Behaving Badly

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A former well-respected attorney in Santa Barbara, California behaved badly by not paying his taxes. He used the unpaid taxes to live a lavish lifestyle and to go gambling.

The former criminal defense attorney neglected to report that he had earned $3,590,185 to the Internal Revenue Service (IRS) over eight years. Instead, he used the taxes he was supposed to pay the IRS – $679,958 – to purchase a multi-million dollar home in Santa Barbara for his family. (This enabled him to make additional money by renting out his other multi-million dollar residence.)

He also had a gambling habit. Apparently, he lost tens of thousands of dollars over one weekend that could have easily paid his taxes for one year.

The attorney originally pleaded guilty to three misdemeanor counts of willfully failing to file tax returns for his law practice for three years. However, in his plea agreement, he admitted to not paying his income taxes for eight years. (Just a minor detail there.)

He was sentenced to two years in federal prison for willfully failing to file his business tax returns and failing to pay income tax to the IRS. What is ironic in this case is that this man was very familiar with the criminal world and the punishment that comes with committing fraud, yet he still committed the crime willfully and repeatedly. (He’s lucky he was respected in the community, otherwise he could have gotten a much tougher sentence for behaving badly.)

Source: Today’s ”Fraud of the Day” is based on a Department of Justice press release entitled, ”Santa Barbara Criminal Defense Attorney Sentenced to 2 Years in Federal Prison for Failing to Report over $3.5 Million in Income to IRS,” released on February 13, 2017.

It’s been an especially rough month for Darryl Genis, one of Santa Barbara County’s best known and most embattled attorneys.

First, he pled guilty to multiple counts of willful failure to pay taxes between the years 2005 and 2012, admitting that he shortchanged the IRS $679,958. Genis admitted in some years he didn’t pay the full amount he owed for law practice, and in other years he didn’t pay anything. Genis faces a maximum sentence of three years behind bars. In exchange for the plea, the United States Attorney’s Office agreed not to seek the maximum. Based on court documents, the feds appear poised to recommend Genis be sentenced to two years. Neither Genis nor his attorney returned calls for comment, but the terms of the plea deal allow them to argue for a more lenient sentence. Genis will be required to pay off his debt to the IRS as well, and pay a fine.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.