Newport Beach Doctor Pleads Guilty to Tax Evasion Arising from Embezzlement

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Newport Beach Doctor Pleads Guilty to Tax Evasion Arising from Embezzlement

Showing again that it isn’t just the Feds prosecuting tax crimes, the Orange County District Attorney’s Office issued a press release yesterday to bring attention to the guilty plea for willful failure to file returns in Superior Court of Bruce Allan Hagadorn, a Newport Beach doctor.  Hagadorn was sentenced to a year in prison.

According to the press release:

At the time of the crime, Hagadorn was the Chief of Staff at Irvine Regional Hospital and served as a board member of the Medical Executive Committee.

Between January 2009 and December 2010, Hagadorn misappropriated $220,000 from the medical staff account at Irvine Regional Hospital that the hospital physicians established and funded as a non-profit charitable organization. Prior to the hospital’s closure in January 2009, the Medical Executive Committee members voted to donate the funds remaining in the account to the Hoag Hospital Foundation and assigned Hagadorn with coordinating the donation.

Prior to donating any funds to the Hoag Foundation, the defendant wrote numerous checks from the account, paid himself in cash, and deposited the money into his personal medical practice, Canyon Pacific OB/GYN, in Irvine.

Although the misappropriation activity spanned just two years, the non-filing spanned 2008 to 2013, and included his business.

Failure to file tax returns is generally prosecuted when it is clearly willfully – done with the specific intent of violating a known duty.  Technically, that could apply to a lot of people, so the government tends to focus on high dollar cases, high profile violators, and instances where the non-filing could also constitute evasion, having some affirmative bad act as an aspect of the crime – something prosecutors can hang their hats on.  In this case, the misappropriation from a charity and the fact that the defendant is a doctor made the defendant an attractive target.

Daniel Layton, the author of this post, is the principal of Tax Attorney OC.

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