January 28, 11

NEWS / Former Owner & Former In-House Counsel of Cincinnati Company Sentenced to Prison for Tax Crimes

CINCINNATI – The former owner of Buddy’s Carpet, Leif D. Rozin, and Alan W. Koehler, the company’s former in-house counsel, were sentenced to prison for their roles in a tax fraud scheme for which they were convicted in 2008, the Justice Department announced today. Both men were formerly full-time Cincinnati residents. Rozin now resides in Westchester, Ohio, and Bonita Springs, Fla., and Koehler resides in Purcellville, Va. In 2008, a jury found Rozin and Koehler guilty of a conspiracy to defraud the United States. In addition, the jury found Rozin guilty of filing a false corporate income tax return and tax evasion, and found Koehler guilty of assisting in the filing of a false corporate income tax return. Buddy’s Carpet was a retail chain with more than 30 stores in Ohio, Kentucky and Indiana.



Rozin, 68, was sentenced by U.S. District Court Judge Susan J. Dlott to serve 12 months and one day in prison, a three-year period of supervised release, 2,000 hours of community service, and to pay a $30,000 fine as well as the cost of his prosecution and a special assessment. Koehler, age 50, was sentenced to serve 18 months in prison, a three-year period of supervised release, and to pay a $20,000 fine and a special assessment.



Another former owner of the company, Burton B. “Buddy” Kallick; their investment and insurance advisor, Milton Liss, of Cincinnati; and unlicensed financial and insurance salesman Bruce M. Cohen of Louisville, Ky., were indicted along with Rozin and Koehler. Kallick passed away in January 2007, and both Liss and Cohen pleaded guilty to the charged conspiracy to defraud the United States. Cohen was sentenced by Judge Dlott in 2008 to 37 months in prison for his role in the scheme. Liss, 67, was sentenced at the same time as Rozin and Koehler to serve 12 months and one day in prison, a three-year period of supervised release, 1,000 hours of community service, and to pay a $10,000 fine and a special assessment. Although Rozin had already deposited $387,687 with the Internal Revenue Service (IRS), which is the amount he was found guilty of evading on his 1998 income tax return, the court ordered Rozin, Koehler and Liss to pay to the IRS jointly an additional $387,687, which was the amount of Kallick’s unpaid 1998 income taxes.



John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division; Carter M. Stewart, U.S. Attorney for the Southern District of Ohio; and Jose A. Gonzalez, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati, announced the sentences today.



During the three-week trial, the evidence showed that Rozin and Koehler conspired with Liss, Cohen and others to defraud the United States by having Rozin, Inc., dba Buddy’s Carpet, purchase several sham “Loss of Income” insurance policies from an insurance company in the U.S. Virgin Islands. The co-conspirators used these sham insurance policies to evade approximately $775,000 in income taxes on the 1998 tax returns of Rozin and Kallick. In addition, the evidence showed that the co-conspirators intended to evade a similar amount of income taxes for the 1999 tax returns of Rozin and Kallick, but they did not file the returns because the IRS disclosed its criminal investigation.



The evidence showed that, prior to selling the business in 2000, the defendants caused the firm to spend a total of $3.6 million on eight “Loss of Income” insurance policies, the purpose of which was to provide substantial tax deductions to the company and to the owners, Rozin and Kallick. The evidence also demonstrated that these insurance policies were a sham. The evidence further showed that Rozin, Kallick, Koehler, Cohen and Liss attempted to conceal their participation in these sham arrangements by establishing offshore nominee entities in foreign countries, such as Nevis.



The former owners and operators of the source of the “Loss of Income” policies, Security Trust Insurance Company in the U.S. Virgin Islands, along with their attorney, were also prosecuted and convicted in a federal court in Grand Rapids, Mich., in 2009.



During the trial, the evidence revealed that Rozin and Koehler engaged in a series of purchases of these insurance policies and took numerous steps to conceal their scheme, including creating backdated documents. In addition, the evidence showed that Rozin, Koehler and others shared Liss’s commissions from their purchases of the policies, as well as the commissions from others’ purchases.



Acting Assistant Attorney General DiCicco, U.S. Attorney Stewart and Special Agent Gonzalez commended the investigative efforts of the IRS agents involved in this case, as well as Justice Department Tax Division attorneys Richard Rolwing and Patrick J. Murray, who prosecuted the case.



Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.

http://www.justice.gov/opa/pr/2011/January/11-tax-119.html

Tags: criminal investigation, document,