Top 10 Firm Baker Tilly announced plans to acquire West Virginia-based Hayflich CPAs PLLC, in its third deal this month.

Based in Huntington and founded in 1952, Hayflich provides audit, tax and advisory services, with specialties in the wholesale distribution, construction and manufacturing industries.

“Hayflich CPAs has built a strong reputation over its 70-year history, and we are excited to welcome their talented team to Baker Tilly,” said Fred Massanova, Baker Tilly’s chief growth officer, in a statement Thursday. “Together, we will create even greater opportunities for our clients and team members.”

Scott McDonald

The acquisition follows on the heels of Baker Tilly’s intention, announced earlier this month, to acquire both Connecticut-based firm CironeFriedberg, and Hancock Askew, a Regional Leader based in Georgia. The Top 10 Firm has done several acquisitions since receiving private equity funding last February led by Hellman & Friedman and Valeas Capital Partners, accelerating the firm’s growth strategy. Last May, it merged in Seiler LLP, a Top 75 Firm based in Redwood City, California.

Terms of the deal were not disclosed. As a result of its PE deal, Baker Tilly operates in the alternative practice structure that is common with those deals. As a result, the Hayflich deal will involve two acquisitions: Baker Tilly US LLP will acquire the firm’s attest assets, while Baker Tilly Advisory Group LP will acquire its nonattest assets.

“Joining Baker Tilly opens new opportunities for our clients and team members,” said Rob Fuller, managing partner of Hayflich CPAs, in a statement. “We are excited to bring our local expertise to a firm that values strong client relationships and forward-thinking solutions.”

Prior to taking on PE funding, in 2022, Baker Tilly merged in Henry + Horne in Tempe, Arizona, True Partners Consulting in Chicago; Management Partners in Cincinnati and San Jose; Bader Martin in Seattle; Orchestra Healthcare in West Palm Beach, Florida; and Vanilla, based in the United Kingdom. In 2021, it added MFA Companies in Boston; The Compliance Group in Carlsbad, California; Arnett Carbis Toothman in West Virginia; AcctTwo in Houston; and Margolin, Winer & Evens in New York.

Professional services solutions provider Intapp announced the release of Intapp DealCloud Activator, which uses a social media-like interface to give users “nudges” to adopt certain practices and habits that are associated with successful business development. While currently made for law firms, Intapp intends to roll this out for other professions, including accountants, in the future. Intapp made the announcement during its Intapp Amplify event in New York City on Feb. 26. 

The new solution is built around the results of an exhaustive study about the habits of highly effective rainmakers in partner-based businesses, which was eventually published in the Harvard Business Review, which Intapp funded. A series of survey tools and 1-on-1 interviews with professionals across the world coalesced into five business development profiles: Experts, Confidantes, Debaters, Realists and Activators. The final group, Activators, were found by the researchers to be 32% more successful in bringing in new business. In general, their behavior profile emphasizes network building and proactivity, such as reaching out to current or prospective clients when changes occur in the regulatory or economic environment or introducing clients to partners from other practice areas that they think can provide value. 

Rory Channer, founding partner of DCM Insights and one of the lead authors of the HBR study, said during his talk that, since the study was completed, he has been advising firms on how to encourage Activator behavior among their own staff, which he said has led to great improvements in business development. 

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Laura Saklad, vice president of Intapp’s legal industry group, said the DealCloud Activator solution is meant to encourage the same kinds of behavioral changes, but with AI-driven software versus a consulting engagement. The product, she said, is meant to address two challenges. One is how do leaders influence their professionals to adopt Activator behaviors when they cannot command or control them? The other is how can we give leaders the tools they need to monitor and adapt to AI in a way that works for their culture? 

The answer to both, said Saklad, is a concept in behavioral science called “Nudges” which encourage or discourage certain behaviors not through coercion or education but, rather, subtle interventions in the choice architecture that, while easy and cheap to avoid, can alter how one makes decisions. Contrast putting fruit at eye level to encourage people to eat healthier, versus outright banning junk food. Saklad said we already see this being applied in other applications. 

“Nudges are embedded in the apps we use everyday, your phone may nudge you about your steps or to drink water or to stand up and get out of your seat and move around, whatever it is you are personally committed to you can use your apps and this technology to keep you true to your commitments. The approach focuses on encouraging small incremental improvements that add up over time, and given the size of the firms you all work in, even modest individual improvements can have a significant cumulative impact and that is what we’re going for. Our implementation is called Signals, it behaves like an assistant thinking of you and your practice 24 hours a day without having to go into a dashboard or tech app,” she said.

The solution interface features what is called an Activator Feed that is tailored specifically to the user. It appears similar to a social media feed, but instead of scrolling through posts about people’s dogs or their trip to Italy, users scroll through AI-produced reminders about current clients who could be proactively contacted to discuss a recent tax law change, or notes about changes in a company that night necessitate a talk. During her talk, her Activator Feed first reminded her of tips she received from a recent training session and the need to take quick action when she has time to spare, followed by a reminder to nurture her professional network by reaching out to a client who recently completed an M&A transaction so she can talk about how post-deal integration is going. 

“Now, of course, this is good client service, but importantly, I know that clients often need compliance advice after closing these types of deals, and so it is certainly worth checking in to see if my firm can be a further assistance. And once I do that, I can schedule a meeting. I can record that that meeting took place, so I have that and I can reference it in the future,” she said. 

The final item was to reminding her to take action to create new value for the firm. Specifically, the AI looked at historical data as well as information about her own work patterns to tell her that a partner at her firm has recently opened an IT engagement with a client she has been trying to figure out how to build a relationship with, which gives her an opportunity to expand the relationship further by offering other services. 

“It’s really exciting, because I would not have known this without this piece. I have not met him yet at his new firm, so now I can quickly send him an email or message and suggest that we collaborate on how we can expand the relationship and add more value for this. So that is a glimpse at how the activator experience for professionals can use nudge theory to provide timely, data driven insights that will help partners commit to consistent business development, connect with their professional networks and then create new opportunities for their firms and new greater value for their clients. That’s pretty cool,” she said. 

The second problem—how can we give leaders the tools they need to monitor and adapt to AI in a way that works for their culture?—is also addressed through nudges, according to Saklad. The software allows firm management to monitor, fine tune and prioritize how Activator behaviors are deployed in their firm. She noted that managing partners often have had difficulty getting clear insight into how my partners spend their business development time, but technology now enables this level of oversight. 

“[In this example] I am very focused on cross-selling, and I am able to see how my partners are engaged with cross-selling behavior and how they are improving over time… I can also see how much time my partners are spending on business development time versus billable work. And again, I can see it over time, and I can save by practice group. And then when I look at the details, I can say, for example, that right now my capital markets partners are not spending as much time on business development as some other groups. And I can make a note that when I next talk to the practice group leader, I can talk to her about how we can best support our partners and others. I can also drill down to see the daily and the weekly cadence of business development time,” she said. 

It also has a heat map of which practice groups have the strongest adoption of the desired behaviors, and offers the ability to drill down and identify how specific individuals are performing. 

“I can see which partners are doing well and reach out and give them a pat on the back. I can see which partners are slower to change and provide them with additional coaching. And lastly, the most exciting thing, is that the data provided in these dashboards allows me to connect Activator behaviors with revenue generation, and so I really can quantify for the first time the impact to the bottom line,” she said. 

Intapp DealCloud Activator is currently only available for law firms, Tom Koehler, Intapp’s global managing principal for accounting and consulting, said in a later interview that there are plans to release versions for other professions, such as those in audit, advisory or tax in the future. He noted that it is not a matter of simply changing labels, as the specific type of nudges the software uses need to be particular to the profession. For instance, in countries that have mandatory audit partner rotation (done to preserve auditor independence), the software could nudge accountants on how to convert turnover into business opportunities. 

“When you leave your client you have a lot of relationships. So how do you leverage that, then into business development, into cross selling, so you turn it into more of an asset,” he said. 

While a specific date or timeframe was not mentioned for accountants, Kohler said that an accounting-focused version is “on our horizon as a next rollout.” 

Checked out; nothing’s free; some days the Bear gets you; and other highlights of recent tax cases.

Tualatin, Oregon: Businessman David Katz has been sentenced to four years in prison and three years of supervised release and ordered to repay tens of millions of dollars for conspiring to defraud the United States and filing false currency transaction reports.

From January 2014 through December 2017, Katz, president of Check Cash Pacific Inc., conspired with others in the construction industry to facilitate under-the-table payments to workers. Sham companies were created and used to cash more than $177 million in payroll checks at different Check Cash locations, with the cash then used to pay construction workers with no taxes withheld or reported to the IRS. 

Hundreds of thousands of dollars of payroll checks were cashed daily and Katz was aware that at least one of his co-conspirators used a false name and Social Security number. Acting as compliance officer, Katz allowed hundreds of false regulatory reports to be filed knowing they contained the fake identity.

Katz received a 2% commission on each transaction, which, in total, amounted to more than $4 million. He and his co-conspirators prevented the IRS from collecting more than $44 million in payroll and income taxes.

Katz, found guilty in June, was also ordered to pay $44,877,254 in restitution to the IRS.

Trenton, New Jersey: CPA and tax preparer Ralph Anderson has been sentenced to two years in prison for his role in the promotion and sale of abusive syndicated conservation easement shelters.

He worked for accounting firms in New Jersey and New York. From around 2013 to 2019, he promoted and sold tax deductions to high-income clients in the form of units in illegal syndicated conservation easement tax shelters created by convicted co-conspirators Jack Fisher and James Sinnott.

The charitable deductions purchased by clients were derived from the donation of land with a conservation easement or the land itself to a charity, and the deductions were based on fraudulently inflated appraisals for the donated land. Anderson and the promoters promised clients “4.5 to 1” in deductions for every dollar paid into the shelter. In some instances, Anderson and his co-conspirators also instructed and caused clients to falsely backdate documents.

Each year from 2013 to 2019, Anderson and his co-conspirators assisted clients with claiming these false deductions on their returns. In total, Anderson assisted in preparing returns for clients that claimed more than $9.3 million in false charitable deductions based on backdated documents, which caused a tax loss to the United States of nearly $3 million.

Between approximately 2016 and 2019, Anderson earned more than $300,000 in commissions for promoting and selling illegal shelters to his clients. He also claimed false deductions for charitable contributions generated from the shelters that he received as “free units” on his own returns and fraudulently reduced his own taxes on his income from the scheme.

Anderson, who previously pleaded guilty, was also ordered to serve three years of supervised release and pay $3,543,005.53 in total restitution to the IRS and the Small Business Administration.

The scheme resulted in more than $1.3 billion in fraudulent deductions and caused more than $400 million in tax loss to the IRS. Fisher and Sinnott were previously sentenced; nine additional defendants pleaded guilty to the scheme, including six CPAs, two attorneys and an appraiser. 

Fitchburg, Massachusetts: Former Massachusetts State Senator Dean A. Tran has been sentenced to 18 months in prison, to be followed by two years of supervised release.

Convicted last year, Tran served as an elected member of the Massachusetts State Senate from 2017 to January 2021. After his term ended, Tran fraudulently received pandemic unemployment benefits while simultaneously employed as a paid consultant for a New Hampshire-based retailer of automotive parts; Tran fraudulently collected $30,120 in pandemic unemployment benefits.

He concealed $54,700 of that consulting income on his 2021 federal income tax return, in addition to thousands of dollars that he concealed from the IRS while collecting rent from tenants who rented his local property from 2020 to 2022.

Tran was also ordered to pay $25,100 in restitution to the Massachusetts Department of Unemployment Assistance and $23,327 to the IRS, as well as a $7,500 fine and an assessment of $2,300.

Miami: A federal court has issued a permanent injunction against tax preparer Dieuseul Jean-Louis that bars him from preparing or assisting in preparing federal income tax returns, working for or having any ownership stake in any tax prep business, assisting others to set up business as a preparer, and transferring or assigning customer lists to any other person or entity.

Jean-Louis, d.b.a. DJL Multi-Services, prepared returns for clients that claimed, without clients’ knowledge, various false or fabricated deductions and credits, including false charitable and mortgage interest deductions, fake or inflated business expenses, and fraudulent claims for the Fuel Tax Credit and American Opportunity Credit. The complaint further alleged that Jean-Louis falsified clients’ income and filing statuses to increase the amount of the Earned Income Tax Credit, and that Jean-Louis has prepared thousands of returns for clients for more than a decade.

The complaint asserted that Jean-Louis furnished clients with copies of returns that were different from the returns filed with the IRS where the latter claimed a higher refund, which allowed Jean-Louis to retain the additional amount without clients’ knowledge.

The court also ordered Jean-Louis to disgorge $245,275 that he’d received from his tax prep business. He agreed to both the injunction and the disgorgement.

Rumford, Maine: Business owner Jeffrey Richard has been sentenced to a year and a day in prison, to be followed by three years of supervised release, for evading employment taxes.

Between 2013 and 2017, Richard attempted to evade employment withholding taxes owed by his company, Black Bear Industrial, by regularly using money from the business bank account to make business and personal purchases while making no payments toward Black Bear’s tax liability.

He also created two nominee companies and took steps to disguise his ownership of the companies, lying to an IRS officer that he had anything to do with one of them. The other company did business and had more than $174,000 of business income in 2017, but none of the money was used to pay the IRS. Richard never informed the IRS about the company, and the company never filed corporate or employment tax returns.

Richard, who pleaded guilty in 2023, was also ordered to pay $910,980.37 in restitution to the IRS.

Vancouver, Washington: Unlicensed tax preparer Saul Valdez, owner of a business that sought to assist immigrants with a variety of services, has been sentenced to nine months in prison and four months of home confinement for tax fraud.

He operated Conexion Latina and used such programs as TaxAct and TurboTax to prepare taxes. He led his immigrant clients to believe he was filling out their tax forms correctly. Instead, from 2016 through 2018, he inserted a variety of false deductions and expenses on returns.

For tax year 2017, he claimed false and fraudulent expenses, donations and credits on 36 returns, causing a tax loss of $54,045. 

Valdez, who pleaded guilty in 2023, has agreed to pay that in restitution and admits that the total tax loss for his fraud is $1,293,921.