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Date: 02-12-2022
Case Style:
Case Number: 2:20-cr-00354-GJP
Judge: Gerald J. Pappert
Court: United States District Court for the Eastern District of Pennsylvania (Philadelphia County)
Plaintiff's Attorney: United States Attorney’s Office
Defendant's Attorney:
Description: Philadelphia, Pennsylvania criminal defense attorney represented defendant charged with failure to file tax returns.
Joseph Smith, of Fishkill, owned and operated New York Bagel, a business that operated in Pennsylvania and other states. Smith and Dennis Mason conspired to defraud individuals who sought to open new franchises of New York Bagel. Smith and Mason induced the prospective franchisees to open up New York Bagel stores by understating the startup costs, overstating the number of franchises that were up and running, and exaggerating the financial success of existing franchises. Smith and Mason charged prospective franchisees fees ranging between $7,500 and $44,500 to gain rights to open stores. When prospective franchisees learned of the misrepresentations, Smith refused to refund these fees.
For the years 2014 through 2016, Smith deposited more than $1.3 million in franchise fees into New York Bagel bank accounts he controlled. Smith spent these funds on personal items wholly unrelated to New York Bagel including rent for his personal home, recreational travel, car payments for personal vehicles and everyday living expenses. Smith did not timely file corporate or individual income taxes for these three years, or pay the taxes owed to the IRS, even though he was required by law to do so.
Mason previously pleaded guilty to wire fraud and conspiracy to commit wire fraud on June 25, 2020.
Smith is scheduled to be sentenced on May 24. He faces a maximum penalty of five years in prison on both the tax evasion and conspiracy charges, as well as a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania made the announcement.
IRS-Criminal Investigation is investigating the case.
Trial Attorney Eric B. Powers of the Justice Department’s Tax Division and Assistant U.S. Attorney David Ignall of the U.S. Attorney’s Office are prosecuting the case.
Outcome: 02/11/2022 37 Plea Document as to JOSEPH SMITH (Attachments: # 1 Attachment)(IGNALL, DAVID) (Entered: 02/11/2022)
02/11/2022 38 Minute Entry for proceedings held before HONORABLE GERALD J. PAPPERT in Courtroom 11A: Change of Plea Hearing as to JOSEPH SMITH held on 2/11/2022. Deft sworn. Judge colloquy with deft. Deft pleads GUILTY to Counts 1ss-2ss. Pre-sentence report ordered. Sentencing is set for 5/24/2022 at 10:00 a.m. Court Reporter: ESR.(tomg) (Entered: 02/11/2022)
02/11/2022 39 WAIVER OF INDICTMENT as to JOSEPH SMITH (tomg, ) (Entered: 02/11/2022)
02/11/2022 40 Plea Document as to JOSEPH SMITH (tomg, ) (Entered: 02/11/2022)
Plaintiff's Experts:
Defendant's Experts:
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