Owners of North Carolina orthopedic clinic convicted of fraud still liable for unpaid taxes


Orthopedic surgeon James Rice, MD, and his wife, Susan, are still criminally liable for unpaid taxes, the Fourth Circuit court ruled May 9.

They appealed their conviction and sentence on 10 counts related to their failure to file tax returns and pay employment taxes, claiming ineffective counsel, according to a May 9 opinion. But the court found the record "does not conclusively establish trial counsel's ineffectiveness" and deferred consideration of the ineffective counsel claim.  

The couple also challenged the court's sentencing guideline calculation saying the district court applied the wrong loss amount, leading to a higher sentence. The unpaid employment taxes combined with interest and penalties totaled $1,736,592, which fell in the same loss bracket as the loss amount the district court calculated. The Fourth court ruled that any errors in calculations for attributable loss were "harmless" and affirmed the couple's sentences.

The couple was sentenced to five years in prison in 2022 for federal employment and individual income tax fraud. Dr. Rice owned Pinehurst, N.C.-based Sandhills Orthopaedic and Spine Clinic, and Ms. Rice oversaw administrative operations there. In total they skirted more than $2.4 million in personal, corporate and employment taxes they owed. Prosecutors said the couple transferred money from Sandhills Orthopaedic's bank accounts to other accounts and withheld almost $580,000 in Social Security and other taxes from employee wages from 2007 to 2016.

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