Alan MacPhee admits to cooking his books, faces fines and jail
Beach Bar owner Allan MacPhee pleaded guilty last week to four counts of a 20-count indictment charging him with filing false tax returns and structuring.
MacPhee pleaded guilty to charges of willfully filing a false U.S. self-employment tax return, willfully filing a false U.S. individual income tax return, willfully filing a false gross receipts monthly tax return and structuring currency transactions to avoid reporting requirements.
The maximum penalty for the four counts totals $605,000 in fines and 16 years in prison.
As part of his plea agreement, MacPhee will make full restitution to the Internal Revenue Service and the V.I. Bureau of Internal Revenue, and will forfeit property involved in the structuring offense, according to a U.S. Department of Justice (DOJ) press release.
MacPhee will reportedly be sentenced to approximately two years in prison at his sentencing hearing, scheduled for February 20, 2008.
The DOJ press release detailed MacPhee’s offenses.
Two Sets of Books
“During the tax years 2000 through 2005, MacPhee willfully filed materially false income tax returns, self employment tax returns and Virgin Islands gross receipts tax returns by omitting income he earned from his sole proprietorship, The Beach Bar,” according to the press release. “MacPhee kept two sets of books for The Beach Bar, one containing the true and correct gross income of the business, and the other containing a reduced amount of income, which the accountant received to prepare the tax returns.”
“MacPhee consistently underreported large amounts of income and knowingly gave his accountant false gross income figures to prepare his tax returns,” according to the release.
As a result of the unreported income, MacPhee paid approximately $446,000 less in taxes than he should have during the five year period, according to the DOJ.
Cash Deposits Under $10,000
In December 2002, MacPhee began making cash deposits to his Beach Bar bank account in amounts below $10,000 to avoid transaction reporting requirements, the DOJ release explained. This practice continued until March 2005, according to the release.
Banks are required to report deposits larger than $10,000.
The IRS is stepping up its investigation of individuals who purposely hide their income, according to IRS Special Agent in Charge Michael Yasofsky.
“Within IRS Criminal Investigation, our mission is to provide a deterrent effect to tax evasion,” said Yasofsky. “IRS CI has increased its investigation of individuals who structure financial transactions to hide their income and ultimately evade taxes.”
The U.S. Attorney’s office promises to work hard to prosecute individuals who file false tax returns, according to the release.
“U.S. Attorney Anthony Jenkins said that his office is devoting additional attention to the prosecution of individuals who fail to file income tax returns with the V.I. BIR and the IRS, or file false returns,” according to the release.
The IRS investigation of Mac-Phee culminated on November 17, 2005, when IRS agents swarmed into MacPhee’s apartment above The Beach Bar with guns drawn to serve a search warrant on the bar and MacPhee’s home.
Following the execution of the search warrant, MacPhee told St. John Tradewinds he believed the investigation stemmed from his purchase of a truck.
“Nothing Illegal Here”
“I purchased a truck a couple years ago with two different checks — a check from my account, a check from my wife’s account and some cash, and the disbursement of the three broke some kind of banking regulation, some sort of fraud,” MacPhee told the Tradewinds at the time. “That gave them the right to seize my truck and investigate my business and my home.”
Immediately following the search of his home and business, MacPhee commented on the law he now appears to have broken.
“I assume the intent of the law is to stop money laundering,” he said at the time. “I wish I had enough money to launder. There was nothing illegal here.”
MacPhee did not return calls requesting comment.