We are committed to closing 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.
Tax fraud is not a victimless crime. You can report suspected tax fraud by calling FTB at (800) 540-3453.
Former CFO guilty of grand theft, filing false income tax returns
On March 27, 2007, the former chief financial officer of a Los Angeles-based medical firm was sentenced to four years in state prison on charges of grand theft and filing false state income tax returns.
Emmanuel A. Udeobong, 48, was employed by New World Medical Group, Inc. According to court documents, Udeobong issued false claims to Medi-Cal and Medicare between 1999 and 2001, and received more than $418,000 in fraudulent payments. Because the theft involved more than $150,000, Udeobong was also sentenced to an additional two years in state prison for a white collar crime enhancement, and is ineligible for probation since his theft involved more than $100,000. His two sentences will run concurrently.
In addition, Udeobong failed to claim more than $267,541 in income on his state income tax returns. All income is taxable including income from illegal sources. Restitution to the FTB of more than $23,900 representing the unpaid tax, penalties, interest, and the cost of the investigation was also ordered.
The conviction was the result of a joint investigation between Attorney General's Office, the Department of Justice Medi-Cal Fraud and Elder Abuse, and the FTB.
Victorville man sentenced to prison
A Victorville man was sentenced on April 5, 2007, to three years in state prison for filing a false state income tax return, insurance fraud, and grand theft.
Farrell Cobbs, 43, a plant manager at a gypsum building materials company, received more than $700,000 from fraudulent insurance claims, and failed to claim them on his state income tax return. According to court documents, Cobbs filed fraudulent insurance claims with two insurance companies for medical injuries he did not receive. Cobbs learned about the scheme from a friend, who is currently in prison on similar charges.
He deposited the funds into his personal checking account, and used the money on entertainment and gambling in Las Vegas.
Restitution of more than $52,300, representing the unpaid tax, penalties, interest, and the cost of the investigation, was also ordered.