Surgeon dodged taxes — and used funds on his wife’s NC truffle farm instead, feds say
A husband and wife in North Carolina are accused of skirting employment and income taxes for almost a decade to help pay for their own personal luxuries — including boarding the family pet.
James and Susan Rice were indicted Tuesday by a federal grand jury in Greensboro on conspiracy and tax evasion charges, the U.S. Attorney’s Office for the Middle District of North Carolina announced in a news release. The pair face more than 15 years in prison and hundreds of thousands of dollars in fines if convicted.
James Rice is an orthopedic surgeon who operates his own practice called Sandhills Orthopedic in Southern Pines, about two hours east of Charlotte, according to court filings.
Prosecutors said his wife ran the administrative side of Sandhills Orthopedic as well as her own truffle business.
The alleged fraud involving employment taxes dates from 2007 to 2014. During that time, prosecutors said James and Susan Rice withheld Medicare, Social Security and federal income taxes from their employees’ wages but never turned the money over to the state and federal government.
All told, the couple is accused of failing to pay roughly $580,000 in employment taxes for Sandhills Orthopedic.
James and Susan Rice also failed to file personal and corporate tax returns on almost $8 million the practice took in between 2012 and 2016, according to court filings. Prosecutors said they personally netted around $680,000 from the business during that time, and some of their unpaid income taxes date to at least 2008.
The pair hid the funds from the federal government by moving it into bank accounts belonging to their other businesses, court filings state.
The money was used to pay for a variety of personal luxuries from 2013 to 2018, prosecutors said, including:
- More than $6,000 on boarding their dog at a kennel
- Close to $28,000 on a country club membership
- Several visits to Susan Rice’s spiritual adviser totaling close to $8,000
Susan Rice’s truffle farm in North Carolina — known as “Susan Alexander Truffles” or “Black Diamond French Truffles” — also benefited from the alleged scheme, according to court filings.
A representative from the business did not immediately respond to McClatchy News’ request for comment on Wednesday.
The farm is 10 miles from her “home base and test kitchen” in Pinehurst, according to Susan Rice’s LinkedIn. Her bio touts the business, which started in 2007, as “the largest commercial truffle orchard in America since 2006.”
In a 2011 article by The New York Times detailing dueling truffle growers in North Carolina titled “A Tasty Fungus, Stirring Dreams and Lawsuits,” Susan Rice was described as running “garden club tours through her 10,000-square-foot home, feeding them truffle-laced grilled cheese sandwiches.”
The Times reported she was going after an elusive but highly sought after crop of truffles known as the black Perigord that sold for $800 a pound at the time.
Prosecutors said her truffle farm — called Forest Haven LLC — spans 237 acres. They didn’t say how the tax dollars the couple are accused of hiding from the federal government were used to help fund the business, but the Internal Revenue Service issued a lien on the property in 2016, according to court filings.
James and Susan Rice were charged Tuesday with conspiracy to defraud, tax evasion, failure to pay employment taxes and failure to file individual income taxes. James Rice also faces an additional charge of failing to file corporate taxes.
Warrants for their arrest were also issued Tuesday, court filings show.
