Indictment alleges conspiracy, witness tampering, obstruction of justice, and multiple tax violations in a barratry scheme
Texas Border Business
A federal magistrate in Houston denied bail for Bellaire attorney Jeffrey Stern also with offices in McAllen, Texas. Stern was indicted by a federal grand jury on charges of tax fraud, obstruction of justice and witness tampering that government investigators say went on for more than a decade.
The Department of Justice, U.S. Attorney’s Office Southern District of Texas said through a press release
Houston personal injury attorneys Jeffrey Stern, Deborah Bradley,
During the 3 1/2-hour hearing, Assistant U.S. Attorney Robert Johnson argued that Stern shouldn’t be allowed bail, laying out the government’s case for the magistrate, Peter Bray.
The charges against Stern and his alleged co-conspirators stem from a long-running criminal scheme to evade taxes. Stern also allegedly obtained his personal injury cases through barratry – the illegal practice of soliciting law firm clients by paying kickbacks to middlemen known as “case runners.”
Stern and his co-conspirators sought to enrich themselves by illegally recruiting clients through the payment and receipt of illegal kickbacks in order to generate personal injury cases and legal fees, according to the charges. They allegedly worked to conceal and disguise the payments and hide their resulting income from the IRS by filing false documents with them. These allegedly included tax returns, 1099 forms and an offer in compromise that falsely reported material information including amounts of income, expenses,
Once Stern became aware of the investigation, he allegedly worked to obstruct justice by ordering others to destroy subpoenaed documents and instructing co-conspirators not to cooperate.
According to the indictment, Stern employed multiple devices to disguise his illegal kickback payments to case runners as legitimate referral fees paid to attorneys or as other types of legitimate payments that would be deductible under the tax laws. Stern allegedly funneled kickback payments to case runners Ratcliff and Marcus Esquivel (charged in a separate case) through the accounts of Bradley and Plezia. The charges allege Stern claimed the payments were legitimate referral fees to Bradley and Plezia rather than illegal kickbacks to Ratcliff and Esquivel.
Johnson said Stern engaged in barratry, the illegal practice of paying runners to recruit defendants for personal injury lawsuits. He said Stern tried to cover it up through tax fraud, hiding or destroying documents and pressuring potential witnesses not to cooperate.
The government went through the 187-paragraph indictment to show where Stern allegedly tampered with witnesses and tried to obstruct the government’s investigation by hiding or destroying documents, destroying evidence or creating false evidence to short-circuit the government’s investigation.
The indictment also alleges Stern wrote referral fee checks in the names of attorneys who never received the checks. Instead, Morris would allegedly cash the checks with forged endorsements at check-cashing locations and use the funds to pay illegal kickbacks owed to himself and other case runners for Stern’s referrals.
Stern allegedly also filed 1099 forms that falsely reported to the IRS the nature of the payments and to whom they were made. On his tax returns, Stern falsely reported the illegal, non-deductible kickback payments as legitimate, deductible business expenses, which greatly reduced his tax burden, according to the charges.
Bradley and Plezia allegedly filed false tax returns to facilitate the scheme. Ratcliff failed to report many of the kickback payments he received as income on his company’s tax returns, according to the charges. Stern and Morris also allegedly caused another attorney to file false tax returns and a false offer in compromise with the IRS to help cover-up the scheme.
Stern’s lawyers argued that the government’s case has yet to be proven and that Stern has roots in the community that ensure he’s not a flight risk.
Stern practiced law from Stern Law Group, a law firm he founded. His website says that the firm is a Houston-McAllen law firm, and they have helped 40,000 clients. Stern will have another chance to argue for bail to be set when his case goes before Judge Lee Rosenthal. The McAllen office address is 1100 E Jasmine Ave Suite201, McAllen, TX 78504