The owner of a landscaping and contracting business in Monmouth County has pleaded guilty to tax evasion, admitting that he evaded more than $300,000 in federal income taxes, U.S. Attorney Christopher J. Christie announced. According to a press release from Christie's office, Christopher M. Aldarelli Sr., 40, of Howell, appeared before U.S. District Court Judge Stanley R. Chesler in Newark on April 13 and entered a guilty plea to Count Two of an indictment which charged him with willful tax evasion for calendar year 1999. He also admitted evading taxes for other years.

Aldarelli was arrested in February on an indictment charging him with three counts of tax evasion for calendar years 1998, 1999 and 2000. Chesler scheduled sentencing for Sept. 13.

The count to which Aldarelli pleaded guilty carries a statutory maximum penalty of five years in prison and a fine of $100,000, according to the press release. The remaining counts will be dismissed, however, all of the conduct (known as relevant conduct) described in the indictment will be taken into consideration when Chesler imposes sentence.

The indictment sets forth that from 1998 through 2000, Aldarelli ran two corporations, Aldo 1 Landscaping and Lawn Service Inc. and Aldarelli Enterprises Inc., which performed a large volume of paving, construction, high-end landscaping and lawn-cutting work for private residences and municipalities.

Aldarelli admitted during his guilty plea that because these businesses were "S" corporations, he was required to report any income derived from the businesses on his U.S. individual tax return. The indictment further set forth that for the three years in question, Aldarelli reported that he owed tax in the amount of just under $15,000 for the three years combined.

For calendar year 1999, Aldarelli reported taxable income in the amount of $66,232 with a resulting tax in the amount of $12,121. During his guilty plea, Aldarelli admitted that he intentionally failed to include an additional amount of nearly $300,000 in personal income he received during 1999 on that tax return in an effort to evade paying income taxes, according to the press release. He also admitted that for calendar years 1998, 1999 and 2000, he owed an additional total tax of approximately $317,000 on the basis of income he failed to report.

Aldarelli admitted that this additional income stemmed from the receipt of cash for work his companies performed which he did not report, as well as from cash he withdrew from business accounts but used for personal expenses. He also admitted to writing checks to himself from the business accounts which he used for personal and non-business-related expenses, according to Christie.

The guilty plea of Aldarelli represents the latest conviction to arise from Operation Bid Rig, the same investigation which has led to charges being filed against more than 18 officials in Monmouth and Ocean counties over the last several years, including convictions of the former mayors of Asbury Park, Ocean Township, West Long Branch, Brick Township, Hazlet and Keyport.

The Internal Revenue Service today announced there will be no change in the interest rates for the calendar quarter beginning January 1, 2007.  The interest rates are as follows:

-  eight (8) percent for overpayments [seven (7) percent in the case of a corporation];
-  eight (8) percent for underpayments;
- ten (10) percent for large corporate underpayments; and
- five and one-half (5.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.  Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.  The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.  The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during October 2006.

Over the past several years, Justice Department prosecutors in concert with IRS agents have aggressively worked to identify and prosecute tax cheats and promoters of tax fraud schemes. Increased efforts to stop fraud have resulted in numerous federal injunctions to stop the sale of bogus tax advice; court orders for the IRS to obtain records of offshore credit cards used by the people who transfer assets overseas to evade their tax obligations; and lengthy prison sentences for individuals who engage in fraudulent behavior.

Today the Justice Department announced that Lanny R. White of Orem, Utah pleaded guilty to a felony charge of conspiracy to defraud the Internal Revenue Service (IRS) and to commit mail and wire fraud, in connection with the promotion of a tax and investment fraud scheme. White is the 11th defendant who promoted a trust scheme that defrauded the IRS of more than $5 million in tax revenue.

Other convictions in this case include:

*In March 2004, Orem, Utah attorney Todd Cannon pleaded guilty to a felony charge of conspiracy to commit mail and wire fraud and to defraud the IRS. Cannon admitted that his actions cost the federal treasury almost $3 million in lost tax revenue. Cannon also admitted that he allowed his fellow conspirators to fraudulently use and invest over $1 million of client funds for purposes other than those promised to the clients. As a condition of his guilty plea, Cannon agreed to surrender his law license.

*In March 2004, Dr. Lance Hatch, a Walla Walla, Washington chiropractor, pleaded guilty to a felony charge of conspiracy to defraud the IRS. Hatch admitted that his actions cost the federal treasury more than $3 million in lost tax revenue.

*In April 2004, Valencia, California attorneys Martin Arnoldini and Jerrold Boschma each pleaded guilty to a felony charge of conspiracy to commit mail and wire fraud and to defraud the IRS. Arnoldini and Boschma admitted their actions caused a loss of federal tax revenue totaling approximately $3.6 million and also admitted to participating in fraudulent investment schemes, which led to clients losing approximately $1.3 million. As a condition of their guilty pleas, Arnoldini, who held an advanced degree in tax law, and Boschma agreed to surrender their law licenses.

*In April 2004, David J. Orr of Salt Lake City, Utah pleaded guilty to a felony charge of conspiracy to commit mail and wire fraud and to defraud the IRS. Orr admitted that his actions cost the federal treasury between $5 million and $10 million in lost tax revenue. Orr also admitted that he obtained between $5 million and $7 million from clients by misrepresenting his investment experience and the safety and expected return on the investments he marketed. Orr further admitted causing client assets to be commingled and misappropriated.

*In April 2004, Sandy, Utah attorney Michael Behunin pleaded guilty to a felony charge of conspiracy to commit mail and wire fraud and to defraud the IRS. Behunin admitted that his actions cost the federal treasury between $950,000 and $1.5 million in lost tax revenue. Behunin also admitted to participating in a fraudulent railroad bond investment scheme, causing clients to lose between $350,000 and $450,000. As a condition of his guilty plea, Behunin agreed to surrender his law license.

*In February 2005, R. Scot Stokes of Henderson, Nevada pleaded guilty to a felony charge of conspiracy to commit mail and wire fraud and to defraud the IRS. Stokes admitted that his actions cost the federal treasury between $7 million and $10 million. Stokes also admitted participating in fraudulent investment schemes that caused customers to lose between $2.5 million and $5 million.

*In March 2005, former IRS Revenue Agent Marissa Hyde of Overland, Kansas, who pleaded guilty in August 2004 to a felony charge of interfering with the administration of the internal revenue laws, was sentenced to 3 months in federal prison, 3 months home confinement, and was fined $5,000. Hyde admitted using her previous employment as an IRS revenue agent to give the trust scheme an appearance of legitimacy.

*In April 2005, Edward T. Woodger of Sandy, Utah pleaded guilty to a felony charge of conspiracy to commit mail and wire fraud and to defraud the IRS. Woodger admitted that his actions cost the federal treasury more than $7 million. Woodger also admitted participating as the “offshore money man” in fraudulent investment schemes, that caused customers to lose between $2.5 million and $5 million.

*In February 2006, Max C. Lloyd, a Midvale, Utah CPA licensed in California was sentenced to 21 months in federal prison for aiding and assisting in the preparation of a false federal income tax return. Lloyd previously pleaded guilty to the felony charge in October 2005.

A federal court in Tampa, Fla. has permanently barred David Marvin Swanson of Sarasota from promoting an illegal tax fraud scheme that involves sham trusts and limited liability companies, the Justice Department announced today. The court found that Swanson, who uses the business name Dynamic Monetary Strategies, promotes a system of sham trusts called “unincorporated business trust organizations” and limited liability companies on his Web site and in a manual he sells to customers.

According to the court, Swanson “falsely advises his customers that by placing the customers’ assets and income into these trusts the customers can avoid federal income tax.” The court concluded that “in organizing and selling his abusive tax schemes, Swanson made false or fraudulent statements regarding the excludibility of income.”

The order requires Swanson to notify his customers of the injunction and to give the Justice Department a list with his customers’ names, addresses, e-mail addresses, Social Security numbers and telephone numbers.

More information about this case is available at http://www.usdoj.gov/tax/txdv04111.htm

Jeff Castaldo
Staff Reporter

WASHINGTON -(USDOJ) Robert Wayne Hallock, an attorney from Chicago, was convicted by a federal judge today of tax evasion for attempting to hide from the government over $1 million obtained by selling fraudulent Certificates of Deposit (CD), the Justice Department and Internal Revenue Service (IRS) announced.

According to the indictment and evidence introduced at trial, in February 1997, Hallock, formerly a partner at the law firm of Kirkland & Ellis LLP, sold a fraudulent CD from which he received approximately $1.8 million dollars. In an attempt to hide that income from the government, Hallock funneled it through a Florida bank account in the name of Himmel & Grund, LLC and hired an associate to use the funds from that bank account to purchase hundreds of thousands of dollars in cashier’s checks that Hallock used to spend on personal expenditures.

Hallock’s expenditures included, among other things, $150,000 in checks to his girlfriend, and her parents; and a $100,000 honeymoon aboard a private yacht. In addition, Hallock opened additional bank accounts with the funds from the sale of the CD and used those bank accounts to make personal expenditures. According to evidence introduced at trial, Hallock evaded over $400,000 in income tax for 1997.

“People who hide their income and evade their federal tax obligations will be prosecuted and convicted,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Department of Justice and the Internal Revenue Service are working vigorously to defend the interests of honest taxpayers.”

Hallock faces a maximum sentence of five years in prison and a $250,000 fine, together with the costs of prosecution. United States District Judge Matthew F. Kennelly scheduled sentencing for February 15, 2007.

“The prosecution of individuals who intentionally conceal income and evade taxes is a key element of the IRS Enforcement Strategy and signals our intention to assure confidence in our tax system,” stated Nancy Jardini, IRS Chief, Criminal Investigation. “Individual actions such as those of Mr. Hallock add to the nation’s tax gap, which is defined as the difference between what taxpayers owe and what they pay the government. Today’s conviction sends a strong message that the IRS is committed to closing that gap by enforcing the tax laws.”

The case was prosecuted by Assistant United States Attorney Susan Coppedge from Atlanta and Justice Department Tax Division Trial Attorney Charles E. Pell. The investigation was conducted by IRS Criminal Investigation special agents.

WASHINGTON — The Internal Revenue Service today announced limited tax relief for taxpayers in Hawaii affected by the earthquake on Oct. 15, 2006.

The IRS is granting the limited relief because the earthquake occurred at a crucial filing deadline when individual income tax returns on extension are due.

The relief applies to the counties of Hawaii, Kauai, Maui and Honolulu and the City of Honolulu.

Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts falling on or after Oct. 15, 2006, and on or before Oct. 23, 2006, have been postponed to Oct. 23, 2006.

In addition, the IRS will waive the failure to deposit penalty for employment and excise deposits due on or after Oct. 15, 2006, and on or before Oct. 23, 2006, as long as the deposits were made by Oct. 23, 2006. If any affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply during the period from Oct. 15, 2006 to Oct. 23, 2006. No penalty or interest will be abated for taxpayers that do not have a filing, payment or deposit due date (including an extended filing or payment due date) during this period.

WASHINGTON — Military reservists called to active duty can receive payments from their individual retirement accounts, 401(k) plans and 403(b) tax-sheltered annuities, without having to pay the early-distribution tax, according to the Internal Revenue Service.

The newly-enacted Pension Protection Act of 2006 eliminates the 10-percent early-distribution tax that normally applies to most retirement distributions received before age 59½. The new law provides this relief to reservists called to active duty for at least 180 days or for an indefinite period.

Eligible reservists activated after Sept. 11, 2001, and before Dec. 31, 2007, qualify for relief from this tax. This tax is often referred to as the 10-percent early-withdrawal penalty. Regular income taxes continue to apply to these payments in most cases.

Early distributions from both Roth and traditional IRAs received by a reservist while on active duty qualify for this relief. Likewise, a reservist’s elective contributions and earnings distributed to him or her by employer sponsored 401(k) plans and 403(b) tax-sheltered annuities also qualify for this relief.

Because this relief is retroactive, eligible reservists who already paid the 10-percent tax can claim a refund by using Form 1040X to amend their return for the year in which the retirement distribution was received. Eligible reservists should write the words, "active duty reservist," at the top of the form. In Part II Explanation of Changes, the reservist should write the date he or she was called to active duty, the amount of the retirement distribution and the amount of early-distribution tax paid.

Reservists can choose to re-contribute part or all of these distributions to an IRA. Ordinarily, these special contributions must be made within two years after the reservist's active-duty period ends. However, if the reservist's active duty ended before Aug. 17, 2006 (the date the new law was enacted), he or she will have until Aug. 17, 2008, to make these special contributions. No deduction is available for these contributions.