Central Coast accountant sentenced for fraud involving sham non-profit organization

March 5, 2013

A Santa Barbara-based certified public accountant has been sentenced to 36 months in federal prison for failing to report more than $1 million on federal tax returns by pretending that money earned through his accounting business came from a charitable foundation he called the Foundation for Harmony and Happiness.

Steven Mark Pybrum, 61, who resided in Montecito and claimed on his website that he appeared as a tax and financial expert on national television shows, was sentenced late Monday afternoon following his conviction last year on four counts of filing false income tax returns.

Pybrum fraudulently used money from his non-profit organization to pay personal expenses, including renting a Montecito mansion and buying a plane, a fishing boat and an SUV.

At Friday’s sentencing hearing, United States District Judge Gary A. Feess stated Pybrum operated a “blatant, calculated, tax-fraud scheme,” and that his conduct was “indefensible.”

Pybrum, who operated his accounting practice under the names of Pybrum & Company and Family Business Center, was convicted by a jury last October. The evidence presented during a three-day trial showed that Pybrum subscribed to false individual income tax returns for the tax years 1999 through 2002, and that he underreported his income on tax returns that were filed up to three years late.

In 1999, Pybrum began depositing receipts from his accounting practice into a bank account held in the name of the Foundation for Harmony and Happiness (FFHH). Documents filed with the IRS stated that FFHH was established to provide financial and conflict resolution to help couples avoid financial disputes, which Pybrum claimed was a leading cause of divorce.

The evidence presented at trial showed that between 1999 and 2002, Pybrum brought in as much as $380,000 per year from accounting work. But instead of reporting that income on his own tax return, he claimed that money had been earned by FFHH for providing marital counseling. Prosecutors stated at trial that there was no evidence that FFHH actually did any charitable work or earned any money for charitable activities during these four years, and that FFHH was simply a name on bank accounts that Pybrum set up to avoid paying taxes.

The investigation of Pybrum was conducted by the IRS in Los Angeles.