IRS-CI case sends Round Rock business tax cheat to prison

Date: June 27, 2024

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A Round Rock businessman who evaded federal taxes, while buying jet skis, vacations and jewelry was sentenced to more than three years in prison and ordered to pay more than $500,000 in restitution for his crime.

According to court documents, John L. Petrone did not file individual income tax returns from 2014 through 2019, nor did he pay income taxes for those years, despite earning hundreds of thousands of dollars from his business that sold an herbal extract known as "kratom". Those businesses included K Botanicals, Round Rock Botanicals, Evil Monkey Tatoo and Unicorn Botanicals, with Petrone switching between them on a frequent basis, helping him to illegally avoid tax responsibilities.

"Petrone is a criminal who fired his bookkeeper when confronted about his scheme and lived a more luxurious lifestyle due to the money he stole from our nation," said acting Special Agent in Charge Lucy Tan of IRS Criminal Investigation's Houston Field Office. "Whether you are a career criminal or someone debating the merits of cheating on your returns for the first time, I recommend rethinking your actions. Our special agents are expert financial crime investigators, and it is just a matter of time before we uncover your illegal tax schemes."

Petrone attempted to evade his income taxes by opting not to withhold federal taxes from his paychecks, operating the business under different names, dealing in cash, using business bank accounts to pay for personal expenses and lying to the IRS during an audit. In addition, Petrone did not pay his business's employment taxes.

Petrone caused a tax loss to the IRS of over $529,000, which was ordered paid through restitution. His sentence also includes 37 months in prison and three years of supervised release.

IRS-CI investigated the case.

Assistant Chief David Zisserson and Trial Attorney Andres Chinchilla of the Department of Justice's Tax Division prosecuted the case, with assistance and support from the U.S. Attorney's Office for the Western District of Texas.

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code. The agency's Houston Field Office stretches across Texas with nine offices between Houston and El Paso.