Tax Fraud: MICHAEL MAGNALDI Pled Guilty To One Count Of Aiding And Assisting In The Filing Of False Tax Returns
Pelham- And Bronx-Based Tax Preparer Pleads Guilty In White Plains Federal Court To Preparing And Filing False Income Tax Returns
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Jonathan D. Larsen, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today that MICHAEL MAGNALDI, a former Pelham resident and an owner and operator of a Bronx-based tax preparation business, pled guilty to one count of aiding and assisting in the filing of false tax returns for tax years 2014 to 2017 and one count of subscribing to a false tax return for tax year 2016. MAGNALDI pled guilty before U.S. Magistrate Judge Paul E. Davison.
U.S. Attorney Geoffrey S. Berman said: “After serving in the New York City Department of Finance for 15 years, Michael Magnaldi betrayed the public’s trust by engaging in a years-long pattern of preparing false returns for clients and falsely understating his own income the same year he bought a $705,000 home in Pelham. Magnaldi’s fraudulent conduct undermined the government’s ability to fund its mandates and cost the government $476,184 in tax revenue. As we enter tax filing season, Magnaldi now stands convicted of two counts of criminal tax charges and awaits sentencing for his crimes.”
IRS-CI Special Agent-in-Charge Jonathan D. Larsen said: “As the tax season heats up, this is an important reminder to taxpayers to beware of unscrupulous tax return preparers. Fraudulent tax return preparers harm taxpayers, legitimate businesses, and the American public. IRS-CI is steadfast in its commitment to ending such tax fraud and today’s guilty plea shows the serious consequences for violating this nation’s tax laws.”
According to the allegations contained in the Information to which MAGNALDI pled guilty, MAGNALDI’s plea agreement, and statements made in court:
MAGNALDI has years of audit experience in the New York City Department of Finance. Since at least 2014, MAGNALDI owned and operated MGM Tax Solutions, a tax preparation business located in the Bronx, New York.
As charged in Count One of the Information, for the 2014 through 2017 tax years, MAGNALDI prepared for clients 37 false Forms 1040 containing, among other false information, false Schedule D capital losses, false Individual Retirement Account (“IRA”) contribution deductions, and false Education Tax credits. MAGNALDI unsuccessfully attempted to conceal his role in preparing these fraudulent tax returns by not listing his or any name as the return preparer, to make it seem as if the returns were self-prepared. In response to IRS correspondence audits, MAGNALDI caused additional false forms to be sent to the IRS, in an attempt to substantiate the false losses, deductions, and credits claimed on the tax returns. The total tax loss for the 37 false individual income tax returns of MAGNALDI’s clients is $232,767.
As charged in Count Two of the Information, in addition to the false filings prepared on behalf of his clients, MAGNALDI also falsely understated his own and his business’s income on their 2016 tax returns, the same year he bought a roughly $705,000 home in Pelham. Specifically, MAGNALDI falsely understated income on MGM Tax Solutions’ 2016 Form 1120S, which understated flow-through income on MAGNALDI’s 2016 Form 1040. The tax loss for MAGNALDI’s understatement of flow-through income is $243,417.
The total tax loss resulting from both schemes is $476,184.
MAGNALDI, 54, formerly of Pelham, New York, and currently living in St. Augustine, Florida, pled guilty to one count of aiding and assisting in the filing of false tax returns for tax years 2014 to 2017 and one count of subscribing to a false tax return for tax year 2016, each of which carries a maximum sentence of three years in prison. As part of the plea agreement, MAGNALDI has agreed to pay restitution to the IRS in the amount of at least $476,184 plus interest and penalties. Sentencing is scheduled for May 8, 2020, at 10:00 a.m., before U.S. District Judge Vincent L. Briccetti.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Berman praised the outstanding work of IRS Criminal Investigation in this case.
This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorney David R. Felton is in charge of the prosecution.