UPDATE: The criminal charges against James Lee were dismissed by Nassau County Supervising Judge Teresa Corrigan on April 25, 2018, according to a court document. The records in the case also were sealed on that date, the document said.
The story below was originally published on Feb. 3, 2015.
A tax preparer who worked in Baldwin was arrested Tuesday after he pocketed more than $117,000 in checks that his client had written to pay state sales taxes, prosecutors said.
James Lee, 63, of Long Beach, was arraigned on two counts of second-degree grand larceny, first-degree scheme to defraud and three counts of offering a false instrument for filing, the Nassau District Attorney's office said.
He pleaded not guilty, and his attorney, Vito Palmieri of Mineola, said he had not yet spoken with his client and reviewed all the charges. "We're going to investigate the charges and we're going to defend him vigorously," the attorney said.
From 2007 to 2013, Lee, a certified public accountant, had prepared all business-related sales tax returns and payments for a client who owned three restaurants, according to a joint investigation by the district attorney's office and the New York State Department of Tax and Finance.
But two years ago, his client hired a new accountant after the IRS and state tax officials contacted him about the underreporting and underpayment of sales taxes, authorities said.
The new accountant discovered that checks for the tax due were cashed by Lee and put into Lee's corporate account, prosecutors said.
Also, the taxes due were tens of thousands of dollars lower in the returns that Lee submitted to the New York State Department of Tax and Finance than in the copies of returns that he gave to the client, authorities said.
Lee paid the lower tax amount using his corporate checks, but his client wrote checks with the larger payments to Lee to cover the taxes, prosecutors said.
In all, a discrepancy of $117,131.80 was discovered, and neither the client nor the state got any of this money, prosecutors said.
After the state's audit of his businesses, the client confronted Lee, who issued a $71,000 check that bounced, authorities said. Confronted again, Lee then wrote out three checks totaling $39,574, but the client did not cash these and the case was referred to the district attorney last September, prosecutors said.