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Ex-BDO Seidman Partner Favato Gets 18 Months for Tax Crimes

Stephen A. Favato, a former partner at New York-based auditor BDO Seidman LLP, was sentenced to 18 months in prison for two tax crimes related to helping a client falsify his returns.
Favato was sentenced in federal court in Newark, New Jersey, where a jury convicted him in August 2010 of one count of obstructing the administration of Internal Revenue Service laws and one count of aiding the preparation of a false tax return. He faced as many as three years in prison on each count. He was acquitted on one count of tax evasion.

Prosecutors showed jurors that Favato, formerly a partner in BDO Seidman’s office in Woodbridge, New Jersey, advised client Daniel Funsch to include false items on joint tax returns in 2002, 2003 and 2004, according to a statement by the Justice Department and Internal Revenue Service. Favato gave advice that“enabled Funsch to fraudulently deduct his personal yacht expenses as business expenses,” according to the statement.

Funsch, chief executive officer of Intarome Fragrance & Flavor Corp. in Norwood, New Jersey, pleaded guilty in 2006 to conspiracy and tax evasion, court records show. Funsch testified as a prosecution witness against Favato.

Favato’s attorney, Alan Zegas, didn’t immediately return a call seeking comment.
After Favato’s indictment in April 2009, he was placed on a leave of absence, BDO Seidman spokesman Jerry Walsh said in an e-mailed statement at the time of his conviction. A month later, his partnership interest was terminated, Walsh said.

The case is U.S. v. Favato, 09-cr-237, U.S. District Court, District of New Jersey (Newark).


Read more at: Tax Times blog

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