Judge Albert G. (“Scholar Al”) Lauber stiches up the career of ex-PA-Senator Vincent J. Fumo, T. C. Memo. 2025-97, filed 9/24/25, as “Senator R2–D2” (T. C. Memo. 2025-97, at p. 22) gets hit both for unreported income on his 1040, and for Section 4958 excess benefits he got from the 501(c)(3) he created.

Most of the information in this case comes from the criminal trial in USDCEDPA, wherein Sen. Fumo went down on 137 (count ’em, 137) counts “including mail fraud, wire fraud, obstruction of justice, conspiracy to obstruct justice, and violation of section 7206(2) for willfully aiding or assisting in filing false tax returns.” T. C. Memo. 2025-97, at p. 4.

Sen. Fumo padded his payroll, aided by the chief clerk of the PA Senate who routinely accepted whatever senators said. And while the cash didn’t go into Sen. Fumo’s pocket, what it bought was valuable.

“By diverting excess compensation to his staff, petitioner garnered more than ‘political capital.’ He sought to assure—and he in fact obtained—unquestioning loyalty from his staff, especially when the going got tough. He incentivized his employees’ compliance in rendering personal services that directly benefited him and his political allies. And he ‘bought their silence’ about improper or illegal behavior in which he was engaging, including the use of Senate resources for his political Campaigns. These benefits plainly had economic value. And while the fair market value of these benefits might be hard to calculate in isolation, petitioner has not shown that it was ‘arbitrary or erroneous’ for the Commissioner to use the excess compensation he engineered for his staff as an index of the value he received from them.” T. C. Memo. 2025-97, at pp. 44-45.

There’s a lot more. His ostensible staff, paid for by the taxpayers, were his personal servants, the taxpayers paid for his travel, tools, farm equipment, cars, cellphones, and girlfriends, and the 501(c)(3) paid for the rest, though he was careful to trash all the records.

Of course, some of the staff actually worked in appropriate situations, and Judge Scholar Al carves these up as best he can. If any reader works for a corrupt politician and needs a template for dividing the padded staff wages, read T. C. Memo. 2025-97, at pp. 46-61. And any of you who practice in the criminal fraud arena will find this useful too.

As for the money given to family, friends, and political allies, that’s still income to Sen. Fumo, as he could choose where to divert what he stole.

The Section 4958 excess benefit excise tax is extensively dealt with. I leave that to Mr. Paul Streckfus, the EO expert, to discuss.

As for Section 6663 chops and the open fraud SOL, Sen. Fumo has enough badges to qualify for eagle status. Wiping your e-records goes a long way. And Sen. Fumo failed to file Form 4720 to report his excess benefits.

“The Form 4720 is admittedly an exotic species: The obligation to file this return––unlike the obligation to file (say) Form 1040––is far from common knowledge. Petitioner maintains that he had reasonable cause for his failure to file because he lacked any concept of the terms ‘constructive income’ or ‘disqualified person.’ He assertedly had ‘no inkling that he may have obtained a taxable . . . benefit’ during the years at issue.

“We are not persuaded. Petitioner was an attorney, a bank chairman, and a highly sophisticated actor. He caused his Senate staff to create [the 501(c)(3)] as a tax-exempt charity, and it was operated out of his office. He is charged with knowledge of the basic rules governing the operation of public charities.” T. C. Memo. 2025-97, at p. 89.