Cheating with Cheddar

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40197797 - taxes concept. word on folder register of card index. selective focus.

Warning to all readers: this blog post is cheesy. Today’s fraudster used all types of cheese plus lettuce, tomato, hot peppers, olives, pickles and deli meat to commit more than half a million dollars in tax fraud. (It’s possible that you may crave a sub sandwich by the time you finish reading this.)

A Hamden, Conn., deli owner was quite creative in all the ways he avoided paying his taxes. Over two tax years, he underreported his income by $638,173 and neglected to pay $220,000 in taxes.

Here’s how he did it. First, he simply didn’t deposit all of his cash receipts from his deli business into his business bank account. Some of the proceeds were used to fill an in-store ATM. (He neglected to report this cash as income.) The owner also used the deli’s bank account to pay for personal expenses. He also deposited three large checks totaling about $300,000 into his personal investment account. (Again, he did not report any of this as income.)

Then, he withdrew money from this personal investment account so he could buy investment properties.

Most likely, the deli owner thought he’d won the lottery by carrying out this tax fraud scheme. Speaking of – he even used his business lottery account to write a $25,800 check which was later deposited into his personal investment account. (And, you guessed it, he didn’t report those funds as income either.)

While the deli owner probably made a really good sub, he most likely did not think he’d find himself in a Pastrami Nightmare. (I swear I did not make this up — it’s the actual name of a sandwich on his deli’s menu.)

The 52-year-old deli owner pleaded guilty to tax fraud and, when sentenced, will face up to five years in prison and a potential $400,000 fine. He also agreed to pay $220,663 in back taxes. (That’s enough to make you want to quit defrauding, cold turkey.)

Today’s “Fraud of the Day” is based on an article, “Hamden deli owner pleads guilty to tax evasion,” published by New Haven Register on May 20, 2019.

HAMDEN — Raymond George, owner of the Ray and Mike’s Deli on Whitney Avenue, pleaded guilty Monday to evading taxes on more than $500,000 in income, according to the U.S. District Attorney’s Office for Connecticut.

According to a release, George “underreported his income by approximately $365,065 for the 2012 tax year and by $273,108 for the 2013 tax year, and failed to pay a total of approximately $220,000 in taxes.”

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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.