Rosemead CPA Sentenced to Serve 18 Months in Prison for Filing False Income Tax Return

LOS ANGELES – October 9, 2009 – – Legal Newswire – Leslie P. DeMarco, Special Agent in Charge for the Los Angeles Field Office announced that Arnold C. Libman, a licensed California Certified Public Accountant was sentenced in federal court yesterday by U.S. District Court Judge Otis D. Wright II.

Arnold C. Libman, a licensed CPA since 1973, who prepared tax returns in Rosemead, California, was sentenced to serve 18 months in custody followed by 1 year supervised release, and ordered to pay a fine of $250,000.00. Libman previously pleaded guilty to one count of Title 26 United States Code, Section 7206(2), aiding and assisting in the preparation of false income tax returns. Libman was also ordered to pay $100,000.00 in restitution to the IRS. Judge Wright also ordered Libman to no longer prepare tax returns.

According to Libman’s plea agreement, from 2002 through 2005, Libman prepared at least fifty-four false federal and state income tax returns for at least twenty clients for tax years 2001 through 2004, by including in the returns inflated amounts for charitable contributions, medical expenses, and unreimbursed employee and business expenses, and various other deductible items. These twenty returns Libman prepared, understated his clients’ tax liability by approximately $173,346.00.

According to the information filed on January 6, 2009, in or about February 2004, in Los Angeles County, Arnold Libman prepared a fraudulent United States Individual Income Tax Returns, Form 1040, for an individual, “T.C.” The false return was submitted to the IRS and falsely reported that “T.C.” had incurred $32,025 in medical and dental expenses, cash gifts to charity, and unreimbursed employee expenses, when, in fact, as Libman knew, “T.C.” had not incurred such expenses and had not made any such gifts.

The majority of CPAs and tax preparers are honest and prepare accurate tax returns for their clients, said Leslie P. DeMarco, Special Agent in Charge for the Los Angeles Field Office, IRS Criminal Investigation. “Those few dishonest tax professionals who circumvent our tax system risk prosecution.”

Libman is to surrender to the Bureau of Prisons on December 9, 2009.

This investigation and prosecution of Arnold C. Libman was conducted by Internal Revenue Service, Criminal Investigation – Los Angeles Field Office in conjunction with the United States Attorney’s Office in the Central District of California.

For more information regarding cases involving return preparer fraud, please visit www.IRS.Gov.

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