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Tax News
Criminal Corner

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 behaviors 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.

Orland woman pleads guilty to grand theft, forgery, and state income tax charges

On June 20, 2008, an Orland woman pleaded guilty to two counts of grand theft, one count of forgery, and one count of state income tax evasion.

Jennifer Sites, 37, was formerly employed as the bookkeeper for a Chico heavy equipment company. According to court documents, Sites embezzled more than $500,000 from 2006 - 2008 by abusing her position of trust as company bookkeeper, and used the embezzled funds to purchase items from a television home shopping show. In addition, Sites failed to claim the illegal income on her state income tax return. All income is taxable including income from illegal sources. When the heavy equipment company's owner discovered the theft, he reported it to the Butte County Sheriff's Office.

This was a joint investigation between the Butte County District Attorney's Office and FTB.

Long Beach woman pleads guilty to embezzlement, state income tax charges

A Long Beach woman pleaded guilty on July 3, 2008, to one felony count of grand theft and one felony count of filing a false state income tax return.

Patricia A. Cruz, 46, originally pleaded not guilty in June, but changed her plea and accepted the plea agreement offered by the Los Angles County District Attorney’s Office. According to court documents, Cruz wrote fraudulent checks from the corporate bank account for her personal gain. From 2003 - 2007, Cruz embezzled more than $500,000 from her former employer before the company owner discovered the theft. When confronted, Cruz admitted to the theft, and then presented a spreadsheet detailing the amount and extent of her theft. Cruz used the stolen funds to purchase personal items.

Cruz failed to claim the embezzled funds on her 2004 - 2006 state income tax returns. All income is taxable including income from illegal sources.

The plea agreement includes four years in state prison, full restitution to her former employer, and more than $90,000 to FTB, representing the unpaid tax, penalties and interest, and the cost of the investigation.

This was a joint investigation between the Los Angeles County Sheriff’s Office, the Los Angeles District Attorney’s Office, and FTB.

Whittier doctor guilty of state income tax evasion

A Whittier physician pleaded no contest to one felony count of state income tax evasion on July 9, 2008.

Eugene P. O'Donnell, 72, of La Mirada, is the chief executive officer of Eugene P. O'Donnell, M.D., A Professional Corporation. According to court documents, from 2001-2005 O'Donnell received more than $1.7 million in income from Medicare and other health care payers. O'Donnell failed to file his 2001- 2004 individual and corporate state income tax returns and report any of these funds.

O'Donnell faces up to three years in state prison, loss of his medical license, a $20,000 fine, and restitution in the amount of $373,597 to FTB representing the amount of unpaid tax, penalties and interest, and the cost of investigation.

O'Donnell's case was discovered by the Los Angeles County District Attorney's Fraud Interdiction Program.

Santa Ana couple guilty of state income tax evasion

A Santa Ana couple pleaded guilty to three counts of state income tax evasion on July 17, 2008.

William Greenberg, 64, and Marta S. Greenberg, 55, own and operate the New Green’s Furniture store in Tustin. According to court documents, the Greenbergs failed to report more than $334,322 on their 1999-2001 state income tax returns.

FTB uncovered the case through its internal filing enforcement program. Each year FTB reviews income records from numerous sources, including the Internal Revenue Service, the California Employment Development Department, the Board of Equalization, employers, and banks. FTB compares this data with its database of tax returns filed to identify individuals who should have filed taxes but did not, or to find discrepancies between the income reported and income claimed.

William Greenberg pleaded guilty to three felony counts of state income tax evasion. Marta Greenberg pleaded guilty to three misdemeanor counts of state income tax evasion. In addition, the Greenbergs were ordered to pay FTB restitution totaling $134,495, representing the unpaid tax, penalties, interest, and the cost of the investigation.

Their sentencing is scheduled for January 2009, when they are to pay nearly $80,000.