A federal grand jury has indicted a Scottsdale business attorney after the Internal Revenue Service alleged he masterminded a conspiracy to avoid paying $250,000 in taxes.
Attorney Frederick E. Davidson was indicted on March 26 on three charges, including tax evasion, according to the indictment.
The indictment alleged that Davidson operated multiple law firms in Scottsdale and failed to pay approximately $250,000 in payroll taxes from 2007 to 2011. The failure to pay those taxes also caused Davidson to accrue $110,000 in penalties.
Davidson also faces charges that he actively interfered with the IRS’ attempts to collect the tax payments and falsified a federal document to mislead investigators.
Davidson is currently listed as the managing member of Davidson & Kaffer, PLLC.
According to the indictment, he first began operating Davidson Law Firm from 1990 through 2009, and then opened Davidson Law PC in the same location with the same employees in 2009.
In January 2010, the IRS contacted the defendant in an attempt to collect outstanding payroll taxes from Davidson Law Firm. It expanded that case to include Davidson Law PC the following year.
In 2012, Davidson began operating Davidson & Lester, PLLC, which would later be renamed Davidson & Kaffer, PLLC.
According to the indictment, Davidson opened different bank accounts using these multiple firms in order to conceal the business’ assets and avoid paying taxes.
The indictment also alleged that Davidson transferred over $455,000 from the businesses to the accounts of Arizona Corporation Pinnacle Pro, which he also owned.
“These transfers were falsely characterized as payments for mediation, arbitration, consulting, and marketing services,” the indictment reads.
Davidson started Pinnacle Pro in 1997, and the indictment stated that an individual only referred to as “C.K.” was named director of Pinnacle Pro in October 2013.
Davidson’s partner at Davidson & Kaffer, PLLC is Chad R. Kaffer, though there is no indication in the redacted indictment if he is the individual who took over as director at Pinnacle Pro in 2013.
Shortly after C.K. became director, Davidson, Lester & Kaffer PLLC entered a retainer agreement with the company, paying it $4,000 each month.
The indictment alleged that Davidson transferred income from his firms into Interest on Lawyer Trust Accounts, which are supposed to be used to keep client deposits separate from a law firm’s operating accounts.
Davidson pled not guilty to all charges and was released on his own recognizance.
A trial is scheduled for May 14.