Page 2 - U.S. v. Marc Berger: A Cautionary Tale for Return Preparers

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name on Burrill’s capital account from would pay it back before investors Berger faced a potential sentence of 63
“Deferred Revenue” to “Note Payable.” noticed. Berger’s defense attorneys to 78 months in prison.
Berger also urged Burrill to execute a characterized him as an experienced Berger’s attorneys argued that he
promissory note to support this new accountant who was tricked by a client should not receive any jail time because
loan theory, and he advised others at who had a reputation for being difficult the conduct at issue was aberrational
Burrill’s company to change the lan- to work with; claimed that Berger was from his otherwise upstanding, law-
guage in certain internal documents to focused on managing many clients’ abiding life, and he had already suf-
reflect that the transfers were loans. The matters, not just Burrill’s; and asserted fered significant damage from the loss
effect of Berger’s decision to change the he had no financial motive to aid of his CPA license, reputation, and abil-
character of the transfers was to deceive Burrill’s fraud (Dorothy Atkins, “Jury ity to earn a living. The government
the IRS by concealing $18 million in Convicts Accountant of Aiding Biotech urged the court to sentence Berger to a
taxable transfers to accounts controlled VC in $18M Fraud,” Law 360, July 18, significant term in custody in order to
by Burrill. 2018, http://bit.ly/2FVmShx). deter other CPAs from playing the
On July 18, 2018, after a three-week “IRS audit lottery,” hoping that fraud-
Burrill’s Guilty Plea and Berger’s Trial jury trial, Berger was convicted of aiding ulent tax returns would never be
Berger was indicted in September and abetting the filing of Burrill’s false reviewed. In its sentencing submission,
2017. Prior to his indictment, Berger had 2010, 2011, and 2012 individual income the government surmised that “it is also
voluntarily given testimony before the tax returns, in violation of IRC section likely that CPAs across the United
SEC and had testified as BPM’s custo- States are committing similar crimes for
dian of records before the grand jury their clients because they know the IRS
investigating Burrill’s tax matters. At the has very limited resources, and that it
time of his testimony in May 2016, the is unlikely a revenue agent would have
prosecutors informed Berger that he was time to review complicated tax returns
not a target of the grand jury’s investi- The effect of Berger’s and spend months auditing one tax
gation. Berger thus was taken by surprise returns [sic].”
when, 17 months after he testified before decision to change the Five months after his conviction,
the grand jury, he was arrested at his Berger, who was 68 years old at the time,
home by numerous federal and local law character of the transfers was sentenced to eight months in prison,
enforcement agents. one year of supervised release, and a
In December 2017, Burrill entered a $20,000 fine. Although he is likely to
guilty plea to one count of investment was to deceive the IRS. appeal his conviction, Berger now stands
advisor fraud and one count of filing a a convicted felon. He has lost his CPA
false 2010 individual income tax return. license and is unlikely ever to prepare
Pursuant to Burrill’s plea agreement, the another tax return.
agreed-upon tax loss was $2,912,303, as
compared to the $4.7 million tax loss Not Even Once
charged against Berger in his indictment 7206(2). IRC section 7206(2) provides While many criminal cases against
and pursued by the government at his that whoever “willfully aids or assists in, tax return preparers are for repeated
sentencing. Burrill faced a sentence of or procures, counsels, or advises the conduct in preparing fraudulent tax
between 70 and 87 months in prison, preparation or presentation under, or in returns for numerous clients over a peri-
and the government urged the court to connection with any matter arising under, od of years, the case against Marc
sentence him to 63 months. On the internal revenue laws, of a return, affi- Berger is a sobering reminder that sig-
December 4, 2018, Burrill, who was 74 davit, claim, or other document, which is nificant judgment lapses related to a sin-
years old at the time, was sentenced to fraudulent or is false as to any material gle client can derail a career. It is impor-
30 months’ imprisonment. matter, whether or not such falsity or tant to remember that one’s reputation
Berger chose to fight the charges fraud is with the knowledge or consent for integrity is fragile and impossible to
against him and proceeded to trial in of the person authorized or required to repair once sullied by criminal charges.
the Northern District of California. present such return, affidavit, claim, or No client is worth that sort of risk. q
According to press reports, the govern- document” shall be guilty of a felony and
ment painted Berger as an experienced be imprisoned for up to three years. As Sharon L. McCarthy, JD, is a partner
accountant who was aware that Burrill a result of his conviction on three counts at Kostelanetz & Fink, LLP, New York,
was stealing money and hoped he of aiding and abetting Burrill’s tax fraud, N.Y.

FEBRUARY 2019 / THE CPA JOURNAL 67