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April 19, 12

NEWS / Utah Tax Defier Pleads Guilty in Nine-year Scam to Defraud the United States, Is Sentenced to Two-ye

Stephen Murphy, a Utah resident, pleaded guilty in federal court in Salt Lake City to one count of conspiracy to defraud the United States, and was sentenced the same day to 24 months in prison, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Court Judge Dee Benson presided over the plea hearing and sentencing, which took place yesterday.

According to information disclosed at the hearing, Murphy, with the assistance of several tax defier promoters, filed numerous false income tax returns for the years 2002 through 2009, espousing various false and frivolous tax positions. For example, he filed a false return for 2002 reporting zero income and zero tax due, on the ground that he was “not a U.S. person” subject to tax. He filed several subsequent false returns fraudulently claiming income tax refunds, including a false return for 2008 based on fictitious Forms 1099-OID. Also disclosed at the hearing, Murphy established two fake charities, which were actually just names attached to certain of his personal bank accounts. He fraudulently claimed “charitable contribution” tax deductions for funds siphoned to these accounts. As part of his scheme, Murphy submitted Forms W-4 to his employers vastly overstating his withholding allowances, so as to minimize or eliminate tax withholdings from his wages. Murphy admitted that he intended to cause the U.S. Treasury a loss exceeding $200,000.

After accepting the plea, Judge Benson sentenced Stephen Murphy to two years imprisonment and one year of supervised release. Murphy was also ordered to pay restitution to the IRS in the amount of $83,831.

This case was investigated by IRS - Criminal Investigation and was prosecuted by Assistant U.S. Attorney Stewart Waltz in the Utah U.S. Attorney’s Office and Trial Attorneys Joseph A. Rillotta and Christopher P. O’Donnell of the Justice Department’s Tax Division.

More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.


Tags: criminal investigation,


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