Tax Attorney in Brooklyn Wins Acquittal in $2.1m Case

The prosecution position was that two related businesses operated as one in practice, so invoices exchanged between them could not reflect genuine arms length transactions.

Prosecutors argued that the second entity functioned as a paper company created to reduce taxes, and they treated the invoices as formal documents issued without any actual delivery of goods or provision of services. 

Based on that theory, they framed the conduct as a deliberate fraud designed to distort taxable records, and they sought penalties consistent with a high value, intent based economic offense.

The client maintained that the sole focus should be the real world flow of work, because both entities had ongoing operations that required parts, labor, and documented production activity. 

The client asserted that employees were actually hired, manufacturing tasks were performed, and products were supplied to meet business needs, which meant the invoices corresponded to real obligations rather than invented numbers. 

The client also emphasized that invoicing followed normal business practice for internal procurement and contracting, including routine documentation of quantities, pricing, and delivery timing.

False invoice cases are usually prosecuted as intentional fraud or falsification of business records tied to a tax benefit, rather than as a mere civil underpayment dispute, because the state must show knowing conduct and a wrongful purpose. 

Prosecutors tend to highlight the absence of “economic substance,” meaning they claim there was no real exchange of value, no legitimate business purpose, and no genuine expectation of performance beyond creating a paper trail. 

In practice, that framing increases pressure on the defense, because investigators may present selected bank records, vendor lists, or staffing overlaps as “proof” that transactions could not be real.

When the alleged invoice value exceeds roughly $2 million, prosecutors often treat the case as a major financial crime, which can increase charging severity and bargaining leverage, even before a jury hears the evidence. 

Large numbers also make intent arguments emotionally powerful, because the state may describe the conduct as an organized scheme rather than isolated paperwork mistakes. 

For that reason, a defense strategy must reduce the case back to its real evidentiary question, which is whether the state can prove beyond a reasonable doubt that the invoices were fictitious and knowingly issued as such.

To rebut the claim that nothing happened in the real world, the defense assembled objective business records that demonstrated ongoing performance and supply activity. 

Supporting materials commonly include subcontract or purchase agreements, facility leases, shipment and outbound logs, inventory movement records, and detailed transaction statements that show how amounts were computed. 

When those records are organized month-by-month with consistent quantities, unit pricing, and delivery timing, they can directly undermine the prosecution’s premise that invoices were issued “in form only.” 

This is also where a Tax attorney in Brooklyn adds value by aligning the operational documents with the invoicing chronology, so the jury can see a single, verifiable story rather than disconnected paperwork.

Because prosecutors frequently argue that related companies are “effectively the same,” a key defense step is demonstrating independent operational functions that would reasonably require inter company transactions. 

Evidence may include separate staffing assignments, distinct production responsibilities, independent vendor and customer relationships, and consistent operational continuity that predates the investigation. 

The defense can also highlight practical business reasons for a multi entity structure, such as scaling manufacturing capacity, separating product lines, or managing contracting workflows, as long as the reasons are supported by contemporaneous records rather than after the fact explanations. 

By showing that both entities operated as functioning businesses with real work output, the defense reduces the plausibility of the state’s “paper company” theme.

Even if the prosecution criticizes bookkeeping choices, the state still must prove the invoices were knowingly false and used with wrongful intent, not merely that the structure looked suspicious. 

The defense framed the evidence around intent, emphasizing that documented agreements, measurable performance, and trackable deliverables are inconsistent with a deliberate fabrication theory.

The strategy also addressed how business reality is established in court, because genuine transactions are shown by the parties’ conduct, mutual expectations, and actual performance, not by an investigator’s assumption that related party dealing is automatically fraudulent. 

When that framework is presented clearly, it becomes harder for the prosecution to bridge the gap from “unusual” to “criminal beyond a reasonable doubt.”