Six NY Lawyers Busted for Not Paying Taxes

State charges 6 Rochester-area lawyers with not filing taxes
The Rochester Democrat and Chronicle by Claudia Vargas - March 27, 2009

Six area lawyers, including a town supervisor, are facing felony charges of not filing or paying personal state taxes in more than three years as part of an increased effort by the state Department of Taxation and Finance to crack down on tax delinquent professionals. Deputy Commissioner of Enforcement for the Department of Taxation and Finance Bill Comiskey said the department launched a professional non-filer project in late 2007 that targets people in professional fields, from business owners to doctors, who do not file their taxes. The department increased the number of statewide investigators from just over two dozen in 2007 to about 125 today. Ten of those investigators are in Rochester. Karolyne N. Armer, David R. Coletti, Nat O. "Buddy" Lester III, Paul W. Martin, Steven J. Seidman and D. Scott Young were arraigned Thursday in Rochester City Court on separate charges of failing to file returns for three or more consecutive tax years while having a tax liability in each of those years, a Class E felony. Lester submitted a resignation letter from his position as Sweden supervisor on Monday.

The six lawyers pleaded not guilty Thursday and the charges against them will be heard by a grand jury. The department estimated that all together the six lawyers failed to report more than $1.4 million in income and failed to pay more than $84,000 in tax liability. Tom Bergin, a spokesman for the Department of Taxation and Finance, said he was unable to release the amount each lawyer owed in taxes because not all figures were included in the criminal complaint making them public. If convicted, each lawyer could face up to four years in state prison and lose his or her law license under State Judiciary Law. If a lawyer is charged with a crime, his or her license is not affected, said Dan Drake, principal counsel of the Attorney Grievance Committee of the 7th Judicial District. But if a lawyer is found guilty of a New York state felony, the lawyer is automatically disbarred.

The six lawyers were not informed of the investigation until each was served a subpoena in late January or early February. Had the lawyers not owed money for tax liability, they would have faced misdemeanor charges instead, Bergin said. What elevated their charges to felonies, he said, is that not only did they fail to file taxes for more than three years but they also owed money for each of those years. "We want to motivate the hundreds of thousands of non-filers (to file)," Comiskey said. "We are coming." Comiskey said the department likes doing large round-ups of non-filers to get attention and encourage those who have not filed their taxes to file. The department's investigators throughout the state have had several round-ups in the last month, including a group of three Manhattan business owners who were charged in separate felony cases for failing to report millions of dollars in taxable sales and for underreporting income. The criminal charges of the six Rochester-area lawyers were the result of an investigation by the Rochester Special Investigations Unit of the state Department of Taxation and Finance, which was created just over a year ago.

Here's a list of those arraigned Thursday:

Armer, 59, of 449 Black Walnut Drive, Greece, a solo practitioner in domestic relations and divorce law with offices in Penfield, was charged with three felony counts of failing to file personal income tax returns for tax years 2001 to 2007. According to court documents, Armer told a Department of Taxation and Finance auditor in February that she had failed to file personal income tax returns in recent years because of "bookkeeping problems." Armer stated to the auditor that that she had three different bookkeepers since 2001 and realized that charges were not filed correctly in her book. "She felt that the deductions may have been overstated, thus she did not feel they should be filed," court documents stated. Armer did not return a call for comment.

Coletti, 44, of 119 Moxon Drive, Greece, a partner in the Rochester law firm of Christiano, Gallant & Coletti, was charged with two felony counts of failing to file personal income tax returns for tax years 2004 to 2007. Coletti filed his taxes for taxable years 2004 to 2007 on Jan. 28, after being notified that the department was conducting a criminal investigation, and paid $10,000 of the total unpaid personal income tax liability of $18,168. Coletti had no comment Thursday.

Lester, 48, of 20 Timber Trail in Brockport, the sole member of the Brockport firm of Lester & Lester and the supervisor for the town of Sweden since 1998, was charged with two felony counts of failing to file personal income tax returns for tax years 2004 to 2007. According to court documents, Lester told tax investigators that he fell behind on taxes after the death of his father in 2003. Lester said his father had run the legal practice and Lester had no experience running it. He also said he was unfamiliar with the accounting aspects of the firm and therefore fell behind. Lester had no comment Thursday.

Martin, 49, of 69 Blue Ridge Road in Penfield, a member of the Fairport law firm of Fix, Spindelman, Brovitz & Gold since 2008, was charged with four felony counts for failing to file personal income tax returns since 1998. According to court documents, Martin told a Department of Taxation and Finance auditor that after being laid off from a law firm in 1999, he "basically survived on savings and help from family when he wasn't making enough to survive" and therefore he did not think he was required to file taxes. Martin did not return a call for comment.

Seidman, 52, of 118 Beckwith Terrace in Rochester, a solo practitioner in domestic relations and divorce law with offices in Pittsford, was charged with a single felony count of failing to file personal income tax returns for tax years 2005 through 2007. According to court documents, Seidman told a Department of Taxation and Finance investigator that "his bookkeeper had messed up his records to such an extent that he could not figure out his income." Seidman had no comment Thursday.

Young, 48, of 21 Deer Path in Honeoye Falls, a partner in the Rochester law firm of Ashcraft, Franklin & Young, was charged with four felony counts of failing to file personal income tax returns for tax years 2002 through 2007. According to court documents, he told a Department of Taxation and Finance auditor that he had "serious financial problems" in the last several years and did not have funds to pay his taxes. Young did not return a call for comment.
Comiskey said people who have not filed their taxes for previous tax years should consider contacting the department's Voluntary Disclosure Program to avoid penalties and possibly criminal charges. He added that the Rochester lawyers would have been eligible for the program before the criminal investigation began. "Hopefully they see this as an incentive to do the right thing," he said.  CLVARGAS@DemocratandChronicle.com

Additional Facts
State tax amnesty program available

The state Department of Taxation and Finance started a "Voluntary Disclosure" program that offers eligible taxpayers a form of tax amnesty and helps taxpayers clean up old tax liabilities while avoiding punitive actions such as criminal charges and significant monetary penalties. About 1,700 people in New York state participated in the program since it began last year. Department officials say those who have not filed their taxes in one or more years and owe money will avoid all penalties if they come forward through the disclosure program. However, if an investigation has begun into a particular tax delinquent, that person is not eligible for the program. For more information about the program, go to www.nystax.gov.

********************************************************

The New York Law Journal - News Watch - March 27, 2009
Six NY Lawyers Busted for Not Paying Taxes

Six lawyers in the Rochester region, one of them a part-time town supervisor, have been charged with failing to pay state income taxes for three years or more. Officials say the Town of Sweden's supervisor, Nat Lester, resigned from his post after being charged along with lawyers D. Scott Young, Karolyne Armer, David Coletti, Paul Martin and Steven Seidman. All six pleaded not guilty at an arraignment yesterday. Investigators with the Department of Taxation and Finance estimate the lawyers failed to report a combined $1.4 million in income. If convicted, they could lose their licenses and get up to four years in prison. Authorities say the lawyers acted independently and their cases are not connected.