Dentist Pleads Guilty To Not Paying Taxes On Cocaine Profits

Posted: July 08, 1986

Lawrence W. Lavin, the 31-year-old dentist who masterminded the largest cocaine-distribution ring ever discovered in Philadelphia, pleaded guilty in U.S. District Court yesterday to charges that he failed to pay $545,000 in taxes on his illicit earnings from 1979 through 1982.

Lavin faces a maximum penalty of 25 years imprisonment and $50,000 in fines on the tax-fraud charges, which are in addition to the drug-trafficking charges to which he pleaded guilty last month. The University of Pennsylvania graduate now faces a combined maximum penalty of life plus 25 years, and $150,000 in fines.

"Do you plead guilty because you are guilty?" Judge Louis C. Bechtle asked after questioning Lavin in detail about his decision.

"Yes, your honor," Lavin quietly answered. He appeared in court yesterday wearing the same gray pin-stripe suit he wore when pleading guilty June 26 before Judge Louis H. Pollak.

Lavin was originally charged with drug trafficking and tax evasion in 1984. He posted $15,000 of a $150,000 bail, and fled in October of that year with his wife and 2-year-old son.

Lavin and his wife, Marcia, who gave birth to a daughter in the spring of 1985, lived under assumed names in a comfortable new suburban development in Virginia Beach, Va., until May 15, when they were both arrested by the FBI. Charges against Lavin's wife, who is pregnant with their third child, were dropped last month.

The FBI investigation into Lavin's drug dealing grew out of the IRS probe, which began in 1982. Tax agents began by looking into charges brought by Philadelphia rap singer Frankie Smith that WMOT-TEC Records had cheated him out of royalties from his 1982 hit record "Double Dutch Bus." The record company was owned by Mark Stewart, a flamboyant entrepreneur and boxing promoter, but showed several large transfers totaling nearly $700,000 to Dr. Lawrence W. Lavin.

It took investigators more than two years to piece together sufficient evidence to indict Lavin. Stewart is serving a four-year prison term for his part in using the record company and other investment schemes to help launder the millions of dollars Lavin was making through cocaine sales.

According to papers filed yesterday by Assistant U.S. Attorney Walter S.

Batty Jr., Lavin stated he had only minimal assets when he applied for and received loans and grants from Penn prior to beginning his undergraduate studies in 1973 and graduate studies in 1977.

According to the plea agreement, Lavin acknowledged yesterday that between 1979, when he was still a dental school student, and 1982, he paid cash for the following items: $12,000 for a Volvo, $224,000 for gold and silver ingots, $137,000 to invest in a real estate firm called Lavin Options Inc., $50,000 for a video game room, $23,000 to invest in a silver mine, $53,000 for part ownership of a dental practice, $170,000 in banking and security accounts, $150,000 to purchase a Center City condominium, $132,000 to purchase his home in Devon, $15,000 to install a swimming pool in the back yard, $38,792 for a BMW-733I, $100,000 for three condominiums in Mays Landing, N.J., and $65,000 for a seat on the Philadelphia Stock Exchange.

During this period, Lavin reported the following taxable incomes: $3,000 in 1979 and $32,000 each year from 1980 through 1982. Since his arrest in May, Lavin has surrendered $2.7 million in assets to the Justice Department.

Bechtle set sentencing on the tax charges for Sept. 4. Lavin, who is being held at the Chester County Prison Farm, is to be sentenced by Pollak earlier that same day.

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