We are committed to closing the California's $6.5 billion tax gap, defined as the difference between tax that is owed and tax that is paid. Our special agents work cooperatively with law enforcement agencies throughout California to uncover illegal behaviors that contribute to the tax gap. These include underreporting income, overstating deductions, failing to file returns, failing to pay taxes due, and making illegal cash payments to employees. You can report suspected tax fraud by calling the FTB at (800) 540-3453. Some of the cases prosecuted in the last couple of months are described below.
Former fugitive pleads guilty in state tax fraud case
A Santa Clara woman who, along with her husband, fled the country to avoid prosecution pleaded guilty to felony counts of state tax fraud and grand theft.
On February 28, Patricia Stenshoel, 74, pleaded guilty to three counts of filing fraudulent state income tax returns, two counts of failing to file state sales tax returns, and one count of grand theft for stealing a customer's sales tax payment. She also owes the state more than $1.4 million in restitution, representing the unpaid sales and income tax, penalties, interest, and the cost of the investigation.
Larry M. Stenshoel, Patricia's husband, pleaded guilty to the same charges in January.
The Stenshoels fled the country in 2001 to avoid prosecution, and were arrested in Texas in January 2003, when they tried to re-enter the country. Texas authorities inexplicably released Patricia Stenshoel, but kept Larry Stenshoel in custody. After fighting his extradition, Patricia Stenshoel was brought back to California in June 2005.
Stenshoel owned and operated a local waterproofing company and set up fraudulent trusts for the business and his personal matters for the purpose of evading state income taxes. The Stenshoels filed false state tax returns for 1994-1996 and failed to pay the 1995-1996 state sales tax for the business.
This was a joint investigation between the State Board of Equalization, the Santa Clara County District Attorney's Office, and the FTB.
Electrician family charged in tax evasion
A San Clemente family was arrested on 38 felony charges involving state income tax evasion, and filing false state income tax returns.
FTB special agents arrested Oscar David McDaniel, Jr., 68, his wife Marianne, 64, and son Bryan McDaniel, 35, without incident at their homes on March 10, 2006. The family operates McDaniel Electric Corporation out of their home. Secretary of State records show Oscar is the President, Bryan is the Vice-President, and Marianne is the corporation's CFO/Treasurer. According to investigators, Oscar faces felony charges of allegedly failing to file his 1999-2004 income tax returns on the more than $230,000 in unreported income he earned. Marianne faces five felony charges of filing false state income tax returns and one felony charge of failing to file a return on the more than $545,000 in income she earned during this same period. Bryan faces six felony charges of failing to file tax returns on the more than $404,000 in unreported income he earned. Oscar faces additional felony charges for allegedly filing fraudulent corporate income tax returns. Each felony tax count carries a maximum term of three years in state prison.
McDaniel Electric specializes in performing electrical work for school districts including the Rancho Santiago College District, Saddleback Valley School District, and the Anaheim High School District.
The McDaniel family owes the state more than $55,000 in unpaid tax. McDaniel Electric owes the state more than $74,000 in unpaid tax.
Millions in unreported income leads to tax charges
Two San Diego County couples, each having unreported income of more than $1 million, were arrested April 13 on felony charges of state income evasion.
The two cases are unrelated. According to investigators, the couples allegedly either failed to file their state income tax returns or filed false returns. Each felony count of tax evasion carries a maximum state prison term of three years.
According to state records, Steve Gardality, 51, owns and operates Twin Oaks Estates, Inc., a corporation created for the development and sale of 26 lots located in San Marcos. Steve and Mandana, 48, allegedly received payments from the business and failed to file tax returns on more than $3 million in personal income for 1999-2004.They also earned more than $2.5 million in business income for tax years 2000 to 2004. The Gardalitys owe California over $300,000 in personal income tax and corporate tax. Both are charged with 12 felony counts of tax evasion, and Steve is charged with five felony counts of filing false tax returns.
Alex Silva, 48 and Juana Silva, 46, own and operate A&C Framing Services, and A&C Embossing Wheels in Chula Vista, which manufactures products in Mexico to be sold in the United States. Allegedly, the Silvas made checks payable to cash to finance the Mexico operation. The Silvas failed to report over $1 million in cash income on their tax returns for 1999-2001. They owe $88,000 in tax, and are charged with six felony counts of filing false tax returns.