LAWFUEL – Press Release Service – Venice civil rights attorney Stephen G. Yagman has been indicted on charges of attempting to evade the payment of more than $100,000 in federal income taxes by concealing his assets and committing bankruptcy fraud.
The 19-count indictment was returned under seal by a federal grand jury on June 1. The indictment was unsealed after the conclusion yesterday of a state court jury trial in which Yagman, 61, was representing a criminal defendant. The indictment alleges that Yagman filed federal income tax returns for the tax years 1994 through 1997, but paid only a small portion of the taxes that, according to his own returns, were owed to the Internal Revenue Service. As a result of the underpayment, Yagman accumulated federal income tax liabilities for those four years that, with interest and penalties, totaled more than $158,000. During the four years, Yagman also failed to pay significant amounts of federal payroll taxes owed by his then-law firm, Yagman & Yagman, P.C.
Instead of paying these overdue federal taxes, according to the indictment, Yagman engaged in a scheme to conceal his assets and impede the collection efforts of the IRS. For example, Yagman allegedly used various bank and brokerage accounts held in his girlfriend’s name to deposit and disguise his personal funds, including approximately $776,000 that was transferred to him by relatives. Yagman also allegedly used the accounts to pay for personal purchases and to conduct the majority of his personal financial transactions.
In 1999, Yagman allegedly attempted to subvert the IRS’s collection efforts by filing for both personal and corporate bankruptcy. According to the indictment, Yagman made numerous misrepresentations and omissions in his bankruptcy petitions and in court proceedings. In his personal bankruptcy petition, for example, Yagman allegedly failed to disclose to the Bankruptcy Court that he lived in a 2,800-square-foot house near the beach in Venice, for which he made mortgage and property tax payments, as well as claiming the homeowner’s mortgage-interest deduction on his tax returns. Yagman also allegedly failed to disclose in his bankruptcy proceedings various personal bank and brokerage accounts that he controlled, but were in his girlfriend’s name, as well as hundreds of thousands of dollars in legal settlements, client payments and attorney’s fees that he received in 1999 and 2000.
“Mr. Yagman’s pattern of deception and illegal conduct, as alleged in this indictment, discredits those who practice law,” said Kenneth J. Hines, Special Agent in Charge of IRS Criminal Investigation, Los Angeles Field Office. “The public expects attorneys to be honest, to be trustworthy and to show respect for the law. Special Agents with IRS Criminal Investigation will utilize their financial expertise to investigate abuses of the tax system.”
The indictment charges Yagman with one count of attempting to evade the payment of taxes, one count of bankruptcy fraud and 17 counts of money laundering (engaging in monetary transactions in criminally-derived property). The tax evasion and bankruptcy fraud counts each carry a maximum statutory penalty of five years in federal prison. The money laundering counts each carry a maximum statutory penalty of 10 years in federal prison.
“Regardless of one’s position in life, he or she should be held accountable for their actions,” said Robert Malaby, the Acting Postal Inspector in Charge in Los Angeles. “The U.S. Postal Inspection Service is committed to working with our federal law enforcement partners to investigate allegations of criminal misconduct whenever the United States Mail is used to perpetuate the crime.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Yagman surrendered this morning to federal authorities, and he is expected to make his first court appearance this afternoon in United States District Court in Los Angeles.
This case is the product of an investigation by IRS Criminal Investigation, the United States Postal Inspection Service and the Federal Bureau of Investigation.
CONTACT: Assistant United States Attorney Alka Sagar
Assistant United States Attorney Beong-Soo Kim