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Taxation Law Consultant Richard Zakarian Accused of Defrauding Clients

Lorain, OH-based taxation law consultant Richard Zakarian is facing criminal prosecutions, civil lawsuits and ongoing investigations for allegedly misusing funds paid to him by clients.
Millions of dollars his firm received was supposed to be used to make payroll and tax withholding payments to the IRS on behalf of said clients, but instead went straight into Zakarian’s own pocket.
Spitzer Management Inc., the client who first brought the matter to light, is among those who have already filed a lawsuit against Zakarian. The Lorain County Prosecutor is investigating the other criminal complaints that have been filed. The clients who have been victimized include businesses, non-profits, individuals, and even churches.
Spitzer outsourced their payroll and tax withholdings work to the Benjamin Franklin Tax Service. The consultant firm was supposed to take money from Spitzer, file paperwork with the IRS and clear the tax liabilities.
As per the lawsuit filed by Spitzer, they gave Zakarian more than three quarters of a million dollars for FY 2011-2012 tax liabilities. Of this, $567,130 was supposed to go to the IRS and about $186,000 for state taxes to the Ohio Treasury.  The court documents indicate that Zakarian made only $24,456 in payments to the IRS during this period.
When Spitzer found out about the fraud after a year, Zakarian offered to repay the unpaid amount. But Spitzer declined on the grounds that it would come from someone else’s unpaid tax funds. Instead, they filed a complaint with the county prosecutor and filed a lawsuit to recover the money and damages.
Zakarian also provided free tax consultant services to schools and other non-profits. The Pooh County Day Nursery School has filed a lawsuit claiming that it paid $117,000 to Zakarian’s firm over an 18 month period for taxes that remain unpaid.
Meanwhile, Richard Zakarian has been jailed on theft charges, with claims that he took money from investors and created fake paperwork to show it had been invested.

Did you know?
Accounting malpractice lawsuits are meant specifically to deal with errant CPAs, tax preparers and taxation law consultants.
If money paid by clients is embezzled by a tax professional, the IRS will still demand all the unpaid tax, penalties and interest. The client has to pay the IRS and then recover the money by filing an accounting malpractice lawsuit against the erring professional.