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Miami Tax Law Blog

What is a Ponzi scheme?

People throughout Florida have likely heard about Ponzi schemes on news broadcasts over the last several years. Several high-profile criminal cases involving Ponzi schemes have made national headlines. This type of white-collar crime is deceptively simple and is designed to steal large sums of money from unsuspecting investors.

At its core, a Ponzi scheme is a type of investment fraud. In a typical Ponzi case, a person who may or may not be a financial professional will approach new potential investors with the promise of an investment that offers big payouts with a very small or nonexistent chance that invested money will be lost. However, instead of using investors' funds in the promised fashion, the fraudster will instead use funds from each new investor to pay "dividends" to the original investors. Of course, there are no actual payouts because no money was ever actually invested.

An overview of mortgage fraud

Florida homeowners and real estate professionals may be aware of the prevalence of mortgage fraud situations. There are various schemes that can be considered illegal in this area. White-collar offenses involving mortgages are typically related to misrepresentation of information on documents.

Mortgage fraud normally involves at least two parties as one provides incorrect information on purpose while the other uses that information for the purpose of completing a transaction. Although mortgage fraud is not directly referenced in federal law, this type of crime may be considered conspiracy, bank fraud or wire fraud. Through an investigation of this type of crime, officials might also pinpoint additional white-collar crimes like tax fraud. Unfortunately, unplanned errors can result in an investigation and even detention if incorrect information is submitted by an individual attempting to obtain a mortgage.

Role of the IRS in criminal tax cases

The IRS may investigate criminal tax cases involving Florida taxpayers or taxpayers in any other state. While other government agencies may help in an investigation, only the IRS is authorized to investigate criminal violations of the Internal Revenue Code. The Criminal Investigative (CI) unit is comprised of 2,800 special agents who are trained in computer forensics and other specialized methods of obtaining evidence in criminal tax cases.

The purpose of a financial investigation is to determine if money is being moved for criminal purposes. During an investigation, records will be scrutinized to figure out where the money originated, who may have had access to it and which person or entity may ultimately take possession of it. Records that may be examined include bank account records, motor vehicle records and any record of property sales.

What is forgery?

Florida residents may benefit from learning more about forgery, as described by the Florida Senate. Chapter 831 of the Florida Statutes defines forgery as anyone altering, counterfeiting or falsely making a certificate, public record or other documentation used in relation to matters where it's received as legal proof. Using almost any form of identifying or financial documentation with the intent to defraud or injure a person may be considered forgery and punishable by a third degree felony offense.

Anyone attempting to misrepresent fraudulent documentation as the genuine article may be charged with the third degree felony offense of uttering forged instruments. If someone is apprehended with at least 25 units of counterfeit product, without a satisfactory explanation, they may be charged with intent to sell or distribute. People who forge the labels of other private entities may be charged with counterfeiting.

Understanding tax evasion

Florida residents may benefit from learning more about what actions or behavior constitutes as tax evasion, according to U.S. law. Tax evasion can be described as a business or individual intentionally underpaying the amount of taxes due to the government. Once the IRS suspects a taxpayer of evasion, an investigation is launched to substantiate the suspicion. If the investigation bears any significant evidence, the accused may be charged with tax fraud, a financial crime.

There are several opportunities for taxpayers to attempt evasion or defrauding the government agencies collecting taxes. Some taxpayers manipulate the credit system in an attempt to misrepresent their wealth or economic status. Families may attempt to overstate the number of people in the household in an effort to obtain larger deductions from the government. Similarly, some businesses have attempted defrauding the IRS by inflating the amount of expenses during the year in an attempt to reduce taxes owed.

What are the consequences for committing computer fraud?

Committing computer fraud to gain access to information on another computer or network is a serious offense in the state of Florida. Under state law, it is considered to be a computer crime when an individual or other entity partakes in any act that seeks to gain access to a computer, a computer network or a computer system for any reason.

Someone who commits a computer crime can be sentenced to five years in prison or fined $5,000, and the crime is considered a third-degree felony. However, these penalties may be increased for anyone who commits a computer crime with the intent to cause theft or damage of more than $5,000 or attempts to interrupt government services.

What elements must be proven to be convicted of tax evasion?

In order to prove tax evasion in Florida, prosecutors must demonstrate three elements beyond a reasonable doubt: an attempt to defeat or evade payment of a tax, the existence of an additional tax due, and willfulness on the part of the accused evader. Lacking any one of these elements in their case, prosecutors may not secure a conviction on tax evasion.

The first element, that the taxpayer attempted to defeat or evade a tax, requires an affirmative action on the part of the taxpayer. That is, more than passive neglect is required. A taxpayer who files a false tax return may meet this requirement, but the mere failure to file typically will not, provided that this defaulting is not coupled with other actions indicating evasion, such as destroying records or hiding income.

South Florida man sentenced to 3 years for tax fraud

A Florida man will spend three years and four months in federal prison for stealing the identities of public school students to file false tax returns, federal prosecutors announced on Oct. 27. The 34-year-old pleaded guilty to charges of wire fraud and identity theft after his incarceration in May.

The man, a resident of Miramar, was employed at the Fort Lauderdale-Hollywood International Airport as a Transportation Security Administration worker at the time of his detainment, but also ran a part-time tax preparation business with a male co-defendant. According to authorities, the men obtained stolen student identities with the help of a Miami-Dade schools employee and used them to file illegal tax returns reportedly worth over $200,000 between 2009 and 2011.

What constitutes money laundering?

In Florida, people accused of money laundering may face felony charges and receive severe consequences if convicted. That is because money laundering is a serious criminal offense. According to state law, it is the deliberate act of using financial transactions to conceal the money generated by some form of unlawful activity.

In this sense, 'financial transactions" may include any type of currency and any form of economic activity, such as business sales, bank deposits, stock market investments, wire transfers and loans. Furthermore, 'unlawful activity" refers to any kind of felony crime under state or federal laws. In essence, individuals commit the offense of money laundering if or whenever they attempt to hide the proceeds of a criminal enterprise by passing it through some legitimate form of commerce in order to perpetuate the illicit activities.

Learning about money laundering and its defenses

Money laundering is a serious crime that comes with serious consequences if convicted. However, before a prosecutor can convict a defendant, he or she must show beyond a reasonable doubt that the defendant's actions fulfilled the legal elements of the crime.

A conviction of money laundering requires a positive showing that the defendant knew that property was part of a financial transaction derived from some type of unlawful activity. This means that the person who is being charged must have known that the property was garnered from illegal activity. "Know" in the sense of this crime means that the person had actual knowledge or that the person should have known via reasonable inquiry that the funds were garnered from illegal activity. The individual does not need to know the exact source of the funds or illegal activity from which they derived. Additionally, the prosecution must show that the party intended to promote specified unlawful activity through the financial transaction.

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