Date: Aug. 14, 2024 Contact: newsroom@ci.irs.gov SCRANTON — The United States Attorney’s Office for the Middle District of Pennsylvania and the Department of Justice, Tax Division announced that Robert J. Powell, of Palm Beach, Florida, appeared in federal district court today and pled guilty to a one-count criminal information charging him with tax evasion for calendar year 2016, in connection with substantial legal fees he earned while associated with the Powell Law Group, P.C., a Luzerne County-based law firm. Powell was released on an unsecured bond while awaiting his sentencing. According to court documents and statements made in court, Powell sought to evade a substantial tax that was due and owing the IRS for 2016 by using nominee bank accounts, causing an accountant to file a request for a filing extension that falsely reported zero estimated tax liability for 2016, and making false statements during an IRS audit in 2019. Attached hereto is a detailed statement of facts that accompanied the guilty plea. Powell’s license to practice law was suspended in 2009 and he was subsequently disbarred in 2015. As a result, in 2009 he relinquished his ownership of the Powell Law Group. He nevertheless retained the right to collect 90% of the remainder of any future fees collected by the firm after the payment of firm expenses. Specifically, the Powell Law Group represented thousands of plaintiffs in a mass tort litigation that settled for approximately $5.15 billion in 2015 and the Powell Law Group was expected to receive approximately $120 million in attorneys’ fees from that settlement. Prior to the attorneys’ fees disbursement, the Powell Law Group and its co-counsel used those future legal fees as collateral to obtain a series of loans totaling over $125 million. Instead of depositing the loan proceeds into the Powell Law Group's bank accounts and using them to pay firm expenses, Powell instead directed the loans to nominee bank accounts that were under his control. He then used the loan proceeds for his personal debts and expenses, as well as his and his former law partner’s personal benefit. In June 2016, most of the attorneys’ fees were finally disbursed and the loans were repaid. Nevertheless, Powell did not file a personal income tax return and pay taxes on the receipt of the fees in that year. After the initial disbursement and through October 2019, an additional $12 million in attorneys’ fees was distributed and the Powell Law Group’s share continued to be directed into nominee bank accounts that Powell controlled. Powell personally received an additional $3.6 million of the fees during that time. Indeed for the full period of tax years 2010 through 2022, Powell did not file income tax returns for those years despite receiving and spending other personal income. Rather he willfully attempted to evade taxes due and owing by him to the United States. In 2019, when the IRS commenced an audit of his tax liabilities, Powell made false statements to the interviewing revenue agents to conceal his income and expenditures for tax years 2014 through 2016. Namely, Powell falsely stated that his only source of funds were loan advances, that he and his spouse did not have signature authority or control over other bank accounts, and that he had no ownership in any corporations. Ultimately, as alleged by the government, over the relevant time period Powell received millions in income resulting in substantial taxes that were due but not paid to the United States. In the plea agreement filed with the Court, Powell agreed to pay full restitution to the IRS in an amount to be determined by the Court at a later date. “For over a decade Robert Powell failed to file personal income tax returns and executed a sophisticated scheme to evade paying substantial taxes that were due and owing the IRS from massive legal fees his firm earned, said U.S. Attorney Karam. “The brazenness of his conduct included using nominee bank accounts, reporting zero estimated tax liability for the years in question, and repeatedly lying to IRS auditors attempting to unravel the scheme. I want to thank all the IRS agents, prosecutors, and support staff for their hard work that will allow justice to be finally served in this important case.” “Federal income tax compliance should be equally shared among all Americans,” said Denise Leuenberger, Acting Special Agent in Charge, IRS Criminal Investigation, Philadelphia Field Office. “Defrauding the government with an elaborate scheme to underreport taxable income is unlawful. Mr. Powell’s plea today serves as an important reminder that IRS-CI is committed to bringing to justice those who evade their federal income tax responsibilities.” The Acting Deputy Assistant Attorney General of the Justice Department's Tax Division, Stuart M. Goldberg, said, “Powell engaged in a lengthy scheme to hide his income and not pay taxes. And when audited by the IRS, rather than step up, acknowledge his illegal conduct, and pay what he owed, he chose to double down and lie to the revenue agents who interviewed him.” The case was investigated by the Scranton office of the Internal Revenue Service Criminal Investigation (IRS CI). Senior Litigation Counsel Phillip J. Caraballo, Tax Division Trial Attorney Alexandra Fleszar, and Criminal Division Chief Bruce D. Brandler are prosecuting the case. The maximum penalty under federal law is five years of imprisonment, a term of supervised release following imprisonment, a fine and restitution. A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines. Statement of facts Defendant Robert J. Powell was an attorney, businessman, and investor. Robert J. Powell was a resident of Luzerne County, Pennsylvania, until in or about 2009, when he relocated to Palm Beach County, Florida. Until on or about Aug. 31, 2009, Robert J. Powell was the founder and owner of the Powell Law Group, P.C. (“Powell Law Group”), a law firm located in Luzerne County, Pennsylvania, and incorporated in the Commonwealth of Pennsylvania in or about December 2002. In or about August 2009, Robert J. Powell’s license to practice law was suspended by the Commonwealth of Pennsylvania. Robert J. Powell subsequently was disbarred from the Bar of the Commonwealth of Pennsylvania, in or about January 2015. Prior to Robert J. Powell’s suspension from the practice of law, he owned 90% of the shares of the Powell Law Group. The remaining 10% of shares were owned by his partner, attorney Jill Moran. On or about Aug. 31, 2009, Robert J. Powell relinquished his directorship of the Powell Law Group, and Jill Moran became the managing director and president of the Powell Law Group. Robert J. Powell also surrendered his shares in the Powell Law Group, leaving Jill Moran the sole shareholder. Beginning prior to Robert J. Powell’s suspension from the practice of law and incarceration, the Powell Law Group served as counsel for approximately 4,300 plaintiffs in a mass tort litigation (the “Mass Tort Litigation”). On or about Sept. 15, 2009, Robert J. Powell and Jill Moran entered a memorandum of understanding whereby they agreed that any future attorneys’ fees from the Mass Tort Litigation would first be applied to pay the Powell Law Group’s expenses, with 90% of the remaining fees disbursed to Robert J. Powell, and 10% of the remaining fees disbursed to Jill Moran. In or about April 2014, the Mass Tort Litigation settled for approximately $5.15 billion. Of that settlement, the Powell Law Group expected to receive attorneys’ fees in excess of approximately $120 million. In or about May 2014, the Powell Law Group and two co-counsel law firms entered a loan agreement with Financing Company #1. Pursuant to that loan agreement, Financing Company #1 agreed to loan approximately $100 million to the Powell Law Group and the two co-counsel law firms. The loan was collateralized by the anticipated attorneys’ fees from the Mass Tort Litigation. As Robert J. Powell had relinquished his ownership of the Powell Law Group, he provided Jill Moran the loan agreement with Financing Company #1, to sign on behalf of the Powell Law Group. Pursuant to the loan agreement with Financing Company #1, and after the payment of fees and expenses, the Powell Law Group and the two co-counsel law firms were each designated to receive approximately $33 million in loan proceeds. Of the $33 million in loan proceeds designated for the Powell Law Group, approximately $9 million was sent by Financing Company #1 to three financial institution creditors holding outstanding debt-related judgments against Robert J. Powell, the Powell Law Group, and Jill Moran. The remaining Powell Law Group loan proceeds of approximately $24 million were deposited into an account held in the name of Company #1. Robert J. Powell arranged for the Powell Law Group’s loan proceeds to be held in Company #1’s bank account, instead of transferring those funds to the Powell Law Group’s bank accounts. Robert J. Powell had the ability to request distributions of the Powell Law Group loan proceeds held in Company #1’s bank account. Robert J. Powell used funds from the Powell Law Group loan proceeds held in Company #1’s bank account for his own personal expenses and investments, including to pay down personal debts accrued by Robert J. Powell. In or about May 2015, the Powell Law Group and the two co-counsel law firms refinanced the loan agreement with Financing Company #1, by entering an agreement with Financing Company #2. Pursuant to that agreement, Financing Company #2 agreed to repay Financing Company #1, and to distribute an additional approximate $7.6 million to the Powell Law Group and the two co-counsel law firms. The funds distributed by Financing Company #2 were collateralized by the anticipated attorneys’ fees from the Mass Tort Litigation. As Robert J. Powell had relinquished his ownership of the Powell Law Group, he provided Jill Moran with the agreement with Financing Company #2, to sign on behalf of the Powell Law Group. Financing Company #2 distributed the additional approximate $7.6 million to a bank account held in the name of Company #1. Robert J. Powell retained those funds in a bank account held in the name of Company #1, instead of transferring those funds to the Powell Law Group’s bank accounts. On or about April 8, 2016, the Powell Law Group and the two co-counsel law firms entered a second amendment to the agreement with Financing Company #2. As Robert J. Powell had relinquished his ownership of the Powell Law Group, he provided Jill Moran with the second amendment, to sign on behalf of the Powell Law Group. Pursuant to the second amendment, Financing Company #2 distributed an additional $3 million to Company #1’s bank account. Robert J. Powell used funds from the $3 million for personal obligations and expenses. Between in or about February and June 2016, the trustee overseeing the Mass Tort Litigation (the “Tort Trustee”) repaid Financing Company #2 in full, by distributing approximately $125,849,595.59 in attorneys’ fees due to the Powell Law Group. Following the payoff of Financing Company #2, all additional attorneys’ fees due to the Powell Law Group from the Mass Tort Litigation were distributed by the Tort Trustee to a bank account held in the name of a co-counsel law firm. Between in or about June 2016 to October 2019, the Tort Trustee distributed in excess of approximately $12 million to the co-counsel law firm’s bank account. Nearly all of those approximate $12 million were in turn transferred to Company #1’s bank account. Of that approximate $12 million in additional attorneys’ fees distributed by the Tort Trustee, Robert J. Powell personally received in excess of approximately $3.6 million, between in or about June 2016 through August 2019. Robert J. Powell personally received those funds from Company #1’s bank account, including by requesting that Company #1 transfer funds to a bank account under Robert J. Powell’s control, but held in the name of 656 Hermitage Circle LLC. Robert J. Powell used the funds held in 656 Hermitage Circle LLC’s bank account for his own personal expenses and investments. Robert J. Powell failed to file personal income tax returns for tax years 2010 through 2022, despite receiving and spending personal income during those years, and willfully attempted to evade taxes due and owing by him to the United States. For tax years 2015 through 2019, Robert J. Powell’s accounting professionals filed with the Internal Revenue Service (“IRS”) tax filing extensions that reported zero estimated tax liabilities, on the following dates: a tax filing extension for tax year 2015, filed on or about April 14, 2016; a tax filing extension for tax year 2016, filed on or about April 12, 2017; a tax filing extension for tax year 2017, filed on or about March 17, 2018; a tax filing extension for tax year 2018, filed on or about March 10, 2019; and a tax filing extension for tax year 2019, filed on or about July 9, 2020. In or about August 2019, the IRS notified Robert J. Powell that he was the subject of an IRS audit. On or about Oct. 22, 2019, Robert J. Powell was interviewed by IRS revenue agents in the course of the audit. During that interview, Robert J. Powell made several false statements to the IRS revenue agents, to conceal his income and expenditures during tax years 2014, 2015, and 2016. Those false statements included: that his only sources of funds were loan advances; that he and his spouse did not have signature authority or control over any other bank accounts; and that he had no ownership in any corporations. CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.
