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”), pled guilty today to various crimes arising out of his participation in a scheme to use stolen identities to evade taxes on income paid to various referees in Chelsea Piers’ adult basketball leagues.  IULO’s co-defendant, James Murray, a former Chelsea Piers employee, pled guilty for his role in the scheme on June 11, 2012.  IULO pled guilty today before United States Magistrate Judge Andrew J. Peck.

According to the Indictment to which IULO pled guilty, the Superseding Information to which Murray pled guilty, and statements made by each during their guilty pleas:

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 for which a referee is paid more than $600, Chelsea Piers must report the income payment to the IRS.

From 1996 through 2008, IULO worked as a referee for Chelsea Piers’ adult basketball leagues.  During that period, IULO was also responsible for assigning other referees to officiate at basketball games that were drawn from a list he maintained.  From 1998 through 2008, Murray was an employee of Chelsea Piers and a supervisor of its basketball program. 

IULO, Murray, and others participated in a scheme that used stolen identification information to ensure that referees were rarely, if ever, paid more than $600 per year in their own names.  As a result, they avoided having Chelsea Piers report the income they earned to the IRS, and thereby avoided paying taxes on that income.  As part of the scheme, IULO, MURRAY, and others provided Chelsea Piers with false IRS forms that contained the stolen identification information.  When Chelsea Piers issued checks payable to the stolen identities, IULO and others fraudulently endorsed the checks for the purpose of depositing or cashing them.            

For example, one referee earned more than $10,000 in 2004 for officiating games at the complex.  However, Chelsea Piers’ records and related IRS forms falsely reflected that he only received $608.  The referee accomplished this by stealing the names of members of a youth baseball team that he coached, and then arranged to be paid most of that income in the stolen names.  Another referee stole and used identities to which he had access as a court reporter for the New York State Workers' Compensation Board.  Patrick Hyland, who was also a part of the scheme, stole identities from a local Chamber of Commerce and arranged to be paid in those names, as well as in the names of friends and relatives. 

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IULO, 54, of Brooklyn, New York, pled guilty 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, related to his failure to file timely personal income tax returns for 2005 through 2008, despite depositing more than $63,000 in checks he received from Chelsea Piers into a bank account he maintained during this time frame.  IULO faces a maximum sentence of 40 years in prison, and is scheduled to be sentenced by United States District Judge Barbara S. Jones on October 26, 2012, at 2 p.m.

MURRAY, 45, of Yonkers, New York, pled guilty to one count of aiding and abetting the filing of false tax returns.  He faces a maximum sentence of three years in prison, and is scheduled to be sentenced by Judge Jones on October 11, 2012, at 11 a.m.

Hyland, 35, of Staten Island, New York, pled guilty in September 2011, and was sentenced by United States District Judge John G. Koeltl in February 2012 to two years of probation, including six months of home confinement and 200 hours of community service.  He was also ordered to pay $11,407 in restitution and to pay 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 various crimes, including conspiracy to evade taxes, conspiracy to commit identity theft, and tax evasion.  Fahy and Spence have not yet been sentenced.

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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