Indianapolis Tax Fraud Lawyers

Indianapolis Tax Fraud Lawyers: When Payroll Executives Flee With Nearly $1 Million In Cash

David Downey ran Time Payroll, an Indianapolis payroll company. His job was to ensure that employers’ payroll taxes got paid properly. Instead, he orchestrated a $9.4 million fraud scheme that operated like a Ponzi – using money from one client to cover tax shortages he had created for others.

When investigators closed in, he fled to California. IRS Criminal Investigation agents arrested him at the Kimpton Shorebreak Hotel in Huntington Beach. He had $955,956 in cash. Nearly a million dollars in physical currency – the proceeds of years of fraud. The cash he thought would fund his escape became evidence of his crimes.

The Payroll Executive Arrested With $955,956 In Cash

Heres exactly what David Downey did wrong. He ran a payroll company from 2009 to 2017. His clients trusted him to handle there employment taxes properly. Instead, he created tax shortages for some clients and covered them using money stolen from others – a classic Ponzi structure applied to payroll services.

Downey admitted withdrawing $127,418 from one clients account – Health Facilities Rehab Services in Missouri – and using that money to cover payroll tax shortages he had created for other clients. The fraud touched businesses across multiple states.

When investigators closed in, Downey ran. He took cash and headed for California. But IRS-CI agents coordinate nationwide. They found him at a Huntington Beach hotel. And the $955,956 in cash he was carrying became evidence of exactly how much he had stolen. Running dosent work. It makes everything worse.

Downey faces up to six years in prison plus fines up to $750,000. He’ll also owe restitution to every client he defrauded plus the IRS.

382 False Returns From One Tax Preparer

Christina Moles, also known as Tina Lashley, ran a tax preparation operation near Muncie, Indiana. Between 2015 and 2021, she executed a tax fraud scheme that touched 382 federal income tax returns. She falsified those returns without her clients even knowing.

Her sentence: 18 months in federal prison, followed by three years of supervised release, plus $567,010 in restitution. Each false return is a potential federal charge. Each one represents at least one victim.

And her clients? There dealing with the fallout. Every return she prepared is suspect. The IRS will examine those returns. Refunds obtained based on false claims will be clawed back.

The Operations Manager Who Stole $2.5 Million

Marcie Jean Doty was an operations manager. Between May 2017 and June 2022, she stole approximately $1.8 million from that employer through wire fraud. But the theft wasnt enough – she also failed to file tax returns and filed false returns when she did file.

Her sentence: 60 months in federal prison – five years – plus $2,517,343.05 in restitution. The attempt to hide the theft through tax fraud made everything worse.

The Dermatologist Who Hid $1.2 Million

David Gerstein was an Indianapolis dermatologist. He had operated his own practice since 1997. Between 2017 and 2020, he willfully underreported his taxable income by at least $1.2 million, evading approximately $360,669 in income taxes.

A federal court convicted him for filing false tax returns. The dermatologist who spent years building a respected medical practice destroyed his reputation by cheating on his taxes.

Healthcare Fraud Reveals Tax Evasion

Leslie Smith worked as an office manager for a podiatry practice in Indianapolis. She submitted approximately 288 fraudulent claims to Medicaid for oxygen monitoring devices that were never ordered. She caused Medicaid to pay over $559,000 on false claims – and diverted nearly $1.2 million in Medicaid payments to her personal bank account.

But the healthcare fraud wasnt enough. She also committed tax evasion. Her sentence: 66 months in federal prison – five and a half years – plus $2,341,655 in restitution.

The cascade demonstrates how fraud investigations expand. Investigators looking at Medicaid fraud discovered unreported income. The healthcare crime revealed the tax crime. Each investigation reinforced the other.

Indiana’s Dual Prosecution Reality

Indiana has a 3.05% flat rate state income tax. Tax fraud in Indianapolis can be prosecuted by the Indiana Department of Revenue AND federal prosecutors – creating potential for consecutive sentences.

And Indiana’s professional licensing boards add another dimension. Medical boards review physician convictions. The state bar reviews attorney convictions. Each professional credential creates another institution that will examine tax fraud convictions.

The Southern District’s Approach To Major Fraud

The Southern District of Indiana covers Indianapolis and the southern portion of the state. The US Attorneys Office maintains dedicated prosecutors for financial crimes.

By the time charges get filed, investigations have been running for months or years. The 90%+ federal conviction rate reflects how thoroughly cases get built before prosecution begins.

The sentences are real. Downey faces up to six years plus fines. Doty got 60 months. Smith got 66 months. These arent theoretical maximums – there actual outcomes.

Defense Strategy In Indianapolis

If your facing tax fraud exposure in Indianapolis, the calculus involves understanding how the Southern District operates.

The Downey case shows what happens when you run – arrested in California with nearly a million dollars in cash. The Moles case shows how volume creates exposure – 18 months for 382 false returns. The Doty case shows how covering one crime with another makes everything worse.

The time to address tax fraud exposure is before any of that happens. Voluntary disclosure programs exist. Coming forward before the IRS finds you creates opportunities to resolve issues civily – with penalties and interest, but potentialy without prison.

If theres tax fraud exposure in your situation – unreported income, employment taxes not properly paid, embezzlement you tried to hide through false returns – the time to address it is before anyone starts looking. Appeals go to the Seventh Circuit Court of Appeals. Running dosent work. The federal government has resources that span the entire country.