Biggest Tax Cheaters of the Past Decade

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With 30 percent of an average American's income going toward federal and state taxes, it's no wonder that some people cheat on their taxes. The $4.5 trillion that Americans pay in federal and state taxes is more than they will spend on food, clothing and housing combined, according to the Tax Foundation.

Tax Freedom Day -- the day when taxpayers will have worked enough to pay their taxes for the year -- was April 21, 2014. If federal borrowing is taken into account, that date was May 6, according to the foundation. That's a long time to start earning income for yourself. Some tax cheaters, especially the biggest cheaters, don't want to wait that long. They file fake tax returns, don't file and just plain lie to avoid paying taxes.

In fiscal 2013, the IRS increased criminal investigations related to identity theft by 66 percent from the previous year. Sentencing almost doubled to 438 cases, with prison terms ranging from two months to 317 months. Twenty-six years in prison is a lot of time to think about how being honest with the IRS might be more worthwhile.

Here are the worst and most widely known tax cheaters during the past decade who aren't celebrities, a group that's in a whole other world when it comes to avoiding taxes. The list isn't comprehensive because the Internal Revenue Service and Department of Justice don't publish lists of criminals with the highest tax bills.

Biggest Tax Cheaters of the Past Decade
As if his $65 billion Ponzi scheme and serving a 150-year federal prison sentence for it wasn't enough, prosecutors in January 2014 revealed an IRS analysis showing Madoff didn't report $242.9 million in federal taxes from 1993 through 2007. Some of his former employees are also accused of having unreported income, one as high as $3.5 million.
The billionaire creator of Beanie Babies was sentenced in January 2014 to two years of probation for tax evasion on $25 million in income that he kept in Swiss bank accounts. Prosecutors say Warner earned $3.1 million in gross income in 2002 through a secret offshore account starting in 1996. He has agreed to pay $53.5 million, half of the amount he had in a secret UBS account. The federal government has pushed for high-profile prosecutions of Americans concealing income overseas, often in Switzerland.
Wilson, the self-proclaimed "First Lady" of tax fraud, was sentenced in July 2013 to 21 years in prison, according to an IRS list of top cases it prosecuted focused on identity theft. Wilson, then 27, of Tampa Bay, Fla., was also ordered to pay $2.2 million. Larry was sentenced to 14.5 years in prison and ordered to forfeit $2.2 million. From at least April 2009 through their arrests in September 2012, the pair fraudulently obtained tax refunds by receiving U.S. Treasury checks and pre-paid debit cards loaded with proceeds from false tax returns they filed in the names of other people without those persons' permission or knowledge, according to the IRS. Wilson boasted on Facebook that she was untouchable and spent lavishly, including $90,000 on an Audi A8 and $30,000 on her son's first birthday party.
In May 2012 the leaders of a multimillion dollar fraud ring were sentenced to 334 months (Dale) and 310 months (Grant) in prison and ordered to pay more than $2.8 million in restitution to the IRS. From 2009 through 2010 they filed false tax returns using stolen identities. Dale admitted to filing more than 500 fraudulent returns that sought at least $3.7 million in tax refunds, using the names of Medicaid beneficiaries that Dale obtained while working for a company that serviced Medicaid programs.
While not the biggest tax fraud case with a $2.1 million refund through a fraudulent 2011 tax return, she may have been the most creatively stupid. She falsely claimed $3 million in income using TurboTax, which issued her a prepaid Visa debit card with $2.1 million on it after her home state of Oregon approved her claim. She went on a $200,000 spending spree and was only caught after she reported the card lost. That's right: She was caught after reporting a $2.1 million debit card lost that she only got because she filed a fake tax return.
In February 2014, Hilton, 68, was among 13 people indicted in Los Angeles and Riverside counties in California for using stolen identifies to file fraudulent tax returns. Hilton's tax scheme sought nearly $2.9 million in fraudulent tax refunds for the 2008 tax year. Hilton owns two tax preparation businesses
The doomsday prophet from Cincinnati was convicted in June 2012 of five counts of tax evasion for not paying more than $300,000 in taxes between 2005 and 2010. He funneled money into a foreign bank account, lied on his tax forms and wrote off personal expenses as church expenses, a grand jury found. Weinland has wrongly predicted the world would end a few times.
The former chief administrator of the small California city of Bell, Rizzo was sentenced in April 2014 to 33 months in federal prison for tax evasion. He also faces 10 to 12 years in prison on 69 corruption counts. He was ordered to pay nearly $256,000 in restitution to the IRS after pleading guilty in January to federal counts of conspiracy and filing a false federal tax return. Rizzo paid himself as much as $1.1 million as Bell's top administrator before he was fired in 2010. Federal prosecutors say that from 2005 to 2010 he claimed more than $770,000 in phantom losses on his tax returns. 
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A former newspaper journalist, Aaron Crowe is a freelance writer who specializes in personal finance, real estate and insurance for various websites, including Wisebread, insurance websites, MortgageLoan.com and AOL.

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