Tax Law

Lawyer pleads guilty to tax charge for allegedly paying personal expenses through law firm account

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A lawyer in Cornelius, North Carolina, pleaded guilty Friday to one count of filing a false tax return based on allegations that he used his law firm account to pay personal expenses that included a condo mortgage and luxury cars.

John Francis Hanzel, 70, faces up to three years in prison and a $250,000 fine, according to a press release. A sentencing date has not been set.

The Charlotte Observer, Cornelius Today, the State and the Associated Press have coverage.

According to prosecutors, Hanzel did not have a personal bank account and did not pay himself a salary from at least 2011 through 2014. Instead, he used his law firm account to pay for personal expenses that included utility bills, mortgage payments and credit cards. Hanzel then deducted his personal expenses as business expenses.

Hanzel reported total income of less than $73,000 for a four-year period—from 2011 through 2014—and paid taxes of less than $5,500 during that time.

Hanzel’s expenses far exceeded his reported income, prosecutors said.

The March 20 indictment had alleged that Hanzel spent more than $241,000 on cars that included an Aston Martin DB9, an Audi A8, an Audi R8, a BMW X5 and a Camaro SS.

He was also accused of spending more than $56,000 on a boat and boat expenses, more than $29,000 at Hair Club for Men, more than $20,000 at a jewelry store, more than $9,000 at two plastic surgery medical offices, more than $21,000 on dental work, more than $13,000 for housecleaning services at his personal residence, and more than $39,000 on mortgage expenses and home owners association dues.

Hanzel’s law practice included counseling clients to set up offshore accounts to protect assets from creditors, including the IRS, the indictment said.

Hanzel was disbarred in July for paying personal expenses from his law firm account and for misappropriating entrusted funds, Cornelius Today reported at the time.

He did not immediately respond to the ABA Journal’s request for comment.

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