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their clients in various ways. Jerry Haltom was one of these
eighteen. As described by the Fifth Circuit,
Haltom exploited his position by perpetuating a
false invoice scheme against his clients, the
manufacturers. In simple terms, he claimed a greater
amount in promotional funds than was owed the
wholesalers and retailers, and he pocketed the
difference. Unsurprisingly, he failed to report this
illicit income on his federal income tax returns.
Haltom stipulated that he misappropriated $766,618
from the food manufacturers and cheated the government
of $100,838 in taxes for 1989, 1990, 1991, and 1992.
United States v. Haltom, 113 F.3d 43, 44 (5th Cir. 1997).
In October 1994, federal investigators raided the Taylor
Company’s offices. In February 1996, Jerry was charged by
information with one count of mail fraud and four counts of tax
evasion. In June 1996, he pled guilty and was sentenced in
district court to serve 26 months in prison, followed by three
years of probation.
The criminal investigation triggered an audit of the
Haltoms' tax returns for 1989-94. Besides discovering that the
Haltoms had not reported Jerry's embezzlement income, the IRS
also discovered that during those years Linda had earned $4,104
under the name "Dela's Demos"--sporadic employment passing out
samples to customers in local supermarkets. The Haltoms reported
neither the gross receipts nor calculated the net taxable income
from Dela’s Demos on their returns. Linda testified that she
believed it was not enough income to report, but this was true
only of 1991. She should have reported additional net taxable
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