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Tax Fraud Blotter: Place your bets

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Close personal relationships; home is where the scam is; tort trouble; and other highlights of recent tax cases.

Los Angeles: Mathew R. Bowyer, of San Juan Capistrano, California, has agreed to plead guilty to running an illegal gambling business that took in unlawful sports bets, including from professional athletes as well as a former Major League Baseball Japanese-language interpreter who now faces prison time.

Bowyer operated an unlicensed and illegal bookmaking business that focused on sports betting and violated a California law that prohibits bookmaking. Bowyer’s gambling business remained in operation for at least five years until October 2023 and at times had more than 700 bettors.

He operated this business out of various locations in Los Angeles and Orange Counties as well as in Las Vegas. Bowyer also employed agents and sub-agents — including casino hosts — who worked for his illegal gambling business who were paid a portion of the losses that bettors incurred.

One of Bowyer’s clients was Ippei Mizuhara, who pleaded guilty on June 4 to one count of bank fraud and one count of subscribing to a false return. Mizuhara was the Japanese-language interpreter and de facto manager of baseball superstar Shohei Ohtani. Mizuhara admitted to stealing nearly $17 million from Ohtani to pay off gambling debts and to failing to pay tax on his gambling income.

Authorities consider Ohtani a victim; Mizuhara’s sentencing is Oct. 25.

From September 2021 to January 2024, Mizuhara placed at least 19,000 bets with Bowyer’s gambling business. During this time, Mizuhara had total winning bets of at least $142,256,769, and total losing bets of at least $182,935,206, leaving Mizuhara owing approximately $40,678,436.

Bowyer admitted in his plea agreement to knowingly and willfully falsely reporting his taxable income to the IRS on his 2022 return: Bowyer reported $607,897 in total income but his unreported income for that year was $4,030,938 — income from his illegal gambling business. Bowyer owes additional taxes of $1,613,280 for 2022, not including interest and penalties.

Bowyer has agreed to plead guilty to operating an unlawful gambling business, money laundering and subscribing to a false return. He faces up to 10 years in prison on the money laundering count, up to five years for the unlawful gambling business and up to three years for the false return. 

Madison, Wisconsin: David Swartz, of Highland Park, Illinois, has been sentenced to two years in prison for wire fraud and assisting in the preparation of a false return. 

Swartz worked as an unregistered investment advisor and fund manager and had a close personal relationship with his first victim, a resident of Madison. Beginning in January 2009, the victim made regular and periodic investments in Swartz’s investment fund with the understanding that Swartz was conservatively investing. 

Beginning in 2018, Swartz began misrepresenting the performance of the fund. When the fund lost significant value in February 2020 due to risky trades, Swartz lied to the victim about the fund’s performance and induced them to invest an additional $150,000. Swartz also produced a doctored Charles Schwab account statement for the fund and a phony K-1 for 2019.

Relying on the falsified document, on Oct. 12, 2020, the victim filed a 1040 for 2019 that substantially overreported capital gains, causing the victim to report owing an unjustified amount of federal income tax.

Swartz, who pleaded guilty in April, was also ordered to pay $181,915 in restitution to the victim.

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Bristol, Vermont: Jodi Lathrop has been sentenced to 15 months in prison following her guilty plea to charges of wire fraud and federal tax evasion.

In 2023, a federal grand jury returned an indictment charging Lathrop with 11 counts of mail and wire fraud, four of personal tax evasion and four of aiding the preparation of false corporate returns. Lathrop pled guilty to one count of wire fraud and one of tax evasion.

Between 2014 and 2020, she embezzled from Claire Lathrop Band Mill, a logging and wood chipping business, while serving as the company’s office manager and bookkeeper. She used company credit cards to make personal purchases and used company money to pay off personal credit cards and other personal expenses. Lathrop falsely recorded unauthorized checks in company books and caused the company to file returns that falsely deducted Lathrop’s personal expenses as legitimate business expenses.

She was also ordered to pay some $479,000 in restitution and a $15,000 fine and two years of supervised release after her prison term.

Rockwood, Pennsylvania: Resident Jason R. Svonavec has been sentenced to a year and one day in prison, to be followed by one year of supervised release, and ordered to pay a fine of $40,000 and restitution of $207,378 (which has already been paid) to the IRS on his conviction of tax evasion and filing false income tax returns.

Svonavec evaded taxes in 2017 by illegally expensing the construction of his home in Somerset, Pennsylvania, through entities he operates called Heritage Coal and Natural Resources LLC and Banshee Crane. In 2018, he filed a tax return reporting false tax deductions for Heritage Coal.

Scranton, Pennsylvania: Robert J. Powell, of Palm Beach, Florida, has pleaded guilty to tax evasion in connection with substantial legal fees he earned while associated with a local law firm.

Powell sought to dodge a substantial federal tax bill for 2016 by using nominee bank accounts, causing an accountant to file a request for a filing extension that falsely reported zero estimated tax liability for 2016 and making false statements during an IRS audit in 2019.

Powell’s license to practice law was suspended in 2009 and he was disbarred in 2015. In 2009 he relinquished his ownership of the Powell Law Group but retained the right to collect 90% of the remainder of any future fees collected by the firm after firm expenses.

The Powell Group represented thousands of plaintiffs in a mass tort litigation in 2015 for which Powell was expected to receive some $120 million in attorneys’ fees. Prior to the attorneys’ fees disbursement, the Powell Group and its co-counsel used those future legal fees as collateral to obtain a series of loans totaling more than $125 million.

Instead of depositing the loan money into the firm’s bank accounts and paying firm expenses, Powell directed the loans to nominee bank accounts under his control then used the money for personal debts and expenses, as well as his and his former law partner’s personal benefit. In June 2016, most of the attorneys’ fees were finally disbursed and the loans repaid. 

Still, Powell did not file a personal income tax return and pay taxes on the receipt of the fees in that year. After the initial disbursement and through October 2019, an additional $12 million in attorneys’ fees was distributed and the Powell Law Group’s share continued to be directed into nominee bank accounts that Powell controlled. Powell personally received an additional $3.6 million of the fees. For 2010 through 2022, Powell did not file income tax returns despite receiving and spending other personal income.

In 2019, when the IRS commenced an audit, he lied to revenue agents to conceal his income and expenditures for 2014 through 2016, claiming that his only source of funds were loan advances, that he and his spouse did not have signature authority or control over other bank accounts and that he had no ownership in any corporations.

Powell agreed to pay full restitution to the IRS.

Morgantown, West Virginia: Dr. David M. Anderson has admitted to filing a false return.

He filed false tax returns that understated his taxable income, causing a loss to the IRS of $143,599.

Anderson faces up to three years in prison. 

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House passes tax administration bills

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The House unanimously passed four bipartisan bills Tuesday concerning taxes and the Internal Revenue Service that were all endorsed this week by the American Institute of CPAs, and passed two others as well.

  • H.R. 1152, the Electronic Filing and Payment Fairness Act, sponsored by Rep. Darin LaHood, R-Illinois, Suzan Delbene, D-Washington, Randy Feenstra, R-Iowa, Brad Schneider, D-Illinois, Brian Fitzpatrick, R-Pennsylvania and Jimmy Panetta, D-California. The bill would apply the “mailbox rule” to electronically submitted tax returns and payments to allow the IRS to record payments and documents submitted to the IRS electronically on the day the payments or documents are submitted instead of when they are received or reviewed at a later date. The AICPA believes this would offer clarity and simplification to the payment and document submission process while protecting taxpayers from undue penalties.
  • H.R. 998, the Internal Revenue Service Math and Taxpayer Help Act, sponsored by Rep. Randy Feenstra, R-Iowa, and Brad Schneider, D-Illinois, which would require notices describing a mathematical or clerical error to be made in plain language, and require the Treasury to provide additional procedures for requesting an abatement of a math or clerical error adjustment, including by telephone or in person, among other provisions.
  • H.R. 517, the Filing Relief for Natural Disasters Act, sponsored by Rep. David Kustoff, R-Tennessee, and Judy Chu, D-California. The process of receiving tax relief from the IRS following a natural disaster typically must follow a federal disaster declaration, which can often come weeks after a state disaster declaration. The bill would provide the IRS with authority to grant tax relief once the governor of a state declares either a disaster or a state of emergency and expand the mandatory federal filing extension under Section 7508(d) of the Tax Code from 60 days to 120 days, providing taxpayers with more time to file tax returns after a disaster.
  • H.R. 1491, the Disaster related Extension of Deadlines Act, sponsored by Rep. Gregory Murphy, R-North Carolina, and Jimmy Panetta, D-California, would extend the amount of time disaster victims would have to file for a tax refund or credit (i.e., the lookback period) by the amount of time afforded pursuant to a disaster relief postponement period for taxpayers affected by major disasters. This legislative solution would place taxpayers on equal footing as taxpayers not impacted by major disasters and would afford greater clarity and certainty to taxpayers and tax practitioners regarding this lookback period.

“The AICPA has long supported these proposals and will continue to work to advance comprehensive legislation that enhances IRS operations and improves the taxpayer experience,” said Melanie Lauridsen, vice president of tax policy and advocacy for the AICPA, in a statement Tuesday. “We are pleased to work closely with each of these Representatives on common-sense reforms that will benefit taxpayers, tax practitioners and tax administration and we’re encouraged by their passage in the House. We look forward to continuing to work with Congress to improve the taxpayer experience.”

The bills were also included in a recent Senate discussion draft aimed at improving tax administration at the IRS that are strongly supported by the AICPA.

The House also passed two other tax-related bills Tuesday that weren’t endorsed in the recent AICPA letter. 

  • H.R. 1155, Recovery of Stolen Checks Act, sponsored by Rep. Nicole Malliotakis, R-New York, would require the IRS to create a process for taxpayers to request a replacement via direct deposit for a stolen paper check. If a check is determined to be stolen or lost, and not cashed, a taxpayer will receive a replacement check once the original check is cancelled, but many taxpayers are having their replacement checks stolen as well. Taxpayers who have a check stolen are then unable to request that the replacement check be sent via direct deposit. The bill would require the Treasury to establish processes and procedures under which taxpayers, who are otherwise eligible to receive an amount by paper check in replacement of a lost or stolen paper check, may elect to receive such amount by direct deposit.
  • H.R. 997, National Taxpayer Advocate Enhancement Act, sponsored by Rep. Randy Feenstra, R-Iowa, would prevent IRS interference with National Taxpayer Advocate personnel by granting the NTA responsibility for its attorneys. In advocating for taxpayer rights, the National Taxpayer Advocate often requires independent legal advice. But currently, the staff members hired by the National Taxpayer Advocate are accountable to internal IRS counsel, not the Taxpayer Advocate, creating a potential conflict of interest to the detriment of taxpayers. The bill would authorize the National Taxpayer Advocate to hire attorneys who report directly to her, helping establish independence from the IRS. 

House  Ways and Means Committee Chairman Jason Smith, R-Missouri, applauded the bipartisan House passage of the various bills, which had been unanimously passed by the committee.

“President Trump was elected on the promise of finally making the government work better for working people,” Smith said in a statement Tuesday. “This bipartisan legislation helps fulfill that mandate and makes improvements to tax administration that will make it easier for the American people to file their taxes. Those who are rebuilding after a natural disaster particularly need help filing taxes, which is why this set of bills lightens the load for taxpayers in communities struck by a hurricane, tornado or some other disaster. With Tax Day just a few days away, we must look for common-sense, bipartisan ways to make filing taxes less of a hassle.”

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In the blogs: Many hats

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Teaching fraud; easement settlement offers; new blog on the block; and other highlights from our favorite tax bloggers.

Many hats

  • Taxbuzz (https://www.taxbuzz.com/blog): There’s sure an “I” in this “teamwork:” What to know about potential IRS and ICE collaboration.
  • Tax Vox (https://www.taxpolicycenter.org/taxvox): How IRS data would likely be unhelpful validating SNAP eligibility.
  • Yeo & Yeo (https://www.yeoandyeo.com/resources): How financial benchmarking (including involving taxes) can help business clients see trends, pinpoint areas for improvement and forecast future performance.
  • Integritas3 (https://www.integritas3.com/blog): One way to take a bite out of crime, according to this instructor blogger: Teach grad students how to detect, investigate and prevent financial fraud.
  • HBK (https://hbkcpa.com/insights/): Verifying income, fairly distributing property, digging the soon-to-be-ex’s assets out of the back of the dark, dark closet: How forensic accounting has emerged as a crucial element in divorces.

Standing out

Genuine intelligence

  • AICPA & CIMA Insights (https://www.aicpa-cima.com/blog): How artificial intelligence and other tech is “Reshaping Finance,” according to this podcast. Didem Un Ates, CEO of a U.K.-based company offering AI advisory services, tackles the topic.
  • Taxjar (https:/www.taxjar.com/resources/blog): How AI and automation can help even the knottiest sales tax obligations and problems.
  • Dean Dorton (https://deandorton.com/insights/): Favorite opening of the week: “The madness doesn’t just happen on college basketball courts — it also happens when your finance team is stuck using a legacy on-premises accounting system.”
  • Canopy (https://www.getcanopy.com/blog): Top client portals for accounting firms in 2025.
  • Mauled Again (https://mauledagain.blogspot.com/): Despite what Facebook claims, dependents have to be human.

New to us

  • Berkowitz Pollack Brant (https://www.bpbcpa.com/articles-press-releases/): This Florida firm offers a variety of services to many industries and has a good, wide-ranging blog. Recent topics include the BE-10, nexus and state and local tax obligations, IRS cuts and what to know about the possible bonus depreciation phase out. Welcome!

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Is gen AI really a SOX gamechanger?

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By streamlining tasks such as risk assessment, control testing, and reporting, gen AI has the potential to increase efficiency across the entire SOX lifecycle.

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