A Texas man was sentenced today to 37 months in prison, three years probation, and must pay $529,551 in restitution to the United States for evading taxes on income from his business.
According to court documents, John L. Petrone owned and operated a business that sold an herbal extract called “kratom,” as well as other related products. Although Petrone earned hundreds of thousands of dollars from his business, he did not file an income tax return for the years 2014 through 2019, nor did he pay income taxes for those years. To avoid paying his income taxes, Petrone used several methods. These included not withholding federal taxes from his salary, operating the business under different names, dealing in cash, using business bank accounts to pay personal expenses, and lying to the IRS during an audit. In addition, Petrone did not pay payroll taxes for his business.
Through his actions, Petrone caused the IRS a tax loss of over $529,000.
The announcement was made by Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
The IRS Criminal Investigation (IRS-CI) investigated the case and uncovered Petrone's sophisticated scheme to hide his income and avoid tax debt. The case highlights the importance of tax compliance and the consequences of intentional tax evasion. Individuals and business owners must understand that intentional acts to evade the tax system will be met with vigorous investigation and prosecution.
Assistant Chief David Zisserson and Trial Attorney Andres Chinchilla of the Tax Division prosecuted the case with the assistance and support of the U.S. Attorney's Office for the Western District of Texas. The collaboration between the IRS and the Department of Justice's Tax Division was critical to the successful resolution of this case. This case is a reminder of the harsh penalties for tax evasion and the ongoing efforts of federal agencies to enforce tax compliance.
In addition to prison time and restitution, Petrone's three years of probation will include strict compliance with tax laws and regular reporting to a probation officer. This case is indicative of the harsh penalties for tax evasion and the ongoing efforts of federal authorities to enforce compliance with tax laws.
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