DA: Tax preparers, business owners charged with 'gaming the system'

Five Suffolk business owners and three tax preparers have been charged with “gaming the system” by failing to report and pay thousands in personal income taxes, Suffolk County District Attorney Timothy Sini said Wednesday.

The arrests, part of a joint investigation with the state Department of Taxation and Finance to crack down on fraud during the tax filing season, include the owners of a wholesale meat distributor, an auto body shop, a heating and air conditioning company and a concrete supply company.

Three tax preparers also were charged with using defunct corporations to claim tax deductions for their clients, reducing their tax liabilities.

“We are not going to tolerate this,” Sini said at a news conference in Riverhead. “We are paying attention. It’s not just about you. It’s about protecting the vast majority of residents in Suffolk County who do the right thing; who pay their bills, pay their taxes and abide by the law.”

The defendants include:

Steven Morales, 58, of Sayville, charged with second-degree grand larceny; two counts of first-degree offering a false instrument for filing and four counts of third-degree criminal tax fraud. From 2012 through 2015, Morales stole nearly $56,000 in state sales taxes and filed false returns that underreported his taxes, prosecutors said. Morales, the owner of Countywide of Suffolk Inc.; Countywide Autobody Corp., Countywide Collision & Towing of Islip Corp.; and Countywide of Islip Corp in Islip, also failed to file personal income tax returns in 2014 and 2015 to evade paying nearly $15,000 in taxes, prosecutors said.

Robert Falco, 61, of Lake Grove, charged with eight counts of third-degree criminal tax fraud for allegedly failing to file personal income tax returns from 2014 through 2017 to avoid paying more than $145,000 in taxes. Falco is the owner of Corporate Climate Control, an HVAC firm in Lake Grove.

Marc Leibowitz, 48, of Melville, charged with four counts of third-degree criminal tax fraud for failing to file personal income tax returns for 2013 and 2015 and first-degree offering a false instrument for filing for filing a false personal income tax return in 2014 to avoid paying more than $37,000 in taxes. Leibowitz is the owner of Guss’ Glatt Inc.; Leibowitz Enterprises NY Inc. and Guss Provisions Inc. in Melville.

Justin Palladino, 38, of West Babylon, charged with five counts of third-degree criminal tax fraud; one count of fourth-degree criminal tax fraud; and two counts of first-degree offering a false instrument for filing, for not filing personal income tax returns in 2013 and 2015 and filing false returns in 2014 and 2016 to avoid paying more than $47,000 in taxes. Palladino is the owner of Epoxy Tek Manufacturing Inc.; Northeast Decorative Concrete Supply Inc.; and Epoxy Tek Floors Inc. in Melville.

Lawrence Sparks, 55, of Brookhaven, charged with six counts of third-degree criminal tax fraud and two counts of first-degree offering a false instrument for failing to file personal income tax returns in 2013, 2016 and 2017 and filing false tax returns in 2014 and 2015 to avoid paying almost $190,000 in taxes. Sparks is the owner of LNNS Construction & Consulting Inc. in Brookhaven.

The three tax preparers arrested are:

• Richard Pearl, 69, of Commack, charged with two counts of third-degree criminal tax fraud for allegedly filing false personal income tax returns in 2015 and 2016 to evade paying more than $40,000 in taxes. Pearl is also charged with first-degree offering a false instrument for filing false tax returns as a tax preparer.
• Tara Petito, 38, of Selden, charged with first-degree offering a false instrument for filing allegedly false tax returns as a tax preparer.
• Mary Wickman, 63, of Commack, charged with two counts of fourth-degree criminal tax fraud for allegedly filing false personal income tax returns in 2015 and 2016 to evade paying more than $34,000 in taxes. Wickman is also charged with first-degree offering a false instrument for allegedly filing false tax returns as a tax preparer.

Defense attorneys for the eight defendants were not immediately known.

“Fraud is not a victimless crime,” said John Harford, deputy commissioner of criminal investigations for the State Department of Taxation and Finance. “It deprives New Yorkers of vital funding for their communities.”

Morales could face a maximum sentence of 5 to 15 years in prison. Falco, Leibowitz, Palladino, Pearl and Sparks each could face up to 2 1/3 to 7 years in prison while Wickman and Petito each could face up to 1 1/3 to 4 years in prison.

Morales, Falco, Leibowitz, Palladino, Pearl, and Sparks were arraigned earlier this week and released on their own recognizance. Wickman and Petito were given desk appearance tickets and will be arraigned at a later date.

By Robert Brodsky

robert.brodsky@newsday.com@BrodskyRobert

Robert Brodsky is a breaking news reporter who has worked at Newsday since 2011. He is a Queens College and American University alum.