New indictment for the "anti-tax underground"

[Demosthenes]

West Chester lawyer charged for part in 'anti-tax underground'
By MICHAEL HINKELMAN
Philadelphia Daily News
hinkelm@phillynews.com 215-854-2656
A West Chester lawyer and businessman was charged yesterday by a federal grand jury with conspiracy to defraud the IRS and related offenses.
Authorities said that Wayne D. Bozeman, 60, arrested at his home yesterday morning, was part of a conspiracy orchestrated by Norristown lawyer Bernard J. Bagdis to conceal $24 million of income from Uncle Sam, resulting in a tax loss of almost $5 million.
Bagdis and 10 others, including lawyers and doctors, were originally indicted last November.
Seven defendants in the case have already pleaded guilty and are cooperating with the feds.
Besides charges against Bozeman, new charges were added yesterday against Bagdis and co-defendants Bertram R. Russell, a Gladwyne radiologist, and Richard J. Frase, an engineer from Schoharie, N.Y.
Bagdis, Russell, Frase and co-defendant John Leichner, a Newtown surgeon, have all pleaded not guilty to various tax offenses.
The superseding indictment alleges that Bagdis helped Bozeman prepare a false tax return in April 2007, while Bagdis was free on bail and under court supervision.
Peter J. Scuderi, Bagdis' lawyer, said: "My client's position is he's done nothing wrong. There's a defense to everything."
According to the original indictment, Bagdis allegedly boasted to IRS undercover agents that he had been part of an "anti-tax underground," and told a co-defendant cooperating with the feds, "I'm working on my new book - it's called, 'Federal Tax Fraud, the User's Guide.' "
Bozeman appeared before a federal magistrate yesterday and pleaded not guilty to conspiracy and tax-related offenses. He was released on $25,000 personal-recognizance bail. If he fails to show up in court, he'd have to pay that amount to the government.
Defense attorney Frank Marcone said that Bozeman doesn't believe that he did anything inappropriate, and relied on the advice of two tax attorneys, both CPAs and one of whom is a former IRS agent.
Authorities said that Bozeman ran a company that purchased and resold components for amusement and gaming machines, Keystone Game Supply, Inc.
The feds said that Bagdis helped Bozeman receive unreported income from Keystone via checks deposited by Keystone into a bank account held in the name of another company that Bozeman owned and controlled.
The feds said that those checks were then deducted on Keystone's books and tax returns as consulting-fee expenses.
Bozeman allegedly used the unreported compensation to pay his and his wife's personal expenses.
The feds allege that Bozeman received more than $830,000 in taxable income that he did not report from 1999 through 2007, resulting in $157,000 of tax due.

[The Observer]

Peter J. Scuderi, Bagdis' lawyer, said: "My client's position is he's done nothing wrong. There's a defense to everything."

According to the original indictment, Bagdis allegedly boasted to IRS undercover agents that he had been part of an "anti-tax underground," and told a co-defendant cooperating with the feds, "I'm working on my new book - it's called, 'Federal Tax Fraud, the User's Guide.' "

Mr. Scuderi, might I suggest that it's going to take a lot of chutzpah and hard work to come up with a winning defense in light of the fact that your client is actually admitting that what he is doing is fraud?

[Demosthenes]

Posted on Wed, Apr. 22, 2009

Tax attorney, doctor found guilty of tax evasion
MARYCLAIRE DALE
The Associated Press
PHILADELPHIA - A lawyer whose attorney said was obsessed with the U.S. tax code was convicted Wednesday of helping a radiologist and other clients avoid nearly $5 million in taxes on $24 million in income.
The jury verdict capped a seven-year investigation of lawyer-turned-tax preparer Bernard J. Bagdis, 59, of Norristown.
Bagdis testified during the monthlong trial that his close reading of the code led him to conclude that he and his clients did not have to file or pay taxes, in part because of various business losses.
"He was obsessed with the tax code and believed he was right," said attorney Peter J. Scuderi, who represented Bagdis.
The jury found otherwise, convicting Bagdis and two clients of dozens of tax counts. The judge immediately revoked Bagdis' bail and ordered him held until his July 30 sentencing.
Radiologist Bertram Russell, 57, of Gladwyne and engineer Richard Frase, 63, of Schoharie, N.Y., who also testified at the trial, remained free on bail after their convictions. Nine other clients pleaded guilty before the trial.
Russell filed no taxes despite earning nearly $3 million in income from 1998 to 2006, prosecutors said. The 12 defendants together hid $24 million in income, they said.
"It proves that everyone is responsible to comply with their tax obligations," Assistant U.S. Attorney John Pease said.
Russell and Frase argued that they relied on Bagdis for tax advice.
Scuderi described Bagdis as a brilliant inventor with a master's degree in aeronautical engineering from Princeton University, and someone never interested in making money.
At one point during the investigation, Bagdis agreed to help an undercover Internal Revenue Service agent hide $100,000 in cash so that it would not be taxed, authorities said. He boasted that he would write a book and call it "Federal Tax Fraud: The User's Guide," they said.
Bagdis ran a small law office in Blue Bell, a Philadelphia suburb, but did not file individual tax returns since 1990, prosecutors said. At the time of his 2007 arrest, he told officials he had about 25 firearms at his home. He was ordered to surrender the weapons along with his passport.
Bagdis faces a maximum sentence of more than 100 years, but far less under federal guidelines.

[absdes96]

A tax fraud case involving another lawyer?

Correct me if I am wrong here:

Most people who attend law school go through (at the very least) three years of hell. Get indebted to their necks. Go to through hell again with repsect to a state bar exam. They usually work for a modest/starting salary someplace that will pay the student loan payments, buy a used car, and put food on the table. They'll slave away in a law factory someplace (for years) until they gain enough experience to move on, and/or gain professional credibility/connections with their peers and then, maybe, earn a salary one can live comfortably and support a family with.

Heck, even J.D.s who do not practice law still (on average) make a decent living. (Some of them sit in cubicles next to me.)

And then....throw away the J.D., the bar license, the professional connections in the legal community, and your reputation in the broader community for a scheme?

It is easier for me to understand why people who have "nothing to lose" get involved in things like this, but a person like this falls long and hard from everything he/she worked hard to obtain.

Is it the thrill of the chase? Boredom? Depression?

[Judge Roy Bean]

Hubris is close to it - but there is also a sense of entitlement among some.

[Joey Smith]

Like any other profession or occupation, a small percentage of the people are just unbalanced wacko nuts. We had a Ph.D in philosophy in my law school class who had three pages of credentials but was totally nuts. He made it through the bar, but had quit practicing law within a year (and doubtless went back to school to study something else .....).

[Demosthenes]

absdes96, if you look hard enough, you'll usually find some kind of triggering event in the lawyer's life (just like non-lawyer tax deniers) that effectively turned off their common sense switch and turned on their obsession with tax cheating.

[Doktor Avalanche]

absdes96, if you look hard enough, you'll usually find some kind of triggering event in the lawyer's life (just like non-lawyer tax deniers) that effectively turned off their common sense switch and turned on their obsession with tax cheating.

Here now, ladies and gentlemen - the triggering event.

[Gregg]

Hubris is close to it - but there is also a sense of entitlement among some.

And that man is a US Senator...wow

[Gregg]

sorry, I haven't been following it closely, still fighting about it, eh?

I am a bit to the right of Atilla the Hun myself, but honestly, can't we have an election without dueling lawyers anymore?

[Lambkin]

sorry, I haven't been following it closely, still fighting about it, eh?

I am a bit to the right of Atilla the Hun myself, but honestly, can't we have an election without dueling lawyers anymore?

And I'm only a little to the left of Zhou Enlai and I feel the same way!

[Gregg]

sorry, I haven't been following it closely, still fighting about it, eh?

I am a bit to the right of Atilla the Hun myself, but honestly, can't we have an election without dueling lawyers anymore?

And I'm only a little to the left of Zhou Enlai and I feel the same way!

he he he....and I think we'd get along fine.

Honestly, cannot they see the damage this is doing to our government? For all his faults, the most noble and good thing Nixon (yes even Nixon had more decency than our current crop) ever did was to quietly accept that Illinois was stolen from him in 1960, but to contest it would do a lot of damage...
I think Al Franken might be a bad comedian and worse Senator, but he won. At least he has come close enough to winning that to fight it any more is doing far more damage than him being a Senator ever could.

[LegalEye]

If the 82% rule does actually exist, I may be in the 13% of those having a vague idea of what's going on. This case is fascinating because of the apparent intelligence of those involved, and the stupidity of their actions. In these days of lobster thieves being sentenced to four years in prison, and murderers receiving suspended sentences, does anyone know how the sentencing in this case was finalized?

[grixit]

Ouija board.

[Demosthenes]

does anyone know how the sentencing in this case was finalized?

BERNARD J. BAGDIS also known as PAT DAVIS also known as FRANK BENJAMIN also known as ADAM SAMUELS also known as CHRIS WHITE also known as JAY is scheduled to be sentenced on September 30th.

In these days of lobster thieves being sentenced to four years in prison, and murderers receiving suspended sentences,

Contrary to your examples, sentencing in federal tax cases tends to be kind of boring and formulaic. While the judge has the ability to deviate from federal sentencing guidelines, and while there are some factors which can push federal sentencing guidelines either higher or lower, the result is fairly predictable and is based on the crimes he committed, the tax losses involved, the defendant's prior criminal history, and so on.

[LegalEye]

Thank you for the update - and the crash course in tax fraud sentencing 101 ... do you know if there was a continuance issued since the original sentencing date was July 30? Does that typically occur? Thanks for any info.

[wserra]

I don't see an application to adjourn sentencing in the docket, so I'm not sure why it happened. Perhaps it came from a non-party, such as the Probation Department, and thus was not filed. In any event, yes, it happens quite frequently.

Welcome to Quatloos, LegalEye.

[LegalEye]

Still trying to keep up with Bagdis and Russell. Have heard from an unsubstantiated source that the sentencing has been delayed until December (from September). Is there a way of finding the new date for the sentencing? Thanks.

[LPC]

Still trying to keep up with Bagdis and Russell. Have heard from an unsubstantiated source that the sentencing has been delayed until December (from September). Is there a way of finding the new date for the sentencing? Thanks.

Subsequent (i.e., post-July) docket entries, per PACER:

07/09/2009 430 ORDER AS TO BERNARD J. BAGDIS THAT THE DEFENSE MOTION FOR EXTENSION OF TIME IS MOOT. Signed by HONORABLE J. CURTIS JOYNER on 7/8/09.7/9/09 Entered and Copies Mailed, E-Mailed. (mac, ) (Entered: 07/09/2009)
09/14/2009 454 NOTICE OF HEARING as to BERNARD J. BAGDIS Sentencing rescheduled for 11/5/2009 at 3:30 PM in COURTROOM 17A, 17th Floor before HONORABLE J. CURTIS JOYNER. (sc, ) (Entered: 09/14/2009)
09/16/2009 455 APPLICATION OF ALAN S. LEWIS, ESQUIRE TO BE ADMITTED PRO HAC VICE TO PRACTICE IN THIS COURT FILED BY BERNARD BAGDIS, STATEMENT, CERTIFICATE OF SERVICE. (mac, ) (Entered: 09/16/2009)
09/16/2009 456 APPLICATION OF MICHAEL SHAPIRO, ESQUIRE TO BE ADMITTED PRO HAC VICE TO PRACTICE IN THIS COURT FILED BY BERNARD BAGDIS, STATEMENT, CERTIFICATE OF SERVICE. (mac, ) (Entered: 09/16/2009)

[LegalEye]

Any additional information on this case? Sentencing did not take place in November. Curious to know where it stands. Thanks.