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Long Island

LI doctor and attorney wife charged with tax fraud, prosecutors say

A vascular surgeon and his attorney wife pleaded guilty Tuesday to obstructing the IRS by inflating expenses and providing "bogus" invoices for services, including one from a dead military veteran, federal authorities said.

The Manhattan couple, Jeffrey Stein, 58, and Marla Stein, 52, were audited in 2013 for their 2010-11 joint tax returns, but their "corrupt effort" sparked an investigation that discovered "hundreds of thousands of dollars" in false expenses aimed at lowering their tax bills, according to the Internal Revenue Service and U.S. attorney's office in Manhattan. The couple falsified documents for the 2009-12 tax years, authorities said.

On some fake bills, Stein, who has a Valley Stream office, used the names of four disabled veterans, information he obtained through his contract with the U.S. Department of Veterans Affairs. He said in one case that the bill was from an "ultrasound technologist," prosecutors said. He provided bogus bills in paperwork for more than $126,000 in services under the veterans' names, officials said.

He also dummied up bills for other services, including transcription to labor, according to court documents. In other documents submitted to the IRS, Stein said he paid for the shared cost of a surgical physician assistant with a Long Island hospital -- a service that never happened, prosecutors said.

In her invoices for labor and advertising services that were never incurred, Marla Stein used the names of a photographer and videographer who had done work for a relative and also the name of the couple's domestic employee, court papers said.

The Steins paid their domestic employee $15,000 a year in cash to clean and take care of their children but never reported this to the IRS, avoiding employment taxes, authorities said.

The names of the couple's attorneys were not immediately available. The couple could not be reached Tuesday night.

If convicted, the doctor faces up to 8 years in prison and his wife 3 years at their July 28 sentencing in front of a U.S. District Court judge.

U.S. Attorney Preet Bharara in Manhattan said the couple "doubled down" on their fraud by using others' names.The IRS special agent-in-charge, Shantelle P. Kitchen, said the scam essentially forces other taxpayers to make up the difference: "It is inexcusable when financially successful individuals, with the resources to meet their tax obligations, defraud the tax system."

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