Los Angeles, CA – A Santa Barbara man was sentenced today to 5 years…

Los Angeles, CA – A Santa Barbara man was sentenced today to 5 years in federal prison for evading the payment of approximately $2.2 million dollars in unpaid tax, penalties, and accrued interest to the Internal Revenue Service.

Ronald Leon Rakow, of Santa Barbara, was sentenced to prison by United States District Court Judge Margaret M. Morrow in Los Angeles. In addition to the prison term, Judge Morrow ordered Rakow to serve three years of supervised release after his release from prison. In July of 2006, a jury found Rakow guilty of one count of evading and defeating the payment of nearly $2.2 million in tax to the Internal Revenue Service.

As alleged in the indictment, Rakow was aware that the Internal Revenue Service was actively attempting to collect taxes he owed dating back to 1985. Beginning in January, 1998, and continuing to October, 2002, in an effort to evade the payment of tax, RAKOW transferred approximately $5.2 million in income and assets belonging or due and owing to him to accounts held in the names of others. Rakow directed that the proceeds of the sales of stock, or the actual shares of stock themselves, that he owned in companies such as American Interactive Media, Inc., Tradesafe, Inc., and Earthlink, Inc., be deposited into the accounts of others. Upon selling the shares of stock he owned in the aforementioned companies, Rakow failed to report the profit from the sales of the stock on his tax returns. Further, Rakow failed to report income on his tax returns that he received in the form of consulting fees, directing that these payments also be made to the names and into the accounts of others. By putting the title to assets in the names of others, by directing that the proceeds of stock sales and consulting fees due to him be paid and deposited into the accounts of others, Rakow prevented the Internal Revenue Service from seizing his assets to satisfy his income tax debt dating back to 1985.

This case was investigated by the Internal Revenue Service – Criminal Investigation Division.

Patrick Caruth (Acting PIO)
Special Agent, Los Angeles Field Office

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