Los Angeles, CA – LAWFUEL – Legal News Network – United States District Court Judge Robert M. Takasugi sentenced Scott Morrison, 41, on Monday to serve 21 months in federal prison for filing false income tax returns. Morrison had pleaded guilty on August 15, 2005 to two counts of filing false returns with the Internal Revenue Service on which he failed to report substantial amounts of income earned in 1998 and 1999.
In Judge Takasugi’s courtroom, Morrison’s attorney explained that Morrison was acting as a salesman for business owner Michael Silver when he became involved in a scheme involving illegal kickbacks. Morrison’s participation with the scheme, which Silver orchestrated, was the source of his unreported income.
IRS Criminal Investigation Special Agent in Charge for the Los Angeles Field Office, Debra D. King commented, “Earnings from any income producing activity, whether legal or illegal, is taxable and must be reported on returns.”
Silver, 62, owned and operated the downtown Los Angeles-based M&M Foods, as well as American Distributors, California Food Distributing, General Provisions, Quality Foods, United Seafoods, and Universal Foods. Through these companies, Silver sold beef, poultry, and seafood to restaurants, country clubs, hospitals, and assisted living facilities throughout California, Nevada, and Hawaii and paid kickbacks to purchasing agents and chefs based upon the quantity of food they ordered. In order to obtain larger cash kickbacks, some of the purchasing agents accepted less food than they had actually ordered. A majority of the food facility owners did not know that their employees were receiving illegal kickbacks as Silver most often mailed the cash payments directly to the purchasing agents at their homes. Nor did the facility owners know about food products purchased at increased prices or paid for when they had not been received. The scheme reportedly ran from January 1997 through February 2002.
Judge Takasugi sentenced Silver on August 29, 2006 to serve 60 months home detention after pleading guilty to three counts of mail fraud related to his scheme. Silver also pleaded guilty to two counts of tax evasion admitting that he had illegally deducted the cash kickbacks as business expenses on his 1998 and 1999 federal income tax returns. As a result of the more than $10 million in kickbacks that he declared as business expenses, Silver failed to pay more than $5.5 million in taxes owed to the IRS.
Scott Morrison’s 21-month sentence reportedly will run concurrent with a sentence that he is already serving in an unrelated case. Morrison is currently being held at the Metropolitan Detention Center in Los Angeles.
This case is the result of an investigation by IRS Criminal Investigation and the Federal Bureau of Investigation.