Geoffrey S. Berman, the United States Attorney for the Southern District of New York announced today that RICHARD JOSEPHBERG was sentenced to 42 months in prison for evading hundreds of thousands of dollars in taxes for the calendar year 2011 and willfully failing to file tax returns for the calendar years 2013 through 2015. JOSEPHBERG previously pleaded guilty to these crimes before U.S. Circuit Judge Richard J. Sullivan, who imposed today’s sentence.
According to allegations in the Indictment, court filings, and statements made in public court proceedings:
JOSEPHBERG was previously convicted in September 2007, in the U.S. District Court for the Southern District of New York, of 16 counts of tax fraud and one count of health care fraud, which resulted in a sentence of 50 months in prison and three years’ supervised release. JOSEPHBERG was released from custody and commenced his term of supervised release in late October 2010. While on supervised release, JOSEPHBERG began committing the tax crimes for which he was sentenced today.
Specifically, starting in late 2010, JOSEPHBERG began employment with an investor relations firm called CEOcast in Manhattan. Through the individual who operated CEOcast, JOSEPHBERG secured a commission-based arrangement with another investment firm, Socius Capital Group LLC (“Socius”). Socius agreed to pay JOSEPHBERG a commission of approximately 15 percent of any profit generated by Socius on financing deals originated by JOSEPHBERG. For originating one such financing deal, JOSEPHBERG was entitled to commission payments totaling approximately $1.57 million in 2011. After receiving payments totaling approximately $35,725 in his own name, JOSEPHBERG directed Socius to issue the remaining commission payments in the name of a newly formed corporate entity called “Almorli Advisors Inc.” JOSEPHBERG opened a new bank account in the name of Almorli Advisors Inc. (“Almorli Bank Account-1”), and deposited payments totaling approximately $1.53 million into that account.
In March 2012, while preparing to file 2011 federal income tax returns, JOSEPHBERG took steps to evade paying hundreds of thousands of dollars in federal income taxes by disguising and concealing the type of income that JOSEPHBERG had received from Socius. On or about March 27, 2012, JOSEPHBERG formed a second corporate entity called “Almorli Advisors NY LLC,” which served as a shell company to insulate JOSEPHBERG from IRS scrutiny. JOSEPHBERG caused his accountant to prepare a false 2011 partnership income tax return, Form 1065, in the name of Almorli Advisors NY LLC (the “2011 Form 1065”), listing JOSEPHBERG as a 99 percent partner and JOSEPHBERG’s son as a one percent partner. To evade a substantial part of the income taxes due and owing for 2011, JOSEPHBERG caused the 2011 Form 1065 falsely to report the commission payments from Socius, totaling approximately $1,574,922, as a long-term capital gain, rather than ordinary income. JOSEPHBERG’s purported 99 percent share of this false long-term capital gain flowed through to his 2011 individual income tax return, Form 1040. JOSEPHBERG’s fraudulent misclassification of this income resulted in a reported tax liability that was hundreds of thousands of dollars lower than the true tax liability because individual long-term capital gains were taxed at a significantly lower rate than ordinary income.
JOSEPHBERG also engaged in a scheme to evade the assessment of federal income taxes for calendar years 2013 through 2016. During those years, JOSEPHBERG received substantial income from performing consulting and other professional services. Despite earning substantial income, JOSEPHBERG failed timely to file any federal income tax returns for the calendar years 2013 through 2016 until after IRS agents informed JOSEPHBERG in May 2017 that he was under investigation. In addition to not timely filing any tax returns, JOSEPHBERG took various affirmative steps to evade the assessment of taxes. Among other things, JOSEPHBERG routed substantial amounts of income through Almorli Bank Account-1 and another bank account in the name of Almorli Advisors Inc., which bank accounts JOSEPHBERG controlled and used to pay for his personal expenses.
In all, through the crimes to which he pleaded guilty and relevant conduct, JOSEPHBERG caused the Internal Revenue Service (“IRS”) to incur losses of approximately $1.2 million. JOSEPHBERG’s scheme also caused a loss of $75,744.28 to the New York State Department of Taxation and Finance (“NYSDTF”), based in large part on JOSEPHBERG’s failure to timely file any state tax returns for 2013 through 2016.
In addition to the term of prison imprisonment, Judge Sullivan ordered JOSEPHBERG to serve 3 years of supervised release. Judge Sullivan deferred restitution to a later date.
Mr. Berman praised the outstanding investigative work of IRS Criminal Investigation in this case.
This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution.