By now most people are familiar with quite possibly the most famous person to ever be convicted of tax evasion, Al Capone. Capone was a Chicago mob boss during Prohibition who, despite ordering the deaths of dozens, was sentenced to just eleven years in prison on federal income tax evasion charges in 1931.
It could be the nature of the business. Since most mobsters' gains are ill-gotten, they are rarely eager to report those gains to the IRS. Such was the case in Capone's prosecution, as federal agents noticed that gangsters were living lavish lifestyles without filing income tax returns. In 1927, the Supreme Court ruled that illegally earned income was subject to income tax, and tax evasion prosecutions of criminals soon followed.
Ironically, Capone was also convicted using evidence provided by his own attempts to comply with tax laws. After his brother Ralph went to jail for tax evasion in 1930, Capone asked his lawyer to make sure his tax obligations were paid. During negotiations with federal authorities, Capone's attorney conceded the mobster had sizeable income for 1928 and 1929 on which he had paid zero in taxes. Those admissions, along with extensive evidence regarding Capone's spending habits, were central to proving his untaxed income.
Demeo sold his shares in valuable real estate in Downtown Brooklyn, earning him more than $2 million in capital gains. Rather than report this income, as he was required to do, Demeo took a series of measures designed to conceal the proceeds from the IRS. For example, he instructed his attorney to issue his shares to him in eight separate bank checks: three checks for the first transaction and five checks for the second transaction. In addition, even though Demeo had multiple bank accounts, he chose to not deposit the proceeds into them, and instead enlisted the assistance of others to help conceal the funds. First, he endorsed two checks, amounting to $1 million, to a plumbing business, despite the fact that he has no apparent ownership interest in it, or other business relationship with it. In addition, he endorsed another of the checks, in the amount of approximately $355,944, to an individual who operated an unlicensed check-cashing business, who then withdrew from the accounts approximately five cashier's checks in smaller amounts, which were then cashed at licensed check-cashing establishments in exchange for a fee. As a result of Demeo's fraud, Demeo avoided payment of federal taxes in excess of $365,000.
"Today's arrest reflects our continued commitment to prosecuting alleged members of the mafia with every tool available to us," stated Executive Assistant United States Attorney Muller. "Organized crime members are on notice that this Office and its law enforcement partners will hold them accountable for such economic crimes no less than for their traditional schemes and offenses."
If you've avoided paying taxes, you may want to contact a good tax attorney in your area, and an experienced criminal defense lawyer as well.