Accountant takes stand in area tax case

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One of the accountants who prepared the corporate and personal tax returns for Dippin Donuts and the Zourdos family took the stand on Wednesday and testified that she filed the proper paperwork based on financial information given to her by the family.

Heather O’Rourke told the jury that she never had any reason to look at the personal bank accounts of John, Helen or Dimitrios Zourdos when filing their tax returns. She said she relied on the routine W2 tax form that everyone uses to file their taxes.

“We were told that all of the deposits were going into the corporate checking accounts,” O’Rourke testified.

The Zourdos family “told us that. We don’t have corporate clients who put money into their personal accounts.”

The defense for the Zourdos family is arguing that O’Rourke should have been more proactive in looking at the family’s bank accounts and calendar books.

John, his wife Helen, and their son Dimitrios, of Rome, are on trial this week in federal court, accused of embezzling roughly $1 million in cash sales from Dippin Donuts between 2013 and 2017 and never reporting that money to the IRS. Prosecutors have accused the family of taking some cash sales from the business and depositing the cash into their personal bank accounts, then never telling their accountants or tax preparers of the deposits.

They are all charged with one count of conspiring to defraud the United States, seven counts of tax evasion and seven counts of aiding and assisting in the filing of false corporate income tax returns, according to the U.S. Department of Justice, Tax Division. They each face at least three to five years in federal prison if convicted on the charges.

Tax returns

O’Rourke took the stand Wednesday afternoon and explained that she has worked for accountant Vincent Gilroy for 30 years, assisting in corporate tax work, tax returns, bookkeeping and more. O’Rourke said she and Gilroy did accounting work for the Zourdos family for 20 to 25 years, which stopped roughly five or six years ago.

O’Rourke told the jury she did not do any financial planning or asset management for the Zourdos family, and she did not have access to their personal bank accounts.

A routine was developed with the Zourdos family in which O’Rourke said she would stop by the Dippin Donuts on Erie Boulevard West every month or so to pick up the corporate bank statements to keep track of company sales. She said she did not do this for every client, but Dippin was on her way into her accounting office in New Hartford.

O’Rourke said either John or Helen would often be at the store to let her into the office to grab the corporate bank statements.

“It was a certain drawer you pulled open” to retrieve the paperwork, O’Rourke testified.

“Sometimes they were occasionally left on the chair already put together for me. I never opened any other drawers because you don’t open other people’s desk drawers. Everything I needed was in that one drawer.”

O’Rourke said these were “quick in and out” visits. She testified that the Zourdos family told her all of the company sales were being deposited into the corporate bank accounts, and was “never” told that any company money was being deposited into any personal bank accounts.

O’Rourke told the jury there was no need to look at cash register receipts or any sales notebooks because “we had the gross sales from the bank statements.”

Using this information, O’Rourke said she would prepare drafts of the corporate tax returns and the drafts would be reviewed by her boss. Vincent Gilroy would also meet once a year with the Zourdos family to review their financial statements, she said. Gilroy was scheduled to testify on Thursday.

“Copies of financial statements and corporate returns are always submitted to the client,” O’Rourke testified. She said the Zourdos family signed a permission form stating that they had reviewed the tax returns and approved having them electronically filed.

As for filing the family’s personal tax returns, O’Rourke said she relied on their W2 forms for the wages they received from Dippin, along with separate investment accounts. O’Rourke said the W2 forms were prepared by the payroll company that handled Dippin’s paychecks.

In regards to Dimitrios Zourdos, O’Rourke specified that she never had any correspondence with him because he was not involved in the corporate bank accounts, as far as she knew. O’Rourke said she received Dimitrios’ W2 and used that to file his personal tax return.

Calendar books

According to prior testimony in the trial, employees of Dippin Donuts said the Zourdos family kept calendar books in the office to track daily sales and daily deposits. According to the prosecution, these daily notations would never balance out and there was always some amount of cash missing in the numbers.

O’Rourke testified on Wednesday that she was never shown these books or even told about them by the Zourdos family.

“I should have been told that,” O’Rourke testified. “I have no idea what they were doing.”

In 2016, the Dippin Donuts store on Black River Boulevard was audited by the IRS. O’Rourke said the auditor knew about the calendar books, and it was O’Rourke’s job to gather them from Dippin Donuts and deliver them to the auditor.

Defense attorney David Garvin, who represents John and Helen Zourdos, asked O’Rourke why she never looked in the books when she picked them up for the auditor.

“I just picked up the book and brought it to the office for the auditor,” O’Rourke replied. “We just piled everything into a box, is normally how we do it.”

She said her work on the tax return was already complete and she had no reason to double check her work or look at any new documents. She said everything was simply gathered and turned over to the auditor. The auditor was expected to take the stand on Thursday.

Garvin also asked O’Rourke about Dippin Donuts’ status as a “C Corporation” and what that meant for taxation. She explained that a C Corporation is taxed as a company, and then the owner is also taxed on any money they earn through the company.

Garvin suggested that it is a legitimate tax strategy to therefore “sweep” money out of the corporate account into a personal account to avoid too much double taxation. O’Rourke agreed that this was a strategy, but she clarified that when C Corporations typically do this, they give the owners the money through year-end bonuses, complete with checks that are accounted for on the W2 forms and get taxed.

O’Rourke said she does not know of any clients who “sweep” out the money by making untaxed cash deposits into their personal bank accounts.

Luxury buys

Two other witnesses on Wednesday told the jury about some expensive purchases the Zourdos family made.

Jay FitzGerald, of Geneva Foreign & Sports, testified about selling John Zourdos a 2001 Porsche, which he called “a really nice car.”

FitzGerald said John paid $21,000 in cash out of the $47,556 total cost of the car.

Jay Lowenstein, of Henry Wilson Jewelers in Syracuse, testified how both John and Dimitrios Zourdos came to him to buy Rolex watches. Lowenstein said John paid $18,000 in cash to buy a rose-gold, diamond-faced Rolex watch for his wife, while Dimitrios paid $12,660 in credit through Citibank for a $15,660 gold Rolex.

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