Friday, February 19, 2016

San Diego Physician Convicted of Eight Counts of Tax Evasion at Trial In Using A Trust to Not Pay Taxes

On January 28, 2016, a federal jury in San Diego convicted Dr. William Bailey, a  physician of osteopathic medicine, on eight counts of tax evasion (26 United States Code Section 7201 B).

According to evidence presented at trial, between 2004 and 2011 Dr. Bailey earned over $1.1 million in compensation for his services as a physician at two different local clinics and paid no taxes. Dr. Bailey allegedly concealed his income by having his paychecks directed to an account in the name of a trust.

In his own testimony at trial, Dr. Bailey admitted that he cut and pasted other documents to create the trust himself and signed the name of another person as the creator of the trust. As the grantor, sole trustee and also the beneficiary of the so-called trust, the income was attributed to Dr. Bailey as an individual.

Dr. Bailey spent the $1.1 million he deposited in the trust account to pay his personal expenses, including the purchase of a home, two cars, a time share and approximately $400,000 in credit card bills. Despite earning a significant income, Dr. Bailey reported no taxable income on the tax returns he filed. Evidence presented at trial showed that Dr. Bailey owed a total of $315,000 in unpaid taxes for the period from 2004-2011.

Dr. Bailey is scheduled to be sentenced on April 20, 2016, at 9:00 a.m., before U.S. District Judge Cathy A. Bencivengo. The maximum penalty on each count is 5 years imprisonment and a potential fine of $250,000 per count.  


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