Newport Beach Doctor Pleads Guilty to Tax Evasion Arising from Embezzlement
IRS Improperly Withholding Documents In Response to Freedom of Information Act Requests
The FBI issued a press release earlier this week, giving publicity to yet another example of a tax prosecution intermingled with abusing a position within a non-profit organization. (I blogged about another example involving a Catholic charity here and a hospital charity here.)
According to the press release, documents filed in court state:
A religious facility located in Rahway, New Jersey, hired Gridiron based, in part, on his connections with individuals in the religious community as well as his standing within that community. The religious facility agreed to pay Gridiron a monthly salary and reimburse him for reasonable expenses related to his work. In addition, Gridiron was the treasurer for a non-profit entity registered in California.
Gridiron used his employment with the worship center and his status with the non-profit to illegally syphon money without their consent or authorization. In total, Gridiron transferred more than $4 million to accounts he controlled. Gridiron then used the funds for his own use, including mortgage payments, luxury car payments and gambling expenses. Gridiron also failed to report this income on his tax returns, including $950,000 he stole during the 2011 tax year.
It is hugely, hugely unfortunate that this happened to a religious non-profit, but the message is perhaps unavoidable – a shared faith alone isn’t a sufficient guarantee of trustworthiness when it comes to hiring an accountant. In fact, it was only last year that Pope Francis was quoted as stressing the importance of “doing good,” stating:
We are created children in the likeness of God and the Blood of Christ has redeemed us all! And we all have a duty to do good. And this commandment for everyone to do good, I think, is a beautiful path towards peace. If we, each doing our own part, if we do good to others, if we meet there, doing good, and we go slowly, gently, little by little, we will make that culture of encounter: we need that so much. We must meet one another doing good.
As explained on the Vatican Radio site, this means that doing good isn’t a matter of faith, but a duty instilled in us. It is also a duty CPAs have to clients and, a duty under the law that the government seems to have no hesitation in prosecuting.
Daniel Layton, the author of this post, is the principal of Tax Attorney OC.