Dr. Martin Jacobs sentenced for tax evasion

[The Operative]

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A Bradford doctor was sentenced Friday in Erie to serve 24 months of federal incarceration for income tax evasion.

Martin D. Jacobs, doctor of internal medicine, was also sentenced to three years supervised release, pay a $5,000 fine, and ordered to pay all back taxes. That amount was not immediately clear, as the civil division of the IRS can pursue interest and penalties against Jacobs as well, according to Special Agent Andrew Hromoko of the Department of the Treasury.

Jacobs had pleaded guilty to one count of income tax evasion in July.

“Jacobs will be allowed to self report to prison, which will be coordinated by the U.S. Marshal’s office and Bureau of Prisons,” Hromoko said.

Jacobs had been asking for a sentence of home confinement and probation, and several of his patients from Bradford had written letters on his behalf to U.S. District Judge Sean McLaughlin for consideration at the time of sentencing.

The prosecution, led by Assistant U.S. Attorney Marshall Piccinini, objected to Jacobs’ request, saying the doctor had used “sophisticated means in perpetrating the crime to which he pled.”

Piccinini argued that between 1997 and 2006, “Jacobs purposefully evaded paying his federal income taxes, sought to hide various personal assets from the IRS, failed to disclose the existence of cashier’s checks, transferred money to foreign bank accounts, used a false Social Security number to open bank accounts into which assets were transferred and established a trust account in New Jersey into which assets were to be transferred.”

After several years of not paying income taxes, Jacobs used “a variety of tax protestor-style arguments concerning his obligation to pay taxes.”

Piccinini said that Jacobs created the “Jacobs Jersey Trust” in New Jersey and then purchased a vehicle in 2001 using $27,791.16 from that account. Jacobs said the account was an “estate and divorce planning trust,” Piccinini said, but countered that Jacobs had divorced in 1998.

Another vehicle was purchased in 2003 with funds from an undisclosed account which Jacobs had opened using a false Social Security number, the prosecutor alleged, saying that vehicle was placed in the name of the Trust as well.

Referring to cashier’s checks, the prosecutor said Jacobs “claims that (they) were used to pay his wife under the terms of their divorce settlement agreement. However, at the time Jacobs began to meet with the IRS, his divorce settlement was no longer a major financial concern.”

Piccinini said that on May 21, 2004, “the very day Jacobs knew he was the subject of an IRS criminal investigation, he deposited a $78,404.43 cashier’s check into the undisclosed, false Social Security number bearing” bank account and then had the funds wire transferred to a Swiss bank account. Three days later, he did the same thing, according to Piccinini.

The prosecutor also said that in July 1998, Jacobs deposited $131,442.33 in undisclosed cashier’s checks “that were supposedly in existence to pay his wife in the divorce” into another undisclosed bank account also opened with a false Social Security number. He then transferred that money to an account in the Netherlands Antilles.

Those accounts were successfully used to hide assets, Piccinini said, adding that Jacobs claims to have $266,563.27 in his Swiss bank account currently.

“Finally, without sufficient explanation, Jacobs opened bank accounts in another person’s Social Security number,” the prosecutor said, calling his conduct “just another attempt to make it difficult for the IRS to detect his assets and collect Jacobs’ delinquent taxes.”