The following summaries were obtained from the Internal Revenue Service Web site:
Steven P. Amato
On October 23, 2008, Portland, Maine, Steven P. Amato, formerly of Bremen, Maine, was sentenced to 24 months in prison, followed by three years of supervised release, and ordered to pay a $10,000 fine and $100,041 in restitution to insurance companies. According to court documents, the defendant previously paid more than $700,000 to the Internal Revenue Service (IRS) for his back taxes, interest and penalties. Amato pleaded guilty on June 27, 2008, to one count of health care fraud and three counts of federal income tax evasion for the years 2001, 2002 and 2003. Until 2005, Amato was a chiropractor practicing in Damariscotta, doing business as the Center for Alternative Healing. Court records stated that Amato committed health care fraud during the years 2000 to 2004 by submitting fraudulent claims to insurance companies that billed for services he did not actually render to his patients. Many of these false claims exaggerated the amount of time that Amato spent with his patients performing therapeutic procedures or conducting physical performance tests or measurements. Amato also submitted false claims that billed insurance companies for patient visits that never occurred. The false claims caused losses to insurance companies that totaled approximately $100,441. Court records also stated that Amato committed tax evasion by hiding a substantial amount of business receipts in a bank account that he opened at the Chase Manhattan Bank in New York which he failed to disclose to his return preparers. He then filed income tax returns that underreported taxable income by $193,096 for 2000, 165,362 for 2001, $241,146 for 2002 and $241,968 for 2003. His total tax loss for these years was approximately $319,675.
Ivan G. Carney
On January 11, 2005, in Wichita, KS, Ivan G. Carney was sentenced to 21 months in prison for tax fraud. Carney, a self-employed chiropractor, willfully failed to file a tax return and concealed $48,347 in income during 1997 in an effort to avoid paying federal income taxes of $11,884. Testimony also showed that in 1998, Carney willfully failed to file a tax return and concealed $146,489 in income in an effort to avoid paying $59,277 in federal income taxes.
Robert Lee Cavins, Jr.
On September 6, 2007, Robert Lee Cavins, Jr was sentenced to 33 months in prison for tax evasion. The court also ordered Cavins to pay $201,442 to the Internal Revenue Service, which represents the amount of unpaid taxes plus interest and penalties. On March 21, 2006, Cavins was found guilty of evading the payment of $119,595 in federal income tax owed for the years 1992, 1993 and 1994. Cavins, who failed to file income tax returns, placed money and property – including his former home and chiropractic office – in the names of other persons and entities (including trusts such as Cavins Residential Trust and Cavins Chiropractic Trust). He also deposited income from his chiropractic business and elsewhere into bank accounts in the names of other persons and entities. Cavins used $70,000 in cash to fund a bank account for Advantage Trust at Swiss American Bank in Antigua.
Mark S. Cox
On July 10, 2007, in Charlotte, NC, Mark S. Cox was sentenced in federal court to 24 months in prison and ordered to pay a $50,000 fine and $1.4 million in restitution to Wachovia Bank and to several insurance companies. In April 2005, Cox pleaded guilty to having submitted more than $360,000 in false health care-related claims, and for laundering the proceeds he derived from that health care fraud. Under the terms of his plea agreement, Cox is required to forfeit $1.4 million to the government and forfeit his chiropractic license, and will not be eligible for reinstatement during the entire term of his federal sentence. Additionally, Cox was required to issue a full, written, public statement which acknowledged the nature and extent of his criminal conduct. According to court documents, Cox had several businesses: Diagnostic Testing Services, Inc.; Southeast Medical Management, Inc.; and Total Care Family Health Center; all located in Mecklenburg County. Cox, through his business, Diagnostic Testing Services, Inc., submitted false claims to health insurance companies of diagnostic tests which were allegedly interpreted by a medical doctor, when, in fact, no medical doctor was involved in any part of the testing services. In addition, Cox admitted to his participation in a $2 million fraud on Wachovia Bank wherein Cox made materially false statements to the bank on loan application papers, all of which would have adversely affected the bank’s decision to issue the loan.
Gregory R. Daniels
On Dec. 12, 2002, a Wisconsin chiropractor, Gregory R. Daniels, and his wife, Susan V. Daniels, were sentenced to 15 months in prison for tax evasion for failing to report over $260,000 in income on their personal income tax returns for 1993 and 1994. The Daniels were also ordered to serve three years supervised release following their release from prison and pay $13,014 for the costs of prosecution. According to court records, Gregory Daniels is the sole-proprietor of Daniels Chiropractor clinic in West Allis, Wis. During 1993 and 1994, Susan Daniels worked as a receptionist and performed various office duties in her husband’s clinic. During a jury trial, it was shown that the Daniels had unreported taxable income of $260,892 for 1993 and 1994. By understating their income for those years, they attempted to evade $74,849 of personal income taxes.
John D. Fitzgerald
On July 10, 2008, in Columbia, S.C., John D. Fitzgerald, of Las Vegas, Nevada, was sentenced to 12 months in prison for tax evasion. Fitzgerald failed to report $930,848 in income from his Accurate Chiropractic Clinic in Mt. Pleasant, South Carolina and evaded $263,381 in federal income taxes. Fitzgerald committed the tax evasion by transferring his income to a fraudulent trust and then to an offshore bank account in the Bahamas. Fitzgerald paid the full amount of tax due prior to sentencing.
David R. Funk
On March 23, 2005, in Sacramento, CA, Dr. David R. Funk, a former chiropractor, was sentenced to a year in prison to be followed by one year of supervised release. Funk was also ordered to pay costs of $1,227 and an assessment of $200. Funk pleaded guilty to two counts of filing false income tax returns on November 3, 2004. Funk admitted in his plea agreement that he filed false tax returns reporting negative adjusted gross income which reflected his use of two tax evasion schemes that involved the creation of shell companies to hide taxable income and create paper losses. In one of the schemes, taxable income was diverted away from Funk on paper through a series of corporate entities that in fact had no economic substance. Although Funk earned and used income, he did not report it on his returns. The other scheme, Funk created a joint venture entity which reported bogus losses which he reported on his personal tax return. Funk admitted evading over $183,000 in federal income taxes for tax years 1997, 1998, and 1999. Funk was a client of Richard Marks, who was a leader of the Anderson’s Ark and Associates organization. Marks was sentenced to 81 months in prison on November 14, 2002.
Lisa M. Getas
On October 11, 2007, in Reno, Nev., Lisa M. Getas, of Carson City, was sentenced to 24 months in prison, to be followed by one year of supervised release, and ordered to pay $48,792 in restitution to the Internal Revenue Service (IRS). Getas was convicted of three counts of filing fraudulent income tax returns on July 2, 2007. According to court documents, Getas controlled an offshore corporation in Nevis, West Indies. Getas wire-transferred funds to her offshore corporation’s “warehouse” bank account and caused these funds to be fraudulently characterized as business expenses and mortgage payments to reduce her income taxes. After sending the money offshore, she repatriated the funds back to the United States and avoided paying taxes on them by fraudulently calling them loan proceeds. As a result, Getas falsely understated her income on her Individual Income Tax Returns for the tax years 1999, 2000, and 2001. The evidence further established that Getas falsely overstated the business expenses of Lisa Bray Getas, Ltd., her chiropractic business, on the company’s Form 1120S income tax returns for the tax years 1999, 2000 and 2001. This resulted in the company taking improperly large deductions.
On November 17, 2008, San Diego, Calif., Chiropractor Kathryn Hanes was sentenced to 18 months in prison and ordered to pay $80,000 in restitution. Her partner, Madonna Hanes, was sentenced to five months in prison. In March 2008, a jury in federal court convicted the defendants on charges of conspiracy to defraud the United States and income tax evasion. According to the indictment Kathryn Hanes and Madonna Hanes failed to file tax returns, mailed frivolous letters to the IRS claiming that (a) they were not U.S. citizens, (b) the IRS had no authority or jurisdiction to collect income tax from them, and (c) they earned no income and owed no income taxes. Trial evidence showed that the Hanes earned hundreds of thousands of dollars from Kathryn Hanes’ chiropractic business called “Biophysics Chiropractic.” In letters sent to the IRS, defendant Kathryn Hanes claimed that the IRS lacked authority to collect income taxes from her because she placed her income in a “pure trust” that did not have income tax reporting requirements. She also claimed that she was not a U.S. citizen and that she did not engage in business in the United States. Madonna Hanes sent similar correspondence to the IRS and spent the proceeds of the conspiracy on multiple trips to Hawaii, expensive automobiles, and other goods and services.
On August 7, 2006, in Salt Lake City, UT, Lance Hatch, a chiropractor, was sentenced to 20 months in prison followed by 3 years of supervised release and ordered to pay a $10,000 fine for conspiring to defraud the IRS in connection with a tax fraud scheme. The scheme called for Hatch to place his chiropractic business into trust in 1993, then continue to operate his business as usual. In addition to that arrangement, Hatch sold the same fraudulent trust scheme as a licensee of Advanta Strategies and World Contractual Services, though he admitted in his plea agreement that he had no actual knowledge of trusts and never actually performed the duties of a trustee. In one case, Hatch confirmed he filed a lien against a client’s assets in an attempt to frustrate IRS efforts to collect an outstanding tax debt. Hatch caused a total tax loss to the government of more than $1 million, including $248,000 related to his participation in the trust scheme.
Bruce E. Hedendal
On October 22, 2004, in West Palm Beach, FL, Bruce E. Hedendal was sentenced to a term of imprisonment of 36 months, supervised release term of 3 years and ordered to pay restitution of $717,899 to the IRS. In August 2000, a federal grand jury charged Hedendal with three counts of income tax evasion for the years 1993 through 1995. According to the indictment, Hedendal attempted to evade paying a total of about $180,000 in taxes on income of about $561,000; failed to file income tax returns; concealed his true income through the use of sham trusts and made false representations to the IRS. When summonsed to face tax evasion charges, Hedendal fled to Canada and ultimately to Australia, where he practiced under the names Erick Hedendal. In October 2003, the Defendant was located in Australia and was extradited back to the U.S. On July 2004, Hedendal pled guilty to one count of income tax evasion.
On December 19, 2008, in Pittsburgh, Pa., Douglas Henderson, of Lower Burrell, Pa., was sentenced to 48 months in prison on his conviction for defrauding Highmark Blue Cross/Blue Shield between 1995-2002. Henderson was also ordered to pay over $12.1 million restitution to Highmark. Henderson, a former chiropractor, pleaded guilty in April 2006 to health care fraud, conspiracy and tax fraud. According to information presented in court, Henderson defrauded Highmark by falsely claiming reimbursement under patients’ health care insurance policies for treatment that had not actually been provided. False claims worth more than $20 million were submitted to Highmark, and Henderson received approximately $12.1 million in insurance benefits. The patients named in the claims agreed to cooperate with Henderson’s scheme in return for kickbacks. One employee and 13 patients have also been prosecuted for participating in Henderson’s fraudulent scheme against Highmark.
On March 31, 2006, in Miami, FL, Eric Innes was sentenced to 36 months imprisonment, followed by three years supervised release, on three counts of tax evasion. The chiropractor was convicted for evading $40,000 in taxes on income earned in 1998 and 1999. It further alleged that Innes evaded the collection of more than $120,000 in taxes, interest, and penalties that he owed for tax years 1992-1995. During the trial, Innes testified that he was not a U.S. citizen for purposes of federal income taxes but was a US citizen for all other purposes including carrying a passport and registering to vote. Innes testified that he was not required to pay income taxes and that the income tax on wages was unconstitutional. Innes testified that he attended a meeting at a restaurant in West Palm Beach were he met people who taught him anti-tax ideas. Innes further testified that since his arrest, he realizes that the views regarding the tax system were wrong.
Thomas M. Klassy
On April 27, 2009, in Sacramento, Calif., Thomas M. Klassy, of Weed, Calif., was sentenced to 135 months in prison. On June 5, 2008, a jury found Klassy guilty of making false declarations under penalty of perjury in a bankruptcy case, fraudulently concealing property in a bankruptcy case, and money laundering. The evidence introduced at trial showed that Klassy committed perjury in his bankruptcy proceedings and thereby concealed substantial assets from the bankruptcy court. Among the false statements he made under oath were that he did not own an airplane, a pickup truck, a one-third interest in a 220-acre ranch, $205,000 he received for the sale of his chiropractic business, and two shell corporations named Rose Ventures Inc. and Aromor Inc. As to the sale of his business, Klassy said that he sold it for only $60,000. The evidence showed that he gave the bankruptcy court trustee a forged contract while concealing the true contract of $265,000. Klassy was also convicted of money laundering for funneling $205,000 through an attorney’s trust account and then back to Rose Ventures Inc. and Aromor Inc. bank accounts. He held these shell corporations in the names of straw-men to avoid having his name attached to the corporations. Klassy used blank checks that had been pre-signed by the straw-man to spend the corporations’ money.
On July 30, 2008, in Miami, Fla., Patrick Bronder, a personal trainer residing in Boca Raton, Florida, and Michael Manno, a former chiropractor living in Lodi, New Jersey, were sentenced for their participation in a scheme to illegally distribute human growth hormone and other pharmaceuticals and to commit tax evasion. Bronder was sentenced to 87 months in prison, to be followed by three years of supervised release, and ordered to forfeit $325,913 in illegal proceeds. Manno was sentenced to 38 months in prison, to be followed by three years supervised release, and ordered to pay a $10,000 fine and to forfeit $128,533 in illegal proceeds. As outlined in court documents, from April 2001 through June 2002, Bronder purchased prescription drugs, including human growth hormone and drugs for the treatment of cancer, high cholesterol and other medical conditions from Manno. Manno purchased these drugs from individuals who acquired the drugs, directly and indirectly, from patients who had obtained the drugs through clinics in New York City through Medicaid. Bronder and Manno sold the drugs to a pharmaceutical wholesaler located in Boca Raton, Florida for more than $6.8 million. At the same time, Bronder received additional compensation of $325,000 from the same pharmaceutical wholesaler for the sale of prescription drugs. Bronder directed that more than $3.3 million of the money received from the pharmaceutical wholesaler be wired into bank accounts in the Bahamas established by him and another co-conspirator, Michael Sherman. Bronder caused most of that money to be repatriated into the United States through more than 3,000 withdrawals from automatic teller machines in southern Florida.
Paul M. Neumann
On March 4, 2008, in Toledo, Ohio, Paul M. Neumann was sentenced to 37 months in prison to be followed by three years of supervised release. Timothy D. Neumann was sentenced on February 25, 2008, to 33 months in prison to be followed by three years of supervised release. Both defendants were each ordered to pay $1,710,725 in restitution, a $75,000 fine, a $200 special assessment fee, and $550,000 for the cost of prosecution. Paul and Tim Neumann were charged in August 2005 with one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering. The charges related to the defendants’ ownership and/or operation of the former MedBack chiropractic/medical clinics in Toledo, Oregon, Bowling Green, Fremont, Findlay, Bryan, and Sandusky. The Informations alleged that from June 1997 to October 2000, the defendants caused the MedBack clinics to submit $4,860,017 in false billings for non-covered chiropractic services to Medicare, Medicaid, BWC, Medical Mutual of Ohio, Anthem, TriCare, and other health care benefit programs. The Informations further alleged these health care benefit programs paid the MedBack clinics $1,710,725 based on the allegedly false bills. The Informations also alleged that the defendants conspired to commit money laundering by using money derived from the alleged fraudulent billing scheme to make $1,589,439 in salary payments to the MedBack medical doctors, thereby allowing the fraudulent billing scheme to continue.
Ernst J. Neumeyer and Erich G. Neumeyer
On May 18, 2006, in Madison, WI, Ernst J. Neumeyer and Erich G. Neumeyer were each sentenced to 15 month prison terms and ordered to pay a $30,000 fine. The two co-owners of Neumeyer Chiropractic Clinic in Wausau, WI pleaded guilty on March 3, 2006 to filing false income tax returns by understating their incomes. The two brothers diverted receipts from their company and did not pay taxes on the diverted income.
Roy A. Ottinger II
On January 22, 2008, in Phoenix, Ariz., Roy A. Ottinger II was sentenced to 18 months in prison and was ordered to cooperate with the Internal Revenue Service (IRS) in order to come into compliance. Ottinger was charged in an Information on August 16, 2007 with two counts of willful failure to file federal income tax returns. According to court documents, Ottinger was a licensed chiropractor in the state of Arizona, conducting his practice in Apache Junction, Ariz., through Optima Multi-Care PLC, a Limited Liability Company that Ottinger incorporated in 1999. In 2001 and 2002, Ottinger earned a gross income from his practice of $1,110,263 and $ 826,309 respectively. Ottinger also earned rental income of $51,466 in 2001 and $59,807 in 2002 generated from numerous residential and commercial properties that he owned in the Apache Junction area. The Information states, Ottinger did not file a correct tax return between 1992 and 2005 and espoused that his income was excluded from taxation based upon the United States Constitution. Beginning as early as 1998 the IRS initiated examinations on Ottinger for his 1994, 1995 and 1997 tax return delinquencies. Ottinger responded to the IRS inquiries by providing various letters to the IRS espousing his anti-tax views and filed Individual Income Tax Returns reflecting zero income for the years 1994, 1995 and 1997.
On March 27, 2008, in Oakland, Calif., Ramon Reynoso was sentenced 24 months in prison and ordered to pay a $50,000 fine and $1,162,222 in restitution for tax evasion. Reynoso, of Castro Valley, Calif., pleaded guilty on September 13, 2007 to one count of tax evasion. According to the plea agreement, he admitted that from 1991 through 2004, he was a self-employed chiropractor. He agreed that his taxable income from 2000 to 2003 was $3.1 million and the tax due and owing on that income was $1.16 million. Reynoso admitted that he had last filed his personal federal income taxes for the calendar year 1996, and despite earning a significant income during the calendar year 2001, he willfully failed to file his federal income taxes by placing assets in nominee accounts, including the Mary S. Caballero Family Trust and the Tlaquepaque Familia Trust, to conceal his ownership of assets. He also used a Zeus Trust to conceal his receipt of income and opened bank accounts using false Social Security Numbers.
On August 27, 2008, in Buffalo, N.Y., John Weisberg, a chiropractor, was sentenced to 21 months in prison and as a condition of supervised release, he was also ordered to cooperate with the Internal Revenue Service (IRS) in filing tax returns and paying back taxes. A federal jury convicted Weisberg of three counts of failure to file tax returns following a trial in February 2008. According to trial evidence, Weisberg became a member-client of a Florida-based “tax defier” organization known as American Rights Litigators (ARL) in 1997. Weisberg purchased an ARL service by which ARL-affiliated lawyers and accountants, on Weisberg’s behalf, responded to IRS notices seeking his returns. According to court documents, letters to the IRS advanced false and frivolous “tax defier” claims and requests purporting to set forth reasons why the defendant was not required to file returns or pay taxes. Weisberg stopped filing tax returns in 1995 and did not pay any federal income taxes between 1995 and 2003. The tax loss associated with Weisberg’s failure to file is approximately $144,000. Despite Weisberg’s claims during trial that he had relied in the good faith advice of ARL, the evidence at trial showed that Weisberg was warned of his legal duty to file returns not only by the IRS, but also by Buffalo-area accountants and attorneys. Evidence at trial also showed that Weisberg employed other tax schemes, including an offshore bank account in the Bahamas, to evade the IRS.
This page was revised on June 9, 2009.