Hold onto your seats! As if Mike Sorrentino, the former “Jersey Shore” cast member’s legal woes couldn’t get any worse, they just did. Mr. Sorrentino pleaded not guilty on Wednesday, September 24, 2014 to failing to pay taxes on nearly $9 million in income. According to the indictment, Mr. Sorrentino earned this income trading off the name he made for himself on the now-defunct reality TV show, “Jersey Shore.”

Mr. Sorrentino and his brother, Marc, have been charged with conspiring to defraud the U.S. and filing false tax returns for tax years 2010 through 2012.

Appearing in U.S. District Court, Mike Sorrentino entered a not guilty plea and was released on a $250,000 bond.

“The situation will sort itself out,” said Sorrentino, popularly known by his nickname – “The Situation.” “Thanks, guys,” he said before jumping in the passenger seat of a Kia and leaving court.

Mr. Sorrentino’s charges also include failing to file a tax return for 2011 when, according to U.S. Attorney Paul Fishman, he raked in more than $ 1.95 million in income. For those curious about Mr. Sorrentino’s exposure, he faces up to 11 years in prison and fines totaling $600,000. Marc, Michael’s brother, was charged in the same seven-count indictment. He faces up to 14 years in prison for the conspiracy charge and three counts of filing false tax returns.

Not publicized during the press conference was the amount that the brothers owe for allegedly understating income and inflating business expenses.

However, U.S. Attorney Paul Fishman made the following comments:

“Michael and Marc Sorrentino filed false tax returns that incorrectly reported millions made from promotions and appearances. The brothers allegedly also claimed costly clothes and cars as business expenses and funneled company money into personal accounts. The law is absolutely clear: telling the truth to the IRS is not optional.”

Specifically, the indictment alleges that Michael and Marc conspired to fail to pay federal taxes on income generated by two companies that they controlled: MPS Entertainment, LLC and Situation Nation.

The Sorrentinos created MPS Entertainment one month after the MTV series premiered in December 2009. Not surprisingly, its’ purpose was tied to promoting Mike Sorrentino by “cashing in” on the rock-star status that he achieved virtually overnight.

Mike Sorrentino held an 80 percent ownership in MPS and his brother held the rest.

According to the indictment, MPS promoted Sorrentino’s celebrity status by landing him appearances on TV and in person and helping him to win endorsements for all sorts of products and clothing lines – from vitamins, clothing, and jewelry to sunglasses and tuxedoes.

According to the indictment, the Sorrentinos also owned an online clothing business, partnered in a vodka company, and profited from the publication of a comic book that featured Mike Sorrentino as a superhero.

Prosecutors say Mike Sorrentino raked in between $1,500 and $48,000 for appearances at nightclubs, bars, and liquor stores. As a Jersey-shore vacationer, this author can attest to the fact that nary a summer night would go by without Mike Sorrentino making a cameo appearance at the infamous, “Bamboo Bar” in Seaside Heights, NJ. A large portion of the fees he collected were paid in cash, with some of it going into bank accounts controlled by the Sorrentinos, prosecutors say.

While there is nothing wrong with collecting exorbitant fees – even in cash – for making cameo appearances at nightclubs, it’s what Mr. Sorrentino failed to do with that cash that caught the attention of federal prosecutors. He and his brother allegedly failed to declare all of the cash as income. And as you might expect, it wasn’t chump change. On the contrary, it is alleged that $184,000 was unreported for 2010; $154,000 was unreported for 2011, and $31,000 was unreported for 2012.

To add insult to injury, prosecutors allege that the brothers misled the Staten Island accounting firm that prepared their taxes about the true income they received from MPS and Situation Nation. According to the indictment, business expenses were grossly inflated:

“These false and/or inflated business expenses included, among other things, payments for several high-end vehicles, purchases of high-end clothing and personal grooming expenses that were disguised as legitimate business expenses.”

After being given the false information, the accountant prepared a tax return for MPS that claimed $1.1 million in expenses for 2010 and understated the company’s gross receipts. The expenses include payments for luxury cars and clothing, the indictment adds.

Jonathan Larsen, the acting Special Agent in Charge of the Newark office of the IRS’ Criminal Investigation Division, was the agent who led the probe. He said the following:

“Most individuals file truthful tax returns and pay their fair share of taxes. However, as alleged in today’s indictment, rather than living in reality and reporting their true income, Michael Sorrentino and his brother Marc created the illusion that they earned less income by filing false and fraudulent tax returns.”

Michael and Marc are scheduled to return to court on October 6, 2014.

The brothers may have caught one break. Under the terms of the bond agreement reached with prosecutors, neither has to put up property as collateral. However, if they fail to appear for a court appearance they will forfeit the entire amount.

This is one more speed bump in the road of a series of legal problems for Mike Sorrentino. In July, he agreed to attend a 12-week anger management program as part of a plea deal to resolve a simple assault charge against his brother, Frank, at their family’s Middletown tanning salon.

Sadly, Sorrentino is not the only New Jersey celebrity to face charges of not paying taxes. “Fat Joe” (Joe Cartagena), the Grammy-award winning rapper, was sentenced to four months in prison in June 2013 for failing to pay taxes on more than $2 million of income in 2007 and 2008. And just one month earlier, Lauryn Hill, the eight-time Grammy award winner, was sentenced to three-months in prison for failing to pay taxes on millions of dollars in income.

The government’s targeting of Michael Sorrentino for prosecution is the latest example of how singling out celebrities for prosecution allows the government to maximize the deterrent effect of the criminal tax enforcement system on the general public. Other notable personalities include “Survivor” contestant, Richard Hatch and Hollywood actor, Wesley Snipes. Very simply, the publicity that cases like Michael’s get send a strong message to the public that they should not be tempted to play fast and loose with the IRS. Instead, they should “get right on their taxes” or face the wrath of the criminal tax enforcement system.

As stated in the Criminal Tax Manual, the Federal Tax Enforcement Program is designed to:

“… protect the public interest in preserving the integrity of the nation’s self-assessment tax system through vigorous enforcement of the internal revenue laws. The purpose of a criminal tax prosecution is to expose the wrongdoer, thereby deterring other potential tax violators. Obviously, the most effective deterrent to would-be violators is successful prosecution coupled with a sentence commensurate with the gravity of the offense.

The government’s objective in criminal tax prosecutions is to get the maximum deterrent value from the cases prosecuted. To achieve this objective, the government’s tax enforcement activities must reflect uniform enforcement of the tax laws. Uniformity is particularly necessary because prosecution standards in the tax area affect more individuals than any other area of the law. Accordingly, the Federal tax Enforcement Program is designed to have the broadest possible impact on compliance attitudes by emphasizing balanced enforcement, not only with respect to the types of violations prosecuted but also the geographic location and economic and vocational status of the violators.”

[CTM 2.00 (incorporating U.S. Attorney’s Manual π 6-4.010).]

The lesson to be learned here is not to be tempted to think that just because your friend, family member, or neighbor might have been able to “get away” with underreporting income that you will slide by too, even if his or her tax noncompliance was larger and more pervasive than yours. At the risk of overstating the obvious, this type of thinking is extraordinarily dangerous and might lead to a one-way ticket to “Club Fed.” A good rule of thumb here is to be both prudent and cautious.