A Long Beach man, who once worked as a tax and estate-planning lawyer, faces trial in February on tax evasion charges for allegedly setting up shell companies to avoid payment of more than $1.4 million he owed to the Internal Revenue Service.
James Roy McDaniel, 65, was arrested Tuesday and remains in federal custody without bond, according to the U.S. Attorney’s Office.
McDaniel was a licensed California attorney for more than two decades until he pleaded guilty in 2004 to one felony count of filing a false income tax return. The following year, McDaniel was sentenced to three years in federal prison and surrendered his license to practice law in California, prosecutors said.
In that case, McDaniel’s failure to report income resulted in a tax loss of $677,368 to the federal government, according to court documents. The IRS subsequently assessed McDaniel more than $1.4 million in taxes, interest and penalties for the tax years 1997 through 2001, court papers state.
According to the current indictment returned by a Los Angeles federal grand jury, McDaniel willfully attempted to evade paying his debt to the IRS by creating two shell companies—Davis Bell Consulting LLC and James Roy Consulting LLC—where he directed payments for tax and estate planning work he performed after being released from prison.
During a scheme that allegedly ran from May 2008 until December 2012, McDaniel attempted to mislead federal tax authorities and conceal his income by directing other people to sign documents identifying themselves as the sole managing members of the shell companies, according to federal prosecutors.
As part of the alleged scheme, McDaniel directed them to open bank accounts where he deposited checks for his tax and estate planning work, the indictment states. McDaniel also allegedly applied for a Taxpayer Identification Number for James Roy Consulting in the name of another person without obtaining that person’s consent.
The indictment also alleges that McDaniel failed to file a federal income tax return for 2012 and failed to pay $45,725 in taxes due for that year, court papers state.
If convicted of the two charges alleged in the indictment, McDaniel would face a sentence of up to 10 years in federal prison, according to the U.S. Attorney’s Office.
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