LOS ANGELES – A Long Beach man who once worked as a tax and estate-planning lawyer has been charged by a federal grand jury with two felony counts of tax evasion for setting up shell companies to evade the payment of over $1.4 million he owed to the Internal Revenue Service.
James Roy McDaniel, 65, was arrested on Tuesday and today remains in federal custody without bond. At his arraignment on Tuesday, McDaniel entered a not guilty plea and was ordered to stand trial on February 12.
McDaniel was a licensed California attorney for more than two decades, until he pleaded guilty in late 2004 to one felony count of subscribing to a false income tax return. In 2005, McDaniel was sentenced to three years in federal prison for that crime, and he surrendered his license to practice law in California. In that case, McDaniel’s failure to report income resulted in a tax loss of $677,368 to the federal government, according to court documents. The IRS subsequently assessed McDaniel more than $1.4 million in taxes, interest and penalties for the tax years 1997 through 2001, court papers state.
According to the tax evasion indictment returned by a federal grand jury earlier this month, McDaniel willfully attempted to evade paying his debt to the IRS by creating two shell companies – Davis Bell Consulting LLC and James Roy Consulting LLC – where he directed payments for tax and estate planning work he performed after being released from prison. During a scheme that allegedly ran from May 2008 until December 2012, McDaniel attempted to mislead federal tax authorities and conceal his income by directing other people to sign documents identifying themselves as the sole managing members of the shell companies. As part of the alleged scheme, McDaniel directed them to open bank accounts where he deposited checks for his tax and estate planning work, the indictment states.
McDaniel also allegedly applied for a Taxpayer Identification Number for James Roy Consulting in the name of another person without obtaining that person’s consent.
The indictment also alleges that McDaniel failed to file a federal income tax return for 2012 and failed to pay $45,725 in taxes due for that year.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If he were to be convicted of the two tax evasion charges alleged in the indictment, McDaniel would face a statutory maximum sentence of 10 years in federal prison.
This case is being investigated by IRS Criminal Investigation.
This case is being prosecuted by Assistant United States Attorney Ruth Pinkel of the Public Corruption and Civil Rights Section.