James S. Faller II, Tax Fraud, Kentucky 2015

Former Kentucky Private Investigator Sentenced to Prison for Tax Fraud

A former Russell Springs, Kentucky investigator and legal consultant, James S. Faller II, 54, has been sentenced to three years in prison and three years of supervised release for tax fraud, according to the U.S. Attorney’s Office for the Eastern District of Kentucky.

Faller was convicted after a two-week jury trial of one count of corruptly endeavoring to obstruct the Internal Revenue Service (IRS), four counts of evading federal individual income taxes, one count of falsifying a document submitted to the IRS under penalties of perjury, and four counts of failing to timely file his federal individual income tax returns.

According to the evidence admitted at trial, from 2006 through 2009, Faller received annual income of approximately $126,000 to $289,000 per year from his work as a private investigator and legal consultant. However, Faller did not timely file any individual income tax returns for that period. Instead, Faller took steps to conceal his income from the IRS in several ways, including arranging for his income to be made payable to a nominee and using nominee bank accounts.

Faller owes additional federal income taxes of $112,065 for the 2006 through 2009 tax years.

‘When individuals submit false information in an effort to obstruct the IRS and evade the payment of tax due and in doing so, steal from the American public, the Tax Division stands ready to prosecute,’ said Acting Assistant Attorney General Caroline D. Ciraolo. ‘Today’s sentence sends a message that this conduct will not be tolerated, and those lying to the IRS and hiding their income to avoid paying their tax liabilities will pay a heavy price.’

In March 2010, Faller signed and submitted a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to an IRS revenue officer as part of the IRS’s efforts to collect his unpaid taxes. On the Form 433-A that Faller submitted to the IRS revenue officer, Faller falsely reported that he had no income even though he had earned $23,000 in the preceding month alone.

Defendant: James S. Faller II

Criminal charges: corruptly endeavoring to obstruct the Internal Revenue Service (IRS), four counts of evading federal individual income taxes, one count of falsifying a document submitted to the IRS under penalties of perjury, and four counts of failing to timely file his federal individual income tax returns

City and state: Russell Springs, Kentucky

Exact date: June 2015

Sentence or outcome: three years in prison and three years of supervised release

$112,065 – the amount Faller owes in back taxes

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