Date: Feb. 11, 2025
Contact: [email protected]
LOS ANGELES — Milton C. Grimes, a long-time Los Angeles lawyer, was sentenced today to 18 months in federal prison for evading the payment of more than $7.2 million in federal and state taxes over a period of more than two decades.
Grimes was sentenced by United States District Judge Stanley Blumenfeld Jr., who also ordered him to pay $7,236,556 in restitution, both to the IRS and to the California Franchise Tax Board.
In October 2024, Grimes pleaded guilty to one count of tax evasion relating to his 2014 taxes and admitted that he failed to pay $1,690,922 to the IRS.
“Despite being a respected attorney, Mr. Grimes also made the deliberate decision to cheat on his taxes for decades, evading the payment of millions of dollars in tax that all citizens are required to pay,” said Acting United States Attorney Joseph T. McNally. “Tax fraud has a corrosive effect on society’s foundations, and we thank our partners at the IRS for their diligence in bringing this defendant to justice.”
“As a successful attorney and owner of a law practice, Mr. Grimes was well aware of his income tax obligations, which he repeatedly chose to evade,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation (IRS-CI), Los Angeles Field Office. “Despite multiple attempts by the IRS to help him settle his tax obligations, Mr. Grimes continued to obfuscate his income. Unfortunately for him, IRS-CI special agents are the best financial investigators in the world, and now he will feel the repercussions of his actions.”
Grimes did not pay federal income taxes due for 23 years, 2002 through 2005, 2007, 2009 through 2011, and 2014 through 2023. The amount owed totaled $5,921,260, including tax, penalties, and interest owed to the IRS. Grimes also admitted he did not file a 2013 tax return with the IRS.
In addition to the federal tax evasion, Grimes admitted that he owed over $1,313,231 in delinquent state taxes to the Franchise Tax Board from 2014 to 2023.
Beginning in September 2011, the IRS attempted to collect Grimes’ taxes by issuing more than 30 levies on his personal bank accounts. However, from at least May 2014 to April 2020, Grimes willfully evaded the payment of the outstanding income tax owed to the IRS by not depositing income he earned from his clients into his personal bank accounts that were subject to levy.
Instead, Grimes purchased approximately 238 cashier’s checks totaling $16 million to keep the money out of the reach of the IRS. Grimes would routinely purchase cashier’s checks and withdraw cash from his client trust account, his Interest on Lawyers’ Trust Accounts (IOLTA), and his law firm’s bank account, rather than pay the IRS.
For example, on December 5, 2018, Grimes purchased nine cashier’s checks worth approximately $1,001,961, following the deposit of the same amount and on the same date into his IOLTA bank account.
IRS-CI investigated this matter.
Assistant United States Attorneys Valerie L. Makarewicz and Sarah S. Lee of the Major Frauds Section prosecuted this case.
IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a 90% federal conviction rate. The agency has 20 field offices located across the U.S. and 14 attaché posts abroad.