Los Angeles, California – Appearing in United States District Court in Los Angeles this morning, the owner / operator of G Ray Hawkins Gallery, an art gallery located in Los Angeles, was sentenced by United States District Judge Dean D. Pregerson to spend 12 months and one day in federal prison for his participation in a conspiracy to defraud the Internal Revenue Service
George Ray Hawkins, of Beverly Hills, was also ordered to serve 36 months on supervised release after completing his prison sentence and was ordered to pay restitution totaling $35,042 to the IRS. Hawkins pleaded guilty last year to conspiring to defraud the IRS in its assessment and collection of income taxes by creating fraudulent charitable contribution deductions for his clients as well as to one count of subscribing to, under penalty of perjury, a false income tax return in his own name.
Hawkins admitted in his plea agreement that, beginning in 1997 and continuing to September 2003, he had conspired with other individuals to obstruct the Internal Revenue Service. To do this, Hawkins admitted to falsifying the records used by his clients to claim deductions for charitable contributions on their tax returns. Hawkins provided his clients with backdated appraisals for alleged donations of non-cash charitable contributions for the purpose of claiming fraudulent contribution deductions on their federal income tax returns, reducing his clients’ taxable income and respective income tax liabilities.
In the past, Hawkins had previously prepared appraisal packages which related to art items he had donated to charitable institutions. Hawkins would sell the previously prepared appraisal packages to his clients and would fraudulently insert the clients’ names on the appraisal packages. Further, Hawkins would falsely backdate the appraisals so that his clients could take advantage of donations made by him, on their personal income tax returns, for the tax years from which they would receive the greatest benefit in reducing their taxable income. According to his plea agreement, Hawkins’ clients knew what he was doing on their behalf.
During the period that he engaged in the fraud, Hawkins, caused at least twenty-four false income tax returns to be filed on behalf of at least fourteen clients. These twenty-four income tax returns, filed by Hawkins’ clients, claimed more than $379,085 in false deductions for charitable contributions.
In addition to helping his clients reduce their own tax liabilities, Hawkins utilized the same techniques to reduce his personal tax liability. Hawkins admitted to subscribing to false 1997, 1998, and 1999 Joint Federal Income Tax Returns, Forms 1040, upon which he personally claimed deductions for charitable contributions of artwork in the amounts of $43,000 in 1997; $39,450 in 1998; and $42,700 in 1999. In each case, Hawkins knew that the returns were not correct because, by pre-dating appraisal documents filed with his tax returns, Hawkins’ returns falsely claimed deductions for charitable contributions for the years in question.
Judge Pregerson ordered Hawkins to begin serving his sentence on July 25, 2008.
The investigation and prosecution of Hawkins was handled by IRS – Criminal Investigation and the United States Attorney’s Office in Los Angeles.