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Unpaid taxes, $14M refund claim snare CT man

BY Gregory Seay

3/29/2016
A Newington insurance salesman, who after the IRS confronted him about failing to file years of tax returns tried to trick the agency and taxpayers into refunding him $14 million, has been convicted of tax fraud, federal investigators say.

Terry DiMartino, 62, was convicted Monday after a seven-day trial in Hartford federal court of tax of one count of corruptly interfering with the due administration of the internal revenue laws, two counts of filing false tax returns and five counts of willfully failing to file tax returns, according to Acting Assistant Attorney General Caroline D. Ciraolo of the U.S. Justice Department's Tax Division.

DiMartino's sentencing is set for July 20. He faces a maximum sentence of three years in prison for the charge of obstructing the IRS; three years for each of the false tax return charges; and a year for each count of willfully failing to file tax returns, Ciraolo said. DiMartino also faces monetary penalties.

According to Ciraolo and IRS investigators, DiMartino earned millions of dollars in commissions the past decade selling insurance for a number of in-state insurers and brokers. Despite that, they said, he failed since 1996 to file accurate tax returns or pay the taxes he owed.

But once he was confronted, DiMartino brazenly tried to obstruct the IRS by mailing false documents, including three false tax returns for the 2007 tax year, one of which requested a fraudulent $14 million refund.

He also sent false and threatening correspondence to the IRS in an attempt to defeat the IRS's assessment, collection and investigative efforts. He submitted false and threatening correspondence to insurance companies that sought to cooperate with the IRS collection activities.

DiMartino also set up nominee entities which he used to divert his insurance commissions. He used the nominees to hide and conceal assets to prevent the IRS from collecting on his tax liabilities.

"Taxes are the price we pay for the public goods and services we want; yet Mr. DiMartino tried to undermine and corrupt the tax system when he attempted to steal $14 million in taxpayer money,'' said Special Agent in Charge Manny Muriel in the IRS' criminal investigation division. "Furthermore, he tried to intimidate insurance companies that sought to cooperate with the IRS.''