JOHNSTOWN —
Twenty years of good works – including overseas missions, collecting clothes for Bosnian refugees and spooning soup-kitchen food – kept a fraudulent Daisytown tax accountant out of jail Tuesday.
Samuel J. Grasso, 48, the self-nicknamed “tax man,” was sentenced by U.S. District Judge Kim Gibson to five years’ probation and a $15,000 fine for filing false client tax returns.
Grasso had pleaded guilty in April to aiding in the filing of false tax returns for 23 clients, cheating the federal government out of $87,000.
Outsized tax refunds were achieved through inflated deductions such as for charitable contributions and business and medical expenses.
“Your sentence is outside the guideline range,” Gibson said, noting the break he gave Grasso. The recommended term for that offense for a first-time offender is 18 to 24 months in prison.
Grasso “mistakenly and wrongly thought he was helping working people,” defense attorney Cynthia Eddy of Pittsburgh said in arguing for a probationary sentence. She noted Grasso did not take a share of the unduly large tax refunds as a kickback, nor did he charge higher fees.
But Assistant U.S. Attorney Stephanie Haines argued that Grasso should spend prison time, because his business benefitted by word of mouth.
Gibson agreed.
“His business and reputation certainly profited from his clients’ positive outcomes,” the judge said. But Gibson credited Grasso’s innumerable charitable efforts and recognized his family needed him on the outside.
Grasso and his Honduran-born wife, Carmen, both made pleas to Gibson before sentencing.
“I’m totally sorry for what I did,” Grasso said, his voice cracking.
“It’s breaking my heart, not only for me but for her (Carmen).”
Carmen Grasso addressed the judge in broken English.
“He has suffered a lot with me – mental, physical, spiritual,” she said.
Grasso noted her husband fixed a roof for her family in Honduras and regularly sent them money. She said she depends on him for rides to the doctor, for grocery shopping and the like.
“He’s touched many lives,” she said. “Please, honorable Judge Gibson, be merciful.”
“Her family doesn’t know any of this that’s going on,” Grasso said, only that the money they send to Honduras has been scaled back.
Eddy said Grasso’s works have included working at orphanages in Honduras, and distributing rice and medicine on mission trips.
As part of Grasso’s sentence, he will wear an electronic monitoring device for 18 months and will be allowed to leave home to work at his minimum-wage maintenance job. He voluntarily removed his tax preparation shingle when the criminal case broke.
Also, Gibson mandated that he perform 100 hours of community service for each of his five years of probation. The $15,000 fine must be paid off in his first year of probation.
While the criminal case has been settled, IRS officials from Pittsburgh said afterward that the 23 clients who defrauded the government must settle up.
About 82 inflated returns were sent in for the years 2003-06 – an average refund overage of $1,060.
Tim Marsh, special agent in charge of the IRS criminal division in Pittsburgh, couldn’t say what those taxpayers will wind up paying in interest and penalties above the $87,000 owed.
Variables include whether the individuals are subjected to fines, and prevailing interest rates.
“Those folks are being pursued civilly to bring them in compliance with the tax code,” said Andrew Hromoko Jr., a spokesman for the IRS in Pittsburgh who also attended the Johnstown sentencing.
Taxpayers in the Grasso case might not have consciously worked to defraud the IRS. But Hromoko said getting the numbers right is their responsibility.
He said taxpayers were not reviewing their returns, or not reviewing them closely enough.
“Go line by line with that preparer,” Hromoko advised.
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