A North Carolina surgeon and his wife were sentenced Friday to five years in prison for federal employment and individual income tax crimes, officials stated.

According to evidence presented at trial and statements made in court, James Rice, an orthopedic surgeon, and his wife Susan Rice, who worked for his medical practice, conspired to defraud the IRS, evaded payment of taxes.

They also failed to pay over employment taxes and failed to file tax returns. In total, the Rices did not pay more than $2.4 million in personal, corporate and employment taxes that they owed.

From 1992 to present, James Rice owned and operated Sandhills Orthopaedic, a medical practice located in Pinehurst, North Carolina.

Susan Rice handled the practice’s administrative operations.

Between 2007 and 2016, the Rices conspired to defraud the United States with respect to Sandhills Orthopaedic’s employment taxes and their individual income taxes.

To accomplish this, the Rices transferred approximately $1 million from Sandhills Orthopaedic’s business bank accounts to other accounts they controlled, including personal bank accounts and a business account related to an unrelated truffle company owned by Susan Rice.

black and silver pen on white paperThe Rices also used Sandhills Orthopaedic’s business bank accounts to pay for personal expenses, including a country-club membership and dog kennel boarding.

The Rices also withheld nearly $580,000 in taxes from the paychecks of the medical practice’s employees, then used those withholdings for their own personal gain rather than paying them over to the IRS as required by law.

Finally, from 2014 to 2016 the Rices did not file individual tax returns, and James Rice did not file corporate taxes for another entity he owned, even though they were respectively required to file returns for all of those years.

“As a result of today’s sentence, James and Susan Rice’s prolonged effort to evade paying their taxes has come to an end,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “Each year, the vast majority of Americans and businesses follow the tax laws and pay their fair share. Those who willfully evade such obligations should fully expect to be held accountable for their criminal conduct.”

On Sept. 20, 2021, a federal jury convicted the Rices of one count of conspiracy to defraud the United States, one count of tax evasion, two counts of failure to pay over employment taxes, and three counts of failure to file tax returns.

The jury also convicted James Rice of three counts of failure to file corporate tax returns.

In addition to the term of imprisonment, U.S. District Judge Catherine C. Eagles ordered the Rices to pay about $2.4 million in restitution to the United States.

Acting Deputy Assistant Attorney General Goldberg made the announcement.

IRS-Criminal Investigation investigated the case.

By Raul

Raul Hernandez is a former journalist. He has worked as a newspaper reporter for more than 30 years at the El Paso Herald-Post, El Paso Times, Press Enterprise in Riverside, California and the Ventura County Star in California. He was a court reporter for more than 20 years.