US v. Gregory VanDemark, CA-6, Docket No. 21-3470, June 30, 2022

Gregory VanDemark owns the Used Car Supermarket, which sells cars from two lots in Amelia, Ohio. In 2013 and 2014, VanDemark funneled away his customers’ cash down payments. In 2012, VanDemark deposited $265,499.25 in cash into the business bank account. But in 2013 and 2014, that number was much reduced to $12,194.63 and $71,150.86, respectively. Because the stashed-away cash never reached the bank account, it never made it into VanDemark’s QuickBooks files. And because VanDemark’s tax preparer relied on those QuickBooks files, he failed to report the cash on VanDemark’s tax returns. It turned out that VanDemark used most of this cash to pay the mortgage on his multimillion-dollar mansion.

Don’t ask the bank about cash reporting requirements, or else. Wary of attracting the IRS’s attention, VanDemark asked an employee at his bank to confirm the IRS reporting threshold. She told VanDemark that the bank had to report “[a]nything over 10,000 in cash” to the IRS. So, with this information in hand, VanDemark began to make cash payments toward his mortgage several times a month, keeping each payment below $10,000.

VanDemark’s enquiries at the bank caused the bank employee to report her conversation with VanDemark to her Bank Secrecy Act officer.  This information made its way to the IRS, which deployed a special agent to investigate. In December 2014, an IRS special agent contacted VanDemark. Posing undercover as a businessperson, he expressed an interest in buying VanDemark’s businesses. The pair spoke over and VanDemark boasted that he had about “$16 million in assets” and his businesses “net over $1 million a year.”  VanDemark all but admitted to tax evasion by explaining that he “pulled out . . . 25% of that big figure” “in the last couple of years [2013 and 2014].”  What’s more, he kept track of the stashed-away 25% “just in case. And to top it all off, VanDemark confessed he was “kind of . . . giving [the agent] information [he] shouldn’t even be talking about.” 

Structuring payments to avoid cash reporting is a crime. A grand jury indicted VanDemark on six counts of tax evasion related crimes, one of which included structuring payments, in violation of 31 USC §5324(a)(30)

Also See.

(Mycles Cycles, Inc. v. US Southern District of California, Case No.: 18-CV-314 JLS (AGS)) Where multiple violations occurring on three separate occasions ended with $225,000 of penalties assessed by IRS. On appeal, the court would not uphold the penalties, finding that even with knowledge of the law, intentional disregard could not be shown.