Man is sentenced to federal prison on tax-evasion charges
September 21, 2014
A Woody Creek man has been sentenced to serve 24 months in federal prison on income tax-related charges, the Department of Justice announced Wednesday.
Mathew Zuckerman, 70, was sentenced Tuesday by U.S. District Court Judge Robert E. Blackburn, according to a Justice Department statement. He also has been ordered to pay $693,706 in restitution to the Internal Revenue Service, the statement said.
There is no credit for good behavior in the federal justice system, so Zuckerman will be required to serve at least 85 percent of his sentence, said Jeff Dorschner, spokesman for the U.S. Attorney's Office in Denver.
Once the Bureau of Prisons designates him to a prison, Zuckerman will have 15 days to report to it, Dorschner said. Zuckerman is currently free on bond. After his release from prison, he will be required to participate in supervised release for three years, a process similar to probation that involves substance-abuse tests and visits with a court officer.
The official announcement was made jointly by U.S. Attorney John F. Walsh and Stephen Boyd, IRS special agent in charge of criminal investigations.
In addition, they said Blackburn sentenced Zuckerman's wife, Sandra Zuckerman, 67, to three years of probation for her role in her husband's tax scheme. Sandra Zuckerman also is jointly liable for $112,511 of her husband's restitution, the statement said.
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"For over a decade they committed tax fraud; it was only a matter of time until they were caught and brought to justice," Boyd said.
The Zuckermans were indicted by a federal grand jury in Denver on April 25, 2012. Mathew Zuckerman pleaded guilty on Feb. 18 to income tax evasion, and his wife pleaded guilty to willful failure to pay income taxes on May 30.
Beginning in 1986 and continuing through 2009, the Zuckermans either failed to file an income tax return or filed a return using incorrect income amounts. From 2003 through 2009, no income tax returns were filed with the IRS, the statement said.
Starting in 1998, Mathew Zuckerman and an associate became equal business partners and began to specialize in taking small companies public through reverse mergers of existing corporate shells, the statement said. To operate their new venture, Zuckerman and his business partner formed Silicon Valley New Issues Inc. In addition, he formed Intermountain Marketing & Finance Inc., a corporation he solely owned, which owned half of Silicon Valley New Issues, the department said.
Zuckerman evaded corporate income taxes on several million dollars of taxable income in 1999 from Silicon Valley New Issues, the statement said. Over the course of the next 10 years, he continued to conceal his assets and business affairs from the IRS by using additional corporations and trusts in order to avoid payment and collection of the Zuckermans' outstanding tax liabilities, the department said.
"Specifically, to avoid IRS liens, in 1999, the Zuckermans caused the deed to their Woody Creek residence, purchased for approximately $1.2 million, to be recorded in the name of Hyperpanel University Inc., a Nevada corporation that listed the names of a cat and a dog as its officers and directors on its filings with the secretary of state," the Justice Department's statement said.
Similarly, the statement said, Mathew Zuckerman formed a company in 2004 called Treya Inc. in Nevada that was used to purchase a $1.8 million home in Toluca Lake, California. Based on her husband's directions, Sandra Zuckerman allowed her name from an earlier marriage, Sandra Eberli, to be filed in connection with transactions conducted by Treya.
Further, in December 2004, Mathew Zuckerman created the Mathew Mark Zuckerman Trust and placed himself in the position as "trustor" while his accountant was appointed as "trustee," the statement said.
"In July 2006, he caused his daughter to be appointed as the trustee and in 2008 caused 4.9 million shares of Green Earth Technologies (a company for which he served as chairman) to be issued to the trust using an incorrect employer identification number" for the trust, the statement said.
He then instructed his daughter to sell shares of the stock and transfer funds to his personal bank accounts. By doing this, he received profits of more than $500,000 while evading payments of taxes owed to the IRS, the statement said.
"The defendants established multiple entities to engage in a complex scheme to hide money owed to the IRS," Walsh said in the statement. "Despite their best efforts, the defendants were caught and ultimately held accountable for their criminal behavior."