Forsyth Co. man sentenced for filing false tax returns

Defendant stole company money by creating false invoices and later claimed the money as loans to avoid tax liability

Posted:

Comment

ATLANTA — Jorge A. Castellanos, 49, of Cumming, who filed false federal Individual Income Tax Returns for 2006 and 2007 tax years with the Internal Revenue Service, was sentenced Dec. 11 by United States District Judge Timothy C. Batten, Sr. to serve 4 years, 9 months in federal prison followed by 1 year of supervised release.

“The law is clear on the issue of taxable income and who is required to file and pay taxes, there is no gray area on the subject,” said Veronica Hyman-Pilott acting special agent in charge of IRS Criminal Investigation. “This sentence hopefully sends a message that the IRS is working to make sure that all taxpayers file and pay their fair share of taxes.”

Castellanos was convicted of these charges on Sept. 19, 2012, upon his plea of guilty to filing false tax return charges.

“This office will continue to aggressively prosecute individuals, who knowingly and willfully defy their tax obligations by lying and cheating,” said United States Attorney Sally Quillian Yates.

Castellanos orchestrated a scheme in which he duped his two partners and the company’s investors, and ultimately failed to report on his 2006 and 2007 personal income tax returns over $1.3 million in investment funds that he had stolen.

In 2004, Castellanos and his partners formed an investment business, named GC Trading, LLC (“GCT LLC”), which touted itself as pre-selling overstock golf equipment and providing a return of the profits to its investors.

Castellanos modeled GCT LLC after another totally separate business with a very similar name that he solely owned and operated: GC Trading, Inc. (“GCT INC”).

Castellanos did not operate GCT LLC legitimately.

Instead of purchasing golf equipment from vendors with GCT LLC’s investors’ funds, Castellanos diverted most of the money to his GCT INC bank account, and used the money to pay his own business and personal expenses. Castellanos then tried to hide this stolen income from the Internal Revenue Service by telling his accountants that the stolen income was from loans.

One accountant relied on this false information and unknowingly prepared and filed false income tax returns for tax years 2006 and 2007 on Castellanos’ behalf.

The false returns resulted in a tax loss of approximately $1,357,562.