Entrepreneurship

The Day – Flower entrepreneur’s tax evasion sentencing delayed due to hospitalization

By October 4, 2018 No Comments

Flower entrepreneur David M. Adams was due in federal court Wednesday for sentencing in a tax evasion case, but was unable to appear because he was in the intensive care unit at Yale-New Haven Hospital, according to his attorneys.  

Adams, 57, of Old Saybrook faces years or even decades in prison when he appears before U.S. District Judge Vanessa L. Bryant for sentencing. He pleaded guilty in October 2017 to two counts of tax evasion, three counts of making and subscribing a false tax return and one count of attempting to interfere with the administration of Internal Revenue Service laws.

The sentencing initially was scheduled for January, postponed to March and then marked over until Wednesday as a certified public accountant reviewed Adams’ finances to determine if he does in fact owe $4.8 million in back taxes, penalties and interest, as the government claims.

Judge Bryant, learning of a new claim by the government that Adams failed to disclose a bank account containing $500,000 in life insurance proceeds, ordered him to appear within 24 hours of his release from the hospital.

The sentencing may not even occur that day, depending on what the judge learns about Adams’ medical condition, but the prosecutor, Assistant U.S. Attorney Susan L. Wines, will argue that Adams’ bond should be revoked based on Adams’ failure to disclose the bank account and a $200,000 payment he had made from the account to pay off his home on Cape Cod.

Wines said Wednesday that Adams’ “shell game” with the government continues and that statements he made on a financial affidavit he submitted appear to be “either lies, half-truths or some combination of both.”

The judge had ordered Adams’ lawyers, William T. Koch Jr. and Drzislav “Dado” Coric, to appear in court as scheduled Wednesday. She said from the bench that, given a history of “questionable circumstances” that prevented Adams from attending court proceedings, she wanted credible information concerning his medical condition.

Koch called on Adams’ brother, Dan Adams, to explain what had happened. The brother said Adams’ girlfriend had texted him that Adams’ blood pressure was high, he was sweating, red in the face and had a rapid heart rate. She said both she and their neighbors tried to convince Adams to go to the hospital but he refused. Dan Adams said he drove to his brother’s house and convinced him to go to a medical clinic in Guilford, where the staff performed tests and indicated they were transferring him to Yale-New Haven Hospital by ambulance.

Adams’ blood condition was so bad, he needed dialysis, and his heart stopped at Yale, according to Koch. He said Wednesday that Adams would be hospitalized at least two more days.

“You can fake a lot of things, but one thing you can’t fake is needing blood dialysis,” Coric said after court.

Judge Bryant said if the hospital releases Adams to his home and not a rehabilitation facility, there’s no reason why he can’t sit in court.

“Given Mr. Adams’ history of obfuscation and avoidance, he is to be in this court within 24 hours or as soon thereafter as the court can accommodate him,” she said. Knowing hospitals usually discharge people in late morning or midafternoon, the court will “wedge him in” that day or the following day, Bryant said.

The government alleges Adams has engaged them in a decadeslong cat-and-mouse game, first by underreporting his income and underpaying his taxes, then by delaying his prosecution once he was arrested and pleading guilty at the 11th hour before his trial was to begin.

Then came the delayed sentencing hearings.

The latest offense, which Wines said the government learned of late last week, is that he failed to disclose a bank account labeled the Sandra Adams Irrevocable Life Insurance Trust. Adams and his wife Sandra divorced in 2013, and she died in March 2018, according to public records. Adams is the trustee of the life insurance account but it is unclear who are the beneficiaries. Though he was supposed to report any financial transactions above $10,000 to his probation officer, the prosecution learned late last week that he had used about $201,000 to pay off the home in Mashpee, Mass., on Cape Cod, according to court documents and testimony.

The government has liens on the Cape Cod home and on Adams’ custom-built estate in East Lyme, which Adams has been renting out lately for events.

At the sentencing, Adams’ lawyers plan to argue that the amount of restitution he owes should be approximately $2.6 million rather than the $4.8 million the government is seeking, due to added interest and penalties.

Adams had founded USA Flowers, a national operation, from a shop in Groton and sold it in 2002 for $6 million, according to court documents. He later opened an Internet flower business that he sold in 2006 for another $6 million gain. He also had an interest in the leases on the businesses at the Saybrook Junction marketplace on Boston Post Road.

In fashioning the sentence, the judge will consider sentencing guidelines estimated in one court document at 53 to 61 months in prison based on several factors, including the offenses and Adams’ prior convictions. His attorneys will argue for a sentence of 46 months, which is below the guidelines.

According to court records, Adams avoided imprisonment in 1986, when he was  convicted of using his flower business to submit hundreds of fraudulent credit card sales online, and in 1992, when he was convicted of willful failure to file tax returns for 1984 and 1985.

His attorneys have requested that following his sentencing, Adams be allowed to turn himself in, or “self surrender,” to a federal prison after taking care of family issues. The government objects.

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