Las Vegas Sun

March 29, 2024

Feds turn a watchful eye on Las Vegas

The odds aren't in Las Vegans' favor.

This gambling mecca is among the top 10 cities targeted by Internal Revenue Service agents snooping for signs of criminal tax fraud, a national study reported today.

That means Las Vegans are nearly two times more likely to fall under the government's scrutiny than win the Megabucks jackpot (a windfall with its own share of tax headaches).

Three of every 100,000 Nevadans are likely to be investigated for criminal tax violations, securing the state the 10th spot in a Syracuse University study of 1994 criminal tax referrals.

Las Vegas IRS criminal investigation Chief Byram Tichenor said one reason for Nevada's elite standing is its large number of self-employed workers -- exotic dancers, telemarketers, construction workers and others.

"I don't want to infer that the people who are self-employed are not honest," said Tichenor, who dismissed the issue of unreported casino tips as a problem solved. "But if somebody is self-employed, it is probably easier to cheat on their taxes than somebody who is a wage earner."

Tichenor refers to some high-profile cases and investigations his office has been investigating as proof of his argument. Among them:

* Valerie Carp, a Las Vegas madam being investigated for criminal tax fraud after pleading guilty to the misdemeanor crimes of conspiracy to commit pandering and living off a prostitute's wages. Carp was accused of running an expensive prostitution ring that serviced casino high-rollers.

* Operation Senior Sentinel, a nationwide telemarketing investigation that resulted in charges being filed against 422 people, many of whom were Las Vegas residents. Among those indicted were United Holdings and American Freedom Association, Las Vegas firms accused of laundering more than $1 million.

* Three construction-related companies -- roof, air conditioning and plaster and drywall -- have been indicted on charges of cheating the government out of millions of dollars. Cedar Roofing was found guilty of tax violations, but is appealing the conviction.

Such entrepreneurship may not be the only reason that Las Vegans are more likely to be targets of tax fraud than most other Americans.

Nevada has nearly three IRS agents for every 100,000 people, two times the national average, the study reported.

The Nevada Development Authority, a nonprofit company, has been influential in attracting big-name companies such as Citibank, Levi and Ocean Spray to Southern Nevada. Companies are enticed by Nevada's lack of corporate or personal income taxes.

But for the unlucky company or individual who is investigated by the IRS for criminal tax fraud, the odds of getting convicted get even worse.

The IRS and U.S. attorney's office successfully prosecute 52 percent of their cases -- which include not only tax fraud but bribery and assaults on employees, the Syracuse study found.

The IRS contends its success rate in Las Vegas was even higher for 1994, punishing nearly 94 percent of those charged with criminal tax violations.

"I'm sure if you're a taxpayer in Las Vegas, you feel unique," said Tichenor, reassuring that Nevadans are under the same scrutiny at tax time as all other Americans.

"This is a growing area and there's a very, very strong economy," the criminal investigation chief said. "I think it is important to have presence all year long."

Is it enough to give transplanted Texans, Californians or Pennsylvanians second thoughts about moving here?

Two men who make it their business to cast positive light on even the worst news about Las Vegas don't think it will slow the steady stream of newcomers.

"It's a little blip that we don't necessarily need," Las Vegas Chamber of Commerce President Mark Smith said.

"I think the average, across-the-board Las Vegas person pays their taxes like anybody else," said Somer Hollingsworth, president of the Nevada Development Authority.

And if they don't?

"Perhaps that isn't a resident we'd be looking for," Smith quipped.

Bottom line: You know the odds. Bet accordingly.

archive