There is an
accounting firm in St. Louis that seems determined to remain highlighted in the
professional literature, and not in a good way. In 2008 the federal government sued
Zerjav & Company P.C. (Zerjav) to
permanently ban it from the tax business. There are two Zerjav’s in the firm:
the father “Frank” and the son “Tiger.” The father is the CPA. Tiger’s
co-workers have called him “the magician” because the numbers on tax returns employees
prepare are “magically” different after he reviews the return. I have known
people like Tiger. One is soon headed to jail for tax fraud.
The IRS must
have gotten way ahead of itself with Zerjav, however, requesting but being
denied a preliminary injunction. The government then reached a settlement in
2010 rather than prosecuting the case. Each side can claim victory in a settlement,
of course, and the terms of this settlement were not especially harsh. Tiger
was prohibited from preparing tax returns or giving tax advice for three years.
His father was barred from certain conduct, including:
- claiming business deductions for personal expenses
- improperly deducting restaurant meals, child care or education expenses
- claiming wage deductions for children, unless the children actually worked and the wages were reasonable
- changing accounting records without informing the client
That is, the
father was barred from doing things that CPAs are not allowed to do in the
first place! The father manufactured deductions virtually out of thin air, but
it must not have risen to the level of fraud. As a consequence, the father was
permitted to continue his tax practice, although with oversight for a five-year
period.
Tiger
could not prepare returns for a few years – but his father could. Really? One
doesn’t have to be Houdini to figure an escape from that box.
Well, Tiger
is back in the news.
Last month
the government filed an indictment alleging the following:
- Tiger and his wife filed a fraudulent 2001 return showing taxable income of $43,124,whereas the correct income was $210,268
- Tiger and his wife filed a fraudulent 2002 return showing taxable income of $14,053,whereas the correct income was $225,449
- Tiger and his wife filed a fraudulent 2003 return showing taxable income of $23,627,whereas the correct income was $158,984
- Tiger and his wife filed a fraudulent 2004 return showing taxable income of $149,415,whereas the correct income was $231,804
How did
Tiger accomplish this sleight of hand? In each case, the government alleges
that he altered QuickBooks to conceal his correct taxable income. The IRS
issued its QuickBooks summons in 2011. Zerjav resisted but a District Court
determined that Zerjav had to produce its electronic QuickBooks backup file.
Folks,
this is fraud, and it will get one into HUGE problems with the IRS. Fraud
brings in the Criminal Investigation Division of the IRS. These are the
guys/gals who have badges and carry guns, and they have little to nothing to do
with regular civil tax matters. If convicted, Tiger faces up to five years
imprisonment and a $250,000 fine on each count.
Seems like
Tiger’s magic may have run out.
