A decade-long scheme to defraud the Internal Revenue Service has resulted in a guilty verdict against an orthopedic surgeon and his truffle farming wife in North Carolina.
James and Susan Rice were found guilty on all counts following 40 minutes of deliberation and a four-day trial in the Middle District of North Carolina, according to federal court filings. The pair is accused of skirting employment and income taxes from 2007 to 2016 and using the money to pay for personal expenses — including a “luxury” dog kennel, trips to Aruba and visits with a spiritual adviser.
Defense attorneys representing the Rices declined to comment in a statement to McClatchy News on Tuesday.
A grand jury indicted the couple on several counts of tax fraud in October 2020. They were arrested and released on a $30,000 bond each, court documents show.
According to prosecutors, the Rices operated their own medical practice called Sandhills Orthopedic in Southern Pines, about 100 miles east of Charlotte. James Rice ran the medical side of the business while Susan Rice handled administrative tasks and financial affairs.
From June 2013 to December 2016, prosecutors said, the couple diverted $1 million in co-payments from Sandhills Orthopedic to their personal bank accounts.
James and Susan Rice reportedly used those ferreted funds to cover lavish personal expenses, including:
▪ a country club membership
▪ a luxury dog kennel
▪ luxury rental homes
▪ vacations in Aruba and the Blue Ridge Mountains
▪ gambling in Las Vegas
▪ a spiritual advisor
Truffles and taxes
According to court documents, the tax fraud was two-fold.
Sandhills Orthopedic reportedly had between seven and 12 employees at any given time during the alleged scheme. From 2007 to 2014, prosecutors said, James and Susan Rice withheld $580,000 in taxes from their employees’ wages but never turned the money over to the state and federal government.
They are also accused of failing to file individual taxes from 2014 to 2016.
To conceal the fraud, the Rices formed several companies with “at best, convoluted business purposes,” prosecutors said. Most seemed to exist for the sole purpose of opening bank accounts where the Rices could divert funds from Sandhills Orthopedic.
One of those accounts belonged to Susan Rice’s truffle farm in North Carolina, known as “Susan Alexander Truffles” or “Black Diamond French Truffles.”
According to the “about” section on the truffle company website, her farm is known for harvesting “Black Diamond French Perigord Truffle, the most sought after truffle in France.” Susan Rice’s endeavors to harvest the black Perigord were featured in a 2011 article by The New York Times detailing dueling truffle growers in North Carolina. The elusive crop was described as selling for $800 a pound at the time.
The Rices face up to five years in prison on each count of conspiracy, tax evasion and employment tax fraud, prosecutors said. They face an extra one year for each count of failing to file individual and corporate tax returns.
A sentencing date has not been set.