Insurance Company Owner Sentenced for Tax Evasion, DOJ Says

Insurance Company Owner Sentenced to Prison for Tax Evasion

Thursday, March 5, 2020

PITTSBURGH, Pa — A resident of Pittsburgh has been sentenced in federal court to two-and-a-half years (30 months) in prison and fined $10,000 on his conviction of tax evasion, United States Attorney Scott W. Brady announced today.

United States District Judge Cathy Bissoon imposed the sentence on Robert Rionda, Jr., of Pittsburgh, Pennsylvania.

According to information presented to the court, Rionda solely owned and operated Arms Insurance Group, Inc. (Arms Inc.), a subchapter S corporation, from 2002 through May 2014. In October 2011, the Collection Division of the Internal Revenue Service opened a case on Mr. Rionda for unpaid income taxes for the 2009, 2010 and 2011 tax years. In May 2012, after several attempts to receive payments from Mr. Rionda, the IRS levied his personal bank accounts for the unpaid 2009 and 2010 taxes. The defendant responded to the levies by directing the controller/bookkeeper of Arms Inc. to do several things:

• Stop issuing salary checks to Mr. Rionda and his wife;

• Stop using his personal checking accounts altogether; and

• Start paying all of his personal bills from the company's bank accounts rather than from his personal bank accounts (note — some personal bills were being paid out of the company accounts prior to the levies).

Over the next several years, Rionda continued to file apparently accurate corporate returns on behalf of Arms Inc., as well as personal income tax returns, but he only made minimal payments to the IRS for the personal income taxes he owed, and he took the actions described above to evade collection of his taxes.

Rionda sold Arms Inc. to his son over time, starting in May 2014, and he stayed on as a part owner of the son's new business, Arms Insurance Group, LLC (Arms LLC), through May 20, 2017. After the sale of the business on May 22, 2014, Arms LLC began making payments by check to Rionda that represented monthly payments on a promissory note, rent payments, and owner draw payments to Rionda. From July 25, 2014 to December 28, 2015, Rionda deposited some of these checks to two bank accounts at PNC Bank and an account at Citizens Bank, all of which were maintained in the name of Arms Inc. his old business which was no longer active, rather than depositing them to a personal account in his own name.

Despite receiving very large distributions from Arms Inc. and Arms LLC, Rionda chose not to make substantial payments towards his taxes. Rionda did, however, make payments towards his personal mortgage, a mortgage on a business property, his credit cards, and his utility bills. In addition, Rionda also transferred millions of dollars — at least $2.7 million of his own funds — to an associate, Joseph Duva, as a purported investment.

The parties stipulate that the total criminal tax loss, including assessed interest and penalties, is $1,539,117.00.

Prior to imposing sentence, Judge Bissoon stated that Rionda engaged in "a sophisticated scheme to direct monies elsewhere and evade collection" of his taxes by the IRS.

Assistant United States Attorneys Stephen R. Kaufman and Mary M. Houghton prosecuted this case on behalf of the government.

United States Attorney Brady commended the Internal Revenue Service — Criminal Investigation for the investigation leading to the successful prosecution of Rionda.