Portland Tax Fraud Lawyers

Portland Tax Fraud Lawyers: When $177 Million Flows Through A Check Cashing Business

David Katz was president of Check Cash Pacific, a check cashing business in Tualatin, Oregon. From January 2014 through December 2017, he conspired with construction industry operators to cash more than $177 million in payroll checks. The cash wasn’t going into workers’ bank accounts through normal channels. It was being used to pay workers “under the table” – no taxes withheld, no income reported to the IRS.

When a federal jury in Portland convicted Katz of all charges on June 12, 2024, his sentence was 48 months in federal prison. His restitution order: $44,877,254 to the IRS. The check cashing business that was supposed to provide a legitimate financial service became a laundromat for construction industry tax evasion.

$177 Million Through A Check Cashing Business

Heres exactly what David Katz did wrong. As president of Check Cash Pacific, he had a legitimate business that could cash checks for construction companies and workers. But Katz didnt just cash checks – he conspired with construction industry operators to create a system for evading employment taxes.

The scheme worked like this. Sham construction companies were created – shell entities that existed only on paper. These fake companies would bring payroll checks to Check Cash Pacific locations. Katz and his employees would cash those checks. The cash would then be distributed to construction workers as under-the-table payments. No W-2s. No withholding. No reports to the IRS.

Think about the scale. $177 million in payroll checks cashed over four years. That represents thousands of workers paid in cash. Thousands of workers building no Social Security credits. Thousands of workers whose employers avoided payroll taxes. The construction projects those workers completed – homes, buildings, infrastructure throughout Oregon – were built by people the goverment didnt know existed as employees.

The Biggest Refund Guaranteed

Elizabeth Munoz operated a tax return preparation business from her home in Southeast Portland. Her marketing pitch was simple: “biggest refund guaranteed.” From 2015 through 2018, she delivered on that promise – by committing fraud on every return she prepared.

Munoz prepared more than 1,300 false and fraudulent income tax returns for more than 600 clients. She used fraudulent tax schedules. She claimed credits clients weren’t entitled to receive. The tax loss attributed to her scheme: approximately $1.8 million.

But Munoz wasnt just stealing from the IRS. She was also stealing from Oregon. During the same period she was falsifying federal returns, Munoz was collecting public benefits from the Oregon Department of Human Services that she wasnt entitled to recieve.

Her sentence: 21 months in federal prison, plus three years of supervised release. Her restitution: $1.8 million to the IRS, plus $82,400 to Oregon DHS.

$2.1 Million On A Debit Card

Krystle Reyes was 25 years old when she filed her 2011 Oregon state income tax return. She reported over $3 million in wages from a fake employer. The employer didnt exist. The wages were completly fabricated. But the Oregon Department of Revenue processed the return – and issued a $2.1 million refund.

On a debit card.

The Reyes case reveals an uncomfortable truth about the system. When the Oregon Attorney General’s office charged Reyes, it became the largest fraud refund case in state history. The spokesperson for Oregon DOR said something remarkable: “We dont have the resources nor does the Attorney General to prosecute 1,000 inappropriate claims or every fraudulent claim we have.”

The Tax Fraud Promoter Who Got 10 Years

Winston Shrout lived in Hillsboro, Oregon. From approximately 2008 through 2015, he operated as a “tax fraud promoter” – someone who sells fraudulent tax strategies to others. He created and submitted more than 300 fraudulent financial instruments to financial institutions and the U.S. Treasury.

His sentence: 10 years in federal prison. Thats one of the longest sentences in this article – longer then the preparer who falsified 1,300 returns, longer then the check casher who facilitated $177 million in fraud. Why? Because promoters create more damage then individual fraudsters.

The 300 fraudulent financial instruments Shrout submitted werent just tax returns. They were fake documents submitted to banks and the Treasury Department. He was trying to extract money from the financial system using paper that looked official but was worthless.

224 False Returns And Stolen Identities

Danyelle Calcagno was 41 years old when she pleaded guilty to conspiracy to defraud the goverment, wire fraud, and aggravated identity theft. Her scheme involved filing at least 224 false federal income tax returns. Those returns fraudulently claimed a total of $1,220,246 in refunds.

Identity theft tax fraud is particularly destructive for victims. Calcagno wasn’t just filing false returns in her own name. She was using other peoples identities to file returns and claim refunds they knew nothing about.

The aggravated identity theft charge carries a mandatory two-year consecutive sentence. Calcagno didnt just commit tax fraud. She commited identity theft that hurt real people who had nothing to do with her schemes.

Oregons Dual Prosecution Reality

Oregon has a state income tax with a top rate of 9.9%. Unlike Nevada or Washington, there is a state income tax here – which means there is state-level tax fraud enforcement. The Oregon Department of Revenue investigates tax crimes. The Oregon Attorney General prosecutes them.

The Reyes case with the $2.1 million debit card refund was prosecuted at the state level. The Katz case with $177 million in payroll fraud was prosecuted federally. The dual system means more investigators, more prosecutors, and more potential charges.

The District Of Oregons Approach To Major Fraud

The District of Oregon has demonstrated through case after case that it will pursue tax fraud aggressivly. David Katz – 48 months for the $177 million check cashing scheme. Elizabeth Munoz – 21 months for 1,300 false returns. Winston Shrout – 10 years for promoting fraud.

Heres the reality about sentences. Katz got 48 months plus $44.8 million restitution. Munoz got 21 months plus $1.8 million. The restitution orders follow defendants permanantly.

And the 90% federal conviction rate means most people who get charged get convicted. Federal prosecutors in the District of Oregon dont bring cases they cant prove.

Defense Strategy In Portland

If your facing tax fraud exposure in Portland, the calculus involves understanding how both state and federal systems operate.

The Katz case shows what happens when legitimate businesses become fraud infrastructure – 48 months and $44.8 million. The Munoz case shows that “biggest refund guaranteed” leads to prison. The Shrout case shows that promoting fraud to others creates the longest sentences.

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. Appeals go to the Ninth Circuit Court of Appeals. Your exposure persists untill you address it.