The Cavaretta case was a legal battle Between Jeffrey A. Human representing the prosecutor against Kevin M. Murphy who was the respondent. In the case, the defendant was accused of charging extra bills for services not offered. He later paid after being instructed by the judge to pay for the money amounting to the services he had not offered. Also again, the wife to the accused was tried and found guilty of health care fraud and the commissioner sentenced her to serve 18 months in prison plus an additional two years of supervised release afterward.
Other issues that came up during the proceedings were that Peter Cavaretta and Karen Cavaretta, who were the acquainted, had parallel operations but linked directly with the business. The court also realized that Karen and her husband had charged additional extra charges before notifying their clients. The court further realized that Stephen V Commissioner had criminally defrauded Raytheon and was ordered to pay $ 1 million in restitution. Furthermore, the court clarified that compensation expenses could not be accepted as a business expense as in…show more content… The judge confirmed that such payments couldn't be business payments because they were expenses of committing fraud and Dr. Cavaeretta’s business was not fraud but rather dentistry. The Cavarettas argued that the payments towards Dr. Cavaretta were ordinary and necessary for him as a doctor. The court agreed that the Cavarettas were right in their doings and that it allowed such payments if the payments contributed to the success of a business or if the institution needed the money. Deductibility varies according to the relation of the payment to the firm claiming the deduction. Therefore, business is legible to claiming deductions if there is a reasonable purpose for the repayment. The judge only required the Cavarettas to follow the civil laws and agreement that they had earlier negotiated with
