South San Francisco Resident Pleads Guilty To Tax Fraud | USAO-NDCA


SAN FRANCISCO –Robert Stein, also known as Mikhail Solovey and Michael Swarovski, pleaded guilty to filing a false tax return announced United States Attorney David L. Anderson and Internal Revenue Service – Criminal Investigation Special Agent in Charge Kareem Carter.  The plea was accepted by the Hon. Susan Illston, United States District Judge

According to the plea agreement, Stein, 55, of South San Francisco, admitted that while he was in prison serving a prior sentence for fraud, he met S.Z., who was also in prison serving a sentence for investment and securities fraud.  After Stein and S.Z. were released from prison, S.Z. offered Stein a marketing job, to be paid by commission, selling securities and recruiting investors.  Stein worked for S.Z. beginning in late 2012, and continuing through 2017.   S.Z. provided Stein with a database of potential investors for him to make cold calls for securities sales.  S.Z. also provided Stein with a misleading script for these cold calls.  Stein admitted in his plea agreement that he lied to investors in at least two ways.  First, Stein concealed his prior fraud convictions by misrepresenting his name and his background.  Second, he misled the investors as he eventually figured out that the investments S.Z had him sell had overstated financial results.   During that time, Stein convinced investors to send at least $2,336,681 to S.Z. who paid Stein approximately $416,564 in commissions as part of the scheme.  Stein failed to report the commissions on his U.S. Individual Income Tax Returns.  To conceal the commission income from the IRS, Stein deposited the commissions into two nominee corporations’ bank accounts, Massachusetts Diagnostic Service, Inc. (MDS) and R&M Marketing (R&M) accounts in 2014, 2015, 2016, and 2017.  To further conceal commission income from the IRS, Stein also caused a tax return preparer to prepare and file false corporate income tax returns for MDS and R&M.  The unreported income resulted in a tax due in the amount of $98,197.

Stein’s sentencing hearing is scheduled for October 30, 2020, before Judge Illston.  Stein was charged by information on July 6, 2020 with one count of filing a false tax return for the year 2013.  He pleaded guilty to the one count.  The maximum statutory penalty for filing a false tax return, in violation of Title 26, U.S.C. § 7206(1) is three years in prison, a fine of $250,000 and one year of supervised release.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The case is being prosecuted by the Special Prosecutions Unit of the United States Attorney’s Office for the Northern District of California.  The prosecution is the result of an investigation by the Internal Revenue Service – Criminal Investigation.    
 



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