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United States of America v. Francis J. O'Reilly
Case Number: 7:19-cr-00882-KMK
Judge: Kenneth M. Karas
Court: United States District Court for the Southern District of New York (Westchester County)
Plaintiff's Attorney: United States District Attorney’s Office, White Plains, New York
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Description: White Plains, NY - Felony, Tax Evasion, Failure to Pay Payroll Taxes
The United States of America charged Francis J. O'Reilly with committing tax evasion and failing to pay over payroll taxes for the tax year 2015 as part of a long-running tax fraud scheme that cost the U.S. Treasury over $800,000, including penalties and interests.
According to the allegations contained in the Information to which O’REILLY pled guilty, court filings, and statements made in public court proceedings:
In or about 1989, O’REILLY was admitted to practice law in New York State. At all relevant times, O’REILLY was a self-employed attorney who maintained a law practice in Putnam County, New York, that specialized in, among other things, bankruptcy, foreclosure defense, and criminal defense.
O’REILLY operated his law practice as a sole proprietorship and exercised control over its financial affairs. In particular, O’REILLY was responsible under federal law for collecting, truthfully accounting for, and paying over payroll taxes to the Internal Revenue Service (“IRS”) for his employees. Instead of fulfilling this responsibility, O’REILLY engaged in a decades-long scheme to defraud the IRS of the payroll taxes that were due and owing for his law practice. Between 1997 and 2018, O’REILLY failed to pay over a total of approximately $155,771 in payroll taxes, resulting in a liability of approximately $232,283 after interest and penalties.
In addition to failing to pay over payroll taxes, O’REILLY also engaged in substantial personal tax evasion. Between 2013 and 2017, O’REILLY withdrew a total of approximately $481,673 in untaxed funds from his attorney trust account for personal use, none of which he reported on his tax returns for those years. In addition to substantially underreporting his income and tax liabilities, O’REILLY failed to pay even those taxes that he did report, accruing large unpaid liabilities. In total, during the tax years 2007 through 2018, O’Reilly evaded approximately $566,027 in personal federal income taxes, including interest and penalties.
In or about late 2016, in an effort to settle with the IRS, O’REILLY submitted an offer in compromise to the IRS proposing to settle at least approximately $691,561 in outstanding tax liabilities for merely $12,400. In the 2016 offer in compromise, which O’REILLY signed under penalty of perjury, O’REILLY made several material misstatements and omissions regarding his income and assets. Among other things, O’REILLY’s offer in compromise: (a) failed to disclose the existence of O’REILLY’s attorney trust account, from which, as described above, O’REILLY drew substantial income; (b) failed to disclose real property and land that O’REILLY owned in Socorro County, New Mexico; and (c) failed to disclose a 2010 Lincoln vehicle that O’REILLY had recently purchased for approximately $16,000.
In all, O’REILLY caused the IRS to incur losses of over $800,000, including penalties and interest.
* * *
In addition to the prison term, Judge Karas ordered O’REILLY, 62, of Danbury, Connecticut, to serve two years of supervised release, and to pay restitution to the IRS in the amount of $801,969, which represents O’REILLY’s unpaid tax liabilities, as well as certain penalties and interest, relating to his personal income taxes for the calendar years 2007 through 2018, payroll taxes for the calendar years 1997 through 2018, and Federal Unemployment Tax Act (FUTA) taxes for the calendar years 1998 through 2017.
Ms. Strauss praised the outstanding work of IRS Criminal Investigation in this case.
This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution.
26:7202.F WILLFUL FAILURE TO COLLECT/PAY OVER TAX
26:7201.F ATTEMPT TO EVADE OR DEFEAT TAX
Outcome: Defendant was sentenced to 18 months in prison.
09/09/2020 21 ORDER OF RESTITUTION as to Francis J. O'Reilly. ORDERED that Amount of Restitution: FRANCIS J. O'REILLY, the Defendant, shall pay restitution in the total amount of $801,969, pursuant to 18 U.S.C. § 3663, to the victim of the offenses charged in Counts One and Two, as set forth below. Upon advice by the United States Attorney's Office of a change of address of a victim, the Clerk of the Court is authorized to send payments to the new address without further order of this Court...... (Signed by Judge Kenneth M. Karas on 9/9/2020)(jbo) (Entered: 09/11/2020)