AUGUST 2014
In This Issue

"No people is wholly civilized where a distinction is drawn between stealing an office and stealing a purse."

~ Theodore Roosevelt

 

 


 


 

The goal of this e-newsletter is to provide you critical, inside information that will help you prevail when defending an IRS criminal case. We will do this by sharing the knowledge we have from our 25+ years of experience as an IRS Special Agent. 

 

We are grateful to have the opportunity to provide you this valuable information via our monthly e-newsletter and our unparalleled forensic accounting and investigative services.

 

We take special care to ensure the information we provide you in "The Beacon" is the latest and most current information available. In this edition, we have addressed "The Impact of Relevant Conduct on Taxpayers"and "Asset Misappropriation by Check Fraud".

  

We want to write about topics that will assist you in prevailing with criminal IRS cases. Please e-mail us your topics of interest to Thebeacon@sageinvestigations.com. 

 

We encourage you to share our e-newsletter with others in your sphere of influence.

 

Sincerely,

 

Edmond J. Martin

 
Principal, Chief Investigator
Certified Fraud Examiner (CFE)

Texas Certified Investigator (TCI)

 

The Impact of Relevant Conduct on Taxpayers  
IRS Criminal Investigation Special Agents use the specific items method of proving income because it is generally the easiest method of proof that the IRS has in its arsenal to prove unreported income. 

IRM 9.5.9.4 states, "Where the government is using the specific item method of proof (in an investigation of alleged tax evasion), the government attempts to document specific transactions that were not completely or accurately reflected on the subject's income tax return. Additionally, the government must show that the specific omissions of income were made willfully for the purpose of understanding the subject's income tax liability."  

 

This is the most direct method of proving unreported income and is the most difficult method for defense counsel to defend against.  

 

IRM 9.5.9.4.1 states, "The type of evasion that allows for the specific item method include: omitted income, fictitious deductions, false exemptions, or false tax credits. There are two approaches to specific items the basic and aggregate approach and depending upon the facts and circumstances the Special Agent will choose the approach."  

  1. The basic approach to the specific item method of proof requires... Read More
Asset Misappropriation by Check Fraud

The Association of Certified Fraud Examiners recently issued its Report on Fraud to the Nation for 2014. The report cites three major areas of occupation fraud: asset misappropriation, corruption, and financial statement fraud.

 

"Small businesses are both disproportionately victimized by fraud and notably under-protected by anti-fraud controls generally because they lack resources. The most prevalent fraud area is asset misappropriation committed by individuals in the accounting department. The perpetrator is generally a male and the longer the fraud last (sic) the more financial damage is caused."  

 

Case Study:

 

A bookkeeper for a lumber mill with over 250 employees issued multiple fraudulent payroll checks to individuals with identification, who cashed the checks through a nearby grocery store check cashing operation. The foreman of the company solicited twenty-five employees (some illegal immigrants) with identifications to join the conspiracy by cashing the checks on a Friday afternoon in return for paying him a kickback. In some instances, multiple checks were issued to the same individual. The company bookkeeper used check stock similar in color to the Intuit QuickBooks check stock of the company to prepare the counterfeit checks without the knowledge of company management. The company owner customarily allowed his name to be stamped on the payroll checks rather than signing them himself.

 

Employees typically lined up outside the grocery store waiting to cash their checks every Friday. The theft was efficient until ... Read More

 

About Us

Serving your needs is our priority.

  

At Sage Investigations we are dedicated to serving our clients nationally, to help them navigate the difficulties of dealing with the IRS, and other complex (forensic) financial fraud investigations both civil and criminal. By narrowing our focus to our primary strength of following the money, we steer our knowledge, efforts, and experience to financial issues. We help our clients propel their cases forward by assisting in the review, acquisition, and organization of financial records, evaluating the elements of their cases, and helping create winning strategies. Through the use of our proprietary advanced financial investigative technology we analyze complex financial data quickly, easily and efficiently, saving our client's time and money.

 

Sage handles all cases with altruism, professionalism, honesty, integrity, passion and respect. When you hire Sage, you hire a team of professionals with skill and knowledge that helps you have more effective solutions. We are innovative with our DIO cutting edge technology, and perform every investigation in an orderly and organized manner to develop a clear investigative roadmap and deliver a quality work product. The compass that guides us is strong leadership and accountability. Learn more...

 

Contact Us

 

P.O. Box 160161

Austin, TX 78716

Phone: 512-659-3179

Fax: 512-328-6878

Email: info@SageInvestigations.com 

www.sageinvestigations.com

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