Dentist, acquitted of tax fraud charges, sues for wrongful prosecution

Patrick Kernan, The Times Leader, Wilkes-Barre, Pa.
·3 min read

Jul. 22—A Forty Fort dentist who was acquitted in 2019 by a federal jury of tax fraud has filed a federal lawsuit, claiming his constitutional rights had been violated and that he had been maliciously prosecuted.

Charles Musto, a periodontist, had been charged with federal tax fraud violations in 2016, when prosecutors claimed he underreported income associated with his practice on a 2010 tax return.

According to the indictment filed at the time of his charging, Musto reported gross receipts of $1,504,970 and business income of $587,330, but prosecutors say, "he knew he received gross receipts and business income in excess of the amounts stated on the return."

But after a nearly two-week trial, Musto was found not guilty on all counts he was facing by a federal jury in June 2019. Now, Musto has filed a suit against the federal government in general and a series of individuals who all work for the IRS office in Scranton. Thomas Sweeney, Marie Grabinski, Ben Wylam and Alan C. Frevele, all employees of the IRS, were named as defendants in the case.

The suit was filed in late May, records show, in federal court by attorneys Joseph P. Guzzardo, of Guzzardo & Associates in Philadelphia, and Matthew Moroney, of Goldberg, Miller & Rubin, also in Philadelphia.

According to the suit, the investigation into Musto began after a "routine civil tax audit into Musto and his dental practice." The suit openly acknowledges that Musto had underreported, but says that it, "in and of itself, is not a crime," and goes onto say "Musto paid his tax balances upon learning of the discrepancy."

The suit says the government opened a criminal case after Musto invoked his fifth amendment rights and chose to communicate through his counsel. "As such, the government held Musto's right to remain silent against him and violated his constitutional rights," the suit says.

The suit says Musto did not have knowledge or reason to believe that he had reported his income incorrectly, and that the government was unable to prove that he had.

"In essence, the government retaliated against Musto for exercising his constitutional rights and engaged in a misguided malicious prosecution, which was based on evidence the government knew or should have known was false," the suit says. "As explained (in the suit), the government's case was belied by Musto's accounting program, which accurately records all earned income. After reviewing these records, two Assistant United States Attorneys chose to not prosecute Musto. Unfortunately, the defendants chose to ignore Musto's accounting program and proceed with the criminal case."

The suit claims the government intentionally chose to omit exculpatory information, saying that the IRS employees proceeded with a criminal case, despite "fraud badges" not being found in association with the error.

Musto claims that his fourth, fifth and fourteenth amendment rights were violated, and that the government had engaged in malicious prosecution, as it put forth a case that was "knowingly false," the suit says. He also says that numerous damages had been made against him, including damages of his standing in the community.

While an official response has not been filed by the government in court, records show that the case has been assigned to United States District Court Judge Jennifer P. Wilson. A hearing is scheduled before Wilson on Sept. 9.