Locked In with Ian Bick - I Was an IRS Special Agent for 20+ Years — Here's How the IRS Actually Puts People in Prison for Taxes | Robert Nordlander

Episode Date: August 18, 2026

Robert Nordlander spent over 20 years as a special agent with IRS Criminal Investigation — investigating complex criminal tax and money laundering violations, working undercover operations, executing search and arrest warrants, and building the cases that sent tax evaders and money launderers to federal prison — and in this episode of Locked In with Ian Bick, he finally tells the complete truth about what that career really looked like from the inside. He shares what cases the IRS Criminal Division actually goes after and prosecutes, what it actually takes to put someone in prison for taxes, the different types of money laundering he investigated, why small business owners evade taxes more than anyone else, how cases came to him and what the investigation process actually looked like, some of the most significant cases of his career, and what the new world of influencers and social media income is producing in terms of tax crime that most people never see coming. _____________________________________________ #irs #taxes #truecrimestories #accountant #cops  _____________________________________________ Thank you to CASH APP for sponsoring this episode: Download Cash App Today: https://capl.onelink.me/vFut/ksjh06pb  #CashAppPod Cash App is a financial services platform, not a bank. Banking services provided by Cash App's bank partner(s). Prepaid debit cards issued by Sutton Bank, Member FDIC. Cash App Visa® Debit Flex Cards issued by Sutton Bank, Member FDIC, and The Bancorp Bank, N.A., pursuant to a license from Visa U.S.A. Inc. See terms and conditions for the Sutton prepaid card, Sutton debit flex card, and Bancorp debit flex card. Discounts and promotions provided by Cash App, a Block, Inc. brand. Visit cash.app/legal/podcast for full disclosures. _____________________________________________ Connect with Robert Nordlander: Website: https://www.nordlandercpa.com/ Buy his books: https://www.amazon.com/stores/Robert-Nordlander/author/B0BMZT4CNK?ref=ap_rdr&shoppingPortalEnabled=true&ccs_id=a4257f70-b089-4db0-8020-c9bd7e35d743 Hosted, Executive Produced & Edited By Ian Bick: https://www.instagram.com/ian_bick/?hl=en  https://ianbick.com/ _____________________________________________ Timestamps: 00:00 Meet the Ex-IRS Agent 00:21 Growing Up and Early Career 02:00 From Chips to IRS Agent 03:48 The CPA Advantage 05:40 IRS CI Origins and Its Role 06:34 Stationed in Alabama 07:19 Dad's Blessing and Career Shift 09:03 First Case: Identity Theft 10:50 The IRS 'Funny Box' Explained 12:05 Tax Protesters and False Refunds 13:37 Sentencing for Tax Protesters 14:59 Statute of Limitations for Tax Crimes 15:38 Hiding Income: The Small Business Owner 16:36 How Agents Find Cases 18:40 Data Mining for Evasion 20:47 The Value of IRS CI to Prosecutors 21:09 Drug Dealers and Tax Returns 22:12 Civil vs. Criminal: Making the Call 24:30 Choosing Cases Worth Prosecuting 25:40 Cash App Sponsorship 27:40 Dollar Amounts Drive Cases 29:34 Most Common Businesses for Fraud 30:42 Contractor Cash Schemes 31:32 Investigating Contractor Fraud 32:51 Why Celebrities Don't File 34:14 The Tax Gap and Who's Responsible 35:30 Are Business Owners Honest? 36:50 Influencer Tax Issues 38:12 The Fiji Hotel Example 39:22 Influencer Contracts and Tax 40:20 Ignorance and Willfulness 41:30 Influencer Cases and Richard Hatch 43:08 Tax Preparer Liability 44:42 Return Preparers: No License Needed 45:29 Preparer Mistakes vs. Crimes 46:53 Abuse of Earned Income Tax Credit 48:55 What Happens to the Clients? 50:00 When to Tell a Subject They're Investigated 51:42 Undercover Work and Surveillance 55:27 Common Lies from Suspects 57:37 Finding the Second Set of Books 58:26 Pissed-Off Partners as Informants 58:49 State vs. Federal Cases 01:00:35 The Length of Federal Investigations 01:01:36 Finding Bank Accounts 01:03:40 Using Flight Rosters as Leads 01:05:27 Structuring: The $10,000 Myth 01:07:19 A Surprising Case: Murder and Taxes 01:12:28 Expectations of Repayment 01:13:12 Most Egregious Money Hiding 01:15:40 PayPal, Venmo, and Cash App 01:17:52 Money Laundering Evolution 01:20:51 Cryptocurrency and the IRS 01:24:17 Unreported 1099 Income 01:26:46 Tips and Minor Tax Evasion 01:27:43 Is the System Fair? 01:29:00 The Tax Boycott Myth 01:31:00 Tax Protesters Are Filing 01:34:19 Jury Trials and Complex Cases 01:37:52 Testifying and Simplifying for Juries 01:42:10 Winning at Trial: The Odds 01:44:00 Robert's Role as a Consultant 01:45:58 Retiring from the IRS 01:47:53 Life on the Defense Side 01:52:56 IRS Layoffs and Efficiency 01:56:58 The Most Important Lesson 01:58:52 Truth Has Many Friends 02:00:18 Final Thoughts and Resources _____________________________________________ To advertise on the show, contact [e-mail] or visit https://advertising.libsyn.com/LockedInWithIanBicka

Think the IRS will never find you? Think again. My guest today is Robert Nordlander, a former IRS criminal investigation special agent who spent more than 20 years tracking people who thought they got away with it. Today, he's revealing how the IRS actually fined to you. I grew up in North Carolina. I grew up in Tar Hill basketball and barbecue. That's kind of where I grew up, you know, been to North Carolina for about 50 years now, about 55 right now.

So 50 out of 55 years has been in North Carolina. How was your childhood? It was good. Great. Wonderful. Great set of parents. Got a nice sister. Couldn't ask for anything better.

So I had good parents and a good childhood. So there's no drama, no trauma, you know, just loving parents and still today. Great parents. Were they in law enforcement at all? No, no. My dad was an accountant, and my mom was a secretary. So my dad said, if you get an accounting degree, you can go anywhere around the world and get a job. And I was like, okay, it's kind of interesting.

because he was a CPA. And I was like, all right, you can go to law school. You can do this. You can do that. Fine. So when I graduated out of high school, went ahead and got a degree in accounting, just because I wanted to, number one, have the skill set. It seemed to be natural for me.

Number two is I wanted to be an FBI agent when I was growing up. Because, you know, FBI gets all the publicity, that type of thing. And so, sure, why not? They hire accountants and lawyers. That's what I wanted to be. But when I graduated at college early at 20. So I just decided just to go into CPA world for a little while and just hold off a little bit. Why law enforcement in general for you?

I probably watched too much chips growing up as a kid. I mean, it's a little after your age, but you're in the 30s. But yeah, chips. I wanted to be a motorcycle cop. And I was, you know, when I was six years old, of course, it's chips, you know. I watched too much chips and too much Miami Vice. and I just loved it, even to the point where I became a reserve deputy sheriff in North Carolina in the mid-90s. So I would be a CPA during the week and play cops and robbers on the weekend.

But that's what I thoroughly enjoyed it. And I just knew I liked it. So how do you marry law enforcement with accounting? And I knew the Bureau, the FBI, did it. But I did not know the IRS did it. And for some reason is the beginning of the Internet. I saw a website that said IRS criminal investigation, accounting and law enforcement. I said, that's me. So went ahead and applied and got the job and started a 20-year career with it.

What did you focus on when you were a CPA? Was there a specialty? When I was a CPA in public accounting, it was everything, audits, reviews, we'd call compilations, doing the financial statements, doing tax returns, getting penalties removed from the IRS, anything and everything. You kind of like did a jack of all trades. You just learned about everything. So there's no particular niche. It was just me and my dad working together in the public accounting firm.

It really was his firm. And I just happened to be working for him. And kind of good education, good experience doing all that. But it really wasn't my passion to be a CPA in that type of world. All you do is books and records every month. Same thing over and over and over again. So I decided, you know, I needed a change. I was in politics for a little while.

city councilman, one of the youngest city councilman's in the state. So I was stuck there for four years and then lost re-election and said, you know, what do I want to do when I grow up at 28? And then I decided to join the IRS and they hired me. Do you think having that perspective as a CPA before going into the IRS was crucial for you? Absolutely. I know the perspective of what a tax return looks like, what the pressures are, what records the CPA should have and shouldn't have. We all have those clients that are kind of like weird. You got to know, there's no way they make $30,000 a year and drive a Mercedes like that and live in this big house. You know something's weird, but you still prepare to return just because, you know, it's what they gave you. So I knew those stories.

So when I came into the IRS, I already had the tax preparation background, looking at financial statements, redoing the books and records, had all that background and all the tax knowledge. So when I went to the IRS, it kind of like was the training was kind of easy for me because I was already law enforcement officer before I got there. So I knew how to do search warrants and stop a car and anything else. And I knew the CPA world. So for six months, it wasn't that bad, you know, of the training. And I really had to learn too much other than some policies and procedures. And then once I got out, went to Alabama.

How long has the IRS criminal investigation division been around for? I think 1917, I think it is. They've been around since the Internal Revenue Code was enacted. Oh, so they started it right away. Yes, yeah. It was called the Intelligence Division, which is kind of ironic, right? Or intelligence unit, you know, so that's what it was. But if you didn't know, the IRS did not have accountants per se.

The first special agents in the IRS were postal inspectors. That's where they got them from. And when they built the agency at the beginning, it came from the postal inspector. They're the ones that started it. And then they became what it is today. Now were those postal inspectors specialized in accounting? I have no idea what their specialized was. But I do know that soon after that, the Al Capone stuff came out and the Charles Lindbergh, the Lindberg baby kidnapping came out.

And that's when the IRSCI really started taking off in publicity-wise. They have a skill set that no other agency has. people talk about the FBI, DEA, Secret Service, and if people don't know, an IRS special agent is on par with those same agencies. So when you see Gun Toter, Secret Service, Gun Toter, FBI, there's a gun tooter accounting nerd, okay, like me, who having a skill set that looks at books and records. You can do a search warrant, and the DEA look at a bank statement going, oh, my God, it's a bank statement, leave it alone. they're looking for drugs. IRS, we see a bank statement going, oh, yeah, love it. It's a special love that you have for books and records and just putting a piece of

deposit together. Why did they send you to Alabama? When they sit there and say, hey, congratulations, you're being hired, pick which city and state you want. There's positions available. Mine was number six, Alabama. And for some reason, they messed up my paperwork. So I got number one and number two in my category or my pick, I got Alabama.

It's like, I'll take it, you know. Because to get a federal job is like huge. You spent years trying to go through the process and the background. So there's no way I'm a debate over, well, I want Alabama. I want some other state. No, thank you very much for the job. Where do you want me to go? And so I was there for five years and then moved back to North Carolina.

What did your dad think about you joining the IRS? Was it kind of like the enemy in a way? No, he loved it. He actually loved the idea. He says because of that experience, you will be a commodity even when you get out. So you know exactly how the sausage is made. You know exactly how things are working. And he's very, very true.

With this skill set I have today, I deal with people constantly who have problems with the IRS, whether criminally or civilly. And I know how things work. I know the processes and everything else. And that's why I get paid. Good money is because you understand who to call, what they can cannot do, what the pressures that the IRS employees are under. So if you understand all that, you can kind of navigate the waters trying to get your client the best deal possible. It's like prosecutors who become self-defense attorneys.

Exactly. Same concept, right. You want a defense attorney that maybe was a federal prosecutor because they understand exactly how things work and shouldn't work. Now, when you're stationed in Alabama, are you just focusing on federal cases in Alabama or could you be attached to other cases in the United States? Good question. It's really an efficiency issue. Typically, you will have a case in Alabama. You work in Alabama because the federal prosecutors are in Alabama. You do interviews in Alabama. You're doing with. Could I do a case in Chicago? Probably. But why? If Chicago can do a, you know, they're not going to fly. I'm in Chicago the whole time to do interviews. They're going to have the local agents do it. Now, there are times where you have to fly out or travel out because it's an important interview.

We're called key witness interview. You have to do that. But for the most part, I'd say 90, 95% of your time is really in your same local area. What kind of cases did you start out working on? Identity theft was one of them in what they call false tax returns or false claims. My first case was a lady who was getting IDs that were true IDs but under false pretenses. So she'd find some homeless people, pay them money, and then she would turn right around and get them to get a temporary driver's license, which in Alabama was very, very easy, unfortunately. The temporary driver's license looked like a construction paper.

I mean, it was so easy to, it was so easy to create it's pitiful. It really was at that time. and she would go in there and get their birth certificate. Somebody else's a birth certificate, say, I'm so-and-so, and then she would use that and then type up a false W-2 that had low wages and high withholdings. So then she'd go to the H&R Block or Jackson Hewitt and say, this is so-and-so, he has a return,

he can't talk very well, and she'd do all the talking. And she would end up getting a large refund sent to her PO box. So when I was going through all this stuff, I was finding, oh, this driver's license looks like this one. It's a fraudulent driver's license in some cases. Some cases it was really used. Anyway, I just did that case, and then ultimately did a search warrant. Found the old ribbon.

If you know what typewriters, you have a ribbon on it. Found the ribbon that she was used to type of the false W-2s on. And then we can look at the ribbon and say, okay, she actually typed this because it goes backwards. You can sit there and say, this ribbon can be tied to this W-2. So you can put more evidence together to figure out exactly she was the culprit. I had other evidence, but there's one piece of the puzzle that said that she was doing all this stuff. How did a case like that come across the IRS desk? There's something called a funny box in the IRS.

When they have service centers, which is just huge buildings around the United States. You send your return to. Now most of it's electronic. You have sent two. And then there was something in the box, and they're like, this doesn't look right. And so they put it what they call it the funny box. And then there are times where that funny box somehow gets to Alabama going, okay, there's some weird stuff going on. Some of us data mining.

For example, if all the refunds are going through the same PO box, that's weird. There shouldn't be 100 tax return refunds going to the same PO box. So you can do it that way. I think that case came from data mining and or the funny box. But anyways, that's kind of how it started because a lot of money is going to the PO box. And when you start looking up backwards to PO box, give me all the returns going to this PO box, 1, 2, 3. And you get a list. Oh, okay.

And then you start going down that list and saying, okay, I got to be this person, this person, who prepared this return, pulled that return, and start following the leads. What do you think is the most common funny box item that appears? That's an instant flag. There are what they call tax protesters. We're not allowed to call them tax protesters to the IRS. We're called them constitutionally challenged. They'll sit there and say, I have this Social Security straw man. You're holding my money.

I want a million dollar refund. And sometimes the IRS will actually approve it. And some guy gets a million dollar check or a deposit. It was ridiculous. But those go into the funny box. And that's technically a crime to try to get money out of the IRS that you never were owed to begin with. But you bombard the IRS enough, they'll give it a money. And then the IRS has to go chase it after it.

But a lot of times those are in the funny boxes are those tax protesters. And they just bombard the system. So what are they just putting a huge loss to get a refund? Yes. Wow. Well, they just sit there and say 1099, if you know what 1099 is, right? I get a 1099. Oh, by the way, I made a million dollars.

It was 1099, but I had $800,000 withheld as 1099. I want my money back. Oh, they're saying that they was withheld for taxes. Yes, I want my money back. And the IRS sometimes is so dumb that they actually issue the money. There's people, if you Google this, there's people out there. Now, they went to prison, by the way. but there's people out there that do this stuff.

And they only have to hit the lottery one time, but they'll bombard the system. And all of a sudden, then the IRS CI has to go find these people and prosecute them. And the money's gone. I mean, they spend it on tattoos and big screen TVs, usually, you know. They just waste it. And how much time will a person like that usually do? It depends on the circumstances. Usually judges have a very low tolerance of people who do something.

this, it'd be a couple years easily, because it's based upon what you tried to get, not necessarily what you got. So if you bombard the system, let's say, for a million dollars, but you only end up getting $50,000, the judge typically will sit there and say, a million dollars is what you tried to get, so they'll put you at a million dollar level versus a $50,000 level. You may owe the IRS 50 grand, but you're going to go to prison for this. It's sort of like robbing the bank. Yeah, you tried to get a lot of money, but you only got X. Now, there's probably a lot more safeguards in place for this now than there was back in the 90s.

You would think. There's not. Never underestimate the IRS's ability to screw things up. That's all I'll tell you. And then act like the victim. Now, how long do they have to prosecute you? Is it just five years? Or how does it work?

Tax crimes are six years, technically. So someone could, if they make it the whole six years, they're safe. in the clear. Yes. The statute of limitations is six years on a tax crime. But if it's a conspiracy,

conspiracies on two and more people to get together to do this type of thing, a conspiracy would be five years after the last bad thing you did.

So you could do this for six years and all of a sudden stop and then all of a sudden now six years after that when you quit doing it. So, yeah,

it's six years or five, excuse me, five years on conspiracy, six years on tax crime. Now, what about the people that actually do make the money but then lie about how much they made in that regard to filing a false tax return? Well, there's a lot of them out there. In particular, there are small business owners. Rarely is it the W... It's kind of hard to hide money in their W-2 employee working at Whole Foods or Lowe's hardware or anywhere else, right?

You made $30,000 a year. It's kind of hard to really cheat on taxes that are worth people's time. Usually it's the small business owner who has a couple employees, the contractor, they're notorious for it. They are the ones that are hiding their income, whether through not reporting all their income, sales, or deducting things they shouldn't be deducting like their trip to Disney World or the kids' private school tuition or the wife may have a shopping problem and they just deduct every Victoria's Secret corporate credit card. in office supplies or you won't call it. That's how they get themselves in trouble. And how did those people come on your radar? Good question.

The IRS Special Agent is evaluated based upon his ability to find these cases. So it just pins on your ability to find them. I've done things such as read newspaper articles. I've done things such as data mining. I give an example. Do you know what the earn income tax credit is? Yeah, is that the one based on how much money you make you can? Yes, if you're too poor and you're a way called working poor,

the IRS will give you money for just, forget about money you put in the system. They'll give you money for being the working poor. Congress allows it. They do it. But if I went to the most expensive zip codes in this state, and I said, that of mine for me, all the zip codes, this expensive zip code, and every single person in the most expensive zip code is getting the earn income tax credit, right? That's claiming to make $30,000, which is very, very rare, right? Give me a list of all those.

I can get a pretty good list. That net is so small, that net is wide enough, but I'm catching the potential tax evaders in that net. and it makes my list a lot easier to go through. And if someone gets an earn-income tax credit for one year, no big deal. If they're getting it for four or five years, they live in a million-dollar house, and then you realize that they're a construction owner or a small-business owner, now we're on to something.

No one can have that lifestyle compared to what we're reporting to the IRS. That's an easy one to find. I've actually done how many houses were purchased in a county or counties that were over a million dollars. And this is back early in 2008, something like that, right? And got a list of all the houses that were purchased over a million dollars for a couple years. And then I had my staff say, okay, give me all the returns of these people who bought million-dollar houses and sort it from lowest income to highest income.

So all the lowest ones on the very top found someone who was a failure to file. Didn't file any tax returns. So it's zero. But yet lives in a million dollars. house and yet got a $700,000 mortgage, how can that be? It's making sense, right? And when you start, that's called a lead, I start investigating and finding out that she took money out of her retirement, became the administrator of her retirement, took a million

dollars out, whatever else it is, and then ultimately didn't pay taxes on it. So that was an easy catch. But that's how we get evaluated is to find these types of cases. Go into the federal prosecutor's office, many times they'll have us on board. I don't think most people understand the value that IRS criminal investigation has to the federal prosecutors is because if you've got someone with a psychology degree or someone with a CPA license on your team, let's assume you have an FBI agent because a psychology degree and you've got an IRS agent with a CPA license. Who do you want looking at the books and records?

The CPA guy. Because IRS does nothing but the white collar stuff. FBI can do bank robberies, kidnappers, child's porn, you know, terrorism, blah, blah, blah. They're fine agency. But if you really want to know the numbers, you want the accounting nerd. And behind almost every large financial white-collar crime, there is an IRS CI special agent behind the scenes. They don't get a lot of kudos, but they are there because the federal prosecutors know I want this person on my team. And it wasn't uncommon if there was a white-collar angle. And most everything's a white-collar angle. for me to be asked by the federal prosecutors to be on something.

So I didn't want to have to look for cases. Sometimes the cases found me just because the federal prosecutor will pick up the phone and say, I need some help. I got this drug dealer who's dealing drugs. We can't catch him with a leaf or a seed. But he lives in a million-dollar house. We know this, this and this. What can you do for me?

I pull the tax return. We've got a tax case. Just like Al Capone, right? And so now we're taking down a drug dealer, not the street person on the corner, but the main person getting the stuff and selling it, or at least distributing it, we're getting him based upon the tax crimes, not based upon the drug and the meth or whatever else he's slinging. Now, in your experience, do you find that the drug dealers or even the white collar criminals that are, say, stealing money? Do they report that accurately on a tax return? No. Does that make this great

Yeah No drug did or reports all his income Except I had one or I had that one They reported enough to where it was It looked reasonable But when dug down a little deeper There were so much cash coming in

That there's no way that this is legit income They would claim it as Rental income on a house Or how it is But then you He had real houses But he was growing marijuana in it So where are the renters?

And why all the renters paying cash? And while the renter is paying, you know, not paying utility bill, but he is. And so you start putting any pieces of the puzzle together and say, this is a front for a money laundering drug business, not necessarily a real rental house business, you know, rental real estate empire. Now, when you get a lead like the woman you were just describing, how do you know whether to take it civilly or criminally? Good question. There's a couple of variables and all that.

One is in particular a pattern of years. IRS CI is not interested in prosecuting a case that's not going to go to prison. It's bad publicity. Ladies and gentlemen, you get in a newspaper, there's a press release, so-and-so committed tax evasion and got zero time in prison. That's not a press release. They won't. So they know in general what the judges are looking for and what a judge.

jury is going to bite on. That's the ones that get our attention. So when we evaluate a case civilly or criminally, I look at it going, is a judge and a jury going to want this type of case in front of them? Could someone still money, could someone commit tax evasion? And the money went to the three girlfriends, the private school tuition, the nice cars, the fancy vacations. A jury's won't eat that up going, yeah, this person should go to prison, right? It's called disposition of funds. Where did the money go to? If it didn't go to the IRS, where do the money go to? That's an easy case. What makes it difficult is that put this person in prison because, yeah, they committed a tax evasion, but the money went to pay for the mother-in-law's brain surgery or brain cancer treatment.

No jury's going to want to do that. Same level of crime, but the disposition was different. So you have to look at what a jury is going to want to sink their teeth in because you don't want to take something to trial and then find out and say not guilty just because there's a lot of sympathy for the person, right? So you've got to look at that. You've got to look at the health. You've got to look at the age. You've got to look at the patterns.

Was this a one-year mistake or this is a 10-year mistake? Ten-year mistakes are easy. One-year mistake? No, we're not doing that. So you have to weed some of these things out. What I'm really looking for is whether or not, if someone read the newspaper and looked at this article, did they sit there and say,

yeah, that person should go to prison. Those are the cases that I wanted. There's times where I sit there and discontinued a case just because it just wasn't there. You know, there's too many variables and it's just not worth the headache. Number one or number two is, it's a 50-50, you know, the guy's really guilty, but is it really that guilty? I mean, there's other people over here I can go after, right?

And so I like to compare it to stopping a car. Is 56 and a 55 still, you know, worthy of a ticket? Yes. Okay. Do cops stop you for 56 and a 55? No. What we're looking for is the one doing 75 and a 55, we even in and out of traffic. we even in out of traffic, throwing beer cans out of the window,

that one's going to get stopped. And that's what CS, RSCIs looking for are those most egregious ones to where it needs to be stopped. And society would say, yes, that's the right thing to do. I have to admit something. For someone who interviews fraud investigators, IRS agents, detectives,

and former scammers all the time, I almost got got. I got one of those text messages saying I had an unpaid toll and needed to pay it immediately. At first, I laughed, then I clicked it, then I thought, wait, did I actually drive through a toll somewhere? For about 45 seconds, I completely talked myself into believing it. Right before I was about to send money,

I stopped and thought, Ian, what are you doing? That's the thing about scams. They don't always catch people who aren't paying attention. They catch people when they're busy, distracted, or in a hurry. That's why I appreciate the security features built in to Cash App. When you get the Cash App card, not only do you get access to a ton of perks and benefits like exclusive early access to nationwide concert pre-sales or discounts on popular brands, but you also have extra security with the power to instantly lock or unlock your card right

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by Sutton Bank, member FDIC, and the BandCorp Bank, N.A. Pursuant to a license from Visa, USA, Inc. See terms and conditions for the Sutton Prepaid Card, Sutton Debit Flex Card, and Band Corp Debit Flex card. Discounts and promotions provide provided by Cash app, a Block Incorporated brand, visit cache.com. slash legal slash podcast for full disclosures. Now, does it also go off a dollar amount too? It does. Dollar amounts drive the train.

There is something called what they call the Sentencing Commission. Every federal judge knows this. A bunch of federal judges and politicians to get together. And every year, I think every year, they get together and say, what does this crime with this amount of money, how much should, should that person spend in prison. It makes sense because you don't want to judge in New York having a million dollar loss, think differently than a judge in L.A. or the judge in Des Moines, Iowa, you want them to probably on the same page. So in a sense, everybody should get the same

type of punishment for the same type of crime no matter where you are in the United States. It's not perfect. But there is a book, and any defense attorney will look at this book and say, what's the loss, here is the formula, and here is the range of time that probably can be expected. We know as federal agents what that is, and the numbers change slightly every year, but for the most part, we know that this amount of loss will generate active prison time, which is hence what I talked about. You want something with good publicity. So you know this $500,000, $1 million loss is going to get someone in prison time.

this $50,000 loss, no. It doesn't meet the formula. No. Oh, gone, yeah. No, it doesn't mean that we can't do the small losses. Some people need to go to prison no matter, or at least need to be smacked ethically because the mayor, they're taking bribes. $50,000 loss will take it every time because it's a person of trust, right?

You got to take this person down. But for the average plumber, construction worker, dentist, 50,000, no, we're not doing that. What's the most common business? Is it restaurants that are audited? Restaurants are notorious for keeping second set of books. That happens. Things are being more and more less cash.

Cash is easy to deal with. Things are more and more credit cards. And so there's less cash in the system and more credit cards. So it's kind of harder to steal money in restaurants when things are just more credit card-oriented than cash back in the day. Now it's getting more and more credit card, debit cards. The most notorious ones I know are construction.

Those individuals that are construction business, remodeling business, building houses, those are the ones that are notorious for the stuff for whatever reason. They just are. The construction trades business, huge. It can't be the dentist every now and in. it can be the chiropractor who was taking the co-pays, putting in one account,

and the insurance pays in the other. But that's easy to find, you know, because co-pays are $30, $40, $50, depending on what it is. Now, with contractors, what are they just saying to the client, give me cash for this job and then? It's that, or they will do, they'll go out there and do a job, and someone pays them in check, and they take the check and go down and cash it. pretty simple. It's not necessarily green stuff, but they get a check and they'll just, they'll just negotiate it and then take the money. And they'll keep it off their books.

They'll be off the books, right. Or they will, here's always a good one, they'll build themselves a house. So you have all these lumber charges? But how do you know which two by four went to the remodeling business or went to the personal house? You really don't know. You just don't. And so, you know, they build their house, frankly, expensing it all. Because you don't know where the two by four went. So how do you investigate a case like that? How do you even prove that? You would have to go to the foreman and say, okay, who bought this two by four and where did it go in a sense?

Oh, where did Home Depot or the lumber company deliver it? If they delivered it to the house, probably that. if they deliver it to the site where the remodeling business is going on, it's probably remodeling. It's tricky because you've got to get more interviews done to figure out who did what. I worked on a case where a banker was building branches, bank branches, but some of the labor actually went to build his personal Taj Mahal, right? So the bank branches never got built, but he had this huge house.

But all the books and records in the bank showed that it was going to, the branches would never die, but the Taj Mahal, in a sense the Taj Mahal was built. And he was convicted of bank fraud. I had a little tangent and, you know, part of it. But that's kind of how this stuff works, is that you get the conjure, you get the person who put in the plumbing. Where did you put in the plumbing? I put it in his house.

All right. But you traced a plumbing. It says, oh, it went to branch ed. and the brand j is still a piece of dirt you know so something i still don't understand too is the high profile people like the celebrities the actors the the sports um players that just don't file you know for two three four years you look at like mike the situation didn't file on two or three million dollars and then eventually got convicted uh why is that why do you why do you think that is why do you think adults are walking around not filing tax returns or why do you think irs picks on

I wouldn't say pick on it if it's that egregious, so I guess why don't they file? And they know that money's documented. If a production company pays, there's probably a 1099 issued. Right. Well, some of us greed, some of us stupidity. Frankly, some of it is they didn't probably do it beforehand and they're not going to do it afterwards. Money doesn't really change people, in my opinion. Money just reveals people. If you're a critical, with $100,000, you'll be a crook with $100 million. If you're an honest person with $100,000, you'll be an honest person with $100 million. So typically these character traits are the same no matter how much money they make. So they probably were a failure to file, in my opinion, more than likely before they even made the money. Now when they made money, the lifestyle goes up called lifestyle creep, and all of a sudden,

eh, you would think anybody with that comment with that much amount of money would be, want to be in compliance because you don't want to be on the radar screen. So, you know, it's what people do, unfortunately. And I don't understand why either, why adults are not paying or not filing tax returns. There's a whole world out there. I think the government estimated $600 billion or $800 billion of monies out there that's not being reported. It's called the tax gap.

AP. What's reported and what should be reported, he estimates it's in the billions. It just happens. Now, what kind of individuals are these? Are these just, you know, labor, every day nine to five laborers? Or are they business owners? More than likely, they're not W2, because W2 already have your money taken out of your paycheck. When you work for, you know, your employer, the money's already out, you know, is already taken out. So the government's not really a victim in all that. It's the small business owners. That's where they get it. or the cryptocurrency people who are buying and selling and not paying the taxes on it, that's a huge issue. But most of it is self-employed business owners, whether it has one employee or 100 employees that's using the main ones. Now, say you take 100 business owners, small business owners, how many of them do you think are actually 100% honest on their taxes?

To the letter of the law? Probably none of them. they like to think that they are, there's some wiggle room. I mean, come on. It's like, you know, when you go out to eat, is it really a business meal or not a business meal? I mean, it happens. You know, there's a lot of gray area in the tax law. Pay your kids, for example. You can pay your kids to do work for you.

Well, is it really the fair market value of the services? Can a six-month-old really make $10,000 a year? You know, well, I'm going to put his face on my business. card and getting paid them $10,000, you probably can't get that. It's not a fair market value. It probably is not, right? But they'll put it. They'll do it. And the IRS comes in audits them and smacks them around a little bit going, this is not a fair market value trick change. And the kids maybe worth $1,000, not $10,000. So there's a $9,000 difference. Pay the tax on $9,000. It happens. You know, it just does. So a case like that is a civil case?

It'll be a civil case. It's low loss, right? And it's just a gray area in life that it's not worthy of prosecution. Now, speaking of gray areas, what about new jobs that have been created, you know, since, say, you working with the IRS back when you first started or even when the tax code came to be, look at influencers, for example. That's a whole new realm of a job. Influencers are a different breed, okay? They are, I can tell you what the civil tax code says. It's probably not going to rise to criminal. Civil tax code is, and this is really interesting about the tax law,

if I'm an influencer and I sit there and say, hey, you in the, in Fiji, the hotel of Fiji, if you give me a free room, I'll put it on my YouTube channel in the Fiji hotel, go, sure, why not? It's a free room. They're supposed to report that as income on their tax return, whatever the fair market value is. So imagine going to Fiji doing your video. You pay for your airplane ticket, right? You get a free Fiji hotel thing and say it's $1,000 a night, and you spend two nights there. You're supposed to put on a return two grand of income because you've got benefit of two grand. You're supposed to do this. This is what the tax law says. Now you've got to pay tax on two grand. You haven't made squat yet, but you're supposed to pay tax on two grand. You haven't made squat yet, but you're you're supposed to do this. You're a benefit of two grand. But you're you're you're getting a bill for something for staying in a hotel room. It is bizarreo, but that's what the

tax law says. So how does that work with casinos that are comping hotels to say a player? Comping is one thing, is where you're still doing a, you're getting something out of it, but you're putting money into the system. So comps, no, sort of like credit card rewards. You know, that's, that's not taxable too. But if you're exchanging a service, which is free video, for what with this hotel, there's a, there's exchange, you know, free advertising, hotel. It's, it's, and they wouldn't give you a free hotel room except for your offering to do a spot on your video. Now that hotel is probably also writing off that room too. Well, there's an expense already, yeah, exactly, there's an expense already incurred on it. The, the maids took up to clean the room,

and so it's an expense no matter what happens, who never, whoever, he's in there is an expense associated with. There's overhead just for having that room, forget about it being by stated or not. So yeah, they're already going to expense that out. That's no big deal. It's the influencer received a benefit, and that benefit does have a tax number with it. Now, what if the influencer billed the hotel for the service, but still got a free room too? Do they still have to report that room? Now you're getting to the realm of, I don't want to give tax advice to, you know, I'm not going to be a TikTok influence here give tax advice regarding all that.

I don't know the full answer to that. Part of me would say it's part of the service. It's built into my... So I bill you, let's say I bill you $2,000 to do this video and you happen to comp me a room. Don't take this as tax advice, folks. But most likely, it'd be fine. That $2,000 of the room being free is just part of the $2,000 of...

excuse me, let's make it three grand. You charge someone for three grand, and you got a $2,000 room out of it, right? The three grand, I would report it's three grand as income and be done with it. I wouldn't report five grand as income, no. So now this is a great segue into ignorance because the average influencer probably has no idea about what you just said as an actual law. Yes. Now, say they get audited or criminally charged or investigate, and they said they didn't know what happens. There's two issues.

Number one, civilly, they're going to get their rear-ins kicked, okay? Because an auditor will look at that going, well, too bad, too sad, whether you knew or didn't know, here's your tax bill. Okay? That's one thing. From a criminal standpoint, there has been an element of willfulness. Did you know for sure that this was illegal? That's different. And most people don't know it's illegal.

So there has to be what they call criminal intent or willfulness. You knew what was right and you didn't do it. That would be the criminal issue. Here's an example. Let's assume that they were audited and they got smacked around a little bit. You can't do this. But they continually doing it. And then CI potentially could come in and go, wait a minute,

you were told three years ago to stop doing this and you continue to do this, you knew better now. That adds more to the way. of should they be criminally prosecuted or not. I haven't seen an influencer yet abused the tax law and still be prosecuted. I don't know the Christie's who had a YouTube channel. I had them on the show too.

Yeah, the Christie's. I know they had a bank fraud issue going on too with an extra element to it, not just misunderstanding tax law. And there's some other issues of the CPA and the conversation. So there's more to that story. than just the YouTuber walking around with a camera trying to just fly around the world and enjoy trips for free. Yeah, I don't think we've seen, if any, any YouTubers, you know, really, like, audited publicly, I'm sure maybe privately, but on a criminal aspect yet.

I haven't seen it yet, but it'd be interesting to see it. The only person close to that would be an influencer was the guy who did the Survivor. Richard. Richard Hatch. Right. He got busted for receiving some income and he didn't report on his return. That was one of those issues. And what really got him, I think, if you look at the indictment, was he went to a CP, I think his return preparer.

And according to the indictment, he went to a return preparer and said, what's my tax bill? They gave him a tax bill. I don't want to pay that. What about if I didn't have that income? Well, here's your other tax. So he had two tax returns. One with the income, one with the income, one without income. And he filed the one without the income.

I mean, so that one's kind of easy. It's like you went to a tax professional, got the right answer, and you wanted the wrong answer, so you used the wrong answer instead. So now what happens to the tax preparer in that situation? Are they responsible or do they, are they responsible for reporting if their client is doing something fishy? No, they're not. Ethically, they're supposed to do what they call due diligence, ask more questions, and they can always sit there and say not going to prepare to return. but return prepares have a standard in which to be criminally prosecuted, they have to be in on it.

Being a stupid return preparer is not a crime. There's lots of stupid return preparers out there. There's a lot of them out there. So being stupid is not a crime. Being complicit, receiving information knowing it's not true or putting down in false information, that is a crime. Now, we go into the willfulness fact. Was it for that one client at one time? They probably won't prosecute that.

If they do it for every single client coming in the door? Oh, absolutely. I've had return preparers that would put charitable contributions on their client's tax returns. And you got 10% of your income was charitable contributions. Whether you gave it or not, they just put down 10%. They know what they're doing. you know, so yeah, you have to put that return preparer in jail. Now, what is the preparer benefit from?

Are they getting a kickback of the return? More business? Yeah, because you get a client as happy. Man, I got a large refund. Who do they do? They go tell the next door neighbor. Man, this person over here is pretty good. They give you a large refund.

Really? And so you just get more business. Now, there's a difference between tax preparers and actual CPAs or accountants. They're all return preparers. return preparers are one of the very few industries out there where you can walk up tomorrow, wake up tomorrow, and say, I want to be a return preparer, and the government says, okay, there's no license needed. Now there's maybe one or two states like Oregon.

I think you had to be licensed. But for real, they don't have to have license. And then you have all the way up to tax attorneys. I mean, so there's a huge knowledge gap between, you know, waking up the day and say, I want to be return prepare. And then, you know, some guys spending six years, 20 years, life trying to understand the tax law. But the IRS says anybody can be a return preparer. Now, what happens if the preparer makes a mistake? Are you criminally prosecuting the individual

that gave the preparer that information? No, the return prepare, the question is, did they know? That's the question. Did they know this thing was false when they prepared it? Most of them are suspicious, but they don't know it's false. And once again, we go into the willfulness issue of did this return prepare do this quote unquote mistake every single time or was it a one-time deal did other clients get this quote-unquote same mistake right so mistakes are not a crime transposing a nine to a six and verse versa you're not going to go to prison for that that's not how this works but there has to be an element of you knew what was right and you did it you did it over and over and over again the wrong thing

to the point where even the dollar amount makes the government look at you going really, we probably can't even put stop of that. Once again, 75 and a 55. We've got to put a stop to this, not a 56 and the 55. So they have to pick and choose. There are some neighborhoods I can go into and spend my whole career going up to bad return repairs because they put in false schedule C businesses in order to get the earn income tax credit. they'd put in fuel credits, you know, downtown Charlotte.

How many people coming out of this, you know, this return preparer's office gets the fuel credit for tractors? It should be zero. Now, in mid-America, you know, farmland, probably more realistic. But everybody out of downtown Charlotte's got a, you know, fuel credit, probably false. but there are whole industries of return preparers, seriously, that do nothing prepare false tax return on a massive basis to where they have to be stopped. And people don't like hearing this,

but the earned income tax credit is one of the most abused systems in the internal revenue code because it's called the working poor. And what the return preparer will do is try to get you down to that bail curve where you're in that spot where you're getting money back, even though you're putting money into the system. They do it all the time. And it's unfortunate, but Congress allows this tax law for the sake of being kind to the poor. Okay, fine. But it gets abused consistently in certain neighborhoods.

Even baby mamas. You know, you got a child. oh, you got three kids. If you give me one of the kids' dependents' name, I'll put it over here, and it's like, I'll pay you $500 for your kids, so they put it on the returns. You get a return repairs that

literally, they pull out a list going, hey, for $1,000, I can get you a $3,000 refill because they've got this kid's name into they bought, and they'll put it on return. And it's like constant. I've done search warrants if I see the list of all the return per, all the kids, all the false dependents. They'll go to home

shelters, paid $25 to a homeless guy for their ID, right, and sit there and use that thing over and over and over again as a disabled kid. The IRS has no idea. So now when you criminally bust one of these tax preparer offices, do you then refer all of their clients to get civilly pursued? You can, more than likely, we don't care. As a criminal investigator, my job is to put that person in prison, the civil side, they're going to do whatever they're going to do. I have no idea what the civil side does once I'm done with the criminal issues. There are some cases where I can disclose information to the civil side.

There are other times I cannot. It depends on a certain type of case. But for the most part, I have no idea what happens to them. Sometimes they get audited before I touch them as a criminal. investigator, sometimes the taxpayer never gets caught. It just depends. There's only so many people that can work audits in the IRS. So when you have all these bad things going on and you only have a handful of people doing this, there's a lot of people that just get away with it, unfortunately. When do you let your subject know that they're being investigated? Good question. It depends.

there are times where I think they should not be told what they call covert. We'll be covert about things. Do surveillance. We will do some interviews covertly. We'll get more bank documents to see what's there before we start letting them know. Sometimes you let them know during a search warrant.

Boom, search warrant, you're under investigation. Okay. Do I need to do a search warrant in the house with the business? that's one of the things I look at as an agent. Where's the evidence at? And is the element of surprise needed? Other times I can do a... I may interview the subject within the first week

and say, hey, we got a problem. Contractor, right? Hey, dude, we got a problem. You live in a million-dollar house and make $30,000 a year. Can you please explain to me why is this going on? Before you say anything, you have the right to remain silent. I mean, you have to do these types of things, right? And a lot of times they'll shut up.

Sometimes they'll try to lie themselves out of it. It never works. I've been doing this for years and years and years and years. But it depends on the case. Do I need to be covert for a little while? It's unfair to the taxpayer to be under investigation for a long period of time, in my opinion, and not go over it. Let them know.

That's just me. You know, I try to let them know as soon as possible, but I have a job to do. If I have to be secret about it for a little while, I'll be secret about it for a little while. Do you ever have to go physically undercover, pretend you're someone you're not? I never went undercover as a person. Did I lie to people? Yes. But never to the subject.

If I am sitting there doing surveillance and the little old lady walking the dog going, hey, who are you? The meter reader. I mean, you know, okay, whatever, right? Go on. That's not really an undercover. But you just get out of my face. I'm working, but I can't tell you why I'm working. That's not really undercover.

Undercover agents are trained particularly or specialized. So you get into this undercover what they call cadre. And you're trained as a special agent to what entrapment looks like. You get a false ID. You get what they call backstopped. Yeah. In some cases, you get a special agent. defaults apart you get an apartment that in a car i mean there's a whole slew of things going from

you do this a little bit or you do this full time i never was an undercover agent um but when there's an undercover operation going on there's what they call an undercover team and part of that team is listening to the undercover operation in case something bad happens we're going to come in and knock that door down and save the undercover agent that's one of the things we do is the protection of the undercover agent is paramount. So if there is an undercover operation where somebody's walking into a business or walking into a junkyard or whatever they're walking into, there's going to be a team of agents already surrounded that people don't know, that if the crap hits the fan, they're coming in

and they're going to save the undercover agent. I haven't had a situation where we needed to, but we train for it consistently just in case. it's part of the job. And so there's a lot of times I'm sitting in a surveillance van or wherever else two blocks away, listening to the conversation. If someone says, help, we're going in guns-blazing type of thing, you know. But we've been trained to do that, is to extract that agent out. Because no undercover operations worth an agent's life, you know, no piece of paper is.

And so no, never been an undercover agent, but been on plenty of undercover operations, led the undercover operations, had my cases as part of undercover operations, but never was actually the guy wired up sitting across, you know, from the mob shit guy, you know, having this conversation. Nope. I don't, I'm not very good at it. Because in some situations, you have to be a little bit shady. You have to lie well. If you took me to a strip bar and said, act like you know what you're doing. I wouldn't know what I'm doing. But there are some agents that are sitting and say, man, they feel like home.

You know, they're okay with this. They're relaxed. I wouldn't have a clue. So you want that guy, right? To be that snarky little, quote unquote, drug dealer or money laundering who can go into places, act like they do and fit the part. I don't fit the part. I'm a short redneck guy, you know, from North Carolina. You take me to Korea town in New York and say, do an undercover operation.

I'd stick out like a sore thumb, right? You want a Korean agent to do the undercover operation who can fit the profile, who feels comfortable in that area that you're putting them into, if that makes sense. Because they've got to fit the profile. And I just don't. And I was asked to, you know, some people can curse every other word and be okay with it. Not me. I'm too much of a nerd.

Now, you mentioned when you met with suspects, they would try to lie their way out of it. What was the most common ones that you would hear? I didn't know, or it's only one time, or I don't know what you're talking about, or they would say, that's not really true. I let them lie to me for a little bit, but I'm not going to sit there and be lied to for three straight hours. If my case rises and falls based upon me getting a confession out of this person, I don't have a case. the numbers will tell itself. Where the money went to and where the money came from

is going to tell the story. I really don't need their confession. It's helpful. But frankly, it's 5% of my problem. 95% of my problem is getting all the money coming from and where it's going to. I'm just interviewing them, frankly, to check the box. And so in most of my cases, I'll read them the rights.

Hey, I'm sorry to bother you. There seems to be some problems with your tax returns. You know, you know, can you mind if I talk? but first of all, let me read your rights. You know. And by the way, Mr. taxpayer, this is a criminal investigation. Okay? I ask a couple questions, and I'm sorry to bother you.

However, don't think about lying to me. If you think about lying to me, just tell me to go pound sand. I'm here to listen to you, but don't waste my time. And most of them want to turn and they'll try to lie themselves out of it. And I'll catch them. I'm like, I'm done. You're lying. me and I walk out the door. I'm not writing a 15-page memo, going back to the office,

write all the lies, because it's irrelevant. They're not going to prosecute. Federal prosecutors are not going to prosecute lying to a federal agent with that. It's expected. The judges understand this is the game, right? What's really going to carry the water at the end of the day is going to be showing the spreadsheet. Ladies and gentlemen, jury, he got this money here and spent it over here. That's going to be the case. It's not about, well, he was interviewed. he lied. So what? Now, how often are you able to actually recover their second set of books or the cookbooks, the ones that are hidden, say from like a restaurant or a cash business that are illegally, you know, running that operation? I can tell you the biggest source, the pissed off

partner, the wife or the girlfriend, they know and they'll rat you out in a heartbeat. Those are the One, they're sitting there's got a second set of books right here because they're mad. They'll come into the IRS office going, I hate my husband to the point where he's an ex. He won't pay me child support. And by the way, here's the second set of books. Where did you get it from? I stole it from the business. Okay.

I mean, we can take it. We'll take it and we'll use it. Pissed off spouses are the worst. They're the best informants. So with that, well, you just automatically pull up their tax return and compare that to that. And then you want a case? I will interview the pissed off girlfriend and sit there and say, okay, tell me a story. Well, he does this, this, this, this.

They'll tell you everything. What about employees? Do you get a lot of complaints from employees? Employees, not really. No, it's always the ticked-off girlfriend or a spouse. It's never a guy going, I hate my wife. It's always the girl going, I hate him. He cheated on me.

Whatever it is, whatever reason is. And they'll bring in the goods. Now, when the state investigates an issue, do they always refer it to the feds? because there might be a federal tax issue going on? Sometimes it depends. The state sometimes turns things over to the feds just because there may be an interstate nexus to where maybe it's Connecticut, New York,

in Maine it's involved. Well, they can only do locally in their county or in the state. And maybe it's bigger than this. So they'll probably talk to the federal prosecutor to see whether or not this is something they want to take. I've had a couple of cases. like that.

Or the state started it and brought it because it was bigger than what they can handle from a jurisdiction standpoint. But most of the states, they do okay job. They're not classically trained like a federal agent, honestly. Not throwing any shade on them. But you can't have a street cop become a detective, right? Street cop has got a criminal justice degree out of some cops. or community college, right?

And then all of a sudden, turn them into a white collar crime guy. They can do the bad checks and the unauthorized credit cards. But when it starts getting into the millions and surveillance and, you know, all that stuff involved and getting money and tracing, it needs to go to the feds because this is where we're classically trained at is for those big cases. And I'm not throwing any shade on the local detectives. They have to do their job. But when it gets too big, you've got to bring in bigger guns who have better resources.

The IRS CI only does probably three cases a year per agent. Your detective is probably doing 50 in a, you know, 50, balancing 50 cases all at one time, right? Federal agents only doing a handful of cases. So we have to be selective. And it's a good thing. So on average, it takes about 18 months to two years to do a case federally. Wow. Yeah, because from a financial standpoint, we're talking about you, we popped you

with a bunch of drugs in the car. From a financial perspective, we have to figure out what's going on. We have to do surveillance potentially. We have to do some interviews. Then we've got to go find out where the bank records are at. Then we have to subpoena the bank records. Then we've got to analyze the bank records. Then we find out there's more records out there that need be gotten or subpoenaed.

So then we've got to get that. And then maybe overseas to a foreign bank account. Well, then I've got to get that. So as you start pulling the strings, you realize you don't have all information. So you're always pulling, pulling, pulling, pulling, until you've got a pretty good idea of a full grasp of everything. So it'll take about 18 months to two years just to get a case through. Now, when you're finding someone's bank accounts,

is that like a fishing expedition, like shooting subpoenas at different banks? Or how does that work? Or do you get a tip to know which bank they're just at? good question. The IRS is like a vacuum cleaner of financial information. W2 is going to the IRS. 1099 is go to the IRS, what they call F bars,

foreign bank accounts go to the IRS. People don't know this, but even foreign banks, like in saying Costa Rica or Swiss banks, turnover information to the IRS. So the IRS is collecting all this information on you. So the first thing I do is I pull up what do we know so far. Well, we know he got mortgage interest, right? That means he's got a mortgage. We know he's got a 1099 interest income on this

bank account and I just start, this is my lead sheet. So I start following those leads. And I got grab the money, where does money come from and go to? And start pulling that, start pulling that, start pulling that. So we start with what the IRS knows so far. There's also something called the suspicious activity reports. People don't know this either. But, but But the banks are one of the biggest informants financially. There is. They are required by federal law to report to the federal government any suspicious activity going on in their banks.

And if they don't, they get penalized. So they have to have a suspicious activity reporting group. So let's assume someone walks, I'll make up in a scenario. someone walks in with $12,000 in cash every single day, $12,000, $12,000, and it smells like marijuana. They are supposed to write this up, send it to the federal government into a database. So when I, as an agent, five years later, am looking at this defendant, or a potential defendant, I will look at him up in this database.

Has the banks reported him on any suspicious activity? And sometimes they have. That may be a bank account. I had no idea existed. So it's another lead. And I'll go down that rabbit hole. So just putting all the pieces of the puzzle together. I've actually had to do bank accounts.

I've actually had to do, I don't know what you call it, rosters, airplanes. I know that my subject's going from point A to point B. I know he probably has a girlfriend, but I don't know who she is. So someone flying from New York to Toronto I'll get that Who was on the airplane I also know he flew from New York to San Diego I'll get that roster

I'll get another one and I get another one And I figure out okay Who was on the same airplane each time Female so-and-so Found the girlfriend It's very rare for someone to be on the same plane Three different times with this guy right So more like this girlfriend

I finally found this missing piece and I'll start going down that rabbit trail. Maybe go interview her, especially if she's ticked off, that type of thing. So I look at pieces of the puzzle in order to find out who my witnesses could be. So I think I answered your question,

but you just have to think what I call outside the box. It's not just the flow into the money where it come from, where it went to. You have to figure out, are there any other pieces of the puzzle that would be a natural fit to this? I consider a natural fit. In some of it's training, some of it just being inquisitive about how to find people who know what you need to know who would be great witnesses against this defendant.

Do you find or did you find that people still believe that if you deposit under $10,000, they're safe from any unusual activity? I think our last guest, Brian Watts, and he called it tracking or it's tracking. payments, whatever the term. There's something called structuring. Structuring, that's what it is. Right, structuring. If someone, the banks in other institutions, even car dealerships, are required to report to the IRS anything that's cash over $10,000.

And some people go, I don't want the IRS anybody to know about that. So I'll pay them $9,999, so this will never happen. It's called structuring. It's illegal. The best bet is to pay that in cash. Here's the reason why. If you pay in cash, it gets thrown into this huge pile of other forms of paying in cash. It's no big deal.

But if you pay $9,999, the bank will write it up and all of a sudden now you're in this database as being suspicious versus just complying. Well, the suspicious list is a lot shorter than the compliance list. So you're on this naughty list in a sense, a potential naughty list. Just deposit the money, be done with it. How often do you see, say, a business paying another business in cash and one business writing off that expense and the other one not claiming it? Is that common? It's common in the payroll cashing business. It happens. It's out there. I didn't see it that much where one business was reporting, you know, was one cash to another. Typically, it's not a separate business, but a related business. So the owner owns two businesses. So he's doing one.

and move in the other place. I've seen that happen, but not two separate businesses who really just work together and have other customers. It's always related somehow, some way. What was a case that really surprised you that you worked on? I don't think anything really surprised me. I did work on a case where a little girl was murdered by her adopted parents, and we did a white collar case on it because,

according to the press release. I can talk about what's on the press release. She was claimant as dependent on a return in which she was already murdered and was still missing. So we used that as a jumping off point to help get some justice for a little girl. Her name was Erica Parsons.

And so we used a white collar issue to go after the atrocity. But there was no body. A lot of suspicious activity, but no body. This is the reason why the federal government came in, was to go after this because it was the right thing to do at this point in time. And then ultimately a year later, after both of them were convicted of white collar crimes, the adopted dad showed them where they buried the body.

And then a state later on came in and convicted them. They played guilty to murder charges. And I think one's in life, one's like 30. years, something like that. But because we use the white collar, particularly tax laws against these people, we could at least get some type of justice out of it. They end up getting, I think, six years and eight years in federal

prison for a minimal loss, like $30,000 loss. I mean, it's extremely small. But that was a special circumstance where if we did the federal government don't do anything about this, they probably won't get away with it. and the federal prosecutors and my agency and other agencies agreed that this was worthy of going after, the Al Capone type of thing. Can't get him on this, but we can get them on that. And so the judge, bless us all, he's still alive, great judge, he saw exactly what we're doing and why,

and put him in prison for like six or eight years federally on a 30,000, I mean, I don't know the exact number. but it's extremely, extremely small loss. But laid a hammer on him because he knew, and you read the transcript, it's great. Layed a hammer on him because he sat her and said, you did something with this little girl, and you're going to pay for it. Even though it's a white collar issue,

this is the reason why you're here. And ultimately, she now has got a proper burial and everything else. But that was one of the best cases, smallest loss I ever dealt with, but it was one of the most. warding cases because at least got some justice for a 13-year-old girl who was mentally handicapped and was just abused. That's like similar to the Alex Murdo murders.

They charged him federally for fraud or tax evasion. Yes, exactly. There is a hammer that we can use when it comes to tax law to go after people that deserve to be going after. And it's rare do it from this standpoint because of this, but we do do it. it, I say we as the federal government, and I'm retired now, of course, but we do it not all the time, but when you go into federal court, you want to use that privilege sparingly. If we go in there and say, Your Honor, it's a $30,000 loss. They're going to look at you going, it better be good. The judge may not say that, but subconsciously they're saying, all right,

This better be good because we only see hundreds and thousands of millions of dollars and you're doing 30. Why is this? And so you can't be bringing every $30,000 case into the system. Now, most of these cases that you bring against individuals for large dollar amounts, are you ever expecting them to repay it? The federal government expects everybody to repay it. But realistically. No, it's not going to happen. Especially with the interest in penalties.

Yeah. Yeah, as the federal, I will try to find the money if we can recuperate it. But at the end of the day, I know it's just part of their punishment, paying the restitution. I really don't care as a federal agent. It's not my job to worry about how this money is getting paid. We'll monitor it. We'll make sure that you're making $100 a month, $300 a month, whatever the judge determines. will monitor it for a little while to make sure you're still in compliance.

But for the most part, it is, we're done with the case, find something else. What's your take on restitution not being tax deductible? I have no opinion because I don't, have any thought about it. It's interesting that it's not. It is not. I guess if you should have, and I'm just throwing this out there, if a bank robber robs a bank, and gets a million dollars and then spends it and then has to pay it back, is it still should be tax deductible?

I don't know the answer to all this stuff. I just don't. I'm like, okay, you know, that's above my pay grade. I don't make those policies. Yeah. Yeah. No one's ever asked me that question and I haven't thought about it. I guess I think about it because I pay restitution.

Yeah. And it doesn't go against your income. Yeah, I understand that. And I don't have anything to say about that. What do you think was the most egregious way someone has tried to hide money or underreported it in your experience in cases you've investigated? The most egregious. The ones that I see would be using to hide the money. You're talking about you got your typical drug dealer. I use drug dealers all the time because they're like so prevalent. They put it in their girlfriend's name.

Like, ah, whatever. You know, it's just common or putting their mother-in-law's name or buy a car and put in the in the brother's name, that type of thing. That's just so typical. It's not really egregious.

I'm trying to think of most egregious way people have hide money. I really don't think. I do know this. when people try to hide their money from the IRS, the ones that are most sophisticated, stick it overseas, because it's very, very difficult to find it and get it once they hit overseas.

I do know that it's common, not saying it's smart, not even legal, that they'll earn some money, they'll put it overseas, and then they'll have a debit card or a credit card that is to the Cayman Islands, right? So you swipe your debit card, you go to local restaurant. You swipe your debit card and it's coming out of that Cayman Island account,

not out of your local bank account. So they're living a lavish lifestyle by hidden money, but they're still having access to it. That's difficult because you've got to find a receipt in the house and say, oh, what's this credit card? And you figure out it comes from here and trace is there. And some countries do not share information. Like the Cook Islands will not share information.

with the IRS. Good luck getting information from Russia right now because Russia and the United States are not happy with each other, right? And there was a time where they would share information. Nope, not now. So depending on how the political wins change, the country may cooperate and other countries may not. And what are you doing?

What are you going to do? It's very, very difficult to go after someone when there's no bank statements coming in because they've hit it somewhere and the country's not cooperating. How did PayPal, Venmo, cash app, all of those things change things in your career? They really haven't. They're just mechanisms. We understand that, excuse me, I was running.

We understand that they're just a financial institution. Transactions by themselves are not crimes. It's the purpose behind the transaction that becomes the crime. So Venmo may have point A to point B. Okay, why? That's what it comes down to. And then we've got to figure out why. Most people don't understand that when you work with a civil issue with the IRS,

when you're audited, if you receive income, the IRS is automatically going to say it's income to you. Right? The burden of proof is on the taxpayer to say it's not income. It flips in criminal court. In criminal court, you're innocent until proofs. proven guilty, and it has to be beyond a reasonable doubt. So I can't walk into there and say he got money from Venmo.

And was it an income? Was it a loan? Was it a gift? Well, I don't know, but he got something from Venmo. Prove it. What it was for. And that's what we have to do is prove beyond a reasonable doubt what's for. So I have to get someone on a witness stand going, this is what the money was for.

So those entities, you know, it's what it is. It's just like any of the bank. You just got to figure out what the money was for. Sometimes it becomes difficult. I had one case civilly. There's a lot of Venmo to the same person over and over and over and over and over and over and over again. And it was like $200 here, $250 there, like every other night. This must be a lady the night type of thing because, I mean,

And who's paying the same woman a couple hundred dollars every couple of days? And sure enough, you know, when you start devving into it, sure enough, he was just paying a hooker, you know, or a companionship. You don't call it. And that's where a lot of the money went to was quote-unquote companionship. How has money laundering changed over the course of your career? The laws haven't changed any. The money laundering laws have been the same since like 1986. I think it is, something like that.

It's been around for, I know, 30, 40 years now. The way they're doing it is different, depending on how you define money laundering. There is something called trade-based, you know what trade-based money laundering is? All right. Columbia, they make their cocaine. Well, I'll just make something up. Columbia tastes their cocaine. They ship it into the United States, right?

And the drug dealers sell it. They've got to send the money back to cocaine. Columbia. Well, how do they do that? They got a bunch of cash. They get a lot of $20 bills, $100 bills. How did they get this to Columbia? Well, they can put it on a plane somewhere, but good luck, right? You're probably going to get stopped. So what they'll do to take the cash, they'll go out and buy a bulldozer. So you go, go get a bulldozer, you pay $100,000 cash for a bulldozer, $200,000 cash for a bulldozer. Used bulldozer. You take that bulldozer, you put it in a shipping container, right, and you ship it back to Columbia. Customs opens it up, opens up the container,

go, oh, it's a bulldozer, shuts the door, we're done. If they open the door and go, oh, there's a couple hundred thousand dollars in cash in here, different story, right? Suspicious. Bulldozer, no big deal. So the bulldozer goes to Columbia. Now, Columbia, the cartel, can either use it, right, or they sell it and get their money back that way. So you convert cash to a bulldozer and then bulldozer back to cash or they're actually using it. That's called trade-based money laundering. So they can just, they convert the cash from one thing to another. And it's not uncommon in international money laundering. You'll have multiple people depositing money into the same bank account. So the guy in L.A. is depositing $9,000 cash into

one bank account. Somebody in New York is depositing $9,000 cash in the same bank account, right? Bank of America, J.P. Morgan, what are we're going to call it. So various sources are depositing cash. The cash then goes, purchases sneakers, okay? And the sneakers are then shipped to another foreign country. And then the sneakers are then sold. And then the money comes back. So that's money laundering all over again. It can be difficult sometimes. It's very ingenious what people are doing money laundering, cryptocurrency, it is what it is. It's not that difficult, but it is still out there. Money laundering is really just taking illegal money and making it look good. It's really all it is. So when someone's trying to take their drug dealing money, convert it to a bulldozer, that would be the money laundering aspect of it.

Now, do you think the government still hasn't really understood cryptocurrency or how to analyze it and, and I guess regulate it from the IRS perspective? The federal government prosecutors, the agents, are getting really, really good at the cryptocurrency world. IRS CI, if people didn't know, I think it was about 10 years ago, stood up a cryptocurrency unit in D.C. and I think went in L.A. and they were one of the pioneers, if you know about the American gangster

with Polo, what was not Marco Polo? What was the first cryptocurrency, dark web? Oh, Silk Road. Silk Road. That guy that just got released. Yes, he got pardoned by Trump. Yeah.

Yeah, yeah, yeah. Silk Road. Silk Road was one of the big things that the IRS put a stamp on it. Secret Service DEA. There's a lot of people working on that case, but IRS really helped find it. Ross Albright, I think.

Yep, Ross Albright. Yeah, yeah. Help find who a Ross Albright was because he was under the moniker, Dred Roberts, Pirate. Dredd-Pirate Roberts. Yeah, yeah, yeah, yeah, from the movie, Princess Bride. So they started to, they stood it up, and then they started doing other cryptocurrency stuff and started getting better and better and better and better at it. So the agents that are trained in it are really good.

They're using good software. The local IRS agent who's got a briefcase and a bad attitude has come to audit you, probably not. But from a federal money laundering standpoint, they're getting better and better and better. Because if people don't know, cryptocurrency typically is on the blockchain, particularly Bitcoin, right? So it's semi-anonymous. There's a record, and they just follow the record. and what they do, what they do, it called attribution. How do I attribute this cryptocurrency to this person?

And they have various tools to do so. And some of them is just wild guesses. But you try to put the pieces of the puzzle together. Screen names, passwords, lots of stuff. It's not just really one thing. It's many things point into the same direction that you think you've got a case. I've had a couple of cryptocurrency cases and they're interesting.

It takes a little more time, but they're fun. I think they're fun because the people who are using cryptocurrency are a little more sophisticated. And a lot of them are believers. When I think believers, I'm really into it. I mean, they're like, this cryptocurrency is the world,

you know, and it's a different, or a different breed of people. Are those just strictly tax evasion? Or? Some of us tax evasion, some of them just, they just, they just don't want the government knowing what they're doing. And I guess by defaults tax evasion, but they just want to be super secret about it. But the IRS takes a very bad taste in their mouth regarding people who don't report all their income, like anybody else who's not reporting their income. Just cryptocurrency bros, they're just a different breed, you know, they just are.

Now, in regards to reporting income, most of these places that will send you money, so say in my world, you know, you get a 1099 from Facebook, a TikTok, YouTube. How many people do you think roll the dice and not report one of those 1099s on their income? I think usually people who are in a business like you are who receive 1099s know it's going to the IRS. and sooner the IRS is going, if you don't report it, sooner or later the iris is going to knock into the door going, hey, ding-dong, you forgot this, you forgot this form. You know, you made $100,000 and you failed to report it. Most people know that.

For the most part, it's not really an issue. I guess the question is, is it willful that they're doing this? And if they're constantly not reporting this income, the IRS may look at it. as a criminal investigator, if someone's not reporting the 1099 stuff, I wouldn't, I wouldn't open a case on that. Because it's like so obvious. I mean, they just didn't report on the forum.

It's like, it's like shooting fish in the barrels. Like, no, we're not doing that stuff. There has to be some other egregious thing going on. If they're like in some type of, like I said, they're committing murder or whatever else it is, then I'll probably add, you know, add that on to it. But by itself, I wouldn't go after a case like that. Wow.

So I wonder how many people just roll the dust. not putting one in, hoping, you know, to... Well, they're going to lose. Because they're going to lose is because the IRS has got a database. And if you report, let's say, $100,000 on your tax return, and there's $150,000 in 1099s, it's going to kick it out. The computer's going to kick it out saying, hey, you forgot something here.

Here's your bill. So you have almost zero chance of getting away with that type of thing. Oh, so it'll be automatic because of the way system... Yes. Yeah. adds up everything and says there's a mismatch here. It's called a mismatch. There's a mismatch. Please explain yourself. If you can't explain yourself, here's your bill. So it won't even be accepted or it gets accepted and then there's... The IRS will accept your tax return and then two

years later to compare it to what was reported based upon the 1099s. I'll add them all up and go, there's a mismatch. Here's your bill. It's pretty simple. So when someone intentionally misses it, they're going to get a tax bill later on. It's not going to be worthy of a criminal prosecution. Now, tips, do you ever run into issues with tips and tipping in general in the criminal division? No. There is no way in the world I'm going to put a waiter in prison because he didn't report his $20 or he got every now. And you're kidding me? It doesn't even meet the threshold of worthy of federal prosecution. It has to be hundreds of thousands of dollars of not unreported income, but tax. So there is just no way.

It just doesn't meet that. I would have a conscious problem. I mean, is it a crime? Yes. Is it, it's 56 and the 55 again. It's just not worthy of our time to go after someone. Ladies and gentlemen, the jury, put this person in prison because he was serving lobster and didn't pay the tips that he received.

A jury's going, really? We're here for this. I'm going to pick up my kids in school in 30 minutes, and I'm sitting here in a jury box over this? No, it's not going to pass. They're not going to like that. So then do you think the system's fair or unfair because of that? I think at the end of the day, you can't put every tax evader in prison,

just like you can't put everybody who's 56 and the 55 and give them a speeding ticket. The government has to be judicious. We may not like what they pick and choose, but they have to be judicious on what they're going to do and go after. It is what it is. It's part of life. people will say it's not fair, but life's not fair either. And there's only so many resources we can go after people.

I think it to be a travesty to go after the little old lady who's committing who's not reporting all her income and try to put her in prison when you've got someone who's living a lavish lifestyle and really cheating on her taxes and foregoing them put her... No, we're not doing that. I wouldn't do it. I've never seen it done. And I don't think any federal prosecutor with their salt, nor does the judgment that put up with this stuff either. They want the cases that are meaningful, that makes society better place. And I don't think putting an 80-year-old woman

is better place to put in her prison versus the 30-year-old drug dealer. You know, we just have to make these decisions. Now, I'll see people on social media, specifically X, I would say, where they say, I'm not paying, you know, taxes or filing taxes to boycott X, Y, and Z, or we should all get to and not pay. Could that even be possible, you know, if everyone got together and not filed taxes? You could, but I'll tell you a secret. Tax protesters called tax protesters.

They are filing their tax returns. They just say they don't because they want to buy, they want to sell something in order to get you to buy it. And so they're making money because they're like, Publicity number one, I don't want to pay my taxes. See, I haven't been put in prison for, I've been failing to pay tax insurance for 20 years, and they still haven't gotten after me, because the IRS has disclosure laws. The IRS cannot say it's a lie. They have to keep their mouth shut.

Okay? So I can sit there and say, I'm a tax protester, buy my stuff about how, you know, for $1.99, you can figure out how to commit tax evasion too. Well, as long as I report that as income? The IRS has nothing against me. And so people who think, well, he said, just because he said he didn't file a tax returns, doesn't mean he hasn't. Because as a criminal investigator, I'd be looking on TikTok. I'd be looking at TikTok all the time for people like this because it was great.

What are you going to sit there and say? No, I forgot. I've had cases where people are on YouTube committing a crime. and I'd show that to the defense attorney going, Exhibit A. They're like, yeah, my client's guilty. Yeah, no kidding. You know?

But the people who are bragging about it are filing because that's the reason why they're not in prison. It's that simple. You just think they're telling the truth, but they're not. Yeah, and those same videos I was telling you off camera that there's this whole lore of, you know, former agents or tax preparers talking about tax tips. You just look at the comments of what everyone's saying.

Those are all potential suspects right there. Yes. And you think the IRS isn't know this stuff? Of course they know this stuff. The question is, is Billy Bob who lives in a trailer who drives an old pickup truck, you know, yeah, man, the IRS is, I'm going to totally against the IRS. Are we going to go after this guy? No, there ain't nothing here here.

You know. it's the guy who makes a lot of money who flaunts it. That's the one that gets in trouble. It's easy to commit tax evasion. If you live in a trailer with an old pickup truck and a four-wheeler and just enjoying life, it's easy because you're not on the radar screen. What gets on the radar screen is the person who's got the Ferrari and the other stuff and have all these things going on.

Those are the easy ones to catch. The contractor going out there. cutting your grass and, you know, and doing your plumbing and happens to cut down your trees every now and in and it gets paid in cash or something like that nature, those are the ones that are hard to prosecute and fine because they're under the radar screen. There's no records of them earning any money. When you look at their lifestyle, they're like, ugh, they're not doing anything. They probably got a million dollars in cash in the backyard somewhere in a coffee can, but you never know that because they don't flaunt it. That's the key. The people that flaunt it are the ones that

get in trouble. How often do you feel like personally attached, I guess, to a case or sympathize with the individual? Does that ever happen, especially if you're spending 18 months on one individual? I have never had a case that I know of that I sympathize with the tax evader or money launderer. If I thought that there was a sympathetic reason that behind this like, man, I really hate going have this person, I wouldn't open a case. Because if I know I had a sympathetic reaction to it, the judge is going to have a sympathetic reaction, and the jury is too, so what am I doing here? Because at the end of the day, my audience is who? Ten people in a jury box who may not even have a high school education, who don't do their own accounting, who don't reconcile their own checking

account, and don't prepare their own interns, I got to convince them that this person's worthy to go to prison for. So that's my audience. and then a judge as well. But that's my main audience. And if it's not going to be, heck, yes, this guy's guilty. He should be put in prison. I don't want to be part of that.

You know, so I've got to think about the normal person whose pain or taxes what they want the IRS to investigate and not investigate. So I've never had a sympathetic, as far as I know, boy, I really hated doing this. If I had that feeling,

I'd try to close the case. I've never had that feeling. I've always had the people that cheated and in my opinion, we're worthy to stand in front of a judge and give account for whatever they did. Do you find that the juries actually understand these complex, you know, maybe tax cases or understand the numbers, the forensic accounting aspect? And if they don't, do you think they just convict because they think the person's guilty because they're there in the first place? I do believe that there is a bias, whether we like it or not, that the jury is going to automatically be sympathetic for the prosecution. because why are we here if it wasn't really a good case?

There is that. Okay? And we understand that as prosecutors as well as I work for the defense now. We understand that it's an uphill battle because why are we here? The person is really innocent. The IRS CI in particular is not going to bring a complex case in front of a jury. We have to simplify it. He lives a lavish lifestyle.

it doesn't equal the tax return. Pretty simple. Can you live this lifestyle on your income? You're making $70,000 a year, nurse so-and-so. Can you live this lifestyle and make $30,000? No, I cannot. This is the reason why we're here. I mean, that's kind of the story you're selling to the jury.

They'll understand that. We don't get into complex things. You know what depreciation? Depreciation is? Yeah. Okay. We're not going to say, ladies and gentlemen, jury, put this person in prison because they depreciated something over five years versus seven.

I mean, we're just not going to do it. It's a technical issue. It's not going to know. There has to be something that the average common person on the street going, yeah, can't be doing that type of stuff. So when we do a case, we simplify it to its very common denominators that anybody can understand. So my audience needs to understand.

You can't prepare a tax return in claim. X dollars when it's Y. And it's so egregious and we're so long a period of time. And the amount of money is so bad that we have to put a stop to this person from doing it. If that story can be sold to a jury, then that's what I'll recommend prosecution on. Was it hard to get comfortable in front of juries or just even testifying? Nah. Or did it come natural to you? It was sort of natural.

if you're not nervous, you're not taking it seriously. It's sort of like being nervous from a big game that you can play in. Because you're playing major leagues when it comes to federal court. I mean, it's very pomp and circumstance and revere. And there's no playing around. It's not state traffic court by no means. So you've got to take it seriously. But I enjoyed get on the witness stand.

And the reason why I enjoyed it is because you don't. don't know what your cases are until someone crosses examines you on your case. I took it as a learning experience because I want to be better as an agent. I don't want to make the same mistake twice. If I made a mistake here or maybe it wasn't fatal, but it was kind of like, yeah, I should have done something differently. It'll come out. I'll learn from it.

I'll take my lumps a little bit. And then I'll walk off the witness stand and continue on. We're not talking about ethical issues. We're talking about why didn't do this? So I didn't do that. Ah, you're right. I should have done something a little slightly different. The defendant's still guilty.

I mean, the defendant's still guilty. But, yeah, you know, you scored some points. I mean, defense attorney. Okay, I can take my lumps. I'm not taking it personally. But I enjoyed explaining the cases in front of a jury. I think I'm a natural storyteller, not fairy tale, storyteller, to where I've used nursery rhymes or nursery stories in front of a jury.

explaining things. Like, can you explain, you know, this concept? Sure. Goldilocks and three bears, not too cold, not too hot. Just right. I mean, you have to meet it just right. And this person met it just right every single time. And the jury, I look at the jury, they're nodding her heads.

I'm like, cool. They're getting what I'm saying. I'm taking a complex, potentially complex. The defense is going to make a complex. I'm going to simplify it so you can understand it. So I will use things like, what about this? Like, well, it's pretty simple. If you have kids, you know, if you do this, this, this, and this,

why is every single thing, if you can't take your natural thinking process and ignore it? If some, if you get kids? No, no? No, not yet. All right. If you got kids, you say, little Johnny, don't eat that cookie. And you walk out the kitchen and go in the hallway. And you hear the chair scooting across the linoleum floor.

You hear little Johnny stepping on it. You hear the cookie lid come off. You hear the unwrapping of the cookie. You hear them saying, mm, mm, mm, mm, mm, good, right? And then you walk into the room and you see this empty wrapper and chocolate all over his face. Little Johnny did the cookie? No. Now, as a juror, as a parent, you know very good and well.

Johnny ate the cookie, right? You give that type of story from a jury going, listen, in order for you to believe that this person didn't do this, you got to ignore this, this, you got to ignore the aluminum floor, you got to ignore the cookie jar sound, you got to ignore the wrapper, you got to ignore all this stuff. As a parent, would you say to this person ate the cookie or not? Well, yeah, they would.

So I try to simplify things to where they understand from their own life that if all these pieces of the puzzle come together, the natural conclusion is this, right? In a jury go, oh, okay, I get it. Yeah. And I thoroughly love court. Some people, the one reason why forensic accountants get paid well good money to explain the story of the money trail to a jury is number one they do a good job supposedly

hopefully they do a good job number two is they can articulate their point of view number three their stuff can be cross-examined and number four they can explain it to anybody in that jury can understand they can relate to them one of the questions i do ask if you ever you ever in a jury before i was well i was in my own trial no i got but you but then you're Yeah, in state court, I made it through like the first day of them picking a jury, but then they disqualified me. Got it. One of the questions typically is asked of a juror is what is your name? Okay, fine, that's that's kind of secret, right?

What do you do for a living? I'm a nurse. I'm a plumber. I'm a retired, whatever else it is. One of the things I like to ask, the prosecutors or the people I'm working for, what profession these people are in? That one's a banker. This one's a devil. You don't know the names, but you kind of know who they are.

Okay, good, because in my mind, I'm going to relate this to a banking issue. I'm going to relate this to a nurse. I'm going to relate this to whatever. I'm going to be able to touch some souls in that jury box because I want to be able to relate this concept to them, right? And so I think that's what makes a good professional is knowing who my audience is and then relating the story to them. So they consider, yeah, I get that. That's me. Um, that's how I work.

Uh, is it cheating? I don't think it's cheating. I don't think it's just smart. You got, you got to be able to touch the person that you're trying to your audience. They get to pick and choose whether someone's guilty or not guilty. But I want them to understand the concepts. And then they can take that evidence and other evidence and make their own in conclusion. Now, someone that's accused of, you know, filing a false tax return, do they even have any shot of winning at a trial?

And do those cases even go to trial most of the time? Oh, yeah. You're talking about filing a false tax return? Paul's tax return? Yeah, just all the time. And they go to trial? 90, I'd say like 91, 95% of all IRS cases have a guilty verdict. I mean, it's, it's, when you're up against the IRS CI, just realize it's probably not going to end well.

Because, number one, they do a good job most time. They're offered employees. It depends on who you get. If they get you, they're losing. Well, you're behind a eight ball on that one. But they do a multi-year case. So it's not just a one-year case. It's like five years.

It's hard to get away with something you did five years and same pattern over and over and over and over again. It's just difficult for a jury to look at that going, yeah, it's all a mistake. Because mistakes don't put you in prison. It's the intentional mistakes that put you in prison. So when I get a case that the contractor is just not reporting all his income, right, or the chiropractor or the doctor or whatever else it is, I've only been in trial a handful of times. Most of it they plead guilty because what are they going to sit there and say? I didn't do it.

I didn't do it. I didn't do it. I didn't do it. I didn't do it. Okay. Exactly. I didn't do it. Okay, fine. You got to go against all 20 witnesses on the witness stand going, yeah, he knew what I did. He told me to do it. I mean, at the end of the day, it's like, yeah, you're guilty. Sometimes in my job as a consultant for defense attorneys now, I can't change the facts. I can try to help the narrative to get the best deal possible. Sometimes my client's just guilty. Sometimes they're not as a, guilty, but just guilty, right? So maybe the government is trying to steamroll them and you're trying to back that sucker up a little bit. They're still guilty. Let's get them 18 months, not

18 years. And that's why I get paid the money I do is to get as much, negate as much as possible, whittled down that loss as much as possible, trying to get more sympathy in front of a jury or in front of a judge. You know, it happens. Sometimes you have people that are innocent. And I get called on the case in the very beginning of it. I see what happened. They're really the victim. Maybe the boyfriend did the bad stuff under their name, right?

So I go in front of an IRS and say, here's the issues. And the IRS understands where I'm coming from. They'll drop the case. And they'll go after the boyfriend. I'm trying to point them to the right defendant, not my client. I've had a couple cases like that where I just, I, but I get paid by the attorneys to look at this Rubik's Q

from all places in take my experience and my education and say, okay, where is the weaknesses in the case? Where's the lack of willfulness? You know, what can we craft a story? Not fairytale. Craft a story to make this person most sympathetic as possible and then go with it. And many times I'm successful in doing all that.

not 100% of the time. But I know that going in, 80% we can get away with it, 20% not. And most of the time when I'm in that position, we do well as a defense team. How long were you with the CID for? I was with them for almost 21 years. Wow. Why do you decide to retire? Is that a forced retirement at that?

Thank goodness, no. But, yeah. When you turn 50, I turn 50. When you turn 50 and have over 20 years in, you can retire with full benefits, which means that you get a pension and you also get health insurance. So when I turned 50, I did the number crunching. And when I did the number crunching, I determined, oh, it didn't really pay to stay. If I made, frankly, when I did the math, because I'm a math nerd,

I had to make $36,000 a year doing something else to keep my lifestyle. Like, do I want to work 50-hour weeks for $36,000 a year? No, I'm not doing that. I might as well go ahead and just retire and do whatever I want to do. Stock groceries. Take money out of a retirement account. Do something. You can't let this badge identify you as a person.

It's what I did for a job, but it's not who I am. I enjoyed authority. I enjoyed, you know, scaring people to death in some sense. I would walk in the room, Ian, with an FBI agent. Hi. I'm FBI agent so-and-so. I'm IRS so-and-so.

The people would say, I don't want to talk to you. Him I'll talk to. They're scared to death of the IRS. It's scary. The IRS has a lot of authority and fear automatically. They fear the IRS more than any other agency out there. And it was enjoyable getting instant respect.

Don't get me wrong. I never wanted to abuse it. But there was a nice that when I walk into a room, people like, oh, crap. That's a good thing. You know, I'm here to help. Does it feel weird being on the other side now, maybe even going up against people you worked with before or even the agency, I guess? I will tell you this much.

the agency as a whole the people and the agency that I work with probably still like me but at trial oh man you're getting the stairs it's like you turncoat on them and it's funny because I would mentor

some of these agents I would sit there and pour my life into them give them all the wisdom I can because I want them to be good agents and I was helping them through the process and I tell them don't do this, do this, you know, I'm helping them become better agents in a short period of time because it takes a little while to become a very good agent. Some of them have the skill set, some of them don't. And then you go to trial and you're sitting there with your guy that you mentored.

And there are some of them were like smiling and give you a hug, not in the courtroom in the hallway where it's private because you can't be hugging, you know, the opposite side. But once it's game on, it's like major leagues baseball. You can sit there and say, you know, I like you as a friend, but I'm here to win. And same thing here. I'm here to win. And there is that element of, you know, you've turned to the dark side, which is, it's fine. But I know the secrets.

I know what you did wrong and what you didn't do wrong. I know how this played. So imagine someone who knows what the playbook. is and knows when you're making a mistake. No one wants that against them. And it's just common nature, you know, human nature. So, yeah, I still have friends in the IRS, CI. I can still have quarters of conversations with them. I can have what I call back room conversations with them going, hey, this is not a great case. Here's the reason why. And let me explain this to you. When we walk into this conference room, we'll go at it. But I'm just letting you four,

warning you, this is where I'm going with this. And I want to give them common courtesy. I don't want to surprise anybody, any of my friends, right? But I want to be having an honest conversation with them. And I want them to have honest conversation with Robert, I really don't know if this is a great case or not. Okay, fine. You know, we understand each other. I'm not here to screw them over. If my client's guilty, they're guilty. But if my client's got a good reason for what they did and maybe not as guilty or maybe not worthy of prosecution, they went 56 and 55, Let's lay it out. Ultimately, the federal prosecutors and the IRS are going to make that decision.

But that's one reason why I get hired by defense attorneys is that I can have that conversation genuinely because I want what's right for the agency, but I also want right for my client. And like I said, sometimes my clients is guilty. They're just not as guilty. Sometimes the IRS didn't do the work, and I'll call them out on it. You didn't do the work. And it's embarrassing for them. Well, I can't help you to do the work.

Next time do the work. Hopefully they got their butt kicked enough to where they're like, I didn't do it now again. Robert Norlander may have this next case. That's where they need to up their game. They shouldn't be sloppy. And, you know, the praetor principle, 80% of the work is done by 20% of the people. Same concept.

80% of the work by the IRSCI is done by 20% of the people. there's a lot of donkeys in that stable, and there's some thoroughbreds. A lot of them are donkeys, and donkeys and thoroughbreds don't mix. And if you get a good thoroughbred of an agent, great. Sometimes you get some don't do a good job, and it's sloppy. And unfortunately, sometimes don't care. It is what it is. So, you know, working for the opposite side now, the defense side,

I enjoy it. It's a good living. You do get the stairs. You dig with the federal prosecutors going, he's not worthy to be on this witness, Dan. What are you talking about? I'm like, I spent 20 years with you, you know, just last week. You know, I was getting awards by you, you know, a couple years ago.

Now I'm not worthy. I mean, give me a break. But we've had these arguments. But that's not my argument to make. The defense attorney will make that argument going, Your Honor, you know, he got awards. He's done this for 20 years. Now they're saying he's unqualified. Give me a break. The prosecution's got to bring it up. They're going to lose more and likely. And you get on the witness stand and explain whatever you got to explain.

But yeah, I do get those stairs. It's fine, you know. Now, when we hear about the layoffs and the IRS, is that the investigators like your former self or is it that just more the civil side of things? It's more to civil side of things. The layoffs, Doge came in, you know, and wiped out a lot of people. And I would disagree with how they did it. No one asked me my opinion. If Trump called me today going, how would you make the IRS more efficient?

I would say you need to be like survivor. Kick people off the island. because there's a lot of dead weight in the IRS. There's a lot of lazy people. There's a lot of people who are there because they were there last week. And if I ran a group, and I ran a group for a little while, about 10 agents, I could probably keep four and have the same efficiency and effectiveness than 10. I know who my top four agents are.

Let me get rid of the other six. but if the government came in and said, okay, you get 10 people here, which six should go, these. They know who the dead weight is. What those did it come in and go, anybody less than so many years is gone. Well, that doesn't take care of the person who's been in for 10 years

who's a ding-dong, right? And you may have gotten a CPA, MBA, who's really gun-whole and smart, and all of a sudden you fired him because he didn't have enough time in. that is not that's not how I'd have done it I'd say which of these employees need to go that one down down now boom get rid of them

but they didn't do it that way they went by based upon tenure and that's not how I would have not that's not how I would have done it and I feel like that could apply to most government agencies or even corporations in general oh yeah yeah exactly but to me it's a it's a lazy way to fix a quote unquote fix a problem

and doesn't really fix the problem it just makes it just makes the problem I don't know, the people who are working hard want the dead weight gone. And when you get rid of people just arbitrarily, in a sense arbitrarily, it doesn't change the culture.

The team is still playing bad because you just got rid of all the rookies. Okay, so what? Well, I don't care if the rookie's first draft or last draft. Well, you got rid of all the rookies. Well, you should have kept the first draft, you know, top draft ones and get rid of the, a four-year-old guy who's just been around and been around.

So, I don't know what to say. I don't think CI really lost anyone. There were some retirements that were optional. Hey, if you leave now, you can get paid until, you know, whatever. And they took those early retirements. I don't blame them. But I don't think they were cut. What really is stinky, honestly,

was the new agents that came on board who put their lives on hold, who probably quit their jobs to go into training. And then the government says, sorry, there's nothing here for you. So now they left their employer, their health insurance, their wives, probably their spouse, mostly it's mostly men. They put their lives on hold. Their wives and kids are relying upon their income, right? and now of a sudden you fired them.

And now you have probably good quality individuals who now have to go back to the private sector and find another job because this was their dream job and they just, for some reason, arbitrarily no job for you. Those are the ones I have sympathy for because I was that guy

who literally quit to go into training and I would hate for me to have to go find, leave a decent career for another. one just to find out, sorry, no, can't have you. Why? Because of some arbitrary cutting, you know, so. What do you think is the most important lesson your careers taught you? People are people. There are some sympathetic people out there that just did the wrong thing and just got caught up in a moment and yeah, they're guilty and they should be punished. But, you know, the judge ultimately gets to decide how to work that stuff out.

most people have particularly what I did of a tax evasion and the money launders I've had you talk about sympathy I had one case where the guy

was just grew up in the wrong house decent guy grew up in the wrong house tried to get away from it got sucked back in by the family that was just

just narcissist right and got into the drug dealing type of thing really had everything going for him. But because of his family ties, she got sucked back in because of the easy money. And I was

kind of sympathetic to that guy. And he had to pay his lumps. And he went on. But he was just a decent guy. Other ones are just narcissistic people that just think they didn't get away with stuff and they need to be smacked down a little bit. You know, it just, it just the way it was. I really didn't have much sympathy for photos of individuals. I do know as an investigator, particularly from my personal life, and you know this growing in, that there's two sides of every story. And before you assume evil, assume incompetence. There's some type of law out there if you Google it.

I forget what law is. But give people a chance to explain themselves because there's two sides of every story. Not everything that I see is not all that glitter is gold. Okay. And so Lord of the Rings reference, by the way, if you know anything about that. There are, there may be an explanation for it. At least give people a chance to do that. That would be one thing. Number two is I had a great mentor of federal prosecutor who taught me a lot, whether he knew or didn't know it. He used to say the truth has many friends, but a lie walks alone. If something is truthful, there's going to be a lot of things that's going to point to it.

If something's a lie, it's going to stand up by itself. If I told you I went grocery shopping today, there's probably going to be a clerk who remembers me. There's going to be a credit card receipt, right? It's going to show all that. There's going to be surveillance camera, and walking in buying stuff. There's going to be a lot of things in there that's going to point to,

I went grocery shopping today. If I didn't go grocery shopping but said I did, proved to me you did, and you don't have it. So as a forensic accountant, I know that if something is truthful, there's going to be a lot of corroborating evidence around it. If something's a lie, there's not going to be. And that's another thing I learned is look for the corroborating evidence. If this is true, what else must be true?

There should be surveillance, credit card receipts, people who saw you, blah, blah, blah, blah, blah, that type of thing. Well, Robert, I appreciate you coming on the show today. This was such a fun episode. Well, thank you, Ian. I do appreciate it. I will let you know. I do have a couple books out there, and you can go on Amazon to get it. I did write a new book for those who are in divorces.

Hopefully you're not going through a divorce. No, no divorce. It's called I Want My Share, How to Find Hidden Money to Protect You and Yourself in Divorce and Child Support. See, this is what you need to be talking about on TikTok. I should be, and I'm going to, actually. I made some videos on it, and it's coming to a TikTok. or a YouTube short coming toward a show new you.

But there's stuff out there. And I have some websites, forensic CPEs for those CPAs who want to be like me or want to learn like me. I have that out there. I have my own website at NordlanderCPA.com. They can go to. I got some books on Amazon and their tax professionals. I want to know what goes from a civil to criminal.

There's a book out there called Criminal Tax Secrets. And it tells you about how things go from this. to this and what the IRS CI, how they evaluate, like we talked about today. So there's lots of resources out there about uncovering hidden money and what it takes to get in trouble with the IRS. It's out there, Ian. But thank you so much on the, I'll be on the podcast. It's always fun.

Yep, and we'll have the links in the description in this episode for you. I appreciate it. I'm a big fan, and I'm glad to see what you've built. It's been very fascinating. Congratulations. Thank you. You've taken lemons and turning into lemonade. Thank you very much.

Good.