. This is based on the notes of two board members who did. We did not record the interview, but the candidates were free to record it. I don’t know if either candidate did.”