Northern District of California | Napa Valley Winery Owner Pleads Guilty To Aiding And Assisting In Filing Of False Tax Return | United States Department of Justice
By: U.S. Attorney's Office, Northern District of California
Tax evasion, cheating and fraud is certainly something that should be investigated and prosecuted, but something caught my eye in this article that needs to be discussed. Maybe some of those members here more knowledgeable about the law could help me understand this a bit more.
S E E D E D C O N T E N T
For Immediate Release U.S. Attorney's Office, Northern District of California
SAN FRANCISCO - Brian Fleury, 64, of Napa County, pleaded guilty in federal court today to aiding and assisting the preparation of a false tax return for the 2016 tax year.
According to court documents and statements made in court, Fleury and his spouse owned Napa Valley winery Metropolitan Wines, LLC and several vineyards also located in Napa Valley. For tax years 2014 through 2018, Fleury intentionally underreported income earned by Metropolitan Wines to his income tax preparer. Fleury directed some customers to pay for their wine by writing checks directly to Fleury instead of to Metropolitan Wines. Fleury wrote or directed his employees to write "OTB," for "off the books," on some of these customers' invoices. Fleury kept these payments for himself and did not report this as income earned by Metropolitan Wines. Between 2014 and 2018, Fleury underreported his and his spouse's income by $822,450.
Fleury also admitted that from 2007 through 2019, he failed to pay federal excise tax that was due on brandy he received, possessed, and sold. Fleury filed annual reports with the United States Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (TTB) that falsely stated that no wine had been removed for distilling material, no wine had been produced with the addition of wine spirits, no distilled spirits were on hand, and no spirits had been sold or received in bond. Fleury knew these statements were false.
In fact, in 2007, Fleury directed that 3,983 gallons of wine be transferred to a distilled spirits plant, and later that year, the plant returned 911.33 proof gallons of brandy to Metropolitan Wines. Fleury also admitted that he had produced 2006, 2008, and 2009 vintage brandy, and that he bottled and sold brandy from 2013 through 2018 under the name "9 Fiddy" for $350 per 375 ml bottle in regular wine bottles to conceal his sale of brandy.
In total, Fleury caused a tax loss to the IRS and TTB of $211,092.
Acting United States Attorney Patrick D. Robbins, IRS Criminal Investigation (IRS-CI) Special Agent in Charge of the Oakland Field Office Linda Nguyen, IRS-CI Special Agent in Charge of the Washington, D.C. Field Office Kareem Carter, and Anthony P. Gledhill, Assistant Administrator, Field Operations for TTB made the announcement.
Fleury pleaded guilty to one count of aiding and assisting in the preparation of a false tax return in violation of 26 U.S.C. § 7206(2), which carries a maximum sentence of three years in prison. He is scheduled to be sentenced on Aug. 13, 2025, before Senior U.S. District Judge Maxine M. Chesney. 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.
Assistant U.S. Attorney Helen L. Gilbert is prosecuting the case with the assistance of Kathy Tat. The prosecution is the result of an investigation by IRS-CI and TTB, with assistance from the Federal Bureau of Investigation.
Updated May 7, 2025 Component USAO - California, Northern
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Not to mention the cost of several agents and agencies (IRS, TTB, FBI) who were involved in the investigation over the last few years and the cost of prosecuting this guy. That whole effort must have cost the tax payers far more than the tax loss to those agencies.
If that cost is added to the guy's sentence, that is one thing, but will it be? If not, I am not very impressed with the IRS business model.
Perhaps tax investigators should work on a commission basis and if the case isn't large enough to make it worth their time, they'll simply ignore it and go after the big fish tax evaders like Trumps company that was fined $1.6 million for criminal tax fraud and found guilty on 17 criminal charges. Why waste taxpayer money going after the little guys? Although, if anyone making less than $1M a year thinks they will never get audited no matter how egregiously they cheat on their taxes, that may cause some problems since those taxpayers pay well over half of all federal income taxes collected.
Somewhat true, but the top 1% of taxpayers include those making over $663,164/year as of 2022 . Those making over $1M account a very large percentage of those 1% and that whole group paid 40.4% of all Federal income taxes.
Your statement is true, as was mine, as you'll note I said "anyone making less than $1M". Those making $1M or less pay over 50% of income taxes. It's a bit higher than that, as you point out as close as 59.6% but still well over 50% as I noted.
In general, my comment was being a bit facetious as I don't really believe they should go on a commission basis, but do think it's kind of pointless to spend more investigating the little guys than the amount of tax they were dodging. If we could push all our tax investigative resources towards going after the big fish who flaunt our tax laws and use offshore tax havens and other illegal tax shelters to hide their wealth so they don't have to pay the same percent on their income as the waiter serving them, perhaps we'll get a bigger bang (or bank) for our bucks.
Many of those shelters and havens are actually quite legal, the exceptions carved out by members of Congress over many years to aid their constituents who contribute large sums to their campaigns and get them elected (not just a R or D issue to be certain). I'm in favor of closing such loopholes for sure. Seems to me a much easier way to collect larger sums of missing tax revenue than an 8 year investigation/prosecution (using multiple agency resources) of a wine guy who avoided $211,092 in taxes. A simple act of Congress, and modification of the tax code, would collect many hundreds (perhaps thousands) of times that amount without using up massive agency resources.
$211,092 - That’s like 7,000 bottles of overpriced wine!