Felix Landau, 61, a lawyer previously practicing in Bellevue, was convicted March 17 in U. S. District Court in Seattle of two counts of tax evasion, two counts of making false statements and one count of obstructing justice in connection with an Internal Revenue Service Audit of his tax returns.
Landau, a sole practitioner who lives in Redmond, significantly under reported his gross receipts on his tax returns in 2000, 2001, and 2002. When the IRS audited his returns in 2003, Landau lied to an IRS agent and failed to disclose a bank account into which he had deposited more than $90,000 in income. U.S. District Judge Marsha J. Pechman found Landau guilty following a seven-day bench trial.
Judge Pechman stated that Landau was “a well educated attorney” whose family law practice included examining tax returns for clients going through divorce. “It is almost impossible for him to look at his own tax returns and believe he was making only $24,000 a year, supporting a family with three children, and carrying on an affair,” Judge Pechman said.
According to testimony at trial, in 2000, Landau under reported his income by about $87,000 thus avoiding an additional $18,000 in taxes. The next year, 2001, he under reported his income by about $85,000 avoiding an additional $20,000 in income taxes. In 2002, Landau under reported his income by $92,000 thus avoiding an additional $22,000 in taxes.
In March of 2003, an IRS agent asked Landau to provide a variety of records related to his billing and bank records. Landau failed to report one bank account into which he had deposited gross receipts from his law practice. Further, Landau claimed deposits into his bank accounts were cash funds from his new fiancé, when in fact, the deposits were checks from his clients and income that should have been reported on his tax returns.
Prosecutors argued that Landau began hiding his income in 2000 when he began an affair with a woman working across the hall from his office. Landau hid this income from his wife’s divorce attorney, as well as from the IRS. At the same time, he spent lavishly on his girlfriend, taking trips to Paris, Venice, Alaska, and the Mediterranean, purchasing a house with the fiancé, and buying expensive golf clubs.
In his defense, Landau claimed that his depression impacted his ability to account for his income, properly file his tax returns, and respond to questions posed by the IRS agent. Judge Pechman found that the mental-health defense fell short, because Landau’s evasive actions were intentional and not the product of depression, noting his ability to function in other aspects of his life.
“No one is above the law including a member of the state bar association who has practiced criminal defense law,” said Kenneth J. Hines, the IRS Special Agent in Charge of the Pacific Northwest. “Mr. Landau is at or near the top of the list of people who know better than to lie during an IRS audit or to evade their federal income taxes.”
Landau will be sentenced by Judge Pechman on May 15. He faces a maximum term of imprisonment of five years and a $250,000 fine on each count.
The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI) and was prosecuted by Assistant United States Attorneys Andrew Friedman and Mary K. Dimke.
