SAN DIEGO — An Encinitas-based doctor who hatched a number of schemes to obstruct the Internal Revenue Service from assessing and collecting the hundreds of thousands of dollars he owed from his osteopathic medical practices was sentenced Tuesday to four years in federal prison.
Dr. James Francis Murphy, 53, was also ordered pay nearly a half-million dollars in restitution to the IRS.
His wife, Denise Christine Murphy, 52, was sentenced to 12 months of house arrest and ordered to pay restitution of $147,528.
The defendants were convicted last June of corrupt interference with the administration of internal revenue laws and false claims to the United States.
Evidence presented at trial showed that despite earning as much as $1 million a year from their osteopathic medical practices in Encinitas and Omaha, Nebraska, the couple paid almost no federal income taxes for a decade.
Instead of accurately declaring their income and paying taxes lawfully owed, and despite repeated warnings from the IRS, the Murphys filed false income tax returns for their medical practice using a bogus trust, and filed false personal income tax returns concealing their true income, according to prosecutors.
In some years, the Murphys refused to file the required tax returns at all, prosecutors said.
When confronted by the IRS that they owed substantial taxes, the Murphys falsely claimed they were not U.S. citizens and argued that federal tax laws did not apply to them, according to the U.S. Attorney’s Office.