subscribed to the return willfully, with the specific intent to violate the law. United States v. Bishop, 412 U.S. 346, 350, 36 L. Ed. 2d 941, 93 S. Ct. 2008 (1973). It is not necessary under § 7206(1) that the United States establish that any tax was due for the years in question, as § 7206(1) regards merely false statements in tax returns. United States v. Olgin, 745 F.2d 263, 272 (3d Cir. 1984), cert. denied, 471 U.S. 1099 (1985).
Mr. Gollapudi filed federal income tax returns, Forms 1040, for the tax years 1989, 1990, and 1991, with fraudulent Forms W-2 falsely reporting that Softstar had withheld federal income taxes from himself. However, Mr. Gollapudi admitted that to the IRS agent that the W-2s he gave to his employees, which includes himself, were false, so element one is satisfied. The Court finds that Mr. Gollapudi plainly knew that the taxes that the W-2 claimed had been withheld and paid over had not been paid over. These taxes remained in Softstar's corporate checking account, a fact of which Mr. Gollapudi was well aware. The Court finds that Mr. Gollapudi made and subscribed to a false personal income tax return Form 1040 with knowledge that it was false because he knew the taxes for which he claimed substantial tax credits for the years 1989, 1990, and 1991 had not been paid over to the IRS.
The 1989, 1990, and 1991 forms are each signed by Rao Gollapudi. As the law provides, the fact that an individual's name is signed to a federal income tax return is prima facie evidence for all purposes that the return was signed by the person. 26 U.S.C. § 6064. Each of the Forms 1040 contained a jurat which indicated that the return was signed under penalties of perjury. Therefore, the second element is satisfied.
Because Mr. Gollapudi admitted that the W-2s issued by Softstar were false, and because he had that knowledge when he submitted his W-2 with his Form 1040 that the forms were false because the taxes had not in fact been paid over, Mr. Gollapudi clearly did not believe the return to be true and correct as to every matter. Therefore, the only remaining issue, once again, is whether Mr. Gollapudi falsely subscribed to the return willfully, with the specific intent to violate the law.
As established previously, to prove willfulness, the Government must prove that Mr. Gollapudi acted voluntarily and intentionally in violation of a known legal duty. The Government must show that Mr. Gollapudi was aware of the legal duty to provide truthful information on his federal income tax returns and that he voluntarily and intentionally failed to do so.
Mr. Gollapudi is an educated individual, holding a Bachelors Degree in Chemical Engineering and a Masters Degree in Engineering from India's Institute of Technology. (TR. I, p.12) He is the President of his own corporation, of which he is the sole shareholder.
When Mr. Gollapudi filed his personal income tax Form 1040, he claimed a tax credit of $ 6000 for taxes he claimed had been withheld but he knew in fact were not withheld from his "salary." With his Form 1040 he submitted a false statement of withholding, Form W-2.
1. Mr. Gollapudi's Two Separate Entities Defense Fails Regarding The Fraud In Filing His Personal Income Taxes.
Mr. Gollapudi attempted to justify the fact that he filed a W-2 form for himself as an employee of Softstar but did not remit the $ 6000 credited on the W-2 by arguing that he must be considered two separate entities, Mr. Gollapudi, Softstar's President, and Mr. Gollapudi, Softstar's employees. (TR. III, p.97) This attempted distinction is not simply disingenuous. This testimony is so unworthy of belief that it further undermines the credibility of his previous testimony given to support the absence of willfulness. Mr. Gollapudi had knowledge of the fact that Softstar had not paid over any federal taxes withheld from employees' salaries due to the fact that it was his own intentional and voluntary violation of the duty to pay over the taxes withheld. As a result, when Mr. Gollapudi filed his own W-2 form, he committed an act of fraud.
Therefore, this Court finds that Mr. Gollapudi willfully subscribed to the false return with the intent to violate the federal tax laws. Mr. Gollapudi was never formally assigned a salary; instead, Mr. Gollapudi maintained control over the all of the funds in the corporate account, including the funds allegedly withheld from his "salary." In addition to benefiting from the false credit for taxes, Mr. Gollapudi was also able to shield Softstar from any unwanted attention by filing false W-2 forms. The record before the Court makes it clear that Mr. Gollapudi willfully filed false W-2 forms with his personal income tax filing Form 1040. Therefore, this Court finds the defendant guilty of Counts 10 to 12 of the Indictment.
This Court will enter a judgment of GUILTY on all counts.
William G. Bassler, U.S.D.J.
Date: Nov. 26, 1996