In Hot Water

17477953 - business executive in formal suit giving money as a bribe

A former resident of Pagosa Springs, Colorado is in some seriously hot water. (And, I’m not talking about the world’s deepest geothermal hot spring located there.)  Internal Revenue Service (IRS) Criminal Investigation agents effectively sunk today’s fraudster’s tax fraud scheme after they discovered he neglected to report more than $900,000 of income.

 The 68-year-old man, who currently considers Scottsdale, Arizona to be his home, has some pretty close connections to the Springs Resort & Spa in the Colorado town. He previously ran the business, which is currently owned by his two daughters, for two years. (Apparently, the resort paid for many personal expenses under his leadership.)

For anyone considering underreporting income on a tax return, take heed. The deceptive businessman lied about his income on one individual tax return. (Perhaps he thought the IRS would not miss the $900,000 he forgot to report. Did I mention that he did not pay $360,000 in taxes owed?)

Here’s where the crime dives deeper. For about seven years, the former resort manager generated about $9.7 million in investment income from two offshore bank accounts in Liechtenstein. (I guess that’s the abyss where the non-reported income got stashed.) Because the fraudster did not pay taxes on the nearly 10 million earned, he caused a loss of $1.8 million in tax revenue for the IRS. (I guess you could say it was a sunk cost.)

The former Pagosa Springs resident pleaded guilty to tax fraud for filing a false tax return. When sentenced in the Fall, he faces a prison sentence, a period of supervised release, restitution, plus other monetary penalties.

Instead of enjoying his golden years soaking in the warm springs of luxury, this criminal will have to give up the pampering he was accustomed to. Interestingly enough, the business owned by his daughters was cleared in any wrongdoing following the federal investigation. (I bet family gatherings will be a bit strained in the future.) It appears his scheme is all washed up and he’s now headed for a cold, harsh reality that’s more like ice fishing than a spa treatment.

Today’s “Fraud of the Day” is based on an article entitled, Former Pagosa Springs man pleads guilty to tax fraud involving hot springs,” published by The Journal on May 4, 2018.

A former resident of Pagosa Springs with connections to the Springs Resort & Spa has pleaded guilty to filing a false tax return.

William Marvin “Bill” Whittington, 68, of Scottsdale, Arizona, pleaded guilty Wednesday in U.S. District Court in Durango to filing a false 2010 individual income tax return, in which he underreported his income by more than $390,000.

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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.