North Carolina Attorney Pleads Guilty to False Return, DOJ Says

Charlotte-Area Attorney Pleads Guilty To Tax Return Fraud

Friday, November 8, 2019

CHARLOTTE, N.C. — John Francis Hanzel, 70, of Cornelius, North Carolina, appeared before U.S. Magistrate Judge David S. Cayer today and pleaded guilty to filing a false tax return, announced Andrew Murray, U.S. Attorney for the Western District of North Carolina.

Matthew D. Line, Special Agent in Charge of the Internal Revenue Service Criminal Division joins U.S. Attorney Murray in making today's announcement.

According to the filed indictment, plea documents, and today's plea hearing, Hanzel was an attorney with the law firm John F. Hanzel, P.A. whose law practice included, among other things, counseling his clients to set up offshore corporations and offshore bank accounts to purportedly protect income and assets from creditors, including the IRS. From at least 2011 through 2014, Hanzel did not have a personal bank account and did not pay himself a salary from his law firm. Instead, Hanzel wrote checks from his law firm account to pay for personal expenses including utility bills, mortgage payments, and credit cards. Hanzel fraudulently deducted personal expenses paid out of his law firm bank account as business expenses, including by falsely categorizing such as expenses as costs of goods sold and other deductions.

According to the filed indictment, plea documents, and today's plea hearing, from 2011 through 2014, Hanzel reported minimal income on his Federal Individual Income Tax Returns, Forms 1040, fraudulently reporting total income of less than $73,000, total, for those four years and paying total federal income tax of less than $5,500 during that time period. However, Hanzel actually received substantial income that he hid from the IRS by falsely deducting personal expenses as business expenses and by living out of his business bank account. Hanzel's substantial personal expenditures during the time period include payments of more than $297,000 on luxury vehicles and a boat, and payments for numerous other large personal items such as jewelry and plastic surgery. The tax loss associated with Hanzel's filing of fraudulent tax returns was more than $100,000 but less than $250,000.

Hanzel is currently released on bond. The filing a false tax return charge carries a maximum prison term of 3 years and a $250,000 fine. A sentencing date has not been set.

IRS-CI led the investigation. Assistant United States Attorney Jenny G. Sugar, of the U.S. Attorney's Office in Charlotte, is prosecuting the case.