San Jose Resident Pleads Guilty To Tax Evasion

SAN FRANCISCO – Walter Rhodes pleaded guilty today to tax evasion, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. 

According to the plea agreement, Rhodes, 64, of San Jose, admitted he attempted to evade the payment of more than $300,000 that he owed in federal income tax liabilities for the years 2002 through 2007.  Rhodes admitted that between 2006 and 2011, he received numerous notices from the IRS explaining that he owed income taxes for the years 2002 through 2007.  In 2009, the IRS levied his bank account. Subsequently, Rhodes opened a bank account using the name and social security number of another person.  Rhodes also used that other person’s name and social security number to obtain employment as the vice president of an energy company.  In an effort to further evade payment of his employment taxes, Rhodes arranged for the salary he received from his employment to be deposited into the account he opened in the other person’s name. As of September 24, 2013, Rhodes owed $514,476 in taxes and interest for 2002 through 2007. 

Rhodes was indicted on July 25, 2015.  He was charged with one count each of tax evasion, in violation of 26 U.S.C. § 7201; obstructing administration of Internal Revenue Laws, in violation of 26 U.S.C. § 7212(a); social security fraud, in violation of 42 U.S.C. § 408(a)(7); and aggravated identity theft, in violation of 18 U.S.C. § 1028A.  Pursuant to today’s agreement, Rhodes pleaded guilty to tax evasion. The remaining charges will be dismissed.

The maximum penalty for a violation of 26 U.S.C. § 7201 is five years in prison and a fine of $250,000.  Additional monetary assessments and supervised release may be imposed; however, any sentence following this conviction 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.  Rhodes’ sentencing is scheduled for October, 11, 2016, before the Honorable Beth Labson Freemen, U.S. District Judge.

Assistant U.S. Attorney José A. Olivera is prosecuting the case.  The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.