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David Adams, 58, has been sentenced to 90 months in prison, followed by three years of supervised release for failing to pay $4.8 million in federal income taxes, U.S. Attorney John Durham announced this week. His elaborate scheming may have begun as early as 1982.
“For years, Mr. Adams obstructed IRS efforts to collect back taxes through a series of criminal acts,” IRS Criminal Investigation Special Agent in Charge Kristina O’Connell said. “As a successful entrepreneur, he earned millions and amassed significant wealth, yet willfully chose to evade his significant tax obligations. Honest taxpayers bear the brunt of this crime, through reduced government services and a greater tax burden.”
Adams’ schemes began in the early 1980s, and then beginning in 1996, the Old Saybrook resident “was substantially delinquent in filing tax returns and paying amounts owed to the IRS,” despite engaging with collection officers who warned him to pay the taxes. Ignoring those warnings, he continually failed to pay the taxes on time or in sufficient amounts, often bouncing checks in the process.
Durham noted that as part of this tax fraud scheme, Adams engaged the services of a certified public accountant to prepare his personal tax returns beginning in 1993. He then gave the accountant false information about his estimated payments, about his income, and proceeded to blame the accountant for making errors on his returns as an excuse for why he should not be required to pay the tax due.
In 2002, Adams sold an online floral business, for which he owed $1.3 million in taxes. Instead of paying that liability, and ignored tax collectors. He then blamed the CPA for “errors” although none were made.
In June 2011, Adams sold his partnership interest in another business, and received $4,708,419.20 wired into his personal bank account. Knowing that he would have to pay substantive taxes on that sale, he failed to declare the income to his accountant or on his tax return. At the same time, Adams told an IRS revenue officer who was responsible for collecting his delinquent tax payments and securing Adams’ overdue tax returns, that he had hoped to have funds to pay down his back tax liability, but that nothing had been “panning out.”
Durham said that in total, Adams engaged in a more than 20-year effort to inhibit the IRS’s efforts to collect back taxes from him, failing to disclose more than $6 million in income to the IRS. He was arrested on April 14, 2016, and pleaded guilty to two counts of tax evasion, three counts of making and subscribing a false tax return and one count of attempting to interfere with the administration of IRS laws on Oct. 10 last year. Adams was also ordered to pay $4,872,172.91 in back taxes.
“This defendant engaged the IRS in a decades-long wild goose chase to prevent the agency from collecting the taxes he was required by law to pay,” Durham said. “He hid income, repeatedly lied to IRS collections officers, filed frivolous claims for due process hearings, and bounced numerous checks. He also misled, and then attempted to implicate, his accountant. All the while, he had the ability to pay and lived more lavishly than the vast majority of Americans.
“Our nation’s tax collection system requires all of us to pay what we owe, or else our society cannot function. This is an appropriate sentence for an individual who failed to pay his taxes for a good portion of his working life, and likely will never pay all that he owes the citizens of this country.”
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