Doctor sentenced to max jail time for tax fraud
PITTSBURGH — A former Butler Memorial Hospital doctor must pay more than $1 million and serve more than two years in prison for filing false tax returns.
James G. Allen Jr., 54, was sentenced Thursday by federal Judge Arthur Schwab to 30 months in prison, the maximum under sentencing guidelines, after Allen pleaded guilty to filing 16 false tax returns for him and his wife.
As part of Allen’s sentence, he will be on supervised released for one year after his prison sentence.
He must also pay a $10,000 fine and restitution amounting to $1,084,658.58.
Charges against Allen were filed in April 2019. Around that time, Butler Memorial Hospital declined not to renew Allen’s employment as an anesthesiologist.
In court documents, U.S. Attorney Scott Brady accused Allen of knowingly reducing the amount of his actual earned income.
The Internal Revenue Service received a tax return from Allen in 2014 in which the doctor claims to have made only $700 even though his earned income was “substantially” higher than that, according to court documents.
Allen’s lawyer, Anthony DeLuca, filed a memorandum.
In it, DeLuca said Allen was swayed to commit tax fraud after the Great Recession by a book called “Cracking the Code” by Peter Hendrickson.
DeLuca called the book a siren call for Allen, referencing a creature from ancient Greek mythology.
The book was written by a man whom Tax Court Judge Ronald Lee Buch called a “tax protestor,” and the book questions the government’s tax system.
In DeLuca’s filing, he explains Allen believed the American government did not have the “right to tax certain proceeds.”
DeLuca said Allen was “lured to the brink of destruction” and that, “He convinced himself, each tax year, that he was fighting the good fight against a behemoth.”
Prosecutors with Brady’s office countered that Allen is “a longtime tax cheat who flaunted his obligations under the federal tax laws by failing to report any of his income from his work as an anesthesiologist over an eight-year period.”
In pleading guilty, Allen admitted to failing to report any of the $2.1 million he earned between 2010 to 2017 from hospitals and anesthesia groups for his services.
During that time, Allen reported a total of $7,766 in earnings. For his wife’s tax returns, he failed to report $1.2 million of her income. In total, between 2011 and 2018 the Allens filed 16 false tax returns, which prosecutors estimated caused a loss to the government of more than $900,000.
