Paranoia

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17542382 - u s income tax return forms 1040,1065,1120

Just the mention of “Internal Revenue Service (IRS)” or “taxes” in general is enough to cause paranoia in some individuals. Then, consider the fake robocalls that often trick consumers into paying money to the agency via credit card or wire transfer. (Just so you know, the IRS doesn’t ask for your credit card number over the phone to settle up.) Regardless of the fear that some folks may have about paying taxes, they still owe them. If they don’t pay, there are consequences. A New York art dealer is our fraud subject today. Read on to find out how she claimed paranoia – not greed – motivated her to commit tax fraud.

Today’s fraud article explains that the New York art dealer’s upbringing had a lot to do with her crime. Apparently, her father died when she was three and she was left with a mother who was unable to support herself or her children. The article goes on to say that her impoverished upbringing motivated her to never find herself in a position of helplessness again. Fast forward a couple of decades to see her success as one of New York’s prominent art dealers. (Although successful, she irrationally thought that she was always one step away from losing it all.)

The paranoid art dealer may not have been too far off base. After she sustained a substantial business loss in 2011, she falsified her tax return for that year. She claimed $1.6 million in personal expenses as business deductions. (Obviously, that’s a ‘no-no.’ If everyone did that, the U.S. Treasury would be bankrupt.)

The New Yorker pleaded guilty to tax fraud for filing false tax returns and has already paid all of her back taxes, plus interest and penalties amounting to $6.98 million. It’s important to note that she did that before being charged by a grand jury. (I’m sure she hopes this will help the judge to give her a more lenient sentence.)

In addition to being proactive with paying her back taxes, a 237-page memo was provided to help paint a better picture of the defendant and her character. Psychological evaluations declared that she has a mental illness that impairs her ability to be a rational thinker. Other statements from friends, employees and family members indicated that she is irreplaceable due to her expertise in the art world. (Her business would have to close.) More than 100 letters were written to the judge on behalf of the art dealer including: world renowned art figures, gallery employees, fellow members of Alcoholics Anonymous, plus her housekeeper, doorman and driver. (I’m not judging, but I can see a few areas where she could have decreased expenses if you know what I mean.)

While the art dealer’s confession and document of support paints a picture of someone who is truly remorseful, the fact remains that she committed tax fraud. (While she did have a pretty tough upbringing, it doesn’t justify her illegal actions.) She is facing up to six years in jail, but her lawyers have asked the judge to consider home confinement, probation and up to 1,000 hours of community service. (Here’s hoping that this woman will not have to experience her worst fear, because she truly is one step away from losing it all.)

Today’s “Fraud of the Day” is based on an article entitled, “After Pleading Guilty to Tax Fraud, Mary Boone’s Lawyers Cite Childhood Trauma and Mental Instability in a Bid to Avert Jail Time,” published by Art Net News on January 8, 2019.

New York art dealer Mary Boone pleaded guilty in September to filing false tax returns. Now, as she awaits sentencing – which could be up to six years in jail – her lawyers have filed a massive memo calling for leniency from the judge, citing a history of childhood trauma that has left Boone to battle mental illness and addiction.

Boone wears a “veil of success and stability,” wrote her lawyers, Robert S. Fink and Michael Sardar, calling her a “self-made woman who has had to work harder, act tougher, and do everything better in order to succeed in the male-dominated art world.” They are asking Judge Alvin K. Hellerstein to consider a sentence of home confinement, probation, and up to 1,000 hours of community service.

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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.