United States Attorney Kevin V. Ryan announced that Fred De Manuel Jr. pleaded guilty on September 22, 2006, to one count of filing a false tax return. This guilty plea is the result of an investigation by the Internal Revenue Service–Criminal Investigation.
In pleading guilty, Mr. De Manuel Jr. acknowledged that he was the sole owner of FRM Builders, which specializes in home renovations in the Bay Area. FRM Builders was a Schedule C business, which meant that its gross business receipts were required to be reported on Schedule C of Mr. De Manuel Jr.’s personal federal income tax return, and after legitimate expenses were deducted, he was required to pay income and self-employment taxes on FRM Builders’ net income.
According to the plea agreement, for the tax year 2001, the Schedule C filed with Mr. De Manuel Jr.’s federal income tax return reported less gross business receipts for FRM Builders than were actually received, which reduced his federal income tax liability for that year. When Mr. De Manuel Jr. deposited business gross receipts of FRM Builders, he commonly prepared the bank deposit slip by writing the gross deposit amount (amount of the check) and an amount for “less cash” which he subtracted from the gross deposit amount prior to making the net deposit. Mr. De Manuel Jr., provided bank statements for FRM Builders to his return preparer for the preparation of his 2001 federal income tax return. He knew that the bank statements did not reflect the “less cash” he received and he did not inform his return preparer of his practice of taking “less cash.”
Mr. De Manuel Jr. admitted he knew that the 2001 federal income tax return was false and that the correct amount of business gross receipts was at least $860,195 for 2001. As a result of providing false information to his tax return preparer for the 2001 tax year, he under-reported his federal income tax liability by at least $108,108 for 2001.
Mr. De Manuel Jr. of San Francisco, was indicted by a federal grand jury on June 29, 2006. He was charged with four counts of filing false tax returns for the years 1998 through 2001, which he under-reported gross receipts of his home renovation business, FRM Builders. Under the plea agreement, Mr. De Manuel Jr. pleaded guilty to one count.
The sentencing of Mr. De Manuel Jr. is scheduled for January 12, 2007, before Judge Susan Illston in San Francisco. The maximum statutory penalty for each count in violation of 26 U.S.C. § 7206(1) is 3 years and a fine of $250,000, plus restitution of $192,920. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Cynthia Stier is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Stefania Chin.
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Luke Macaulay at (415) 436-6757 or by email at [email protected]