Mendy Gorodetsky and Shalom Rabkin, both residents of Brooklyn, N.Y., pleaded guilty today in U.S. District Court in the Eastern District of New York to tax evasion, the Justice Department and Internal Revenue Service (IRS) announced.

According to court records and admissions made by the defendants, Gorodetsky and Rabkin co-owned Asbestways Services Corp., an asbestos abatement and lead testing company located in Brooklyn. Gorodetsky and Rabkin attempted to evade their income taxes by not reporting the income they earned from Asbestways. In addition, Gorodetsky and Rabkin spent Asbestways corporate funds for personal use by charging personal expenses on an Asbestways corporate credit card. They cashed Asbestways gross receipts checks at a check cashing company and used the unreported cash proceeds for personal expenses. When Gorodetsky and Rabkin filed their 2006 individual income tax returns, they each falsely reported earning no income from Asbestways. 

Gorodetsky admitted that he underreported his income by at least $709,134 and that his criminal conduct between 2006 and 2008 caused a tax loss to the IRS of at least $188,757. Rabkin admitted that he underreported his income by at least $598,491 and that his criminal conduct between 2006 and 2008 caused a tax loss to the IRS of at least $148,999.  

Gorodetsky and Rabkin each face a potential maximum sentence of five years in prison and a fine of up to $250,000. Sentencing is set for Dec. 10, 2012, before U.S. District Judge Jack B. Weinstein.

The case was investigated by IRS - Criminal Investigation and is being prosecuted by Trial Attorneys Mark Kotila and Jeffrey Bender of the Justice Department’s Tax Division.