The Justice Department’s Tax Division announced that a federal grand jury returned an indictment against attorney Scott Norris Johnson, 57, of Carmichael, charging him with three counts of making and subscribing a false tax return.

Johnson is known to sue small businesses citing minor ADA infractions, and based on the law, he can collect thousands of dollars in violations and recoup his own attorney’s fees. He almost always settles for tens of thousands of dollars.

According to the indictment, Johnson owned and operated Disabled Access Prevents Injury Inc. (DAPI), a legal services corporation. First using DAPI, and later using a law firm, Johnson filed thousands of lawsuits in the Eastern District of California and elsewhere. Johnson named himself as the plaintiff in the lawsuits and made claims under the Americans with Disabilities Act of 1990, the California Disabled Persons Act, and the California Unruh Civil Rights Act.

The East Bay Times reported that In December 2015, attorney Catherine Corfee, who often represents small businesses sued by Johnson, said she received an email from a federal prosecutor that there was a criminal grand jury probe into Johnson’s “treatment of settlement proceeds for ADA lawsuits.”

She recounted more than a decade opposing Johnson in court and how he would try to add physical injury wording to the settlements despite not alleging any such damages in the original complaint.

“I have refused to allow the words ’caused injury’ to make sure he pays his taxes,” Corfee said.

“I’m not going to participate in tax fraud,” she said. “Not one of my cases did I ever need to request medical records. If you don’t allege (physical injuries) in the lawsuit, then why settle for it?”  But, she said, other attorneys and defendants may not be as careful when finalizing their settlements.

Under the Small Business Job Protection Act of 1996, payments related to lawsuit settlements or awards are taxable unless they were paid on account of personal physical injury or physical sickness. Johnson, however, allegedly materially underreported the taxable income he received from lawsuit settlements and awards on his income tax returns for tax years 2012, 2013, and 2014. By understating his income on his tax returns, Johnson and DAPI paid little to no income tax for tax years 2012, 2013 and 2014.

This case is the product of an investigation by the Internal Revenue Service Criminal Investigation. Assistant U.S. Attorney Katherine T. Lydon and Trial Attorney Tim Russo of the Tax Division are prosecuting the case.