12/24/2009

News / Ohio Attorney Charged with Tax Fraud, Obstruction of Justice for Scheme to Hide Income and Assets Through Trusts and in Foreign Bank Account

Second Ohio Attorney Agrees to Plead Guilty to Making False Statement

WASHINGTON - Aristotle R. Matsa, an attorney in Columbus, Ohio, was charged with tax offenses, obstruction of justice and additional charges in a 20-count indictment unsealed today, the Justice Department and Internal Revenue Service (IRS) announced. Additionally, George Z. Pappas, an attorney in Urbana, Ohio, was charged in a one-count information with making a false statement. According to a plea agreement filed in conjunction with the information, Pappas has agreed to plead guilty to the false statement charge.

The indictment, which was returned on Dec. 21, 2009, was unsealed upon Matsa’s arrest. Matsa was charged with fifteen counts of aiding and assisting in the preparation of false and fraudulent tax returns that related to five different trusts; one count of willfully failing to file a report of foreign bank and financial accounts; one count of conspiracy to commit obstruction of justice; one count of witness tampering; one count of submitting a false statement; and one count of obstruction of justice.

According to the indictment, Matsa, who is an attorney, real estate broker, architect and licensed minister in Ohio, created and operated several nominee entities in order to disguise his assets and income. Specifically, Matsa caused the preparation and filing of 15 fraudulent trust tax returns, Forms 1041, with the IRS. The trust returns represent filings for at least five separate trust entities during the tax years 2003 to 2005. Each of the trusts reported receiving significant amounts of interest income each year; however, no income tax was reported as due as a result of fraudulently claimed deductions for distributions purportedly paid to a foreign beneficiary each year. The indictment alleges that Matsa used funds from these trusts to purchase a 150-acre farm in Hocking County, Ohio, as well as a single-family residence in Worthington, Ohio, both of which he used as his personal residences.

According to the indictment, Matsa violated the foreign bank account reporting requirements by failing to disclose his ownership and control over a foreign bank account held in the Netherlands during calendar year 2003, where an account was maintained by Matsa with funds in excess of $10,000 from at least August 2003 to November 2003.

According to the indictment, after learning of the grand jury investigation into his business activities in May 2006, Matsa and others conspired to obstruct justice by misleading and concealing evidence from the grand jury, making false statements to the grand jury, creating false documents, tampering with a witness and lying to federal investigators.

According to his plea agreement, Pappas admitted that he made false statements to federal agents during his grand jury testimony and in a letter to the Justice Department about the ownership of a law firm doing business in the Short North area. According to the indictment from 1987 until 2004, the law firm was known as The Law Offices of Aristotle R. Matsa, when the name was changed to The Law Offices of George Z. Pappas.

An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in U.S. District Court. If convicted, Matsa faces a maximum sentence of 90 years in prison, a fine of $5 million, and 5 years of supervised release.

Judge Sargus has not yet scheduled a change of plea hearing for Pappas. Pappas faces a maximum sentence of 5 years in prison, a $250,000 fine, and 3 years of supervised release.

The case is being prosecuted by Justice Department Tax Division trial attorneys Richard M. Rolwing and Jorge Almonte. The case was investigated by the IRS, Criminal Investigation Division.

http://www.justice.gov/opa/pr/2009/December/09-tax-1381.html

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