Dr. John Compagno Pleads Guilty to Tax Evasion Scheme

Dr. John Compagno, 70, of Napa, California, pleaded guilty today to a years-long tax evasion scheme that defrauded the IRS of more than $5.4 million. The licensed pathologist and owner of three Hercules-based medical corporations admitted to systematically falsifying corporate tax returns and hiding personal income from the government between 2005 and 2011.

Compagno, who operated John Compagno, M.D., Inc., West Coast Pathology Laboratory, Inc., and Histopathology Reference Laboratory, Inc., manipulated tax filings by inflating non-deductible expenses on corporate returns. According to court documents, he directed a tax preparer to include false expenses totaling $10,679,080 across seven years, slashing his companies’ tax liabilities by $3,859,060. He personally approved and signed each fraudulent return.

Even as his companies underpaid taxes, Compagno further concealed his wealth by omitting over $10.5 million in constructive dividends from his individual tax returns from 2006 through 2011. That deception added another $1,567,179 in unpaid taxes. The IRS Criminal Investigation unit uncovered the dual-layered fraud during a deep audit of his business and personal finances.

The case was filed via criminal information on November 16, 2016, charging Compagno with one count of tax evasion under 26 U.S.C. § 7201. In his plea agreement, he specifically admitted to willfully filing a false corporate tax return for the year 2010. The charge carries a maximum penalty of five years in federal prison and a $250,000 fine.

Sentencing is set for March 28, 2017, at 2:00 p.m. before U.S. District Judge William Alsup. While the statutory maximums loom, the actual sentence will be determined under the U.S. Sentencing Guidelines and 18 U.S.C. § 3553, which weighs factors including restitution and criminal history. Compagno has not yet made restitution.

Assistant U.S. Attorney Thomas Moore is prosecuting the case, brought by the U.S. Attorney’s Office for the Northern District of California. The conviction is the result of a sustained investigation by the Internal Revenue Service, Criminal Investigation. With over $5.4 million in tax debt now legally acknowledged, federal authorities are weighing asset seizures and financial liens to recover public losses.