(Source: FBI) – Preet Bharara, the United States Attorney for the Southern District of New York, announced that former New York State Senator NICHOLAS A. SPANO was sentenced today in White Plains federal court to a year and a day in prison for obstructing the ability of the Internal Revenue Service to assess and collect U.S. income taxes by concealing illegal income and filing fraudulent tax returns. SPANO pled guilty on February 10, 2012 to one count of obstructing and impeding the due administration of the Internal Revenue Laws before United States District Judge Cathy Seibel, who also imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara stated: “When Nicholas Spano took the oath of office, he swore to uphold the law, and yet he did exactly the opposite. There is absolutely no place in government for lawbreakers, and we will continue to do everything within our power to prosecute and punish them.”
According to the information and statements made during court proceedings:
From 1987 until 2006, SPANO served as a New York state senator for the 35th district, which encompassed most of Westchester County. In that capacity, SPANO was responsible for voting on and approving the operating budget for New York state. A portion of the budget included funding for the Office of General Services (“OGS”).
In 1993, a White Plains-based insurance company began paying SPANO a $1,500 monthly fee to act as an outside consultant. In 1996, after the insurance company was awarded a lucrative contract by OGS to become the broker of record for New York state, the payments increased to $5,000 per month. The payments subsequently increased to $6,000 per month in 1999 and $8,333.33 per month, or $100,000 per year, in 2002. The payments terminated in 2008 when the insurance company ceased to be OGS’s broker of record.
The payments from the insurance company were made through various corporate entities controlled by SPANO, including “ONAPS, Inc.” (“ONAPS”), which later changed its name to HVM Corp (“HVM”). ONAPS had no employees or offices and was used almost exclusively to receive money paid to SPANO by the insurance company.
Spano’s Concealment of Illegal Income
From 2000 through 2008, SPANO engaged in a scheme to impede and impair the due administration of the Internal Revenue Laws by filing false federal income tax returns that mischaracterized income he received from the insurance company and other sources to unlawfully reduce his tax burden. SPANO wrote checks that totaled more than $180,000 from HVM to a real estate holding company he owned, 221 Ridge Ave. Corp. These checks were for non-existent rental expenses at a rental property owned by the holding company that was located at the 221 Ridge Avenue address. SPANO falsely advised his tax return preparer that HVM conducted business at 221 Ridge Avenue, had an office at that location, and paid rent to the holding company. As a result, HVM deducted more than $180,000 in false and fraudulent rental expenses on its tax returns.
In 2004, SPANO also failed to report to the IRS a $45,000 commission he received from the sale of a building to a White Plains real estate developer. Between 2005 and 2006, he also failed to report cash rental payments he received from residential real estate tenants.
In addition to the prison term imposed on SPANO, 59, of Yonkers, New York, Judge Seibel ordered SPANO to pay a fine of $30,000 and to serve one year of supervised release.
Mr. Bharara praised the outstanding work of the IRS Criminal Investigation Division and the FBI in the investigation.
The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Perry A. Carbone and Jason P.W. Halperin are in charge of the prosecution.