Clients Wearing Wires

If you thought wires were only for catching Tony Soprano-type mob bosses, think again. The New York State Tax Department has begun using wiretaps to catch CPAs involved in tax fraud.

The state is likely to expand its use of wiretaps as it relies on enhanced compliance, rather than tax increases, to help fill the projected two-year $14 billion budget deficit, according to tax attorney Mark S. Klein, who shared the news tip during his presentation at FAE’s recent Restaurant and Hospitality Breakfast Conference.

Klein relayed the details of a recent case involving Rockland County restaurateur Varapor Shoberg, who wore a wire to implicate the CPA who prepared her sales tax returns. A state tax audit first raised the red flag on Shoberg’s finances when it revealed bank deposits in excess of her reported sales, according to a state tax department press release. The case was referred to the state’s Special Investigations Unit (SIU), a new division that cooperates with local district attorneys to expose and prosecute fraud.

Shoberg, the owner of Lemongrass restaurant in New City, told investigators that Steven M. Pordy, a White Plains CPA, prepared the sales tax returns. But when officials called on Pordy to testify, he repeatedly denied any involvement with the sales tax returns, according to the release.

Shoberg agreed to wear a wire during face-to-face conversations with Pordy and to speak with him on a recorded phone line. During their conversations, Pordy allegedly admitted that he falsified the returns because Shoberg had told him she couldn’t afford all the taxes that were due, according to the release.

Pordy is now facing grand larceny, conspiracy and perjury charges for allegedly conspiring with Shoberg to steal more than $170,000 in state and county sales taxes by a preparing false sales tax returns. The state is not alleging that Pordy personally pocketed the money.

“We are 'turning' clients who have engaged in tax fraud and those clients are cooperating -- often by wearing a wire -- against the professionals who helped them commit the fraud,” State Tax Commissioner Robert L. Megna stated in the tax department’s press release. The department has been utilizing “investigative techniques not previously common in tax enforcement to penetrate the criminal conspiracies that exist between corrupt tax professionals and their fraudulent clients,” he said.