Yoga Studio Founder Admits to $2.5 Million Tax Fraud

Yoga Studio Founder Admits to $2.5 Million Tax Fraud \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Gregory Gumucio, founder of “Yoga to the People,” pleaded guilty to a tax conspiracy charge in New York federal court, admitting to evading $2.5 million in taxes between 2012 and 2020. He faces up to five years in prison, with sentencing scheduled for January. Gumucio agreed to pay restitution plus interest to the IRS.

Yoga Studio Founder Pleads Guilty to Tax Evasion: Quick Looks

• Founder Pleads Guilty: Gregory Gumucio, founder of “Yoga to the People,” pleaded guilty to conspiracy to defraud the IRS.
• Tax Evasion Details: Gumucio admitted he failed to pay $2.5 million in taxes from 2012 to 2020.
• Restitution Agreement: Gumucio agreed to pay $2.56 million in restitution plus interest to the IRS.

Deep Look

Gregory Gumucio, the founder of the well-known international yoga studio chain “Yoga to the People,” pleaded guilty to a conspiracy charge in a New York federal court on Friday. The charge relates to a tax evasion scheme in which Gumucio, 63, admitted that he deliberately failed to pay over $2.5 million in taxes between 2012 and 2020. Gumucio, originally from Colorado, apologized for his actions during the plea proceedings, acknowledging his wrongdoing in front of Judge John P. Cronan.

The plea agreement with prosecutors recommends a sentence of around five years in prison—the maximum penalty under the charge. Gumucio is due for sentencing on January 16, and he was allowed to leave the court on bail while awaiting this date. Two other defendants in the case are also awaiting trial for related charges.

Tax Evasion Scheme and Business Operations

“Yoga to the People,” Gumucio’s business, had operated in about 20 locations across the United States, including cities like San Francisco, Berkeley, Oakland, Tempe, Orlando, as well as locations in Colorado and Washington. The business expanded internationally, operating in Spain and Israel, and was even seeking further global growth before shutting down four years ago. During its peak, the business generated over $20 million in revenue, yet Gumucio failed to fulfill his tax obligations.

During his court appearance, Gumucio explained how he managed to evade taxes. He admitted that yoga teachers were paid in cash, and he deliberately did not provide them with tax forms to indicate the income earned by the studio. “I deliberately did not file tax returns to avoid paying taxes,” Gumucio confessed in court. He acknowledged his involvement in the tax evasion, specifically citing operations in Manhattan’s East Village, among other locations in the U.S.

Gumucio also agreed to pay $2.56 million in restitution, along with interest, to the IRS as part of his plea deal. While addressing the judge, Gumucio said, “I apologize for that,” referring to his actions of evading taxes for nearly a decade.

Past Legal Issues and Arrest Record

Gumucio’s arrest two years ago revealed a complex past. At the time, prosecutors noted that he had been living in Cathlamet, Washington, and had an arrest record spanning 15 incidents. Gumucio was also known to have used at least six aliases, three different Social Security numbers, and had claimed three distinct places of birth over the years. Despite his lengthy arrest record, Gumucio’s last known arrest before his current charges had been in 1992.

A magistrate judge initially released Gumucio on $250,000 bail, noting the considerable gap between his previous arrest and the current allegations. Since his arrest, Gumucio has been residing in Colorado, although he did not provide specifics on his current residence during the court proceedings.

Yoga Studio Chain and its Downfall

“Yoga to the People” gained popularity for its accessible and donation-based approach, promoting itself as a welcoming space where people from all backgrounds could come together to practice yoga. The chain became well-known for its slogan, “Yoga for everyone, without the need for memberships or high fees,” and sought to provide an inclusive atmosphere in an often-exclusive wellness industry.

However, despite the company’s mission of inclusivity and affordability, it faced challenges beyond the founder’s tax evasion. In 2020, during the COVID-19 pandemic, the chain permanently closed its studios amid financial pressures and accusations of fostering a toxic and abusive work environment. Employees came forward with allegations of emotional manipulation, lack of pay transparency, and exploitative practices within the company.

The business, which was founded with the vision of democratizing yoga and making it accessible to all, ultimately found itself entangled in controversy and financial mismanagement. The tax evasion scheme was just another layer of misconduct within the company, shedding light on deeper operational issues.

Future Sentencing and Potential Penalties

Gumucio’s plea agreement with federal prosecutors includes a recommendation for a sentence of approximately five years, which is also the maximum penalty for the tax conspiracy charge to which he pleaded guilty. Judge John P. Cronan will determine Gumucio’s fate at the sentencing hearing scheduled for January 16.

As part of his agreement, Gumucio will also need to fulfill his obligation to pay back the $2.56 million in restitution to the IRS. This includes interest accumulated during the years he evaded taxes. His acknowledgment of guilt and cooperation with authorities in the form of restitution may be considered during sentencing, though the recommended sentence remains significant, reflecting the scale of the fraud.

Upon leaving the courthouse after his plea, Gumucio kept his head bowed once he noticed he was being photographed. He declined to make any further comments to the press. The case serves as a stark reminder of the legal consequences of tax evasion, even for figures in industries like health and wellness, which are often associated with ideals of balance, integrity, and well-being.

Other Defendants in the Case

While Gumucio’s case moves toward sentencing, two other defendants are still awaiting trial in connection with the tax evasion scheme. Details about their roles and charges have not been fully disclosed, but they are believed to have been involved in the operations of the “Yoga to the People” business and possibly played a role in the tax evasion activities.

Broader Implications

The downfall of “Yoga to the People” underlines broader issues within parts of the wellness industry, where financial transparency and accountability are sometimes overlooked. The yoga industry, which has been widely popularized as a symbol of peace, health, and community, has faced growing scrutiny over financial ethics and labor practices. Gumucio’s case stands as an important example of the consequences of neglecting these responsibilities.

As yoga continues to be a popular practice worldwide, Gumucio’s conviction may serve as a cautionary tale for other wellness entrepreneurs and businesses. The industry’s leaders must maintain integrity not only in their teachings but also in their business practices.

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