Pittsburgh, PA
June 13, 2021
    News           Sports           Lifestyle           Classifieds           About Us
Local News
Pittsburgh Map
Place an Ad
Auto Classifieds
Today^s front page
Headlines by E-mail
Home >  Local News Printer-friendly versionE-mail this story
Cayman account reveals tax fraud

Squirrel Hill man receives sentence

Friday, March 08, 2002

By Torsten Ove, Post-Gazette Staff Writer

Richard E. McCoy of Squirrel Hill, a Penn State graduate in the mid-1960s, ran his own company as a plastic raw materials broker and became "a man of no small means," according to a federal prosecutor.

But McCoy, 58, didn't like sharing his money with the Internal Revenue Service, and yesterday in federal court he was sentenced to 21 months in prison for hiding nearly $400,000 in a secret bank account on Grand Cayman.

The sentence was the lowest that U.S. District Judge William Standish could have imposed, and the $10,000 fine he ordered McCoy to pay was much lower than the maximum $50,000 that Assistant U.S. Attorney Paul Hull suggested.

After listening to testimony from McCoy's friends, Hull told the judge that McCoy's "sophisticated and comprehensive" scheme to avoid his taxes through an offshore shell account was motivated entirely by greed.

"We believe the court should take into consideration that greed," said Hull.

In all, McCoy owes $965,000 to the IRS, although the criminal case involves less than half that.

Hull said if McCoy paid the whole amount, he'd still be worth about $1 million.

But Standish said much of that worth is tied up in assets McCoy owns jointly with his wife, Joyce, including their $353,000 house on Albemarle Avenue. Joyce McCoy has not been implicated in the scheme and McCoy's attorney, Charles Porter, said yesterday that she knew nothing about her husband's illegal activity.

Porter said McCoy is also liable for interest and penalties on the total amount that will leave him with little in the end.

"I would like to apologize to the federal government with deep regret for my actions," McCoy told the judge after his friends had testified on his behalf.

McCoy is the fourth local tax cheat done in by John M. Mathewson of Texas, who owned Guardian Bank & Trust on Grand Cayman. When the FBI arrested him in 1996 for laundering money in a cable-piracy scheme, he turned over his encrypted computer records. For the first time, federal agents had access to the hidden accounts of an offshore bank and about 1,500 clients, who were soon targeted by the Criminal Investigation Division of the Internal Revenue Service.

The IRS probe showed McCoy falsified tax returns for 1993 and 1994 while running two corporations, Polymer Industries and Polymer International, out of his house.

According to the IRS, he opened sham corporations at Mathewson's bank, diverted his business income checks to them to avoid paying taxes and didn't tell his tax preparer what he was doing. Because the gross income for his businesses was prepared on the basis of his deposits to business accounts in the United States, his concealment of income caused his business income to be underreported.

In 1993, he hid $37,827 in business receipts and another $818,748 in 1994. From 1992 through 1994, McCoy did not report a total of $909,687. The total tax loss was $398,529.

Back to top Back to top E-mail this story E-mail this story
Search | Contact Us |  Site Map | Terms of Use |  Privacy Policy |  Advertise | Help |  Corrections