Trial Watch

Everyone into the Poole (except the jurors) 

After a short delay involving some courtroom equipment, the bench trial of US v. Joseph Poole got underway in Judge Bennett’s courtroom this morning at around 9:40.  

Judge Bennett was his personable self, welcoming both sides and explaining to Ms. Renee Bronfein Ades, who along with Andy Radding, is representing the defendant, that if he mispronounces her name, she should feel free to call him Judge Benay. As an aside, I should note here that while I have appeared before Judge Bennett several times, never with an “e” at the end of my name, I have never taken advantage of His Honor’s similarly generous offer to me, though I could have. 

With the aide of a rudimentary powerpoint presentation during his opening statement, Assistant US Attorney Steve Schenning, dressed in a khaki suit, attempted to persuade Judge Richard Bennett, dressed in a black robe, that defendant Poole conspired with another to obstruct the IRS function of assessing and collecting taxes.  The “other,” according to prosecutors, is Stan Mavroulis. 

Specifically, the government alleges that Mr. Poole, an accountant for Bay Area Accounting and Management, served as an accountant for Stan Mavroulis, the owner/operator of Fidelity Home Mortgage Company (FHMC).  FHMC, according to prosecutors, was a mortgage brokerage company that earned fees through the financing of real estate transactions and the selling of mortgage-backed securities to investors.  According to prosecutors, Stan Mavroulis and FHMC failed to report these earned fees as taxable income on various tax forms.   

Among the allegations, AUSA Schenning suggested that Judge Bennett would see evidence that Mr. Mavroulis’ personal expenses were paid for with company funds, thereby lowering the company’s net profit, resulting in an understatement of income and an underpayment of taxes.  Mr. Schenning then provided the Court with some examples:  a $67,000 personal trip to Greece; tuition bills for a family member’s attendance at Towson University; $19,000 for water and electric bills for Mr. Mavroulis’ house; a $3200 cable bill (if anything, that’s evidence that it’s time to buy bottled water and switch to DirecTV). 

AUSA Schenning then outlined other areas of Mr. Mavroulis’s alleged misconduct by suggesting that company funds were used to purchase $290,000 worth of personal stock through E*Trade.   

But since this is US v. Poole, and not US v. Mavroulis, AUSA Schenning had to eventually return to Mr. Poole’s own alleged actions.  And he did, stating that Mr. Poole had complete access to all of FHMC’s books and that Poole’s knowledge of the false returns would be proved through contradictions in various returns and disclosures, prepared by Mr. Poole, as well as Poole’s own statements when confronted by law enforcement officers investigating the matter.    

AUSA Schenning thanked the judge and returned to his seat, at which point Andy Radding stood, drank a little water and then told the judge in very clear terms that he promised to be more brief than the government because he wanted to get to the evidence.  Mr. Radding stood by his word, finishing up in 9 minutes (about 20 minutes shorter than the government), but making some very deliberate points in those 9 minutes. 

To sum up his defense, Mr. Radding explained to the judge that Mr. Poole relied on FHMC’s accounting department to do its job and that he, Mr. Poole, accepted FHMC’s information at face value.  Simply put, Mr. Poole had no knowledge that this alleged misconduct was ongoing.  Mr. Radding portrayed Mr. Poole as a competent accountant who was simply not qualified to handle FHMC’s books with the sophistication required.  According to Mr. Radding, Bay Area Accounting did not have sufficient support or staff to handle FHMC’s books as FHMC expanded into a nationwide organization. 

Mr. Radding promised Judge Bennett that, “if we have to hear a defense case,” (possibly suggesting that this case is an appropriate candidate for a successful Rule 29 motion), then he would hear from Mr. Poole himself.   There was no reaction from AUSAs Schenning or Jonathan Biran, though one might guess that they’ll be tossing a quarter later to see who gets to cross the defendant. 

 Mr. Radding returned to his seat, and the government called its first witness, an IRS CID agent, who preliminarily testified that he was a graduate of Towson University.  Presumably, he paid his own way.

2 thoughts on “Trial Watch

  1. GRASONVILLE ACCOUNTANT CONVICTED OF PREPARATION OF FALSE TAX RETURNS

    On July 24, 2009, after a seven-day bench trial, U.S. District Judge Richard D. Bennett convicted Joseph Poole, age 62, of Grasonville, Maryland, today of four counts of aiding in the preparation of false tax returns, in connection with a scheme to underreport the income earned and tax owed by a Baltimore City business owner, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

    “Willfully filing a false tax return is the same as stealing and there are serious consequences,” stated C. Andre’ Martin, Internal Revenue Service-Criminal Investigation Special Agent in Charge. “Prosecuting individuals who intentionally prepare and file false tax returns is a vital element in maintaining public confidence in our tax system.”

    According to trial testimony, between 1998 and 2003, Stilianos (Stan) Mavroulis, the President and 100 percent owner of Fidelity Home Mortgage Corporation (FHMC), diverted more than $1,100,000 of FHMC’s funds to pay for personal family expenses. Poole classified such personal expenses as business expenses in FHMC’s books, thereby fraudulently decreasing FHMC’s net profit figures as well as the income shown on Stan Mavroulis’ personal tax returns. The evidence also demonstrated that, between 1998 and 2003, Stan Mavroulis withdrew approximately an additional $700,000 from FHMC as shareholder draws that should have been reported as capital gains on his personal tax returns. Poole, who worked for an accounting firm headquartered in Annapolis, Maryland, prepared all of FHMC’s corporate tax returns and Stan Mavroulis’ personal tax returns for the relevant period. Judge Bennett concluded that Poole willfully prepared false personal tax returns for Stan Mavroulis for tax years 2000 through 2003, failing to report a total of more than $1,438,000 in income for Mr. Mavroulis in those years. For 2000 and 2001, Stan Mavroulis’ personal tax returns, as prepared by Poole, claimed the Earned Income Credit, despite the fact that Stan Mavroulis did not qualify for such credit. In addition, the evidence showed that Poole knew that Stan Mavroulis’ children were working at FHMC but were not on FHMC’s payroll and therefore were not reporting their income to the IRS; instead, the payments to the Mavroulis children were disguised within the approximately $700,000 in shareholder draws that were not reported on Stan Mavroulis’ tax returns.

    Poole faces a maximum sentence of three years in prison on each of the four counts for aiding in the preparation of false tax returns. Judge Bennett has scheduled sentencing for October 16, 2009 at 2:00 p.m.

    Stan Mavroulis, age 65, and his son, Kirk Mavroulis, age 27, both of Baltimore, previously pleaded guilty to related charges. Stan Mavroulis pleaded guilty on January 26, 2009, to filing a false individual income tax return, and is scheduled to be sentenced on September 30, 2009, at 9:00 a.m. Kirk Mavroulis, who was the head of FHMC’s accounting department, pleaded guilty on January 22, 2009, to failing to file an individual tax return that should have reported the income he received from FHMC and which was disguised as shareholder draws to Stan Mavroulis. He was sentenced to probation and a $9,000 fine on May 22, 2009.

    United States Attorney Rod J. Rosenstein thanked the Internal Revenue Service – Criminal Investigation for their investigative work. Mr. Rosenstein commended Assistant United States Attorneys Stephen M. Schenning and Jonathan Biran, who are prosecuting the case.

    On November 20, 2009, U.S. District Judge Richard D. Bennett sentenced Joseph Poole, age 64, of Grasonville, Maryland, today two years in prison, followed by one year of supervised release to be served in home detention with electronic monitoring, for preparing false tax returns, in connection with a scheme to underreport the income earned and tax owed by a Baltimore City business owner, announced United States Attorney for the District of Maryland Rod J. Rosenstein. Judge Bennett also ordered Poole to pay a $10,000 fine and to pay half the cost for the government’s expert witness, $13,603,80. On July 24, 2009, Judge Bennett convicted Poole of those charges after a seven day bench trial.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s