Each year IRS Criminal Investigation (IRS: CI) releases its top ten list of tax crimes of the past year. The selections highlight the height of criminal tax fraud and the lengths that defendants go to mint money—if only for a little while. The selections also offer insight into the current focus and priorities of IRS investigators.
Beginning at the top, let’s take a look at numbers ten and nine on this most notorious list.
#10—Embezzled funds lead to bank failure and 25 years in prison
In 2017, Washington Federal Bank for Savings in Chicago was shut down by the Office of the Comptroller of the Currency after it was declared insolvent. The demise of the bank resulted in charges against 16 people, leading to four convictions, ten guilty pleas, and two deferred prosecutions. Robert Kowalski was one of those convicted, while his sister pled guilty. Both were attorneys.
The IRS believed Kowalski was a primary player in the embezzlement scheme that brought down the bank. Funds identified as “loan disbursements” were transferred to him and two real estate developers without appropriate, or in some cases, any documentation. Kowalski and his crew were not asked to pay the money back—until the Federal Deposit Insurance Corporation (FDIC) sought repayment after the bank collapsed.
Instead of taking stock of his position at that point, Kowalski fraudulently filed for bankruptcy. He also produced fake documentation, and false income tax returns although he had failed to file income tax returns for two years. While strongly protesting his innocence, Kowalski was convicted and sentenced to 25 years, ordered to pay $7.2 million in restitution to the FDIC, and $424,047 to the IRS.
#9—OneCoin crypto scam chalks up another prison term
OneCoin was a digital scam initiated in 2014 by Karl Greenwood and Ruja Ignatova. The pair marketed a worthless cryptocurrency called OneCoin around the world. The coin, sold through networkers who earned a commission on sales, was hot hot hot until about 2017 when the scheme broke down and the players fled to the winds.
Greenwood was extradited from Thailand in 2018 and pled guilty, pulling a 20-year prison term. A co-conspirator, Mark Scott, worked at the international law firm, Locke Lord LLP, and met Ignatova in 2018. Soon, Scott was creating fraudulent offshore bank accounts to launder proceeds from the OneCoin scam, ultimately earning himself a cool $50 million for his efforts.
Mr. Scott was sentenced to 10 years in prison and had to forfeit a number of bank accounts, two luxury cars, four real estate properties, a yacht, and $392,940,000. As for Ignatova? She remains on the FBI's Ten Most Wanted Fugitive list. There is an award of up to $5 million for information leading to her arrest and conviction, so if you have seen her around…
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