Is tax cheating viral?

According to a DOJ press release released on 9/19/06, a Danville abusive trust promoter named Robert Douglas Hazen pleaded guilty to aiding in assisting the preparation of a tax return.  His co-defendant, a financial advisor named Earl Combs, had already cut his deal with the DOJ 10 months earlier.

When you trace back through the people mentioned in these releases you really have to wonder whether tax cheating is a disease that either renders the people involved terminally greedy or serially stupid.

So let's start with accountant Donald Fletcher.   Mr. Fletcher was convicted in 2001 of conspiring against the US government and aiding in the preparation of false returns and was sentenced to a 71 month prison sentence where he later passed away.  Mr. Fletcher got into trouble for advising his clients to write off all of their personal expenses as business expenses.

From his 2003 appeal, (which he lost):

Mr. Fletcher also told the prospective clients that JO & C knew of "secret" provisions hidden in the Internal Revenue Code, provisions accountants and attorneys were not trained in, and that his method was not taught at business schools such as Harvard and Stanford. Although Mr. Rogers delivered much of the advice that was rendered directly to taxpayers, that advice, as taxpayers described it at trial, was entirely consistent with Mr. Fletcher's comments during the seminar about deducting a cat as a "rodent control device," or $500 for dog food as a "security device," or even a bird as "aerial surveillance."

Oh dear.   

Financial advisor Earl Combs had a number of clients who had used Mr. Fletcher's creative (cough cough) tax planning and were now being audited.  So he referred these clients to Mr. Hazen, who promised that he could reduce their tax liabilities to practically zero by setting up phony charitable foundations.  The clients under audit for writing off personal expenses as business expenses, were now advised to write off personal expenses as charitable deductions.

It's a disease, but it isn't limited to tax cheating the IRS.  After all, Mr. Hazen also recently lost his CPA license for ripping off clients.

Publication: PR Newswire
Publication Date: 03-JAN-03

Article Excerpt

SACRAMENTO, Calif. -- SACRAMENTO, Calif., Jan. 3 /PRNewswire/ -- Effective immediately, Robert Douglas Hazen, CPA, of Danville, California, is no longer licensed to practice public accountancy in California, as a result of a stipulated settlement in which he admitted diverting hundreds of thousands of dollars from trust funds of which he was the trustee into his own personal accounts and those of his children.

Comments

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A little less than a decade back I was on a trip to Europe. It was a group trip, one that the Hazen family took every year. In matters that really didn't involve him, me making an inappropriate joke to his daughter, he scolded me and told me that maybe I needed to learn some respect for people. He then leaned in and threatened that he hoped he didn't have to be the one to teach it to me. Well, it looks like he needed the lesson after all. Ha, take that Hazen.