Testimony within the tax evasion trial of three members of the Zourdos household on Thursday centered on what their accountant knew — and didn’t know — concerning the earnings, and the way it was recorded, at their three Dippin Donuts shops.
There was some confusion between the Zourdos household, accountant Vincent J. Gilroy Jr. and an IRS agent concerning the actual nature of the every day gross sales calendar books that had been maintained at every of the shops. Gilroy testified on Thursday that he didn’t know the calendar books existed. He mentioned the one time a few of them had been in his possession, he didn’t crack them open, partially as a result of he trusted the Zourdos household.
The IRS agent — Susan Johnson — testified on Thursday that Gilroy’s workplace gave her the books as a part of an audit she performed on the Dippin Donuts retailer on Black River Boulevard in 2016. Johnson mentioned she understood a number of the numbers within the e-book, however not all the numbers. Who knowledgeable her about a number of the numbers? Johnson instructed the jury she doesn’t bear in mind, however famous that Gilroy was the one individual she spoke to concerning the audit of Dippin Donuts.
The protection for the Zourdos household is arguing in federal court docket this week that Gilroy knew extra about these calendar books than he instructed the jury and his attainable negligence is why they’re now on trial on accusations of tax evasion.
John, Helen and Dimitrios Zourdos, all of Rome, are accused of funneling roughly $1 million in money gross sales from Dippin Donuts to themselves between 2013 and 2017 and by no means reporting that cash to the IRS. They’re accused of skimming a portion of the every day money gross sales and depositing it instantly into their private financial institution accounts, then by no means telling their accountants concerning the deposits, resulting in defective tax returns.
They’re all charged with one depend of conspiring to defraud the USA, seven counts of tax evasion and 7 counts of aiding and helping within the submitting of false company earnings tax returns, based on the U.S. Division of Justice, Tax Division. They every face at the very least three to 5 years in federal jail if convicted on the fees.
The prosecution is predicted to complete their case both late within the day on Friday or on Monday. The jury may start deliberations early subsequent week.
The 2016 audit
IRS income agent Susan Johnson testified on Thursday that she performed an audit on the Black River Boulevard Dippin Donuts in 2016, as instructed by her superiors the IRS. She defined to the jury that every of the three Dippin Donuts places — two in Rome and one in New Hartford — are their very own separate entities and file separate tax returns. She mentioned she was solely auditing the store on Black River Boulevard.
Johnson testified that she by no means spoke with anybody from the Zourdos household, that their accountant — Gilroy — was granted the facility to cooperate on the enterprise’ behalf. Johnson mentioned Gilroy and his workplace turned over all tax preparation info and monetary
statements, and that “there was no motive” to look into the private financial institution accounts of the Zourdos household.
The one factor she wished that she didn’t get had been the money register tapes, Johnson mentioned. She was instructed the household didn’t maintain the tapes, so she requested for another information of every day gross sales. This led to Gilroy turning over the every day gross sales calendar books for 2014 and 2015, offered to him by the Zourdos household.
Gilroy testified on Thursday that he was not fearful concerning the audit as a result of he was assured the tax returns had been hermetic. He mentioned he requested Helen Zourdos if there was anything he ought to know, and Helen instructed him a few single worker who was getting paid money beneath the desk for advantages.
“She mentioned that was the one money cost that was going out,” Gilroy instructed the jury.
Gilroy testified that, as a substitute of money register tapes, the Zourdos household instructed him “they did have some books that had been every day books that they stored by the register that they may present to me.”
Gilroy instructed the jury that he by no means appeared into the calendar books earlier than handing them over to Johnson.
“I didn’t suppose I wanted to,” Gilroy testified. “There was a belief between us that they had been going to match the financial institution deposits.”
Gilroy did level out that he could have confused the calendar books for separate gross sales tax notebooks that the Zourdos household used to provide him to compute gross sales tax.
As testified to by a number of witnesses within the trial to date, the every day gross sales calendar books had been maintained by John, Helen and Dimitrios Zourdos at every of the three shops. On the left aspect of every web page had been the whole entrance counter and drive by means of gross sales for every day. In the midst of every web page was the every day money deposit quantity into the company checking account. On the best aspect of every web page was the every day bank card deposit quantity into the company checking account, based on testimony.
A number of witnesses have identified this week that the sum of the gross sales numbers didn’t match the sum of the deposits. This distinction in money is what the federal government has accused the Zourdos household of depositing of their private financial institution accounts.
Susan Johnson testified that she appeared by means of the calendar books and matched the every day money deposits to the company financial institution accounts, together with the bank card deposits. She instructed the jury that she believed the every day money deposit quantity was the whole in money gross sales for that day.
Johnson mentioned she didn’t know what the numbers on the left aspect of the web page meant — the whole entrance counter and drive by means of gross sales.
“I can not recall particularly, however I bear in mind pondering they had been register readings,” Johnson testified.
She mentioned she may see that the sum of the gross sales didn’t match the sum of the deposits, however, “I believed that to be a gross sales tax discrepancy.”
When requested by the protection lawyer how she knew that the quantity in the midst of the web page was the every day money deposit, Johnson mentioned she couldn’t bear in mind. She admitted on the stand that she solely individual she spoke to concerning the books was Gilroy, however “I can’t recall the dialog”.
Johnson testified that as a result of the every day money deposit quantity matched the company checking account, the Dippin Donuts retailer handed its audit and no motion was taken by the IRS at the moment. Johnson instructed the jury that had she recognized that the numbers on the left aspect of the web page had been the whole gross sales numbers, and that they didn’t match the whole deposit numbers, it might have drastically “expanded the audit” and certain would have found the household deposits into their private financial institution accounts.
Together with discussing the audit, Gilroy testified at size about his tax preparation work for the Zourdos household. Gilroy mentioned he was their accountant for roughly 20 years, although he solely did tax returns and monetary statements. Gilroy mentioned he by no means had entry to their financial institution accounts or investments.
When making ready the company and private tax returns every year, Gilroy instructed the jury that he didn’t all the time ask the Zourdos household if they’d given him all the documentation he wanted.
“It was an assumption,” Gilroy mentioned. “We labored collectively for a very long time. I had lots of religion in John and Helen. I trusted them.”
Gilroy mentioned he as soon as spoke to John Zourdos about his enterprise and mentioned,” All gross sales must be deposited within the company checking account.” Gilroy added, “It if went in a unique checking account, it might nonetheless be Dippin Donuts earnings and would belong on this tax return.”
Had he recognized the Zourdos household was depositing money from gross sales into their private financial institution accounts, Gilroy mentioned, “I in all probability would have resigned from doing any work for them.”
Relating to Dimitrios Zourdos, Gilroy mentioned he by no means spoke to Dimitrios about enterprise issues or his private tax return.
Two extra former Dippin Donuts workers additionally testified on Thursday about getting paid money for any extra time hours labored. Like all former and present Dippin workers who’ve testified this week, each Tyler Falcone and Kaleena Kelly have been granted immunity by the court docket from being prosecuted for not declaring these money funds on their tax returns.
Falcone instructed the jury that she requested Helen Zourdos concerning the money funds and there was “no clarification, she simply mentioned that’s how we do it.”
Falcone mentioned she additionally requested Helen about ideas that had been pooled between workers.
“I used to be instructed that I didn’t have to assert ideas after I began working there,” Falcone mentioned, noting that she earned roughly $100 in ideas per week.
Kelly testified that she had some managerial duties at Dippin Donuts and in addition requested Helen concerning the money funds for extra time.
“As a result of it was saving us on paying taxes on that cash,” Kelly defined what she was instructed. “And that we might be making out higher than time and a half.”
Kelly and several other workers have testified this week that the Zourdos household paid extra time in money to keep away from having to pay the state-required time and a half for extra time on an precise payroll test. Kelly mentioned the Zourdos household stopped paying the money as soon as they had been beneath investigation for tax evasion.
Kelly famous that she couldn’t recall “100%” if Helen was the one who instructed her concerning the money and saving on taxes, although “Helen was all the time the individual I spoke to.”