Wealthy Couple Sentenced To Jail For Obstructing IRS At Audit

© Getty Images
© Getty Images

“You’re two people who have great talent, who’ve been very successful in life, who I am going to send to prison,” Manhattan Federal Court Judge Denise Cote advised Dr. Jeffrey Stein and his wife, Marla Stein, shortly before handing down their sentence.

Both will spend time in federal prison for their respective roles in cheating the Internal Revenue Service (IRS). Dr. Jeffrey Stein, a vascular surgeon, was sentenced to 18 months while Marla Stein, a personal injury lawyer, was sentenced to a year plus one day (by way of explanation, crimes deemed a felony, by sentencing guidelines, are generally punishable by more than one year in prison and may then be eligible for early release). Both had hoped to avoid jail time with Marla Stein asking to serve her sentence at home in order to take care of her minor son.

Instead, the judge opted to have the couple stagger their jail terms, Giudice-style.

The Steins were also ordered to pay restitution to the IRS in the aggregate amount of $344,989.

The sentencing followed charges and a guilty plea filed earlier this year. The couple pleaded guilty to a scheme to lower their tax burden by providing “false and fictitious information” to their accountant. That information involved generating fake deductions to offset actual business income from their respective practices. When their returns were flagged by IRS for audit, the two became even more creative: they made up documentation to support their lies.

The documentation that the Steins created didn’t simply rely on fake names and identities. Rather, Jeffrey Stein used the names of four disabled military veterans including two former patients whose identities Stein obtained through his work for the V.A. Hospital. Stein created bogus invoices to make it appear that those patients had worked for him in such positions as “ultrasound technologist” and “vascular technologist.” Not only was all of it a lie, one of the vets whose name appeared on the invoice was not even alive in the year Stein submitted the invoice.

Not to be outdone, Marla Stein also used names and tax ID numbers of other people to substantiate fake deductions. Stein created fake invoices to prove that a household employee and a family doctor had actually performed work for her law firm when they did not. Additionally, she altered invoices for photos and videos of family religious celebrations to look like they were attributable to her law practice.

Noting that the couple had doubled down on their fraud after they had been caught, IRS Special Agent-in-Charge Shantelle P. Kitchen said earlier this year that the investigation against the couple, “also reinforces the message that falsifying books and records ‘after the fact,’ in preparation for a tax audit, is also a criminal offense and will be dealt with accordingly.”

In addition to jail time and fines, pursuant to New York Law, Marla Stein will likely lose her license to practice law. Stein had already lost her job as a result of the scheme. Similarly, Jeffrey Stein could face suspension of his medical license; in the meantime, Stein, who was previously identified on the Mt. Sinai Hospital website as an Assistant Clinical Professor of Vascular Surgery is no longer listed as active.

Written by Kelly Phillips Erb of Forbes

(Source: Forbes)

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