Maryland Lawyer Pleads Guilty to Under-reporting Income Diverted from Law Practice

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Tax Analysts Tax Notes reports that Potomac, Maryland, attorney George Nelson Smith pleaded guilty on November 1, 2013 to filing a false tax return and failing to file a tax return. According to his plea agreement, Smith is an attorney and owner of the Smith Law Firm, which specialized in litigating tort actions. Smith did not pay himself a salary, and used business funds for personal expenses. For example, on his individual tax return for 2005, which he filed on December 16, 2007, Smith stated that his income was $18,972.41, even though he knew that he used money from the law firm's corporate account to pay for personal expenditures that were not accounted for as income on his tax return. These personal expenditures included over $4,100 to a homeowners' association for his personal residence; over $83,000 in mortgage payments on his personal residence; and over $15,000 to a private school for his children's education. Smith failed to file a tax return for 2007, even though he took at least $668,000 from the law firm for personal expenses, including the purchase of a home in Potomac.

Smith will be required to pay restitution of $91,547, the total loss caused by his conduct. Smith faces a maximum sentence of three years in prison for filing a false tax return and one year in prison for failing to file a tax return.

 

Topics:  Embezzlement, False Reporting, Guilty Pleas, Tax Evasion, Tax Returns

Published In: Criminal Law Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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