Osteopath and Wife Gets Jail

[The Observer]

City News Service is reporting that a doctor in Encinatas was sentenced to 4 years in prison and ordered to pay $500,000 in restitituion to the IRS for evading taxes for over a decade.

Dr. James Francis Murphy, 53 was convicted last June, and his wife, Christine Murphy, was sentenced to 12 months of house arrest and ordered to pay restitution of $147,528.

Not only did the good doctor and his wife get involved in filing bogus trusts in an effort to hide their income, but, as CNS reports, "...[T]he Murphys falsely claimed they were not U.S. citizens and argued that federal tax laws did not apply to them."

[NYGman]

For some more background: http://www.utsandiego.com/news/2014/jun ... y-tax-irs/

SAN DIEGO — An Encinitas physician and his wife were found guilty Friday of a decade-long scheme to evade their taxes, using ploys such as filing false claims and creating a sham trust to hide the $1 million annual income earned from the medical practice.

After a two-week trial, a San Diego federal jury convicted Dr. James Francis Murphy and his wife, Denine Christine Murphy, of four counts each relating to making false claims and interfering with tax laws. The doctor was also convicted of four counts of presenting fictitious financial obligations.

“The Murphys have found out that the old adage is true: Nothing is certain but death, taxes and prosecution if you don’t pay your taxes,” U.S. Attorney Laura Duffy said in a statement Friday.

James Murphy, 53, began to practice osteopathic medicine in Omaha, Neb., in 2000 and opened a satellite office in Encinitas in 2005, according to the website for Cornerstone Progressive Health. His wife, 51, works as a bookkeeper and helps manage the practice. The company’s trust earned $2.6 million from 2003 to 2005, but the couple only paid $600 in taxes, according to court documents filed by the U.S. Attorney’s Office.

When a U.S. Internal Revenue Service agent asked for more records for an audit, the couple responded in a letter by questioning her authority and argued against the government’s power to act, prosecutors said. The Murphys also falsely claimed at one point they were not U.S. citizens.

The agent informed them they owed more than $800,000 in taxes for that period, not including penalties.

When the couple tried to pay, they did so with fictitious bonds not recognized as currency, along with letters and a forged signature of then-Secretary of the Treasury Henry Paulson, purporting he was their fiduciary and was responsible for paying their taxes.

Then, from 2005 to 2007, the couple fraudulently claimed refunds of $1.2 million.

Prosecutors said the doctor also sent bogus forms that claimed to show they had paid their taxes.

This is Murphy’s second conviction in recent years. In 2008, he tried to bypass security screening at the San Diego International Airport, presenting a fake “diplomat/ambassador” badge and saying he had a diplomatic pouch that was not subject to search, court records show.

In 2012, Murphy filed a motion to have that conviction vacated. It was after that that prosecutors filed the tax evasion case against him, a move Murphy claims was “vindictive.” A judge disagreed.

The couple is set to be sentenced in September.

Love the part about the fake “diplomat/ambassador” badge, too funny. Although with millions of dollars of unreported income, I would have expected her share of restitution to be a bit more than $147,528

[Famspear]

Love the part about the fake “diplomat/ambassador” badge, too funny.....

Yeah, sounds like he's not the brightest bulb on the tree.

The Federal Bureau of Prisons does show a record for a 53 year old James Francis Murphy. He was released on July 3, 2012 (former inmate # 07327-298).

[Jeffrey]

$1 million annual income earned from the medical practice

God almighty.

[LPC]

using ploys such as filing false claims and creating a sham trust to hide the $1 million annual income earned from the medical practice.

If I were earning $1 million a year, I wouldn't be hiding it, I'd be flaunting it.

[fortinbras]

The airport case is US v. James Frances MURPHY (9th Cir 8/12/2010) 392 Fed.Appx 528, cert.den (1/10/2011) _US_, 131 S.Ct 972, 178 L.Ed.2d 799.

This decision hardly mentions the crime, being spent on whether Murphy had properly been held sufficiently competent to stand trial and to decide to defend himself without a lawyer (he was). The last line of the decision:
"A rational trier-of-fact could have found that Murphy took a substantial step toward violation 18 USC § 1036(a)(4) [entry by false pretenses into any vessel or aircraft or the secure area of an airport or seaport] by claiming diplomatic status at the checkpoint."
Falsely claiming diplomatic status violated 18 USC § 915, which is not mentioned in this brief decision but may have been one of the counts at trial.