California Attorney, a Prior Tax Offender and Embezzler, Pleads Guilty to Tax Evasion
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California Attorney, a Prior Tax Offender and Embezzler, Pleads Guilty to tax Evasion
NEWPORT BEACH November 23, 2019 -- James Roy McDaniel, 66, who pleaded guilty before United States District Judge S. James Otero to one count of tax evasion, is scheduled to be sentenced on February 3, 2020. At sentencing, McDaniel could receive a statutory maximum sentence of five years imprisonment. Because this is his second criminal tax offense his chances of receiving a higher sentence are increased.
McDaniel was a licensed California attorney for more than two decades, until he pleaded guilty in late 2004 to one felony count of subscribing to a false income tax return. In 2005, McDaniel was sentenced to three years in federal prison for that crime, and he surrendered his license to practice law in California. In that case, McDaniel’s failure to report income resulted in a tax loss of $677,368 to the federal government, according to court documents. McDaniel’s additional income was the result of his embezzlement of over $1.6 million from two prominent families he represented as an attorney. McDaniel served time in state prison for the embezzlement.
The IRS subsequently assessed McDaniel more than $1.4 million in taxes, interest and penalties for the tax years 1997 through 2001, court papers state. According to the signed plea agreement, McDaniel willfully attempted to evade paying his debt to the IRS by creating two shell companies – Davis Bell Consulting LLC and James Roy Consulting LLC – where he directed payments for tax and estate planning consulting work he performed after being released from prison.
During a scheme that allegedly ran from May 2008 until December 2012, McDaniel attempted to mislead federal tax authorities and conceal his income by directing other people to sign documents identifying themselves as the sole managing members of the shell companies. As part of the scheme, McDaniel directed them to open bank accounts where he deposited checks for his tax and estate planning work.
McDaniel continued to earn income for tax and estate planning consulting work during each of calendar years 2008 to 2018, but willfully failed to report his income, and willfully failed to file tax returns with the IRS for tax years 2011 to 2018. McDaniel admits that from 2012 through 2017, he received taxable income of at least $527,944, and subsequently owes unpaid taxes of $184,126, in addition to the $1.4 million previously assessed.
Commentator's suggest this may not be your typical tax crimes case. The typical tax crime offender is a one-time offender and is not charged again after serving his time. This is because they presumably learned their lesson and will not commit tax crimes again. However, in this case, McDaniel seriously thumbed his nose at the government following his first conviction by purposefully failing to file tax returns and pay taxes for a period of approximately 8 years. Moreover, McDaniel's arguably engaged in the illegal practice of law and violated the public trust by preparing estate plans for clients without an active law license. For these reasons, it makes sense why the government would proceed against McDaniel's a second time.
Wilson Tax Law Group, APLC is an Orange County law firm specializing in Federal and State tax audits, internal compliance, FBAR, offshore bank account disclosures, and criminal tax, including appeals, trials, and collections. The Los Angeles and San Francisco Daily Journals have named Wilson Tax Law Group, APLC as one of the “Top 20 Boutique Firms in California”.
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