Hernandez Associate Faces Jail : Courts: Mortgage broker Shawn G. Cassidy pleads guilty to income tax evasion arising from phony commission scheme with socialite, who now is serving 71-month prison term.
Convicted socialite Danny Hernandez’s criminal dealings have claimed a fresh victim: Shawn G. Cassidy, his mortgage broker.
Cassidy and Hernandez struck a deal: Cassidy would lie to the Internal Revenue Service and say he paid Hernandez $257,000 in commissions, so that Cassidy could deduct that amount from his taxable income and Hernandez could claim it as income.
A former aide to Orange County supervisors Harriett M. Wieder and Roger R. Stanton, Cassidy pleaded guilty Monday in U.S. District Court to two counts of income tax evasion and faces up to 10 years in a federal prison and $500,000 in fines.
In April, Hernandez received a 71-month prison sentence after pleading guilty to mail fraud and money laundering in connection with the theft of nearly $8 million from the Santa Fe Springs precious metals company where he worked. His wife was sentenced to 16 months for her role in the scheme after pleading guilty to income tax evasion. Both are still in prison.
Cassidy, 35, who was mortgage broker for the purchase of Hernandez’s $1-million, 12-room house in Mission Viejo and for a second house Hernandez’s parents bought in Trabuco Canyon--admitted in court Monday to income tax evasion. He was not involved in the precious-metals theft.
In tax returns both men filed for 1990 and 1991, Cassidy claimed he paid Hernandez the $257,000 in commissions. It gave Hernandez a way to legitimize some of the exorbitant income he was making from the theft at his workplace.
According to court papers, after meeting Hernandez and agreeing to list the phony commissions with the IRS, Cassidy reported his 1990 income as $80,389 and paid taxes of $26,239. However, his real income was $157,442 and he owed taxes of $51,666. His income in 1991 was reported as $52,934 and he paid taxes of $19,873 but he really made $246,838 and owed $78,922 in taxes.
IRS investigators say he cheated the government out of nearly $85,000 in taxes, which he has since paid by filing amended tax returns.
In their investigation of Danny and Susie Hernandez, which began in 1991, federal authorities scrutinizing the Hernandez family’s tax returns discovered the phony commissions. When they questioned Cassidy, he first said he had paid commissions to Hernandez for referring mortgage business to him.
“Then IRS agents said, ‘Fine, then you must have the canceled checks for the commissions you paid him,’ and he said, ‘You got me,’ ” said Assistant U.S. Atty. Stephen Wolfe. “In all of Danny’s bank accounts, we saw no trace of payments to Danny by Shawn Cassidy’s company.”
Wolfe said that although Cassidy was confronted in November, 1992, three months before the Hernandezes were arrested, his case is just now coming to an end because Cassidy had agreed to cooperate in the government’s case against Hernandez.
Cassidy, who lives in Encinitas, is scheduled for sentencing on Oct. 31.
Wolfe said he is recommending probation because of Cassidy’s ready admission that he committed the crimes and because he helped with the Hernandez investigation.
Cassidy is vice president and regional manager for TCS Mortgage in Mission Viejo. The company is based in San Diego. He has also worked for Bayshore Financial Corp. in Huntington Beach, where he was executive vice president and chief lending officer.
His conviction means Cassidy will have to surrender his real estate license, which is necessary to work as a mortgage broker. It is believed that he has not yet informed his employer of the crimes.
Between July, 1981, and April, 1984, he worked as an executive aide for Wieder and Stanton before going to work for World Savings & Loan Assn.
“This is a simple case of Mr. Cassidy underreporting on his taxes,” said Vincent J. La Barbera, Cassidy’s attorney. “He has paid his income taxes.”
Cassidy did not return a call for comment.
“I think Mr. Cassidy is a decent guy who was tempted by Danny Hernandez,” Wolfe said. “This helped Hernandez try and cover his crime. The temptation he offered was greed, and Mr. Cassidy accepted. I think that’s a shame.”