TAMPA — Two Tampa businessmen accused of cooking up $8 million in bogus tax write-offs for corporate clients were found guilty on all counts by a federal judge this week in a case so complex it took a year to decide.
Duane Crithfield, 70, and Stephen Donaldson Sr., 71, now face up to five years in prison for conspiring to defraud the United States, and up to three years on two counts of helping people to lie on tax returns. Sentencing is scheduled for Sept. 27-28.
Chief U.S. District Judge Stephen D. Merryday presided over their nonjury trial in June 2016 and filed his 36-page decision Wednesday, using it to poke at America's complicated tax code, which he called "a bloated and opaque monstrosity."
Early last year, he threw out the men's signed, adjudicated plea deals — against their wishes — after defense attorneys began downplaying their clients' criminal conduct and the resulting loss to the IRS.
Prosecutor Jay Trezevant said the scheme cost the government at least $8 million, but the men admitted to just $4,563. That led the judge to conclude there was no meeting of the minds.
Had the plea deal remained intact, Crithfield and Donaldson would have faced no more than three years each in prison — that, for a single count of helping a Sarasota anesthesiologist make a false statement on his corporate tax return.
The two were accused of marketing so-called "Business Protection Plans" to medical practices, offering doctors and others coverage against unlikely events such as a kidnapping.
Purchasers would pay a premium and claim the cost as a business expense but would later reclaim about 85 percent of the premium if misfortune did not come their way. That spared them paying a much higher marginal tax rate on the earnings.
Merryday wrote that no fair-minded or honorable person could have thought such a scheme would succeed. But he acknowledged that the complex tax code is vulnerable to the efforts of a good salesman.
"That these mostly honest, educated, and experienced taxpayers and their savvy advisers believed in, and committed money to, this criminal scam presents an irrefutable and deafening reminder of the extent of the public's cynicism toward the federal income tax code — a bloated and opaque monstrosity," he wrote.
"In other words, as the present episode evidences, almost no financial scheme is so suspicious or so implausible that a good salesman cannot convince an honest and vigilant taxpayer that the Internal Revenue Service is prepared to award tax relief to a participant."
Contact Patty Ryan at [email protected]