Opinion ID: 1911616
Heading Depth: 1
Heading Rank: 3

Heading: filing false tax returns

Text: When Scott began working with Watkins in late 1979, Scott adopted Watkins' unethical procedures for handling funds received by the firm. Scott testified that as third-party checks were received by the firm to settle cases, the checks would be taken to the bank, with the client present, and the checks would be cashed. The client would receive his or her portion of the settlement, and the firm would take the remainder without ever recording the receipt of the income on the firm's books or reporting the income on Scott's or Watkins' tax returns. Similarly, when a client paid for the firm's services in cash, that payment would not be recorded on the firm's books or on the appropriate tax return. Scott testified that this pattern of failing to record income and misstating income on state and federal tax, returns continued annually until the Internal Revenue Service (IRS) learned of the firm's fraudulent conduct in 1994. In 1994, the IRS interviewed Scott in connection with its investigation of his tax reporting. Scott testified that during the interview, he cooperated, answered the questions truthfully, and admitted to what he had done. Several federal criminal charges were filed against Scott in a superseding indictment on August 21, 1996. Scott entered a plea of guilty to one count of the criminal indictment, and the remaining charges were dismissed. That count of the indictment had alleged that Scott willfully made and subscribed to a U.S. individual income tax return for the 1990 calendar year, which return was false in that said return stated ... that [Scott] had taxable income of $2,915.00, whereas, [Scott] well knew and believed that his taxable income ... was at least $97,277.85 for the calendar year of 1990. Judgment was entered against Scott, and he was sentenced to serve 1 year 1 day in federal prison. The judgment also contained a section entitled Statement of Reasons for Sentence, which included the following: The Court determines that the applicable guidelines are: ... Restitution: $61,112.28. The court also explained in its judgment that a [fine is waived because of [Scott's] inability to pay a fine, and because payment of a fine would interfere with [Scott's] ability to make restitution. On June 2, 1997, Scott voluntarily surrendered his license to practice law, admitting that he violated Canon 1, DR 1-102(A)(3) and (4), of the Code of Professional Responsibility. On June 27, Scott was disbarred. [8] After completing his sentence of imprisonment, Scott returned to Lincoln.