LAWFUEL – The Legal Newswire – Venice civil rights attorney Stephen G. Yagman was sentenced late today to 36 months in federal prison for his conviction earlier this year on charges of attempting to evade the payment of more than $100,000 in federal income taxes and committing bankruptcy fraud.
At the conclusion of a three-day hearing, Yagman was sentenced by United States District Judge Stephen V. Wilson, who ordered the defendant to begin serving his sentenced on January 15.
Judge Wilson said he imposed a “serious sentence” after being “shocked” by Yagman’s testimony in court, which was “so transparently untrue in so many areas.”
A federal jury convicted Yagman in June, finding him guilty of 19 felony counts – 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). On a defense motion following the trial, Judge Wilson later acquitted Yagman on six of the money laundering counts.
“In this case, in my view, justice was done,” Judge Wilson said today. “The jury was right.”
The evidence presented during a four-week trial showed 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 law firm, which was then called Yagman & Yagman, P.C.
Instead of paying these overdue federal taxes, Yagman engaged in a scheme to conceal his assets and to impede the collection efforts of the IRS. As part of the scheme, Yagman deposited hundreds of thousands of dollars into various bank and brokerage accounts in his girlfriend’s name to disguise his personal assets. Yagman used the accounts to pay for personal purchases and to conduct the majority of his personal financial transactions.
In 1999, Yagman attempted to subvert the IRS’s collection efforts by filing for both personal and corporate bankruptcy. Yagman made numerous misrepresentations and omissions in his bankruptcy petitions and in court proceedings relating to those petitions. In his personal bankruptcy petition, for example, Yagman 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 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.
“As an attorney, Mr. Yagman had a duty to play by the rules. He failed to live up to this responsibility, and now he is a convicted felon,” said United States Attorney Thomas P. O’Brien. “Mr. Yagman attempted to compromise the integrity of our tax system and the bankruptcy courts, and for this he will spend the next several years of his life behind bars.”
In sentencing papers, prosecutors said that Yagman’s “crimes were the result of a prolonged, sophisticated and calculated scheme to defraud.” In those papers, the government asked Judge Wilson to impose a nine-year prison term.
“Justice has been served for the citizens of the United States,” said Postal Inspector in Charge B. Bernard Ferguson. “We are all victims when the tax laws are violated. The Postal Inspection Service remains committed to partnering with the IRS to protect the public from those taking advantage of the system.”
Internal Revenue Service Special Agent in Charge Debra King stated: “Mr. Yagman’s sentencing sends a clear message to the public that those who disregard their privilege to practice law and use deceitful and dishonest means for their own financial benefit will be fully prosecuted. The public can be confident that IRS Criminal Investigation is committed to investigating individuals, including law practitioners, who willfully evade their income taxes.”
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