A former deputy attorney general pleaded guilty Tuesday to evading federal income taxes after hiding assets in an attorney trust account under his wife’s name.
Authorities say Toms River solo Lee Gottesman ran nearly all his personal and business expenses through that subaccount, allowing him to avoid personal income taxes on the concealed income.
In 2012, Gottesman was indicted on four counts of failing to report $449,595 in income and failing to pay $112,912 in taxes in 2007-10, and 15 counts of collecting $33,504 in taxes from his employees in 2006-09 but failing to pay those funds to the IRS.
According to the U.S. Attorney’s Office, Gottesman once had two associates and a secretary working in his practice, which focused on bankruptcy, real estate law, corporate law and collections.
He allegedly arranged for a certified public accountant to prepare his personal and his firm’s employment tax returns, but never filed them.
In April 2002, the federal government obtained a tax lien against him. Gottesman opened the subaccount in his wife’s name in November 2002, though she had never been a client of the firm.
The subaccount allegedly was used to pay home mortgage and utility bills; household expenses, including pool maintenance, landscaping and construction costs; and personal expenses, such as life insurance premiums, auto body repair work and credit card payments.
According to the indictment, Gottesman admitted that he had not filed tax returns from about 2002 until 2010 out of fear that he owed taxes and because his records were not well-organized.
He told authorities he began to pay personal expenses through the subaccount because he believed the IRS could not levy his attorney trust account.
Gottesman pleaded guilty before U.S. District Judge Freda Wolfson in Trenton to one count of each offense in the indictment. The pleas, combined with the $146,406 in lost taxes, put him at an offense level of 16 on the U.S. Sentencing Guidelines’ scale of 1 to 43.
His "recognition and affirmative acceptance of personal responsibility for the offenses charged," if it continues until sentencing, earns him a downward departure of two points, according to the plea agreement. And his cooperation in giving timely notice of his intention to plead guilty, allowing prosecutors to avoid preparing for trial, earns him another one-point downward departure.
With 13 points remaining, Gottesman faces 12 to 18 months in jail and fines of $3,000 to $30,000. His sentencing is scheduled for Aug. 21.
Gottesman, 57, graduated from Georgetown University and Case Western Reserve University Law School, and clerked for Superior Court Judge Edwin Stern. He was a deputy attorney general in the Division of Gaming Enforcement from 1982 until 1986.
His lawyer, Bloomfield solo Salvatore Alfano, and Assistant U.S. Attorney Zach Intrater decline to comment on the case.