A Pennsylvania attorney has come clean in agreeing to a guilty tax evasion plea.
According to the court documentation, Robert Powell pleaded guilty to evading taxes in an elaborate setup with his Powell Law Group P.C., a Luzerne County-based law firm.
“Powell engaged in a lengthy scheme to hide his income and not pay taxes,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “And when audited by the IRS, rather than step up, acknowledge his illegal conduct and pay what he owed, he chose to double down and lie to the revenue agents who interviewed him.”
Pennsylvania attorney pleads guilty to tax evasion
Powell has been found, by the court to have evaded paying any tax in the years 2010 through 2022. This was despite a living and earnings that would have been taxed or could be the subject of tax review.
The former attorney lost his ability to practice law and gave up the Powell Law Group in 2009. Since that time it has been a rocky road for the ex-lawyer, but according to the court documents he was eligible for “90% of the remainder of any future fees collected by the firm after the payment of firm expenses. Specifically, The Powell Law Group represented thousands of plaintiffs in a mass tort litigation that settled for approximately $5.15 billion in 2015 and The Powell Law Group was expected to receive approximately $120 million in attorneys’ fees from that settlement.”
Using a series of loans totaling $125 million and based on the collateral of the law firm’s income, Powell used nominated bank accounts. These shell accounts would then act as a buffer and allow the former lawyer to use the loans to fund his private life.
Powell would also take home a reported 3.6 million dollars in additional fee-related income but failed to declare across the reporting period of 2016 to 2019.
“For over a decade Robert Powell failed to file personal income tax returns and executed a sophisticated scheme to evade paying substantial taxes that were due and owing the IRS from massive legal fees his firm earned,” said U.S. Attorney Gerard M. Karam for the Middle District of Pennsylvania.
“The brazenness of his conduct included using nominee bank accounts, reporting zero estimated tax liability for the years in question and repeatedly lying to IRS auditors attempting to unravel the scheme. I want to thank all the IRS agents, prosecutors and support staff for their hard work that will allow justice to be finally served in this important case.”
He has agreed to foot the bill for the owed taxation amount to the IRS, but the figure has yet to be decided.
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