Yoga to the People leaders Gregory Gumucio, Michael Anderson and Haven Soliman have been arrested and charged on allegations of tax fraud, according to an announcement from the U.S. Attorney for the Southern District of New York.
Each of the defendants was charged with one count of conspiracy to defraud the IRS, which carries a maximum penalty of five years in prison, and five counts of tax evasion, each of which carries a maximum penalty of five years in prison.
These allegations are the latest against the company, which closed in 2020 after more than 20 former clients and employees made allegations of sexual assault, racial discrimination and questionable business practices against the company, according to the New York Times.
The defendants are alleged to have not filed individual or business tax returns from 2013 to 2020 — and not paid any taxes during that time — despite receiving “a substantial amount of income” from the business, the attorney along with the IRS and the U.S. Department of Labor allege.
Gumucio, Anderson and Soliman were arrested in Washington State on Aug. 24.
Yoga to the People was founded in 2006 as a yoga studio in New York that operated off of donations, purporting to make yoga more accessible to more people. Over the years, the business, which Gumucio founded and served as CEO, opened at least approximately 20 yoga studios or affiliated entities throughout New York City and in various other places, including California, Colorado, Arizona, Florida and Washington State.
Yoga to the People also offered a teacher training program, which earned income from aspiring yoga teachers.
From 2010 to 2020, Yoga to the People and its affiliates generated gross receipts of more than $20 million, according to the government, yet the company never filed a corporate tax return with the IRS.
Anderson and Soliman also had ownership in the business. Anderson served as the chief financial officer and was involved in, among other things, negotiating leases for Yoga to the People entities, obtaining Employer Identification Numbers from the IRS, opening bank accounts, and working with Gumucio to expand Yoga to the People, according to the government.
Soliman served as its chief communications officer and director of education for its teacher training program. She also helped the business expand internationally.
Using conservative figures for calendar years 2015 to 2020, the government estimates that Gumucio had unreported income directly from Yoga to the People exceeding $1.6 million and a tax due and owing to the IRS exceeding an estimated $431,000; Anderson had unreported income directly from Yoga to the People exceeding $2.1 million and a tax due and owing to the IRS exceeding an estimated $603,000; and Soliman had unreported income directly from the company exceeding $961,000 and a tax due and owing to the IRS exceeding an estimated $196,000.
During the charged period, Gumucio, Anderson and Soliman each represented their annual income to be six figures to third parties not associated with the government (e.g., in loan applications, rental applications, and/or bank documents), yet none of them filed an individual tax return, the government alleges.
During this time, the government alleges that the trio enjoyed frequent foreign travel, expensive meals and clothing, NFL season tickets and horse lodging.
The government alleges that Yoga to the People and its leaders used various methods to evade taxes, including accepting yoga students’ payments in cash collected in tissue boxes that were passed around during yoga classes.
They allegedly paid yoga teachers in cash and “off the books,” and Gumucio allegedly manipulated subordinates into providing free labor (e.g., teaching unpaid classes, stacking cash, cleaning yoga studios, depositing cash into bank accounts, etc.).
In addition, the leaders allegedly used nominees to disguise their connection to various entities which, in fact, were part of the Yoga to the People business and from which the three received income. To that end, Gumucio targeted and groomed typically young women and others to become nominee “owners” of studios, luring them with the title of studio owner when, in fact, he generally controlled business decisions, took a cut of their proceeds, and the nominees generally took on meaningful financial risk, according to the government.
The three also allegedly generally forbid their teachers from counting incoming cash that yoga students paid and required yoga studio managers to transport cash proceeds to Gumucio’s apartment where the proceeds were “stacked” and counted during so-called “stacking parties.”
Yoga to the People also failed to maintain a corporate headquarters or keep corporate books and records.
The defendants also allegedly used Yoga to the People business accounts to pay their personal expenses.
“As alleged, the defendants operated a lucrative nationwide yoga business, which brought in over $20 million and netted them each substantial sums, permitting them to live lavish lifestyles,” U.S. Attorney Damian Williams said in the announcement. “Yet the defendants chose not to file tax returns, or pay income taxes, for at least seven consecutive years. The defendants perpetrated their scheme in various ways, including paying employees in cash and off the books, refusing to provide employees with tax documentation, not maintaining books and records, paying personal expenses from business accounts, and using nominees to disguise their connection to various entities. At least two of the defendants even submitted fabricated tax returns to third parties when seeking a loan or an apartment, despite not filing any tax returns with the IRS. Thanks to dogged investigative work, the defendants now face serious charges for their alleged crimes.”
IRS-CI Special Agent in Charge Fattorusso said: “The defendants purported to create a donation-based exercise community to make yoga more accessible for their clients, when in reality, they allegedly ran a more than decade-long cash cow that relied on a sophisticated network of tens of millions of dollars in unreported income and free labor to fund the leaders’ lavish lifestyles. Today’s arrests and charges are the opening salvo against this years-long scam and the first step to holding these defendants accountable for their alleged crimes.”
DOL-OIG Special Agent-in-Charge Jonathan Mellone said: “An important part of the mission of the Office of Inspector General is ensuring that workers receive the wages that they are entitled to and that appropriate unemployment insurance taxes are withheld from their pay and remitted to the relevant tax authority. We will continue to work with our law enforcement partners to investigate these types of allegations."