Earmark Team

Your Client’s Non-Cash Donation Documentation Is Probably Missing These Critical Details

Earmark Team · February 9, 2026 ·

A married couple donated used goods worth $6,760 to charity. They filed Form 8283 with their 2019 tax return. The IRS examined the return, the case ended up in Tax Court, and the entire deduction was disallowed.

What makes this case remarkable is that neither the IRS nor the Tax Court ever claimed the donation didn’t happen. Both sides agreed the contribution was real and made to a qualifying organization. The taxpayers lost anyway.

In this episode of Tax in Action, host Jeremy Wells breaks down the Besaw v. Commissioner case to reveal what went wrong. It comes down to something every tax practitioner has seen.

“When you help people with tax returns, and you ask them to upload their documents around tax time, and you get a slew of these blank Goodwill receipts,” Wells explains, “the taxpayer’s expecting some sort of tax benefit from all that. And you’re looking at that thinking, I can’t do anything with this.”

When Good Donations Go Bad

The timeline of the Besaw case reads like a warning every tax practitioner should remember.

In 2019, the Besaws filed their joint federal income tax return claiming $6,760 in non-cash charitable contributions. They attached Form 8283, the correct form for reporting non-cash donations of $500 or more. So far, so good.

But the form was basically empty. The Besaws left out the donation dates, the fair market values of the donated property, their cost basis in that property, and the method they used to arrive at the deductible amount.

“Really, all of the important information,” Wells notes.

The IRS examined the return in 2022 and requested proof for those charitable contributions. In response, the Besaws submitted what Wells calls a “reconstructed record,” essentially taking what was on their incomplete Form 8283 and using it to piece together documentation of their contributions.

The IRS said that wasn’t good enough. They denied the deduction and sent a notice of deficiency. The case wound up in Tax Court.

Contemporaneous Is The Magic Word

The fatal flaw in the Besaw case comes down to one word that appears throughout tax law: contemporaneous.

“The word contemporaneous comes up in other places in tax law as well,” Wells explains. “If you drive to meet a client or meet a vendor, you’re supposed to keep a contemporaneous written mileage log. That means you’re supposed to keep that throughout the year. You’re not supposed to look back at the prior year and try to reconstruct that from memory.”

The same principle applies to charitable contribution records. But Section 170 gives a specific definition. Documentation must be received by the earlier of the date you file your return or the due date (including extensions).

The Besaws created their records in 2022, long after filing their 2019 return and while the IRS was already examining it. That timing made all the difference.

What makes this case really striking is that nobody disputed that the donation actually happened. “At no point did the IRS or the Tax Court claim the donation may never have happened,” Wells emphasizes. “Everyone agreed that the donation happened. The issue was whether it was properly documented.”

This flows from a principle Wells returns to often. “Deductions are a matter of legislative grace.” That phrase appears throughout Tax Court decisions. It means the deduction doesn’t come free. You can’t just say you made a contribution and expect the benefit. The law sets rules for how taxpayers claim and prove deductions. Fail to meet those requirements, and the deduction disappears, even if the donation was real.

The Four Levels of Documentation Requirements

Understanding what documentation you need depends on how much you’re donating. The rules get stricter as the amounts go up.

Level 1: Non-Cash Contributions Under $250

For donations under $250, Treasury Regulation 1.170A-13(b)(1) requires a receipt showing:

The name of the charity
A description of the property
The date and location of the contribution

This is where those blank receipts from donation drop-offs become a problem. “A lot of times those slips of paper wind up in our client portal without much more than whatever is preprinted on them by the organization, which is usually just the name of the organization and its location,” Wells observes. “There’s no other information there.”

The receipt doesn’t need to include a value—that’s the taxpayer’s job. But it must describe what the taxpayer gave.

Level 2: Non-Cash Contributions Over $250

Cross the $250 threshold, and you need a contemporaneous written acknowledgment from the organization. This must include:

A description of the property
A statement of whether any goods or services were provided in exchange, and a value or good-faith estimate of those goods or services

“This is actually where the taxpayer failed in this Tax Court case,” Wells points out, “because the charity receipts contained no descriptions of the donated items.”

Remember, the acknowledgment must be received by the earlier of the filing date or the due date, including extensions. Miss that window, and you can’t fix it later.

Level 3: Total Non-Cash Contributions Over $500

When total non-cash contributions exceed $500, you must file Form 8283. Treasury Regulation 1.170A-13(b)(3) says you need to report:

The date you acquired the property
How you acquired it (i.e., purchase, gift, or inheritance)
Your cost or basis in the property
The fair market value at the time of donation
The method used to determine the fair market value

“The taxpayer in this Tax Court case left all these blank,” Wells notes. “And that was problematic for him.”

Level 4: Single Items or Groups Over $5,000

When any single item or group of similar items exceeds $5,000, IRC Section 170(f)(11)(C) requires a qualified appraisal. The taxpayer, the charity, and the appraiser all must sign Section B of Form 8283.

Wells has seen how this plays out. “I’ve had situations where taxpayers wanted to claim a deduction in excess of $5,000, and once we explain the appraisal requirement, either they didn’t want to go through with the appraisal, or they adjusted their valuation of that contribution to an amount below $5,000.”

What You Need vs. What You File

The charity doesn’t provide valuations on receipts. “It’s up to the taxpayer to report and to calculate a fair market value of those contributed items,” Wells explains. “It’s not up to the organization to put that together.”

But descriptions must be detailed enough to identify the items and estimate value. You can’t write “trunk full of stuff.” But you don’t need to list every single piece of clothing either.

Beyond what gets filed with the return, Treasury Regulation 1.170A-13 requires taxpayers to keep:

A detailed list of donated property
Receipts showing dates, locations, and descriptions
Fair market value worksheets showing how they calculated values
Any appraisals, if required

This is what the IRS requested in 2022, and what the Besaws couldn’t produce in its original form. Form 8283 is only part of the package.

Dealing with Those Blank Goodwill Receipts

“When you see those blank Goodwill receipts pop up in your client portal, how will you address those?” Wells asks. It’s a question every practitioner faces each tax season.

When receipts say something like “household goods, used clothing $1,000,” is that enough? Based on the Besaw case and the regulations, “Probably not,” Wells says. “We need a little bit more information than that.”

When non-cash charitable contributions appear, Wells recommends asking these questions:

What exactly did you donate? Get actual descriptions, not just “clothing”
When and where did they donate? Dates and locations matter
Is there a receipt or written acknowledgment? If not, do they have their own records?
Does the record describe the property adequately? “Stuff” won’t cut it
Did they receive anything in return? This affects the deductible amount
Do total non-cash contributions exceed $500? This triggers Form 8283
Does any single item exceed $5,000? This may require an appraisal
How did they determine the value? They need an actual method

Getting Real About Fair Market Value

Treasury Regulation 1.170A-1(c)(2) defines fair market value as “the price a willing, knowledgeable buyer would pay a willing, knowledgeable seller under no compulsion.”

For clothing and household goods, this usually means thrift shop value. Wells recommends a practical test. “If you didn’t know anything about this t-shirt other than you saw it hanging on a rack in a thrift shop and you liked it, what price would you reasonably pay for that?”

One common problem is sentimental value. “Just because an item holds some sentimental value for you or your family doesn’t necessarily mean it has a higher fair market value,” Wells cautions. “Sentimental value doesn’t really translate into actual market value.”

There’s also a quality requirement. Under Section 170(f)(16), clothing and household goods must be in “at least good used condition” to qualify. Worn-out or broken items are not deductible at all.

Four Myths That Create Problems

The Besaw case debunks several common assumptions:

Myth 1: A signed receipt is enough

In reality, the receipt must describe the property and include other details.

Myth 2: You can fix missing details later

This killed the Besaws’ deduction. Documentation must be contemporaneous.

Myth 3: Fair market value is optional for small donations

Form 8283 requires fair market value for every non-cash donation over $500.

Myth 4: If the donation happened, the IRS should allow it

The Besaw case proves otherwise. Both sides agreed that the donation occurred. But the Tax Court still disallowed the deduction.

The Bottom Line

The Besaw case demonstrates that, in tax law, documentation beats facts. A legitimate charitable donation means nothing without proper contemporaneous records.

Tax practitioners must remember:

Contemporaneous means by the filing date or due date (including extensions)
Different amounts trigger different requirements
Form 8283 isn’t the whole story. Taxpayers must keep detailed records
Those blank Goodwill receipts are audit risks waiting to happen

“This Tax Court case illustrates that substantiation is everything,” Wells concludes. “It really is in a lot of areas of tax law, and especially here in terms of charitable contributions.”

The charitable deduction can be powerful, but it comes with serious technical requirements. Listen to the full episode and make sure your clients understand these rules before they drop off that next load at Goodwill, and definitely before they try to claim the deduction.

The Manager Paradox: Why AI Agents Need Just as Much Oversight as Human Employees

Earmark Team · February 9, 2026 ·

David Leary had something to confess at the start of The Accounting Podcast episode 471. He needed an employee health insurance survey for his company, and the whole thing, from blank page to finished Google Form, took him three and a half minutes.

“I started with nothing, and I needed a result, and end to end it did everything for me,” David told co-host Blake Oliver. ChatGPT created the survey questions first. When its implementation got clunky, Google Forms with built-in Gemini AI took over and built the entire form. No tedious field creation or manual option adding. Work that would have taken an hour vanished in the time it takes to brew coffee.

It’s the kind of AI success story that’s becoming common: technology wiping out drudgery and freeing humans for better work. But as the hosts dug deeper in this episode, they uncovered a reality check for accounting firm leaders.

AI’s Hidden Cost: Same Management Time, Different Headaches

The tools keep getting better at connecting dots. Blake pointed to Google’s new “Personal Intelligence” feature that links Gmail, photos, YouTube, and search into Gemini with one click. ChatGPT has similar workspace integrations that search your email history for client and project information.

“Once your firm gets big enough, you don’t realize three other people also have relationships with that client,” David noted. AI that surfaces that context before you act is a real leap forward.

But the success story gets complicated when you deploy AI agents across an organization. Jason Lemkin, who runs SaaStr (a community for software startup founders), has been tracking the results of such deployments. At SaaStr, about 60% of the team is now made up of AI agents. They deliver huge productivity gains, but also need about the same weekly management time as humans.

“The big mistake,” David explained, summarizing Jason’s findings, “is that you can’t treat AI as set-it-and-forget-it. You have to have daily management of AI.”

The reason you need that oversight is the accuracy rates. For five- to ten-minute tasks, AI hits near-perfect accuracy: 99.9%. But stretch those tasks to an hour or two, and accuracy drops to 80% or even 50%. And AI mistakes don’t announce themselves.

“The AI makes these small mistakes that compound into big mistakes,” Blake said. “Humans do this, too. If you don’t have proper oversight of people, they’re just doing their own tasks, and small errors can compound into disasters.”

When There’s No One Watching the Store

The IRS is an excellent case study for what happens without human oversight of AI. The IRS just lost more than 25% of its workforce through various reduction programs, according to the IRS Advisory Council’s annual report. Over 2,000 IT workers have left since January 2025 alone. More than half of the $80 billion allocated under the 2022 Inflation Reduction Act has been rescinded, totaling about $42 billion since 2023, including nearly all enforcement funding.

Now the agency faces implementing the One Big Beautiful Bill Act (OBBBA), which includes more than 100 tax law changes. They need new guidance, technology updates, and process changes—all with fewer people and less money.

The consequences of this skeleton crew approach became clear in the case of Attallah Williams, a former SBA and IRS employee charged with stealing more than $3.5 million from federal COVID-19 relief programs. Williams used insider access at both agencies to approve fraudulent applications, recruiting accomplices through Instagram and collecting kickbacks. The scheme ran for three years and touched Paycheck Protection Program (PPP) loans, Economic Injury Disaster Loan (EIDL) grants, and employee retention credits.

“If one person can approve fraudulent pandemic applications, there are no controls at the federal level,” David said.

Tax Season Reality Check

Against this backdrop, tax season readiness varies wildly. CPA Trendlines’ busy season survey found that only 44% of firms feel about as ready as they were last year. Larger firms with 25 or more professionals report greater stability thanks to deeper staffing and refined processes. Smaller firms with 1-10 employees face the most volatility.

“Late documents, absences, compressed review cycles. When you have fewer people, you have less redundancy,” Blake noted. “When problems happen, it hurts more.”

Tax-heavy firms feel particularly exposed since their entire season depends on client behavior. Firms with recurring revenue from bookkeeping or advisory work report more stability because their work spreads throughout the year.

One bright spot came from Brenda Cannon of Cannon & Associates, who shared an innovation on the CPA Trendlines podcast. Instead of letting tax work pile up, she gives clients calendar links to schedule when they’ll submit documents. Eight slots per day, Monday through Thursday. Fridays for internal work. No slots three weeks before April 15th (reserved for extensions). Clients who don’t schedule by year-end get marked inactive.

“Clients no longer complain about extensions because they basically chose to miss their self-imposed deadline,” Blake explained. Only about 5% of clients left after implementing the system.

The Vanishing Entry Level

But even successful adaptations can’t solve a bigger problem: what happens when AI absorbs all the entry-level work that trains future professionals?

“The quality burden used to fall on the senior staff and managers,” David said. “But now the managers are going to have to bear that weight.”

Blake expanded the concern. Managers used to trust that trained seniors had learned to review work through years of practice. With AI handling those training tasks, that trust disappears. “I have a theory that life is going to get harder for managers in public accounting because they’re going to be the only thing between the AI doing the work and the partner.”

A viewer captured the problem in the live chat: “You can’t get experience to become a manager without an entry level. Bots and offshore have absorbed entry. So how do you get new managers?”

Blake’s answer was sobering. If firms can’t develop managers internally, they’ll have to recruit from industry. But industry professionals who’ve tasted work-life balance won’t return to the grind of public accounting. “The people won’t drink the Kool-Aid after they’ve had a break from drinking the Kool-Aid.”

Testing for Yesterday’s Skills

This transformation raises tough questions about the CPA exam itself. The 2024 pass rates were:

Audit and Attestation: 46%
Financial Accounting and Reporting: 4%
Tax Compliance and Planning: 73%
Regulation: 63%
Business Analysis and Reporting: 38%
Information Systems and Controls:58%

“The hardest part of the exam isn’t the material,” Blake argued. “We’re not doing advanced math. We’re doing algebra. It’s not complicated stuff; it’s just a lot of memorization, and it’s a real grind.”

Blake’s theory is the exam filters for grinders because that’s what firms needed. “The exam is a grind, and public accounting is a grind so they lined up.”

But that’s not the job anymore. “We don’t need accountants to come in and do a bunch of boring, manual, tedious work,” Blake said. AI does that now. The profession needs people who can analyze concepts and direct AI agents, not memorize rules they can look up in seconds.

“You have all these AI tools where they have all the knowledge. You don’t need to memorize things,” David added.

Yet change comes slowly. “Even if the powers that be agree with you, Blake, it’ll be a decade before they change that,” David said.

The Bottom Line

David’s three-minute survey creation shows where we’re headed: routine tasks becoming instant. But efficiency isn’t freedom. AI needs as much management as humans, but a different kind of management. The cognitive burden shifts up while the entry-level work that trained judgment disappears.

Every knowledge profession will face the same questions. How do you develop talent when AI does the training work? How do you maintain quality when the middle layer of reviewers vanishes? How do you test for skills that matter when memorization becomes obsolete?

Listen to the full episode of The Accounting Podcast for all the details, including more on the IRS crisis, innovative tax season solutions, and a surprise supporter for millionaire taxes.

This Accounting Firm Finally Turned “We Should Give Back” Into a Measurable System

Earmark Team · February 5, 2026 ·

Most accounting firm owners consider themselves generous people. They write checks to local charities, sponsor community events, and encourage employees to volunteer. But ask them to quantify their firm’s charitable impact over the past three years, and most would struggle to produce meaningful numbers.

The irony is, professionals who build careers on measurement and accountability often treat their own charitable giving as an unmeasured afterthought.

Marcus and Rachel Dillon faced this same challenge. As co-leaders of Dillon Business Advisors, they listed “giving back locally and internationally” as part of their vision, along with concrete, measurable goals. However, it became a reminder of good intentions that hadn’t yet become systematic action.

In this 2026 New Year episode of Who’s Really the Boss?, the Dillons skip the typical resolution-setting advice. Instead, they share how they live out their rally cry for the year: “lead change, create impact.” For them, IMPACT actually spells out their firm’s values. And they’ve finally found a way to measure it.

The Control That Creates Commitment

The Dillons knew what they wanted to accomplish. The challenge was finding a mechanism for accountability.

A separate bank account seemed obvious. It would be easy and fast. But Marcus saw the flaw immediately. “We wanted that control mechanism in place as opposed to just setting up an additional bank account that we could redistribute or transfer money back into,” he explains.

Their solution was The DBA Impact Fund, established through the National Christian Foundation in 2025. With a donor-advised fund, once money goes in, it can’t come back out. Those dollars are committed to charitable purposes forever.

This constraint is exactly the point. For firm owners who want to build charitable giving into their operations, a donor-advised fund provides accountability that willpower alone can’t.

The practical benefits extend beyond commitment. Funds can be invested and earn returns while accumulating for larger initiatives. The account works like a checking account when distributing money to approved charities. And because it generates standalone statements, the Dillons can share their giving transparently with their team.

Creating the fund was simple. “It literally took five minutes. I went to NCF’s website to create the fund, connected a bank account, and started transferring money,” Marcus notes. Five minutes to solve a problem that had lingered for years.

The Power of Simple Math

With the fund established, the leadership team, which includes Marcus and Rachel, and their directors, Amy McCarty, MBA, and Lezlie Reeves, CPA, decided how much to give.

They came up with a simple formula: 1% of every dollar invoiced, deposited the first week of each month based on the previous month’s revenue. The formula doesn’t consider collections, net income, or profit after expenses. Just invoice revenue.

“There’s direct accountability and no creative accounting or math involved,” Rachel emphasizes. “There’s no ‘it depends.’ Or I have to wait until I run the calculations.”

Anyone can look at the monthly invoice total, calculate 1%, and know exactly what to deposit. No waiting to close books or opportunity for excuses when margins feel tight.

They chose revenue over a fixed dollar amount for a specific reason. “We tied it to revenue because we believe in growth,” Marcus explains. As the firm grows, so does the giving. The charitable impact scales automatically with business success.

“We started with 1% because it’s easy,” Marcus admitted. They can always give more during strong periods, but the baseline stays constant and predictable.

When they created the fund in mid-2025, they made an initial deposit to “true up” all the invoices from earlier in the year. By 2026, they had a solid foundation ready to deploy.

Making Water Flow: The Team Experience

The Dillons wanted their team to experience generosity firsthand.

For their signature initiative, they selected Living Water International, an organization that drills water wells across Latin America and Africa. Both Marcus and Rachel have participated in Living Water trips. They know people on the board and have seen how it operates.

“We know it is a well-run organization,” Marcus explains. “If we were going to choose any one large charity to use this first season of the DBA Impact Fund, we wanted to go with a safe bet.”

The project spans two years. In 2026, The Impact Fund will purchase a well location in Latin America. In 2027, around 20 people, including team members, spouses, clients, and Collective member firms, will travel to install the well.

The Impact Fund covers all costs, removing financial barriers. “The purchase of the well is not voluntary,” Rachel explains. “That’s happening for the whole team. Going on the trip will be voluntary.”

Marcus calls Living Water trips “entry-level” mission experiences. They have structured itineraries with backup plans, safe accommodations, good food, and often a fun activity on the final day. Her first trip included ziplining on the way to the airport.

Birthday Wishes That Matter

While the well project creates a collective experience, the DBA Impact Birthday Gifts program gives individual team members a voice in the firm’s giving.

On each employee’s birthday, they direct the Impact Fund to donate $1,000 to any approved charity of their choice. The program costs employees nothing and adds to their existing birthday recognition.

“It’s significant enough that it does make an impact,” Marcus explains. “If we were only to do $100, they may not feel that it was as much of an impact.”

The program also helps with recruiting. When future team members ask how the firm celebrates birthdays, the answer now includes something more meaningful than cake in the breakroom.

Your Turn to Measure What Matters

The DBA Impact Fund is unusual in that it approaches charitable giving with the same discipline that firm owners bring to client work.

The framework has three parts:

A donor-advised fund that creates real accountability
A simple 1% revenue calculation that eliminates debate
Team involvement through collective projects and individual choice

“As accountants, dollars are an easy way to measure things,” Marcus observes. “And if you want to put dollars to what you care about, this is one small way to do it.”

The Dillons are transparent about their experiment. “We’re entering into the second calendar year of the funds being there, so it’s still an early experiment,” Marcus acknowledges. “If it fails, we won’t hold back from speaking to the failures.”

For other firm owners considering something similar, you don’t need a perfect plan. You need a mechanism that creates accountability and a calculation simple enough to execute consistently.

What would 1% of your firm’s revenue look like directed toward charitable purposes? How might involving your team—not just as contributors, but as participants—change your firm’s relationship with generosity?

For the full conversation, including more of Marcus’s mission trip stories and the team’s approach to capturing impact, listen to the complete episode.

Rachel and Marcus Dillon, CPA, own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, Collective by DBA, supports and guides accounting firm owners and leaders with firm resources, education, and operational strategy through community, groups, and one-on-one advisory.

From Spreadsheets to Raids: What Happens When We Defund Financial Oversight

Earmark Team · February 5, 2026 ·

Three years ago, Fox News host Greg Gutfeld warned viewers that 87,000 new IRS agents would create a “police state.” Today, armed ICE agents are going door-to-door in Minneapolis without warrants, investigating financial fraud. In other words, doing the work accountants would normally do with spreadsheets and calculators.

“We’ve replaced armed IRS agents with armed ICE agents doing work for the IRS,” says David Leary, co-host of The Accounting Podcast, still trying to process this turn of events. “I’ve lost sleep over this.”

In their latest episode, David and co-host Blake Oliver connect the dots between the 2022 fight over IRS funding and today’s reality in Minnesota, where billions in fraud have led to what they call a predictable but devastating outcome.

Minnesota’s Billion-Dollar Fraud Problem

The numbers coming out of Minnesota are staggering. On December 19th, prosecutors announced charges against more than 90 people across multiple public assistance programs. The fraud schemes read like a criminal playbook: daycares that collected $110 million through fake claims, the Feeding Our Future scandal that stole nearly $250 million in pandemic food aid, autism services billing for work never performed, using unqualified staff, and housing stabilization fraud.

A federal warrant has flagged 14 Medicare programs with significant fraud problems. The potential losses are in the billions.

“This is fraud that has taken place over many years,” David explains. The investigation has been ongoing for a while, but the political fallout came fast. Trump accused Somali immigrants of widespread fraud. A YouTuber documentary filmmaker went to Minnesota and started visiting these daycares, creating viral content that painted Minnesota as corrupt on all fronts.

In response, Trump sent 2,000 ICE agents to carry out what he called “the largest immigration operation ever.”

But here’s where it gets interesting for accountants. As Department of Homeland Security Assistant Secretary Tricia McLaughlin explained on a radio show, “Right now, on the ground in Minneapolis, Homeland Security investigators are going door to door to these suspected fraud sites. It’s daycare centers or healthcare centers and businesses around them as well.”

No warrants. Just agents showing up at doors.

Compare that to what happened just 30 days earlier at Taco Giro in Tucson. ICE and IRS Criminal Investigation spent years building a case, got proper warrants, then executed 16 search warrants as part of their investigation into immigration and tax violations. That’s how law enforcement used to work: investigation, evidence, warrants, then action.

“Raids have replaced audits and guns have replaced spreadsheets,” David observes.

The Time Machine: Back to 2022

To understand how we got here, Blake and David take listeners back to April 18, 2022. As explained in episode 292 of what was then called the Cloud Accounting Podcast, that’s when the IRS was set to receive $80 billion through the Inflation Reduction Act, including funding for 87,000 new enforcement agents.

The political response was fierce. They replay a segment featuring enrolled agent Adam Markowitz, whose tweet went viral and got him attacked on Fox News. Markowitz wrote, “All of my GOP friends who are worried about the 87,000 IRS enforcement agents coming after the little guy. How about just don’t cheat on tax returns?”

Gutfeld’s response on Fox was brutal, calling Markowitz a “schmuck” and warning viewers, “If you have an IQ higher than an artichoke, you must see that by now, this country is heading towards a police state.”

“The police state still happened,” David points out. “We didn’t avoid it.”

The hosts then shared a detail most people missed. In November 2024, a federal judge blocked the IRS from further record sharing with ICE. But the court documents revealed the IRS had already handed over tens of thousands of taxpayer records to ICE, including home addresses. ICE had requested more than one million records from the IRS.

“This might be the reason Billy Long is out,” David speculates about the departed IRS commissioner nominee. “He might have been pushing back on this.”

Following the Money (Or Not)

The pattern is clear to anyone who understands accounting controls. Over the past decade, Congress repeatedly cut the IRS budget while increasing funding for ICE. They shifted from investigation and fines to enforcement.

“Taxes dictate social policies,” David notes. “Budgets also do that. What you fund and budget is what the government is going to do.”

The result is less nonprofit oversight, slower detection of payroll and benefits fraud, and fewer audits. The absence of all those controls that seemed expensive created billions in fraud.

“We’re in the golden age of fraud,” David warns. “Maybe the new Enron is not one company; it’s just billions and billions and billions of small frauds because we’ve cut all of the controls that might catch it.”

Blake connects this to broader economic concerns. According to a Harris poll, 45% of Americans believe their financial security is worsening. Even 45% of Republicans think the economy is in a recession, despite GDP growth of 4.3% in Q3.

“If you’re the president and you don’t want people paying attention to the economy, what do you do?” Blake asks. “You start foreign conflicts or you create internal conflict.”

The Profession’s Own Control Problems

The accounting profession has its own control problem. The AICPA recently proposed major ethics rule changes for firms backed by private equity, worried that outside money could compromise auditor independence.

Under the new rules, firms can’t escape independence requirements by simply creating separate legal entities. If a CPA firm depends on a non-CPA entity for staff and infrastructure, they’re treated as one unit for independence purposes. PE-backed firms also can’t audit portfolio companies in the same fund.

“As CPAs, we stand for independence, objectivity, ethics,” Blake emphasizes. “Nobody else can do audits.”

But existing controls don’t always have teeth. The hosts discuss WH Smith, the historic British retailer. Their audit firm, PwC, missed profit misstatements that cost shareholders 600 million pounds. Yet the board recommended keeping PwC as their auditor.

“An auditor can cost a company half a billion dollars and they keep their contract,” David says, incredulous. “If anyone else failed that badly, you would fire them.”

The Lesson for Accountants

“Everything’s an accounting story,” David insists, and this one hits close to home.

The Minnesota fraud crisis shows what happens when you defund financial oversight. The 2022 IRS debate shows how fear of government overreach led to the exact outcome critics wanted to avoid. The profession’s own struggles with independence and accountability show these patterns repeat everywhere.

“If you have underfunded controls and you don’t have preventive measures, it always shows up as a very big expense,” David explains. “One time it was Enron. Now the expense is humans getting shot.”

Accountants talking to clients about taxes can do their part by explaining where that money goes and why controls matter. Because the alternative—as Minnesota shows—is much worse.

Blake and David dig deeper into these connections in the full episode, including their take on California’s proposed billionaire tax, why wars boost economies, and what Excel championship winners can teach us about efficiency. Listen to the complete discussion above or wherever you get your podcasts.

Three Fraud Schemes, Two Decades, and a Quarter-Billion Dollars in Stolen Money

Earmark Team · February 5, 2026 ·

On January 20, 2021, the last day of Donald Trump’s first presidential term, Eliyahu “Eli” Weinstein got a phone call that would rank among the best days of anyone’s life. The President of the United States had commuted his sentence, freeing him after eight years of a 24-year prison term for running a $200 million Ponzi scheme.

Six months later, he was already planning his next fraud.

In this episode of Oh My Fraud, host Caleb Newquist traces the jaw-dropping story of a fraudster who got a presidential second chance and immediately used it to steal another $44 million. It’s a tale that spans two decades, three separate fraud schemes, and over a quarter-billion dollars in losses.

The Community Leader Who Betrayed Everyone’s Trust

Eli wasn’t some shadowy figure operating from the margins. He was a pillar of the Orthodox Jewish community in Lakewood Township, New Jersey—home to Beth Medrash Govoha, the largest yeshiva outside of Israel. The son of a Jewish community leader and school principal from Brooklyn, Eli was known for his devout faith and generous donations to religious organizations. He spent millions on Judaica, Jewish devotional artwork and artifacts.

Starting around 2004, Eli began raising money for real estate deals. His pitch was simple: he had access to below-market properties, could flip them quickly to developers he had lined up, and everyone would make guaranteed returns with little risk. In the tight-knit Orthodox community, where deals often happen on handshakes with minimal paperwork, a respected leader’s word was his bond.

According to the 2011 federal indictment, just three investors—two in the UK and one in Bronxville, New York—put in over $136 million. The total losses exceeded $200 million.

The details in the indictment would be darkly funny if real people hadn’t lost everything. Eli raised $5.4 million for a project involving a national supermarket chain in Trotwood, Georgia. The only problems were there is no Trotwood, Georgia, and the supermarket chain had never heard of him.

Then there was the widow in Los Angeles who worked to help orphaned and poor children in Israel. Her dream was to open a music school for these kids. Eli convinced her to give him $1.2 million, promising to repay it in three weeks with interest. When she emailed asking him to “stop screwing around” and return her money, Eli’s response was two words: “f— you.”

He told a widow who helps orphans to go *$#%! herself.

But wait, it gets worse. When meeting with one victim’s representative, Eli asked what the representative’s wife and Eli had in common. When the man said he didn’t know, Eli replied, “We both f***ed you.”

The Judge Saw Right Through Him

At sentencing in February 2014, Judge Joel Pisano didn’t mince words. “You are a cheat. You lied and your deception is relentless. You’re consumed by deception.” He sentenced Eli to 22 years in prison, plus $250 million in restitution and $215 million in forfeiture.

But Eli couldn’t stop, even while awaiting trial. In February 2012, already under indictment, he started pitching investors on pre-IPO Facebook shares and Florida real estate he didn’t have. He used the money he raised to pay his lawyers for the fraud case.

That earned him an additional 24 months, bringing his total sentence to over 24 years. By white collar crime standards, it was harsh. But Eli had something most convicted fraudsters don’t: connections to people who could get his case in front of the President.

A Second Chance Immediately Squandered

The campaign for Eli’s clemency was well-organized. Criminal justice reform advocates argued his sentence was excessive. The White House statement noted that “numerous victims had written in support” and emphasized his seven children and loving marriage.

On Trump’s last day in office, he granted clemency to more than a dozen people facing fraud charges, which was a dramatic break from historical norms. As Caleb notes in the episode, white collar criminals were “very infrequently chosen for clemency” before Trump.

By July 2021, just six months after his release, Eli was building his next scheme. But his name and face had been everywhere. So he became “Mike Konig.”

The vehicle was Optimus Investments, Inc., supposedly dedicated to brokering deals on personal protective equipment (PPE) like masks, gloves, and hand sanitizer. This was mid-2021, when COVID supplies were still the hottest commodity on earth. “Mike Konig” claimed to have networks of government agencies, Turkish factory owners, and Israeli lawyers. He was always cagey about details. If everyone knew his contacts, he said, they could “reverse engineer him out of business.”

Richard Curry and Christopher Anderson started Tryon Management Group to raise money for these deals, eventually bringing in tens of millions. Investors received regular updates with videos of factories producing masks. “This is something that potentially has major legs,” Curry wrote enthusiastically.

Except almost none of it was real.

The Elaborate COVID Con Unravels

The deception was breathtaking. They hired temporary staff to pretend to be factory workers for videos. Someone in Vietnam procured just enough medical gear to fill a few kits for show. They purchased 5,000 empty boxes, wrapped them, and put them on pallets to represent orders.

The red flags were everywhere. A spreadsheet of Optimus’s expenses included a line reading “mystery expenses” next to $41,028,233.05. As Caleb observes, “A company dealing in medical supplies should not have mystery expenses. The only type of business that should have mystery expenses is whatever Scooby-Doo and the gang are always up to.”

Everything unraveled when Alaa Hattab, an Optimus associate, accidentally revealed the truth to Curry and Anderson. The baby formula deal was fake. The biggest mask deals were fake. The first aid kit deal was also fake.

Then came the bombshell: Mike Konig was actually Eli.

Curry and Anderson confronted him with hidden recording devices. On tape, Eli admitted, “I finagled and lied to people to cover us.” Then he asked them to keep his secret and help him continue. Incredibly, they agreed—at least temporarily.

By November 2022, with inflation surging and investors demanding their money, Tryon halted redemptions. When investors compared notes and found inconsistencies, one filed an SEC whistleblower report. The FBI arrested Eli at his home on July 18, 2023.

The Lessons for Accounting Professionals

After a seven-week trial, Eli was convicted in 2025 of securities fraud, wire fraud, money laundering, and conspiracy. In November 2025, he received a 37-year sentence. Over two decades, he had stolen more than a quarter-billion dollars.

Yitz Grossman, who had championed Eli’s clemency, told Bloomberg, “I still feel sick and embarrassed to speak with some of these people who gave me a letter to help out this family. My conclusion is he’s sick and he can’t control himself. He’s a deal junkie. He thinks he’s smarter than everybody else.”

This case is a reminder to accounting professionals and fraud examiners to look out for red flags appear over and over again, like:

Guaranteed returns with little risk
Short turnarounds that seem too good to be true
Minimal documentation or transparency
“Mystery expenses” in the tens of millions
Deals involving places that don’t exist

It also highlights how affinity fraud remains devastatingly effective because it weaponizes the trust that holds communities together. Eli’s victims trusted someone who demonstrated a commitment to their shared values.

On the political front, Obama’s administration created the Financial Fraud Enforcement Task Force in 2009 to prosecute financial crimes. Trump terminated it and replaced it with his own version. As Caleb observes with characteristic bluntness, Trump is “mercurial, petty, vindictive” and wouldn’t be above granting clemency to people Obama prosecuted simply because Obama prosecuted them.

The broader lesson is that when we reserve mercy for the wealthy and connected while ordinary offenders remain incarcerated, that’s not mercy at all. “That’s callous. That’s malevolent. And now maybe it’s American,” Caleb says.
Eli’s lawyer maintains his innocence and will appeal.

Listen to the full episode of Oh My Fraud to hear all the jaw-dropping details, damning quotes from court documents, and Caleb’s sharp commentary on what this case reveals about fraud, mercy, and American justice. Because when someone uses a presidential pardon to immediately start stealing again, we all need to pay attention.