Taking a Bite Out of Fraud

201
44969068 - office work and filling in tax returns close up

Dentists make good money and tend to earn more than most other healthcare workers. The average salary in 2015 was reported at $172,350, while dental expenditures per capita were $366 during the same year. Two dentists in Waukesha, Wisconsin were evidently not satisfied with the amount of compensation they were receiving, or perhaps they were having trouble with operating their dental practice. They committed tax fraud by underreporting their dental practice’s income and consequently generated an additional $53,000 in income they did not deserve.

The two men, who were from East Troy and Pewaukee, carried out their tax fraud scheme by underreporting income from their family dental practice over three consecutive tax years. An investigation into the matter was conducted by the Wisconsin Department of Revenue’s Office of Criminal Investigation (OCI). Investigators found that the dental practice’s accountant had been preparing the partnership’s returns using one of the dentist’s handwritten notes for many years. (Perhaps the dentist dropped a few zeroes from his calculations before handing his notes over to the accountant.)

The OCI used the practice’s electronic and bank account records for the three-year period under investigation to determine that nearly $700,000 of income had been underreported. (This meant that these two men neglected to pay $53,678 in taxes owed.)

The two Wisconsin dentists, aged 63 and 58, each pleaded guilty to tax fraud after a witness reported that the younger dentist admitted that the pair had cheated on their business partnership taxes. (The guilt must have gotten to him.) They were each sentenced to six months behind bars to be followed by two years of probation. (They must also pay all future taxes on time. Just like the rest of us.)

This case is a reminder for other dentists who may be considering underreporting their income levels due to greed. While being bit by a patient may be unpleasant for a dentist, when the government takes a bite out of fraud, the pain will have repercussions that last a lifetime.

Today’s “Fraud of the Day” is based on an article entitled, Waukesha dentists sentenced to jail for tax fraud,” published by the Journal Sentinel on September 6, 2017.

WAUKESHA – Two Waukesha dentists will serve jail time for filing fraudulent Wisconsin income tax returns in three separate years.

Michael Lafratta, 63, of East Troy and James Murphy, 58, of Pewaukee were sentenced Sept. 5 after pleading guilty to charges, the Wisconsin Department of Revenue said in a statement.

SHARE
Previous articleWatch Out for Lemons
Next articleDying to Defraud
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.