Preet Bharara, the United States Attorney for the Southern District of New York, announced that PETER IULO, a former referee and basketball program supervisor at Chelsea Piers Management, Inc. (“Chelsea Piers”), was sentenced today in Manhattan federal court to two years in prison for his leadership role in a massive identity theft and tax evasion scheme, and for his own personal tax evasion. IULO pled guilty in June 2012 to one count of conspiracy to defraud the United States, to evade taxes, and to file false tax returns, and one count of conspiracy to commit identity theft. He also pled guilty to four counts of tax evasion for failing to file personal income tax returns from 2005 through 2008. U.S. District Judge Barbara S. Jones imposed today’s sentence.

Manhattan U.S. Attorney Preet Bharara said: “Not only did Peter Iulo engage in identity theft and evade his tax obligations, but he aided and abetted others in doing the same. His sentence should serve as a reminder that tax cheats will be brought to justice and punished for their crimes.”

According to the Indictment to which IULO pled guilty, other documents filed in Manhattan federal court, and statements made during IULO’s guilty plea and sentencing:

Chelsea Piers is a sports and entertainment complex in Manhattan where various adult basketball leagues play their games. Referees for the basketball games are paid approximately $40 per game by Chelsea Piers. In any year in which a referee is paid more than $600, Chelsea Piers must report the income to the Internal Revenue Service (the “IRS”).

From 1996 through 2008, IULO worked as a referee for Chelsea Piers’ adult basketball leagues. During that period, he was also responsible for assigning other referees, drawn from a list that he maintained, to officiate at basketball games.

IULO and others participated in a massive identity theft and tax evasion scheme that used stolen identification information to ensure that dozens of referees were rarely, if ever, paid more than $600 per year in their own names. As part of the scheme, IULO provided Chelsea Piers with false IRS forms that contained the stolen identification information. When Chelsea Piers issued checks payable to the names of the stolen identities, IULO, and other referees who received these checks, endorsed, and then cashed or deposited them. IULO used numerous identities, including New York City police officers and firefighters who had acted as referees in the past. As a result of the scheme, IULO avoided having Chelsea Piers report the income he was paid to the IRS, and thereby avoided paying taxes on that income. In addition, IULO facilitated identity theft and tax evasion by dozens of referees at Chelsea Piers.

IULO also failed to file federal income tax returns and engaged in various affirmative acts of tax evasion between 2005 and 2008. Consequently, IULO avoided paying many thousands of dollars in taxes he owed, including on more than $60,000 of income received from Chelsea Piers alone.

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In addition to the prison term and restitution, Judge Jones sentenced IULO, 54, of Brooklyn, New York, to three years of supervised release, and ordered him to pay a $600 special assessment. IULO was also ordered to pay restitution to the IRS of $200,000.

IULO was originally charged together with a supervisor of Chelsea Piers’ basketball program, James Murray, 45, of Yonkers, New York. For his role in the scheme, Murray was sentenced in October 2012 by Judge Jones to 3 years probation, including 6 months home confinement. He was also ordered to perform 200 hours of community service and to pay $120,000 in restitution.

Patrick Hyland, 35, of Staten Island, another former Chelsea Piers basketball referee, was sentenced for his role in the scheme in February 2012 by U.S. District Judge John G. Koeltl. He was sentenced to 2 years probation, including 6 months home confinement. He was also ordered to perform 200 hours of community service, and to pay $11,407 in restitution and a $5,000 fine.

In September 2011, two other referees who participated in the scheme, Gerard Fahy, 58, of Yonkers, New York, and Robert Spence, 58, of Bayside, New York, pled guilty to conspiracy to evade taxes, conspiracy to commit identity theft, and tax evasion. Fahy and Spence await sentencing.

Mr. Bharara praised IRS-Criminal Investigation for its outstanding work in this investigation.

This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Daniel W. Levy and Stanley J. Okula are in charge of the prosecution.

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