Inventor, attorney sentenced to prison, owe $2 million for tax evasion – Reuters

The word “taxes” is seen engraved at the headquarters of the Internal Revenue Service (IRS) in Washington, D.C., U.S., May 10, 2021. REUTERS/Andrew Kelly

  • Inventor underreported proceeds from patent infringement settlements
  • Money was hidden in lawyer’s trust account

(Reuters) – A Dallas federal judge has sentenced an inventor and his attorney to 18 and six months in prison, respectively, for having engaged in a tax-evasion scheme to shield income from his patent licensing company MyMail Ltd, according to a statement on Wednesday from the U.S. Department of Justice.

Inventor Thomas Selgas and Texas attorney John O. Green were also ordered to collectively pay the U.S. government over $2 million in restitution by U.S. District Judge Karen Gren Scholer on Tuesday.

According to DOJ’s 2018 indictment, Selgas and Green conspired to obstruct the collection of Selgas’ taxes by hiding funds in Green’s Interest on Lawyers Trust Account (IOLTA), which is typically used by lawyers to hold money for clients.

The Department of Justice declined to comment on the sentencing. Selgas’ attorney Charles McFarland of New Castle, Kentucky and Green’s attorney Michael Minns of the Law Office of Michael Lewis Minns didn’t immediately respond to a request for comment.

Selgas and his wife Michelle received distributions of $1.1 million of $6.8 million that MyMail won from settling infringement cases with internet service providers over computer network-related patents.

DOJ alleged that after refusing to pay taxes, Selgas omitted much of the income from tax returns, transferred part of it to a metals trading firm to buy and sell gold coins, and stored the proceeds and other personal funds in Green’s account for ten years, concealing the true amount of his income from the IRS.

Selgas also used money from Green’s account to pay his and his wife’s personal expenses, DOJ said.

A Dallas jury convicted Selgas of tax evasion and both Selgas and Green of conspiracy to defraud the U.S. in 2020, while acquitting Michelle Selgas.

Green — a Texas attorney who was also unanimously expelled from the Idaho House of Representatives in 2020 following his conviction — appealed the conviction and sentence to the 5th U.S. Circuit Court of Appeals on Tuesday.

The case is United States v. Selgas, U.S. District Court for the Northern District of Texas, No. 3:18-cr-00356.

For DOJ: Robert Kemins and Mitchell Galloway of the Justice Department’s Tax Division.

For Selgas: Charles McFarland of New Castle, Kentucky

For Green: Michael Minns of the Law Office of Michael Lewis Minns

Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com

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