A former insurance agent for Sun Life Financial (“Sun Life”), Paul Disidoro, 64, of Georgetown, Mass., pleaded guilty December 8, 2015, in Federal Court in Boston to evading income taxes on the more than $470,000 that he stole from three of his insurance clients.
Under federal tax law, Mr. Disidoro had to report the funds he embezzled from his clients on his federal income tax returns. The information filed by the U.S. Attorney alleged that Mr. Disidoro evaded $144,000 in taxes by not reporting his criminal conversions of his insurance clients’ funds.
Could be sentenced to five years in jail and fined $250,000
U.S. District Judge William G. Young, who accepted Mr. Disidoro’s guilty plea, scheduled sentencing for March 8, 2016.
The charge of tax evasion, to which Mr. Disidoro pleaded guilty, allows for a sentence of up to five years in prison, three years of supervised release, a fine of $250,000, or twice the gross gain or loss, whichever is greater.
Under plea agreement U.S. Attorney may appeal any prison sentence under 21 months
In Mr. Disidoro’s case, before pleading guilty, he entered into a written plea agreement with the United States Attorney that was filed in court on November 30, 2015. As a part of the plea agreement Mr. Disidoro stated that he, “…expressly and unequivocally admits that he committed the crime charged [tax evasion on stolen insurance funds], did so knowingly and willfully, and is in fact guilty of this offense.”
In exchange, for Mr. Disidoro’s acceptance of responsibility for his crime, the U.S. Attorney agreed to recommend, at his sentence hearing, incarceration at the low end of the federal sentencing guideline range of twenty-one months. While a judge can deviate downward from the statutorily mandated Sentence Guidelines, the U.S. Attorney did reserve the right to appeal any sentence that did not require Mr. Disidoro to serve less than twenty-one months.
The plea agreement and the recommendation made under the plea agreement are not legally binding on the Federal Judge. Within the maximum sentence allowed under the applicable law, the sentence to be imposed is within the sole discretion of Judge Young. However, as a practical matter, most judges do not materially deviate from the recommendation of the parties under the Guidelines without good reason.
Order of restitution to IRS and to victims
In addition to a jail sentence, the plea agreement will have Mr. Disidoro and the U.S. Attorney recommending to Judge Young that he impose as restitution an order for Mr. Disidoro to pay:
- “$143,209 to the Internal Revenue Service…in tax loss for tax years 2007 through 2010, which does not include interest and penalties;
- $470,597 to Defendant’s three former insurance clients from whom Defendant embezzled funds and on which the tax loss is computed.”
Income tax returns for embezzled funds will have to be reported under plea agreement
The criminal charge for income tax evasion to which Mr. Disidoro pleaded guilty resulted from the Internal Revenue Code requirement that money acquired by fraud, such as, in Mr. Disidoro’s case embezzlement, be reported as income for which a tax must be paid.
The investigation conducted by the Internal Revenue Service found that, between 2007 and 2010, Mr. Disidoro did not report as income on his tax returns the $470,597 that he stole from his insurance clients.
Besides not getting away with this embezzlement, Mr. Disidoro also did not get away with filing inaccurate income tax returns.
As part of the plea agreement with the U.S. Attorney, Mr. Disidoro will be required, in addition to any jail time, supervised release, fines, prosecution costs and restitution to the three victims, to:
- file accurate and complete tax returns for those years for which returns were not filed or for which inaccurate returns were filed; and
- make a good faith effort to pay all delinquent and additional taxes, interest, and penalties.
Convinced victims to give him control over accounts and annuities
Mr. Disidoro could steal his clients’ funds because he was their trusted advisor.
The first victim of Mr. Disidoro’s, lost almost $275,000, when Mr. Disidoro convinced him to move his money to Sun Life and to allow Mr. Disidoro access to his other accounts. Mr. Disidoro was then able to direct Sun Life to issue checks to the victim, but then have those checks mailed directly to Mr. Disidoro’s residence business address. Mr. Disidoro then deposited these checks to his personal or business account. Besides stealing from his victim’s Sun Life annuities, Mr. Disidoro used this victim’s credit cards’ funds for personal purchases and cash advances. This victim only became aware of the conversions when the IRS sent him a notice indicating that funds had been withdrawn from his retirement accounts.
In July 2010, the client sued Mr. Disidoro, Sun Life and a general agency in Middlesex superior court. The claims against Sun Life and the general agent were subsequently dismissed by agreement two months after a judgment was entered against Mr. Disidoro, personally, for approximately $575,000. That amount included punitive damages, attorney fees, interest and compensatory damages for monies received or misappropriated.
The second victim of Mr. Disidoro had been a client of his from 2007 through 2011. Based on advice from Mr. Disidoro, this client transferred her retirement funds to an account at Sun Life. From 2007 through 2009, Mr. Disidoro stole more than $150,000 from her, by converting over $60,000 in checks payable either to her or to Sun Life issued by her prior account holders. Mr. Disidoro also had Sun Life send to him three checks totaling almost $90,000 payable to his client, that he subsequently deposited into his business and personal bank accounts.
In May 2011, this second victim sued Mr. Disidoro, Sun Life, TD Ameritrade and one of its stock brokers. The claims against Ameritrade and its broker went to arbitration and eventually were dismissed. A December 6, 2012, entry on the case docket notes relating to the case against Sun Life states that: “It is the court’s understanding that plaintiff has settled with defendant Sunlife (sic).”
In August 2013, this second victim recovered judgment of approximately $220,000 against Mr. Disidoro that included punitive damages, attorney fees and compensatory damages for the money misappropriated.
The third victim met Mr. Disidoro through friends when she was interested in purchasing disability insurance. Mr. Disidoro convinced her to transfer her retirement accounts to Sun Life after promising her that he could double her money.
From 2008 through 2010, Mr. Disidoro embezzled approximately $90,000, from her retirement accounts that he deposited into his personal and business bank accounts.
Embezzlement to feed gambling habit
During the course of the IRS investigation, Mr. Disidoro was recorded telling one of the victim’s daughter in response to her question: “You said that you stole it (money) because you were gambling; you had a gambling habit. Is that correct? Do you remember that?”
Mr. Disidoro responded: “Yeah” and later admitted: ”… And why I stole the money, I don’t know why. I had a gambling problem. It was like having a drug problem. The money is irrelevant. It doesn’t matter where it comes from, just like drinking or anything else. It’s a situation that—I just—you know, if I could undo it, I’d undo it.” Mr. Disidoro did state to the victim’s daughter “I’m sorry; I’m sorry for all I did.”
The IRS’ investigation turned up evidence suggesting the accuracy of Mr. Disidoro’s statement about a gambling addiction. Financial records the IRS accessed showed that between 2007 and 2010, Mr. Disidoro spent a total of $107,445.11 in payments to TVG Network, a cable/satellite television network dedicated to horse racing. The network permitted account holders to bet on horse racing online or by telephone. Mr. Disidoro paid for these bets by withdrawing significant sums by checks written to cash, through ATM withdrawals, including many such withdrawals near or at casinos, and had made ATM withdrawals or wrote checks to cash totaling $556,760.64.