The United States Attorney’s Office for the Southern District of New York announced that Manhattan tax attorney Harold Levine and Florida certified public account Ronald Katz were charged in Manhattan federal court in an eight-count Indictment with engaging in a multi-year tax evasion scheme involving the diversion of millions of dollars of fees from a Manhattan law firm, and the failure to report that fee income to the IRS.
U.S. Attorney for the Southern District of New York Preet Bharara said in the release: “As tax professionals and partners at professional firms, both Harold Levine and Ronald Katz knew better. But as alleged, they engaged in a multi-year scheme to divert and evade taxes on millions of dollars of fee income.”
The Indictment alleged that Levine, a tax attorney and former head of the tax department at a Manhattan law firm, participated in a scheme with Katz to divert from the law firm over $3 million in fee income from tax shelter and related transactions that Levine worked on while at the firm. In addition, per the Indictment Levine failed to report that fee income to the IRS on his personal tax returns, and Katz received and failed to report to the IRS over $1.2 million in fee income.
The Indictment alleged that as part of the fee diversion scheme, Levine caused tax shelter fees paid by a firm client to be routed to a partnership entity he co-owned with Katz and thereafter used approximately $500,000 to purchase a home in Levittown, New York, then took improper tax deductions on the home as rental property.
The Indictment also alleged that Levine made false statements about the purported rental property when questioned by IRS agents concerning his involvement in certain tax shelter transactions and the fees received for those transactions, and urged a third party to make false statements to the IRS about that property.
Levine and Katz are scheduled to be arraigned on October 31st.
Jeff Petersen is an attorney licensed in California and Illinois representing clients in a wide variety of regulatory matters. He can be reached in California at 858.792.3666 and in Illinois at 312.583.7488.