The Twin Shell Game

Dennis March and Greg March, twin brothers from Berlin, Maryland, each pleaded guilty to tax evasion for concealing income and failing to pay business and individual taxes.

According to their guilty pleas, the brothers owned and controlled business entities and ventures including Elite Marketing Group LLC, Elite MG LLC, and Principal Law Group. The government said they concealed income by arranging payments to a shell entity they controlled, treating those payments as business expenses or costs when they were effectively distributions of income to themselves.

Jason explains how related-party payments can cross the line from planning to concealment, why business expenses need real substance, how IRS-CI follows entity and bank records, and what business owners should do before missing returns and disguised distributions become criminal tax evidence.

KeyTakeaways

• A shell entity does not make owner income disappear.
• Related-party payments need real services, real contracts, reasonable pricing, and clean tax reporting.
• A business expense must be ordinary and necessary, and the label does not override the economic reality.
• Large cash withdrawals, missing returns, and real estate purchases can help prosecutors tell the money-trail story.
• If prior filings are wrong, the cleanup should start before IRS-CI or the DOJ controls the timeline.
• Privilege matters when the facts involve concealed income, shell entities, missing returns, or potential willfulness. 

Resources Mentioned

DOJ case source: https://www.justice.gov/usao-md/pr/maryland-brothers-plead-guilty-tax-evasion

IRS Publication 334, business expenses: https://www.irs.gov/publications/p334

IRS online payment agreements: https://www.irs.gov/paymentplans

The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Case Source

• 26 U.S.C. § 7201: Attempt to evade or defeat tax. The statute provides felony penalties for any person who willfully attempts in any manner to evade or defeat tax or payment of tax.
• IRS Criminal Investigation Manual, IRM 9.1.3: Explains § 7201, including the requirement of an affirmative act and examples of conduct that may show an attempt to evade or defeat tax.
• Spiesv.UnitedStates, 317 U.S. 492 (1943): The Supreme Court distinguished passive failure to file or pay from felony evasion and identified examples of conduct that may show an attempt to evade or defeat tax.
• Cheekv.UnitedStates, 498 U.S. 192 (1991): The Supreme Court described willfulness in criminal tax cases as a voluntary, intentional violation of a known legal duty.
• IRS Publication 334, business expenses: The IRS explains that a deductible business expense must be ordinary and necessary, with “ordinary” meaning common and accepted in the business field and “necessary” meaning helpful and appropriate.

Disclaimer 

This video is for informational and educational purposes only and does not constitute legal or tax advice. Viewing this video does not create an attorney-client relationship between you and The Law Office of Jason Carr, PLLC. The discussion is based on publicly available information and is not a complete analysis of any person’s legal rights, defenses, tax obligations, or case facts. Any commentary about what a taxpayer, business owner, or advisor “should have done” is general educational discussion only and may not apply to your situation. If you have a specific legal or tax question, consult a qualified attorney or tax professional licensed in your jurisdiction.

Comment Policy

Please do not post confidential, sensitive, or personally identifiable tax information in the comments. We do not provide individualized legal or tax advice in the comments or social media replies.

Transcript

SPEAKER_00 0:06

You're listening to Final Notice. Real tax cases exposed with Jason Carr. Each week we break down real Department of Justice tax fraud prosecutions and reveal what should have been done to avoid them. And now here's your host, Jason Carr.

SPEAKER_01 0:28

Twin Brothers, more than $9 million in concealed income, nearly $3.6 million in unpaid taxes, and a shell entity that turned business income into fake expenses. Today's case is about Dennis March and Greg March, twin brothers in Berlin, Maryland. According to their guilty pleas, Dennis and Greg each admitted to one count of tax evasion for concealing income and failing to pay business and individual taxes. From 2017 through April 2023, the government says both brothers willfully evaded paying lawful taxes owed on business and personal income tax returns. The numbers are simple. Each brother concealed more than $4.5 million in income. Each brother failed to pay nearly $1.8 million in taxes. Together, that's more than $9 million in concealed income and over $3.5 million in unpaid taxes. That is not a QuickBooks cleanup. That is not a missed estimated tax payment. That is not a bank feed problem. That is a case about structure, labels, shell entity payments, missing forms, cash withdrawals, and real estate. Sentencing in this case is set for November 6, 2026, and each brother faces up to five years in federal prison. The structure in this case started with real businesses. Beginning in 2017 and continuing into 2023, the March brothers, along with a third business partner, owned and controlled several business entities and ventures. The entities included Elite Marketing Group LLC, Elite MG LLC, and Principal Law Group. Through those businesses and other entities, they generated significant revenue and income from 2017 through 2023. That part's not the problem though. Business owners can own multiple entities. They can use LLCs. They can have management companies, operating companies, marketing entities, professional ventures, and related party arrangements. Complexity is not illegal. The problem is what the money actually did. According to the guilty pleas, the brothers concealed income by arranging payments to a shell entity they controlled. That let them treat payments as expenses or business costs when the payments were really distributions of income to themselves. That's the core move here. Money leaves the operating business, the books call it an expense, the owners still get the economic benefit. That's not tax planning, that is just relabeling. And tax cases are often built on the gap between the label and the economic reality. The brothers also failed to file numerous required IRS forms, including required business and personal tax returns. Then came the asset trail. In September 2021, the brothers sought to use income generated through the tax evasion scheme to buy real estate, including Florida properties they jointly controlled with their business partner. The purchases include several Florida real estate properties worth more than $2 million and payments to a Florida builder for two homes on undeveloped lots. From 2017 to 2022, they also withdrew more than $3.5 million in currency from business bank accounts. That's where the facts become easy to explain. Shell payments, missing returns, cash withdrawals, Florida real estate. Those are the pieces that turn a tax issue into a criminal tax narrative. So what made this criminal? Not owning several companies, not using LLCs, not buying real estate, not having related entities. The line here was concealment. A related party payment can be legitimate. One company can pay another company for real services. A management entity can charge a fee. A marketing company can be paid for marketing, and a professional services entity can be compensated for work it actually performs. But the file has to support the story. There should be a contract, invoices, work product, reasonable pricing, bank records, and tax reporting on both sides. There also needs to be a business reason that makes sense if someone outside the family asks questions. Here, the government said the brothers arranged payments to a shell entity they controlled, treated those payments as expenses or business costs, and in reality used those payments as distributions of income to themselves. That's where a business expense becomes an intent problem. And once intent is the issue, labels are not enough. The government wants to know what the brothers knew, what they reported, what they failed to file, where the money went, and whether the structure misled the IRS. That is the line. A real expense reduces taxable income. A fake expense hides taxable income. The evidence trail in this case was not exotic. It was records. First, the entities. Investigators had the operating businesses, Elite Marketing Group LLC, Elite MG LLC, and Principal Law Group, and then other ventures as well. Second, there was the Shell entity. The government said the brothers controlled the shell entity and arranged payments to it. Third, the accounting treatment. The payments were treated as expenses or business costs, even though the government said they were effectively owner distributions. Fourth were the missing filings. The brothers failed to file required business and personal tax returns and other required IRS forms. Fifth was the spending trail. Again, more than $2 million in Florida real estate, payments to a Florida building company, and more than $3.5 million in currency withdrawals from business bank accounts. That's a strong investigative path. And the IRS can ask simple questions. Who paid the shell entity? Who controlled the shell entity? What work did it do? Was there a contract? What about invoices? Was the payment reasonable? And then was the income, of course, reported? Where did that money go next? And did the owners benefit? If the answers do not match the tax reporting, the documents become the case. The one document that mattered most here was the business record treating shell entity payments as expenses. For tax purposes, a deductible business expense must be ordinary and necessary. An ordinary expense is common and accepted in the business field, and a necessary expense is helpful and appropriate for the business. That standard is simple enough to understand. If the shell entity actually performed real work for the business, the file should show it. If the payment was really a distribution of income to the owners, calling it an expense does not fix the tax problem. The tax law does not stop at the memo line. It follows a substance. The tax law behind this case is straightforward. You cannot turn owner income into a business deduction by routing it through a shell entity. Under 26 USC Section 7201, any person who willfully attempts in any manner to evade or defeat a tax or the payment of a tax is guilty of a felony and faces up to five years in prison plus fines and prosecution costs. Section 7201 requires an affirmative act. The statute also does not limit the methods by which an attempt to evade or defeat tax may be accomplished. That matters because tax evasion is often about conduct. Not one mispayment, not one accounting mistake, conduct. In spies versus United States, the Supreme Court ruled that felony evasion requires a willful commission in addition to passive omissions, and gave examples, including false entries, false invoices or documents, concealing assets or sources of income, and conduct likely to mislead or conceal. That's why this case fits the tax evasion pattern. The government did not simply say the brothers owed tax. It said they concealed income, used a controlled shell entity, treated payments as business expenses, failed to file required forms, withdrew millions in currency, and used scheme income to purchase real estate. That all is conduct. And conduct is what makes the case. There is also a willfulness lesson here. In criminal tax cases, willfulness generally means a voluntary, intentional violation of a known legal duty. The Supreme Court confirmed that standard in Cheek versus United States. Now that does not mean every taxpayer who gets the tax law wrong is a criminal. A genuine misunderstanding of tax law can matter. Cheek says a good faith misunderstanding or good faith belief that the defendant was not violating the law can negate willfulness, even if the belief is unreasonable. But this case is not about a technical disagreement over a complex deduction. The government's theory here was simpler. Business income was generated, payments were routed to a shell entity controlled by the brothers, those payments were treated as business expenses. In reality, the government said they were distributions of income to the brothers. That's why this case is useful. The more a taxpayer's story depends on labels that the records cannot support, the less it looks like a mistake, and the more it looks like concealment. At this point, there were two paths. Path one was the cleanup path. Stop the shell payments, reconstruct income, identify all entities, pull bank records, review business books, determine what services were actually performed, reclassify improper payments, file missing business returns and personal returns, amend any inaccurate filings, report the income on the correct side of the transaction, then deal with the tax. That path is painful. It can mean tax, penalties, interest, liens, installment agreements, financial disclosures, and difficult conversations, but it keeps that problem in the civil tax system if the facts still allow that. Path two was the concealment path. Keep routing money, keep treating owner distributions as expenses, keep failing the file required forms, keep withdrawing cash, keep buying real estate while the tax reporting tells a different story. That second path gives a DOJ a clean theme. The business has made money, the owners hid the income, the records called it something else, and the brothers benefited. That's a theme you do not want prosecutors to have. So if Dennis and Greg March had walked into my office before this became a criminal case, I would have started with one question. What are these payments really? Not what are they called? Not what does the general ledger say? Not what does the memo line say? What are they really? If the operating business paid a related entity, we need to know why. Did the entity provide marketing, management services, legal support, maybe administrative staffing? What about consulting? Lead generation? Technology? If yes, document it. Written agreement, invoices, proof of services, reasonable pricing, books for both entities, income reported on the receiving side. If no, stop pretending. If the payments were really distributions, compensation, draws, dividends, or personal income, then they need to be treated that way. Second, get the filings right. Business returns, personal returns, information returns. Any required employment or reporting forms. If returns are missing, file them. If the returns are wrong, amend. If the numbers are incomplete, reconstruct them from bank records, entity records, closing statements, invoices, cash withdrawals, and accounting files. Third, preserve privilege. Once the facts involve shell entities, missing returns, disguised distributions, cash withdrawals, and real estate purchases, the taxpayer should not casually explain the structure to everyone in their orbit. That means not the bookkeeper, not the business partner, not the lender, not the real estate agent, not the accountant without a privilege plan. The tax attorney should quarterback the fact review, then decide how to involve accountants and other professionals. Fourth, paper up the related party payments. That means real contracts, real services, ordinary payment terms, market pricing, contemporaneous records, and tax reporting that matches the economics. The IRS does not object to structure, it objects to fiction. The lesson from the March Brothers case is direct. A shell entity does not make income disappear. A payment label does not control the tax result. A business deduction needs a real business purpose. And if the owner still gets the economic benefit, the IRS is going to follow the money. Dennis and Greg March each admitted to concealing more than $4.5 million in income and failing to pay nearly $1.8 million in taxes. They're scheduled for sentencing on November 6, 2026. For business owners, the message here is not to avoid entities. Use entities. Use tax planning. Use structure. But make sure that the structure is real. Because once the IRS can show that the entity was just a detour for owner income, the detour becomes the case. I'm Jason Carr, tax attorney. If you want to make sure you never end up on this podcast, you know where to find me. Cartaxlaw.com. Link in the show notes. This has been Final Notice, Real Tax Cases Exposed.

SPEAKER_00 13:24

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