Tax Fraud -- Some Lawyers' Biggest Temptation
Spending too much money is a common temptation for many successful professionals, including lawyers.
Like professional athletes who sometimes burn through fortunes without saving for retirement, some attorneys will spend their money on a flashy BMW while student loans burn holes in their pockets. That's a money-management sort of thing.
The biggest temptation for some practitioners, however, is a criminal sort of thing. It's tax fraud.
Michael Cohen, for example, has been in the news for paying women hush money for the president. But his biggest problem may come from not reporting all his income.
The Wall Street Journal says federal authorities are examining whether Cohen underreported income from taxi medallions, and whether he inflated the value of assets to obtain loans for the taxi business.
Cohen worked with Evgeny Freidman, a disbarred lawyer, who pleaded guilty to tax fraud. He is reportedly cooperating with the investigation.
According to reports, Freidman managed Cohen's tax medallions in New York. Sometimes he paid Cohen cash in transactions that allowed him to keep extra income.
They say "cash is king" in real estate and other business deals, but large cash transactions can also be red flags for banks and tax authorities. It's one of the biggest challenges in the marijuana business, for example.
For lawyers who accept cash payments, there is also the temptation not to report the income. Even $500 retainers, which may not require written agreements in some states, can add up.
There are also dead giveaways for lawyers who underreport and overspend. Attorney Paul Manafort, for example, is in deep trouble for alleged tax fraud.
That's apparently what happens when you wear a $15,000, ostrich-feather jacket.
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