Morris E. Zukerman, Tax Fraud, New York 2023

Manhattan businessman Morris E. Zukerman, the principal of M.E. Zukerman & Co. ("MEZCO"), an investment firm located in Manhattan, pleaded guilty to tax fraud schemes involving the evasion of over $45 million of income and other taxes.

According to the indictment and today's plea proceedings in Manhattan federal court, Morris E. Zukerman schemed to evade taxes based on income received from the January 2008 sale of a petroleum products company (the "Oil Company") he co-owned (through a MEZCO subsidiary) with a public company.

Zukerman schemed to evade the reporting of the sale – which resulted in the receipt by the MEZCO subsidiary of $130 million in gross sales proceeds – by falsely telling his accountants in mid-2008 that he had transferred ownership of the MEZCO subsidiary to a family trust in early 2007.

In support of the story he gave to the accountants, Zukerman created backdated documents such as promissory notes and a board resolution purporting to show the transfer of the subsidiary to his family trust in 2007. The false documents allowed Zukerman to remove the MEZCO subsidiary from the consolidated tax reporting being handled by the accountants for MEZCO and thereby evade the reporting to the IRS of the sale of the Oil Company, as well as the payment of over $35 million in corporate income taxes.

Following the sale of the Oil Company, Zukerman transferred the proceeds of the sale from the MEZCO subsidiary to his family trust and various corporations he controlled, including a company called Zukerman Investments.

Zukerman schemed to evade personal income taxes and to obstruct the IRS by (i) causing various tax return preparers to prepare U.S. Individual Income Tax Returns for Zukerman and his wife, and for Family Member-1, Family Member-2, and Family Member-3, that claimed, in the aggregate, millions of dollars of false and fraudulent deductions and expenses, such as phony charitable contributions and investment interest expenses; (ii) diverting, for personal use, corporate assets from MEZCO and other corporate entities Zukerman controlled by directing that hundreds of thousands of dollars of fees be paid between 2007 and 2013 to Family Member-1, Family Member-2, and Family Member-3, for which the family members performed little or no work; (iii) directing that corporate funds be used to pay compensation to, and health care insurance premiums for, family members who worked for Zukerman and his wife, including Family Member-1 and Family Member-2, at their Upper East Side apartments.

"As his admissions today made clear, Morris Zukerman took numerous pages from the tax evader's playbook: he illegally evaded tens of millions of dollars of corporate income taxes from the $130 million sale of an oil company; he prepared personal tax returns for himself and family members that falsely claimed millions of dollars in deductions; he evaded employment taxes for household employees; and he schemed to defraud and obstruct the IRS auditors who were examining his false tax returns," said Preet Bharara, the United States Attorney for the Southern District of New York.

Zukerman entered his plea before U.S. District Judge Analisa Torres.

According to the indictment, today's plea proceedings in Manhattan federal court, and other court filings related to this matter, the charges against Zukerman include tax evasion, obstruction of an IRS audit, and making false statements to an IRS auditor.

The defendant is scheduled to be sentenced by Judge Torres on a date to be determined.

Source: https://www.justice.gov/usao-sdny/pr/manhattan-energy-investor-pleads-guilty-tax-fraud-schemes-involving-evasion-over-45