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September 16, 2013


Business owners and criminal tax charges: a Texas case

Criminal tax charges against a business owner can severely impact both the person who is charged and the business itself. A recent Texas case provides an example of the potentially double-sided consequences.

The case concerns the owner of several popular nightclubs in Austin. In January of this year, the nightclub owner was sentenced to a federal prison of more than 12 years after conviction on money laundering charges.

But federal prosecutors also brought a separate criminal tax charge.

In this post, we will discuss the consequences that flowed from the two sets of charges.

A resolution in the tax charge case came last week. A federal judge sentenced the nightclub owner to a three-year prison term after the owner pleaded guilty to a tax fraud charge. The charge concerned a false tax return that the owner arranged to have prepared for his business.

The tax fraud sentence will run concurrently with the earlier money laundering sentence.

The consequences of the convictions, however, go beyond prison time. The nightclub owner must also pay $2.5 million in restitution to the government in the tax fraud case.

In addition, nine nightclubs in Austin that were owned by this nightclub owner have been greatly affected by the prolonged litigation. The buildings were closed for a number of months after law enforcement raids led to disputes about control of the clubs’ liquor licenses.

Our point is that when a business owner runs into criminal tax troubles, there can be multiple consequences. One is the individual effect on the owner. And the other is the effect on the businesses involved and their customers.

Source: Austin Business Journal, “Former downtown Austin bar owner sentenced,” Robert Graftan, September 13, 2013

Tax Crimes