The Department of Justice has announced that Michael "The Situation" Sorrentino (Mike) and his brother, Marc Sorrentino, were indicted today on charges including tax evasion, structuring and falsifying records. These charges are in addition to charges which are already pending against the pair.
In September of 2014, the Sorrentino brothers were indicted on a number of tax-related charges. Mike was initially charged with one count of conspiracy; two counts of filing false tax returns for 2010 through 2012; and one count for allegedly failing to file a tax return for 2011. Mike's brother, Marc, was charged with one count of conspiracy and three counts of filing false tax returns.
Today, Mike was additionally charged with tax evasion and structuring funds to evade currency transaction reports and Marc was additionally charged with falsifying records to obstruct a grand jury investigation.
The feds had originally alleged that Mike and his brother, Marc (who is also Mike's manager) used two companies they controlled, MPS Entertainment and Situation Nation, to evade taxation. MPS Entertainment and Situation Nation were S-corporations which means that they were pass-through entities: the income and expenses pass through to the shareholders (Mike and Marc). It's alleged that the brothers took money from the companies for personal expenses including "high-end vehicles, purchases of high-end clothing, and personal grooming expenses" but claimed that they were legitimate business expenses. The brothers are also accused of deliberately understating income received by the companies. Mike was charged with failing to file a personal tax return in 2011, despite earning nearly $2 million that year.
The new indictment now alleges that Mike evaded his 2011 income taxes in a number of ways: failing to file a personal return, filing a false corporate return for Situation Nation, and concealing his cash income.
It is also now alleged that the brothers conspired to defraud the United States by not paying all federal income tax owed on approximately $8.9 million that Michael earned between 2010 and 2012. The feds claim that the brothers filed or caused to be filed false tax returns that understated gross receipts, claimed fraudulent business deductions, disguised income payments made to the brothers and to others, and underreported net business income. As part of the conspiracy, the brothers also reportedly commingled funds among business and personal bank accounts and used business money to pay for personal items.
Mike is also accused of structuring, or making multiple cash deposits on the same day in amounts less than $10,000, into different bank accounts that he controlled, in an effort to evade reporting requirements. The actual practice of making cash deposits (or withdrawals) of less than $10,000 is not illegal; it's only a violation of the law when the transactions are structured "for the purpose of evading" those reporting requirements.