Manhattan Art Gallery Owner Mary Boone Sentenced To 30 Months In Prison For Filing False Tax Returns

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that Manhattan art gallery owner MARY BOONE was sentenced to 30 months in prison for filing false tax returns as part of a multi-year tax fraud scheme that cost the U.S. Treasury over $3 million.  BOONE previously pled guilty to two counts of filing false tax returns in 2011 before U.S. District Judge Alvin K. Hellerstein, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As Manhattan art gallery owner Mary Boone has admitted, her personal tax returns were more a work of impressionism than realism.  Seemingly in order from afar, the picture Boone painted of her profits, losses, and expenses was, upon closer inspection, a palette of lies and misrepresentations mixed together to avoid paying over $3 million in taxes.  Today, Boone was sentenced to 30 months in prison for failing to pay her fair share in taxes.”

According to allegations in the Information to which BOONE pled guilty, court filings, and statements made in public court proceedings:

BOONE, the owner of Mary Boone Gallery (the “Gallery”) in Manhattan, engaged in a multi-year scheme to evade paying millions of dollars in federal income taxes for the calendar years 2009 through 2011.  During each of these years, BOONE regularly provided false records to her accountant and thereby caused the accountant to prepare false tax returns for BOONE and the Gallery. 

BOONE’s tax fraud scheme had two principal components.  First, BOONE converted the Gallery’s funds to her own personal use and then falsely claimed these personal expenses as business deductions.  In 2011, BOONE used business funds to pay approximately $1.28 million in personal expenses, including $793,003 to remodel BOONE’s Manhattan apartment; $120,856 for rent and expenses for a second Manhattan apartment; and approximately $300,000 in personal credit card charges.  To evade paying federal income taxes on this personal income, BOONE fraudulently characterized these expenses as tax-deductible business expenses on the handwritten check registers that BOONE provided to her accountant.  For example, BOONE falsely characterized a $500,000 payment to a contractor for remodeling BOONE’s apartment as a “commission.”  In addition, BOONE withdrew over $560,000 in cash from the Gallery’s accounts between 2009 and 2011.  BOONE either falsely reported the withdrawals as business payments to a printing company or failed to report them at all.

Second, BOONE artificially inflated the Gallery’s stated expenses and, to a lesser degree, the Gallery’s stated income, in order to fraudulently generate business losses when, in reality, the Gallery was generating profits each year.  In furtherance of this aspect of the tax fraud scheme, BOONE engaged in complex financial machinations and further falsification of the check registers that BOONE provided to her accountant.  For example, in 2011, BOONE transferred approximately $9.5 million from one business bank account to another, and falsely characterized these transfers as tax-deductible business expenses, such as commissions to artists, on the check registers that Boone provided to the accountant.

In all, BOONE caused the Internal Revenue Service (“IRS”) to incur losses of over $3 million, not including penalties and interest.

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In addition to the prison term, Judge Hellerstein ordered BOONE to serve one year of supervised release, including 180 hours of community service.  Boone previously paid court-ordered restitution to the IRS in the amount of $3,097,160, which represents the additional tax due and owing as a result of BOONE’s filing of false individual and corporate income tax returns for calendar years 2009, 2010, and 2011.

Mr. Berman praised the outstanding investigative work of IRS Criminal Investigation in this case.

This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution.