Two Philadelphia lawyers have pleaded guilty to tax charges on the eve of trial, Philadelphia-based U.S. Attorney William McSwain announced Tuesday afternoon.
Edward Millstein and Susan Halpern, who are married, pleaded guilty to three counts of tax fraud charges before U.S. District Judge Cynthia Rufe of the Eastern District of Pennsylvania on Tuesday. Prosecutors alleged that the money that should have gone to their six-figure tax debt was instead hidden and used to splurge on luxuries.
Millstein and Halpern owed $444,225 in taxes, for the calendar years 2007 through 2011. When the IRS tried to collect, Millstein hid money in children’s bank accounts to avoid levies. Prosecutors also claim that Millstein lied about obtaining a loan to pay the debt, and didn’t tell investigators about a bank account he used to deposit the $300,000 salary paid by his firm each year from 2013 to 2015.
Halpern then spent tens of thousands of dollars on clothing, cosmetics, jewelry, salons, private clubs and trips abroad, while simultaneously failing to pay any of her and her husband’s tax debt for 2010 and 2011, prosecutors said.
On Tuesday, Millstein’s lawyer, William Brennan, said he was pleased the case was resolved before trial.
“Ted has been a pioneer in the law securing recoveries for Holocaust survivors and taking on mega corporations who stepped on the little guys,” Brennan said. “He is recovering from a major health issue and looks forward to putting this matter behind him and continuing the good work that has defined his career.”
Halpern’s attorney, Jeffrey Miller of Nasuti & Miller, said Halpern was caught up in marital troubles at the time she failed to pay taxes.
“The case arose from eroding marital problems and the joint filings in these two years,” Miller said. “Combining her modest income to her spouse’s much greater compensation increased her tax exposure greatly. She will tender $100,000 before sentencing and will have caused the filing of any back tax returns by Jan 1. She has no criminal record and is a devoted mother of two children.”
McSwain chastised the defendants’ behavior, saying he expected better from lawyers.
“These defendants intentionally failed to pay taxes, instead choosing to hide their money and spend it on luxuries that they could not afford,” McSwain said in a statement released Tuesday. “The defendants are both attorneys—they know better. Instead of being law-abiding citizens, they chose to deliberately cheat the system and bankroll their lavish lifestyle. This office will continue to hold tax cheats accountable for their crimes.”
IRS Criminal Investigation Special Agent in Charge Guy Ficco also used the guilty pleas as an opportunity to underscore the severity of penalties reserved for tax crimes.
“The prosecution of individuals who intentionally conceal income and evade taxes is a vital element of the IRS’ enforcement strategy,” Ficco said in Tuesday’s statement. “Millstein’s and Halpern’s crimes are felony offenses that carry severe consequences. Rest assured that we will continue to protect the integrity of the tax system by ensuring that everyone pays their fair share of taxes.”
Millstein faces a maximum sentence of five years in prison, three years of supervised release and a $100,000 fine, while Halpern faces a maximum sentence of two years in prison, one year of supervised release and a $100,000 fine. Millstein and Halpern will be sentenced Feb. 25, 2019.