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Prison, Restitution for Vienna Man

Sentenced for defrauding the IRS.

Nobody likes paying taxes. But most people don’t go to the lengths Michael F. O’Connor went to in cheating the IRS.

Eventually, though, his wrongdoing caught up with him. And now, not only will the Vienna resident have to repay hundreds of thousands of dollars to the U.S. government, but it will also cost him a year of his life.

“He’s a well-educated CPA,” said Assistant U.S. Attorney Jack Hanly during O’Connor’s sentencing last week in federal court. “He had every opportunity to make good money without doing this.”

On April 28 in U.S. District Court in Alexandria, O’Connor pleaded guilty to making a false tax claim and failing to pay withholding taxes. From 2007 through 2012, he owned and operated TyPay Ventures LLC, an accounting and tax-preparation business first located in Vienna and then in Woodbridge.

According to the Statement of Facts filed with his plea agreement, for several years, O’Connor prepared and filed with the IRS false tax returns on behalf of himself and his wife, receiving fraudulent refunds – to which he wasn’t entitled – as a result. He also failed to pay withholding taxes for TyPay Ventures employees for the years 2009, 2010, 2011 and 2012.

“He overextended himself, got into unexpected debt and made some poor decisions.”

— Nina Ginsberg, defense attorney

FOLLOWING HIS GUILTY PLEAS in April, O’Connor, 62, returned to federal court last Friday, Aug. 8, to learn his punishment. At the outset, defense attorney Nina Ginsberg told Judge Claude Hilton she had checks in her possession for the full amount of the restitution.

Referring to her client, she said, “This is an individual from a family with a long history of hard work and success.” She also noted that O’Connor didn’t “engage in conduct which would be considered illegal” until after nearly a quarter century as a CPA.

“He got involved in the offenses because he overextended himself, got into unexpected debt and made some poor decisions,” said Ginsberg. “His colleagues view him as a man of integrity, a hard worker and an honest person.”

She said O’Connor provided substantial assistance to the tax authorities regarding other people who were also trying to defraud the IRS. Thanks to his help, said Ginsberg, “Tens of millions of dollars in back taxes will be recovered from [a particular] individual in California.”

She also contended that her client’s “own criminal conduct was overstated” by the prosecution. And she told the judge that other cases with similar amounts of tax losses have resulted in sentences ranging from probation to 36 months in prison. Furthermore, added Ginsberg, “Restitution had not been paid in these cases.”

“While Mr. O’Connor’s conduct was regrettable and illegal, he’s made an enormous effort to correct and make amends for it,” she said. “We think restitution, with a long period of home probation and a substantial amount of community service, will accomplish what this court wants to accomplish.”

Hanly, however, believed the defendant deserved some time behind bars. “This was a fairly significant tax [evasion] over several years,” he told Hilton. “[O’Connor] filed false claims for himself and failed to pay withholding taxes for his employees. I ask you to impose an appropriate period of incarceration and supervised release.”

BEFORE SENTENCING, O’Connor stood and addressed the court. Choking up and crying several times while trying to get his words out, he said, “I’m extremely sorry for what I did – it’s been a tremendous embarrassment. I’ve been a CPA for 24 years, going over and above what the professional code calls for.”

“I was raised by a good, Catholic, conservative family with strict moral values,” he continued. “I got into financial problems in 2010, and I don’t know why I did what I did. But I raised two wonderful children and never had any problems until this situation.”

Apologizing again, O’Connor said, “It was a terrible thing. I hope people will forgive me and I will be able to carry on with my life. This caused a major upheaval in my life, both personally and professionally, and now I just want to move on.”

Noting that the federal sentencing guidelines for O’Connor’s crimes are 24-30 months in prison, Hilton said he believed a punishment below those guidelines was appropriate in this case.

He then sentenced O’Connor to make the full $313,393 restitution he owes and spend 12 months and one day in prison, followed by two years supervised release. (If not for the extra day, O’Connor would be able to serve his sentence in jail, instead of in a federal facility).

Hilton also ordered him to pay a special assessment of $100 to the court. The judge gave O’Connor the same sentence for both charges and ran each sentence concurrently. Conditions were that, if the restitution was not paid sooner, O’Connor would have to start repaying it, $500/month, beginning 60 days after his release from prison.

He must also provide any financial information his probation officer requires. And at O’Connor’s request, Hilton agreed to recommend that the Vienna man serve his time in the federal facility in Cumberland, Md. In addition, the judge is allowing him to delay reporting to prison until after Oct. 15 so O’Connor may move his daughter to California.