Prominent American attorney Thomas C. Goldstein, famous for arguing dozens of cases before the US Supreme Court and for co-founding the widely read SCOTUSblog, was indicted on Thursday and charged with 22 counts of tax evasion.
Goldstein, 54, was charged for operating an ongoing scheme from 2016 to 2022 wherein he evaded millions of dollars in federal taxas, much of which he used to fund his participation in private poker games in the US and Macau and to pay, through his legal firm Goldstein and Russell PC, the salaries and health-insurance premiums for several women who never actually worked for his company.
Poker losses triggered years-long chain of tax fraud
According to the 50-page complaint, Goldstein's alleged tax crimes trace back to when he decided to participate, beginning in March of 2016, in a series of high-stakes heads-up poker matches against three "ultra-wealthy individuals", two in Asia (Macau), and the third in Beverly Hills, California.
Goldstein had lost money to at least one of the indivduals on earlier occasions, but in 2016, armed with training from two US-based professional players, Goldstein sharply turned the tables, winning almost $51 million in total from the three wealthy businessmen over 11 poker sessions. The three wealthy gamblers are not named in the indictment, nor are the two US players who trained Goldstein and also had small shares in Goldstein's action.
In paying his total loss of $26,435,000 million to Goldstein, which took place in private games in November and December of 2016, the wealthy Beverly Hills businessman also issued Goldstein an IRS Form 1099 in that amount. Form 1099 is used to report miscellaneous but taxable income, and in this instance figured large in Goldstein's future tax troubles when he allegedly failed to report any of the $50.9 million he won in the private 2016 games.
From then on, according to the complaint, Goldstein became increasingly embedded into an ongoing swirl of illicit financial activity, triggered by Goldstein losing much of the money he won during the following year, including $16.4 million to another American poker pro.
The alleged activity included the failure to disclose the gambling nature of several large transactions that were run through his legal firm, the falsification and omission of important information from at least two mortgage applications, and the occasional and illicit financial support of the women who purportedly worked for his law firm.
In the statement issued by the US Attorney's Office of Maryland, where Goldstein resides and was charged, he allegedly "took various steps to carry out his scheme, including diverting legal fees that were due to the law firm to his personal bank account, and then using them to pay personal poker-related debts; using the law firm’s assets to satisfy his personal poker debts and falsely classifying those payments as 'legal-fee' expenses on the firm’s books and records; and using firm assets to pay salaries and health insurance premiums for people with whom Goldstein had a personal relationship but who performed little or no work for the law firm and did not qualify for its health insurance."
