Milton Tillman and Son Sentenced to Prison on Federal Charges Relating to Operation of 4 Aces Bail Bonds
Bail Bond Business Concealed Ownership and Hid Taxable Income; Milton Tillman Also Had a No-Show Job at Baltimore Port
|U.S. Attorney’s Office July 08, 2011|
BALTIMORE—U.S. District Judge Catherine C. Blake sentenced Milton Tillman, Jr. (Milton Tillman), age 54, of Baltimore, today to 51 months in prison, followed by five years of supervised release, for filing a false tax return, unlawfully engaging in the business of insurance and wire fraud in connection with the operation of his bail bond business and a scheme to defraud Ports America Baltimore, Inc. (Ports America), where he worked. Judge Blake sentenced his son, Milton Tillman III, a/k/a “Moe,”(Moe Tillman) age 33, also of Baltimore, today to five years’ probation with the special condition that he serve six months in community confinement and six months on home detention with electronic monitoring. Judge Blake specified that Moe Tillman would be allowed to work during his community confinement and home detention. Judge Blake ordered Milton Tillman to pay restitution of $120,000 for the losses incurred by Ports America and ordered Moe Tillman to pay restitution of $12,500 to the IRS. Judge Blake further ordered that Moe Tillman perform 100 hours of community service and that both Milton and Moe Tillman resolve any outstanding tax liabilities with the IRS.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Thomas F. Farrell, Assistant Inspector General for Labor Racketeering and Fraud Investigations, U.S. Department of Labor; and Acting Special Agent in Charge Jeannine A. Hammett of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
“Given that bail bond companies in Maryland work closely with state judicial officers and exercise power to arrest criminals, it is important to make certain that the bonding companies themselves are not run by criminals,” said U.S. Attorney Rod J. Rosenstein.
Thomas F. Farrell, Assistant Inspector General for Labor Racketeering and Fraud Investigations, United States Department of Labor, said, “Mr. Tillman defrauded the International Longshoremen’s Association Local 333 and Ports America, Chesapeake, by collecting wages and benefits for work he did not perform. Today’s sentencing demonstrates the Office of Inspector General’s continued resolve in investigating and preventing fraud schemes against our nation’s unions. This office and our law enforcement partners remain committed toward combating union corruption.”
“To maintain faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share,” said Jeannine Hammett, Acting Special Agent in Charge Internal Revenue Service Criminal Investigation Division. “The IRS-Criminal Investigation Division, together with its law enforcement partners will investigate and prosecute those who violate our tax system.”
According to his plea agreement, on October 26, 1996, Milton Tillman began serving a federal prison sentence after being convicted of tax-related charges. Prior to the start of his sentence and during his imprisonment, Milton Tillman made arrangements with his son, Moe Tillman, and others to incorporate and manage a bail bonding business that Milton Tillman had started. About two months after Milton Tillman began his sentence, Moe Tillman incorporated 4 Aces Bail Bonds, Inc. (4 Aces), initially located at 2332 E. Monument Street and relocated to 1101 North Point Boulevard, in Baltimore.
A bail bondsman must be licensed as an insurance producer and must also be authorized to act on behalf of a surety insurer. Milton Tillman, who had previously been convicted of tax charges as well as extortion, was not eligible to be licensed as a bail bondsman without written consent from the Maryland Insurance Administration (MIA). Subsequent to those convictions, Milton Tillman never applied for, nor received, consent from the MIA to engage in the insurance business.
Nonetheless, while serving his federal sentence from 1996 through 2000 and until approximately August of 2008, Milton Tillman oversaw the development of 4 Aces. While he was incarcerated, he used intermediaries to negotiate insurance premiums with out-of-state surety companies and he authorized the employment of various bail bondsman to sell surety insurance through 4 Aces.
After his release from prison in December of 2000, Milton Tillman hired and fired employees and oversaw the daily operations of the office, including the authorization of the writing of bail bonds. He continued to maintain and develop 4 Aces’s relationship with the out-of-state surety companies. Milton Tillman oversaw the incorporation of two other bail bonding companies which were incorporated and owned by Moe Tillman, and the use of their corporate resources. Under Milton Tillman’s management and as represented on 4 Aces’ tax returns, 4 Aces’ gross income grew from $188,337 in 2000 to $5,822,588 in 2006.
Upon Milton Tillman’s release from federal prison in 2001, a condition of his supervised release was to obtain employment. Between 2001 and December 2007, Milton Tillman reactivated his union membership and worked as a longshoreman primarily with Ports America. As a longshoreman, Milton Tillman was required to be physically present at the port terminal to work with a longshoremen gang to load or unload a particular ship. Wage records maintained by Ports America indicate that the company paid wages and hourly benefit contributions to Milton Tillman for at least 258 shifts he purportedly worked during 2006 and 2007. However, Milton Tillman was not present to unload cargo vessels for 121 of the work shifts. Travel records indicate that between July 2006 and September 2007, Milton Tillman was not even in the United States for 10 of the 121 “no-show” shifts. Between January 2006 and August 2007, Milton Tillman was in the country, but not in Maryland for 24 of the 121 “no-show” work shifts.
Milton Tillman used the pretense of working as a longshoreman at the docks not only to unlawfully obtain wages and benefits from Ports America, but also to conceal from the IRS the full extent of his involvement in the bail bonding business and the income he derived from it. For tax years 2000 to 2006, Milton Tillman filed wage and tax statements (W-2 forms) issued by Ports America and other stevedoring companies that overstated the hourly wages and other compensation he earned in those years from working as a longshoreman. For the same tax years, Milton Tillman concealed the true amount of income he derived from his participation in the 4 Aces’ bail bonding businesses by under-reporting the amount of money he had diverted from the business to himself and his real estate companies. For example, on October 15, 2007, Milton Tillman filed a personal tax return for 2006 that listed his total income as $406,426. However, this reported total income failed to include the substantial additional income that Milton Tillman had diverted from 4 Aces. In that year, as he done in past years as well, Milton Tillman directed 4 Aces funds to be used to purchase and improve real estate and to pay down the debt and taxes on properties he owned; pay the premiums on his life insurance policies; make monthly payments on car loans; and pay personal taxes and criminal fines. For the tax years 2002 to 2006, Milton Tillman under-reported a substantial amount of diverted funds on which more than $400,000 of taxes were due.
According to Moe Tillman’s plea agreement, as an officer and the only listed shareholder of the company, Moe Tillman was legally obligated to file a corporate tax return for 2003 for 4 Aces, which he failed to do. Based in part upon the amount of bail bonds issued by 4 Aces in 2003, investigating agents estimated that the company had a net taxable income in 2003 of at least $80,489, with taxes due of approximately $15,616.
U.S. Attorney Rod J. Rosenstein gave special thanks to Maryland Insurance Commissioner Therese Goldsmith and Maryland Attorney General Douglas F. Gansler for the work of their agencies in the investigation and prosecution of this case.
United States Attorney Rod J. Rosenstein thanked Assistant United States Attorneys Martin J. Clarke and Stephen M. Schenning, who prosecuted the case.