Connect with us

Accounting

Tax Fraud Blotter: Place your bets

Published

2 years ago

on

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.

jail2-fotolia.jpg

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. 

Related Topics:
Continue Reading

Accounting

AI-Driven Automation and Continuous Accounting Frameworks

Published

2 days ago

on

August 15, 2026

By

The accounting profession is undergoing a fundamental structural transition as enterprise finance departments shift from periodic month-end closes toward automated continuous accounting models. By integrating specialized machine learning algorithms directly into enterprise resource planning (ERP) platforms, chief accounting officers are transforming financial reporting from a retrospective exercise into a real-time operational asset.

The Shift from Periodic Close to Continuous Financial Reporting
Traditional accounting workflows heavily relied on manual data reconciliation, spreadsheet calculations, and multi-week closing cycles at the end of each fiscal period. In contrast, continuous accounting frameworks utilize automated software agents to process, validate, and post transactional data in real time as business activities occur.

Automated bank reconciliation tools cross-reference incoming bank feeds, invoice records, and purchase orders automatically. By resolving transactional variances instantly throughout the month, corporate accounting teams eliminate the traditional workload spikes associated with quarterly and annual closes.

Machine Learning in Audit Trails and Anomaly Detection
Advanced natural language processing (NLP) and machine learning tools are redefining internal audit and financial control environments. Automated systems analyze 100% of general ledger entries, identifying anomalous transactions, duplicate payments, and unauthorized journal entries in real time.

Rather than relying on random statistical sampling, corporate internal auditors can focus their attention on high-risk flags automatically surfaced by algorithmic monitoring platforms. This continuous risk assessment strengthens internal controls over financial reporting (ICFR) and significantly reduces fraud risk.

Evolving Roles for Accounting Professionals
As routine data entry and manual reconciliation tasks become fully automated, the skill set required for accounting professionals is shifting toward data analysis, system design, and strategic business advisory.
– Systems Governance: Accountants are increasingly responsible for monitoring algorithmic accuracy and managing data integration pipelines.
– Business Partnership: Finance professionals leverage real-time financial dashboards to advise operational leaders on margin management and working capital allocation.
– Regulatory Compliance Management: Accounting teams utilize automated platforms to ensure compliance with dynamic tax codes and international accounting standards.

Core Implementation Recommendations
1. Deploy Automated Reconciliation Tools: Integrate continuous transaction processing modules into existing enterprise ERP architectures.
2. Establish Algorithmic Governance Controls: Implement strict internal testing protocols to ensure automated accounting rules comply with GAAP/IFRS standards.
3. Reskill Accounting Teams: Invest in training finance staff on data analytics, workflow automation, and predictive financial modeling.

Continue Reading

Accounting

Global ESG Reporting Standards and Double Materiality Compliance

Published

1 week ago

on

August 9, 2026

By

Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

Continue Reading

Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

Published

2 weeks ago

on

August 5, 2026

By

Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

Continue Reading

Trending