Drexel University Professor and Pharmacy Owner Faces Two Years for Tax Fraud

Gordian A. Ndubizu, an accounting professor and pharmacy co-owner, has been sentenced to two years in federal prison for tax evasion and filing false tax returns, highlighting the severe consequences of fraudulent tax practices.

The Conviction and Sentencing Details

1. Charges: Convicted on four counts of tax evasion and four counts of filing false tax returns.  
2. Time Period: Tax years 2014 through 2017.
3. Underreported Income: More than $3.28 million.
4. Tax Evasion Amount: Approximately $1.25 million.

The Role of Healthcare Pharmacy in the Scheme

The S corporation structure of the pharmacy played a crucial role in the tax evasion scheme.

Fraudulent Activities

1. Manipulated Books: Ndubizu manipulated pharmacy books to inflate costs of goods sold.
2. Hidden Profits: This fraud concealed actual profits from the IRS.
3. False Wire Transfers: Fabricated wire transfers disguised as inventory payments.
4. Overseas Accounts: Funds routed to bank accounts in Nigeria, tied to his automotive company.
5. Failure to Disclose: Ndubizu falsely stated he had no foreign accounts, violating FBAR and FATCA.

Additional Complications: Prescription Pill Conspiracy

The case was further complicated by the involvement of Ndubizu’s wife.

Florence Ndubizu’s Involvement

1. Convicted of participating in a prescription drug distribution conspiracy.
2. Found to be involved in illegal distribution of prescription pills.

Consequences and Professional Impact

Ndubizu faces significant repercussions beyond his prison sentence.

Repercussions

1. Two-year prison sentence.
2. Financial restitution.
3. Reputational damage.
4. Administrative leave from Drexel University since 2022.

Key Takeaways for Taxpayers

This case offers valuable lessons for all taxpayers.

Important Reminders

1. Accurate Reporting: Income from pass-through entities must be fully and accurately reported.
2. Foreign Account Disclosure: Foreign accounts and assets must be disclosed as required.
3. Consequences of False Records: Fraudulent records and wire transfers lead to criminal charges.  
4. Increased Exposure: Engaging in both tax evasion and other illegal activities increases prosecution risks.

The Importance of Professional Tax Guidance

Seeking professional advice is essential for compliance.

Recommended Actions

1. Consult Tax Professionals: Seek guidance from qualified tax attorneys and CPAs.
2. Preventative Guidance: Proactive advice is less costly than facing prosecution.
3. Understanding legal obligations: especially concerning S corporations and Foreign Financial assets.

Final Thoughts: Prioritize Compliance

• Long term damage: Tax evasion brings severe long term damage.
• Compliance is key: Taxpayers should always prioritize compliance.

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