Crook Goes to Jail -- Again -- This Time for Not Paying Taxes on Ill-Gotten Gains

From the Internal Revenue Service, Criminal Investigation Office:

A formerly convicted businessman who used telemarketers working from offices in Mission Viejo and Irvine to promote bogus oil and gas investments was sentenced to 30 months imprisonment for evading taxes on both his personal and corporate income tax returns. 

Raymond Lee Leonard, 54, of Mission Viejo, was further ordered on Friday by United States District Judge Josephine L. Staton to pay restitution of $2,452,546 to the Internal Revenue Service and spend three years on supervised release following his prison term. 

In August of 2012, Leonard pleaded guilty to a five-count information charging him with evading taxes on his 2006 through 2008 individual income tax returns, as well as his 2005 and 2006 corporate returns.

According to documents filed with the court, in 2004 Leonard was incarcerated due to his criminal convictions in a 2003 mail fraud case relating to telemarketing solicitation for fraudulent investment activities.  

Prior to Leonard’s incarceration, he caused his then 19 year old son, Evan Leonard, 29, also of Mission Viejo, to become the president and 100 percent shareholder of his business, Consumer Information Network, Inc. (“CIN”). Leonard directed his son to oversee CIN’s telemarketing operation while Leonard was incarcerated.

In November 2005, Leonard was released from prison and was subject to conditions of supervised release which forbade him from having any association with telemarketing and investment solicitation activities. Although Evan Leonard remained CIN’s president, Raymond Leonard returned to directing the activities of CIN from their Orange County offices, including holding frequent sales meetings with the telemarketers, conducting training sessions on how to “pitch the public” and offering incentives for the telemarketers who sold the most oil and gas investments.  

Using the alias “Jimmy Blake,” Leonard would participate in conference calls with investors in which he would promote the fraudulent oil and gas investments and act as a closer when his telemarketers had difficulty with interested investors who were asking too many questions. 

In May 2006, Leonard directed his son to transfer a significant portion of funds obtained from the CIN telemarketers’ oil and gas solicitations into two CIN bank accounts held for personal use.  Leonard then caused his son to use the funds to purchase a seven-bedroom and eight bathroom house in Laguna Hills.  

Although title to the house was placed in the name of a relative, Leonard made all the decisions concerning the house, which included major renovations, and used it as his primary residence.  During 2007 and 2008, mortgage payments and renovations to the house were paid for from bank accounts containing the diverted corporate funds.

Leonard controlled the information that his accountant used to prepare his individual tax returns for 2006 through 2008, as well as the corporate returns. 

As a result, Leonard failed to report at least $3,393,622 in income on the individual tax returns he filed for the years 2006 through 2008, resulting in a tax loss to the government of $1,093,284.  Leonard further failed to report at least $1,458,624 in income and claimed false deductions totaling $2,316,590 on CIN’s corporate returns he filed for the years 2005 and 2006, resulting in a tax loss to the government of $1,359,262.

Leonard’s son Evan Leonard pleaded guilty in October of 2013 to a one-count information charging him with subscribing to a false income tax return for the 2006 tax year.  He is scheduled to be sentenced by Judge Staton in June. 

The investigation of Raymond Leonard and Evan Leonard was conducted by IRS Criminal Investigation and the Federal Bureau of Investigation, in conjunction with the United States Attorney’s Office for the Central District of California.