O.C. Contractor Admits Income Tax Fraud

A Santa Ana electrical contractor admitted in federal court Friday that he failed to report more than $950,000 in business income over a two-year period. John P. Reilly, 47, pleaded guilty to filing false income tax returns for 1993 and 1994. He faces a maximum penalty of six years in prison and fines of $500,000 at his Oct. 9 sentencing. When the Internal Revenue Service discovered that Reilly had failed to report $954,119 in income, he paid $362,131 in back taxes, said Assistant U.S. Atty. Michael W. Emmick. The prosecutor said Reilly, an electrical contractor with mainly banking customers, reported 1993 income of about $55,000 and 1994 income of about $64,000. But the IRS found that the actual income was about $890,000 for the first year and $183,000 for the second, Emmick said. “In the course of a routine audit, the IRS saw unusual transactions between several accounts,” Emmick said. “Then they discovered three other accounts that had unreported income in them.”