Michael Mitrow, former CEO of a New Jersey pharmaceutical marketing company, pleaded guilty to tax evasion and conspiracy to commit wire fraud. His brother Matthew pleaded guilty to filing a false tax return. The two men were involved in a scheme in which Michael defrauded his employer of over $1 million.
Prosecutors say that during a two year period, Michael Mitrow defrauded his employer by submitting fraudulent invoices for consulting services that were never provided. They say he used $600,000 of that money for private jet travel. They also say he rented a yacht for over $36,000 per day.
In addition to the federal conspiracy charge, the IRS charged Michael with tax evasion. They say that in 2008 he concealed $1.6 million of income. To hide some of the income, Michael billed personal expenses on a company credit card and tried to claim some of his personal private jet travel as a business expense.
Brother Matthew concealed $91,000 of income he received in the form of kickbacks from a vendor. The money was used on home renovations, private jet travel, personal credit cards and to pay a $19,000 tab at New York strip club.
Prior to the guilty plea, Michael was facing 25 years in prison while Matthew faced 20. Because of their early acceptance of responsibility, both men will probably receive much lighter sentences when sentenced later this year.
Michael’s sentence is could be heavily influenced by the actual amount of the fraud. Federal sentencing guidelines examine the relevant conduct tax loss attributable to the tax evasion as well as the money improperly taken from his employer. The higher the tax loss or theft loss, the longer the sentence. Prosecutors and Michael Mitrow reportedly cannot agree as to the amount illegally taken by him. Prosecutors say that Michael bilked his employer for up to $2.5 million. Michael’s lawyers say the figure may only be $200,000.
We often see cases where executives steal money from their employers. How the brothers were caught remains a mystery but almost a million dollars of private jet travel, expensive strip club tabs and luxury yacht rentals are sure to gather attention. Ultimately, IRS agents built a case for not paying tax on the money taken by the men. As Michael and Matthew learned, lap dances, strippers, home renovations, yacht rentals and jet charters are not valid business expenses!
Their greed may have cost them their freedom.
Under audit or investigation for tax evasion? Seek a competent tax lawyer as soon as possible.