How Did a Yoga Studio Founder Rack Up $2.5M in Tax Evasion?

In a twist of irony that might make any yogi cringe, Gregory Gumucio, the once-revered founder of Yoga to the People, a chain of pay-what-you-can yoga studios with the tagline “All Bodies Rise,” has been exposed for his financial shortcuts. Gumucio has pleaded guilty to evading over $2.5 million in taxes, marking a significant fall from grace for the man whose “zen business” once spanned continents. 

Bending the Rules Beyond the Mat

Gumucio’s story began back in 2006 with the establishment of his first studio in Manhattan's East Village. Known for its bohemian allure, Yoga to the People promised affordable yoga for everyone. Classes were donation-based, and with mats packed from wall to wall, the business thrived. Eventually, it expanded to about 20 locations in the U.S., including California, Colorado, and Washington, as well as international studios in Spain and Israel. The business was pulling in millions – about $20 million in total revenue. But in classic tax-evasion fashion, Gumucio apparently felt he could skip his financial obligations to the IRS, even as his studios became a yoga haven for thousands. 

While the appeal of affordable, no-strings-attached yoga grew, Gumucio’s finances were operating in a parallel universe. Federal prosecutors discovered that Gumucio had made over $3.5 million between 2012 and 2020 without filing any tax returns, a common enough tactic among those contributing to the IRS’s estimated annual “tax gap” of $496 billion. This gap, representing unpaid taxes, is a staggering number that has led the IRS to ramp up enforcement efforts. Gumucio was just one of many on their radar as the agency prioritizes cases involving substantial tax evasion. 

The Road from Om to the Slammer 

In 2022, the authorities finally caught up with Gumucio, exposing his colorful criminal history that included 15 prior arrests, six aliases, three Social Security numbers, and several claimed birthplaces. Despite his past, a magistrate judge released him on $250,000 bail, noting that his last arrest was in 1992. 

Last week, Gumucio appeared in a New York federal court and admitted to tax evasion, revealing that he’d gone to great lengths to keep his operation under the IRS radar. He paid instructors in cash, avoided tax filings altogether, and stored cash donations at his home. The plea deal calls for a potential five-year prison sentence, to be finalized on January 16. Meanwhile, Gumucio has agreed to pay restitution of at least $2.5 million plus interest – a hefty bill for someone who thought he could skip out on the IRS. 

The IRS Criminal Investigation Division has long prioritized cases like Gumucio’s. In 2020 alone, the division uncovered $2.3 billion in tax fraud, with around 72% of those cases involving tax evasion. And while the agency audits less than 1% of taxpayers annually, high-income earners like Gumucio are often on the hook for more frequent scrutiny – especially with recent funding increases aimed at combating large-scale tax evasion. 

The Not-So-Zen Business Practices 

To the public, Yoga to the People was simply a welcoming yoga studio, offering a reprieve from pricey, high-end yoga studios. But prosecutors unveiled a darker side to the business, one that stretched far beyond tax evasion. Former employees have spoken out about Gumucio’s mismanagement, describing his payment of staff “off the books” and claims of labor exploitation, including forcing some to work for free. Damian Williams, U.S. Attorney for Manhattan, remarked, “Gumucio built a thriving yoga business yet chose to evade his tax obligations for nearly a decade.” 

And as it turns out, Gumucio was going to great lengths to hide the true nature of his business. Donations were collected in tissue boxes passed around like collection plates at church, later brought to Gumucio’s home, where he held “stacking parties” to count the cash. A lack of traditional financial records made it difficult for the IRS to track his earnings, but ultimately, this unorthodox approach raised red flags that led to his capture. 

Trials, Tribulations, and Tarnished Reputations

While Gumucio’s story might sound like a Netflix crime drama, it doesn’t end with him alone. Two other co-owners, Michael Anderson and Haven Soliman, have also been charged with conspiracy to defraud the IRS. These co-conspirators are accused of spending Yoga to the People funds on lavish items, from NFL season tickets to luxury vacations, all while avoiding their tax responsibilities. Both Anderson and Soliman pleaded not guilty and are awaiting trial next year. 

Beyond the tax evasion, Gumucio’s actions have sparked a wider conversation about accountability and ethics within the wellness industry. In 2020, former students and employees began sharing alarming stories online, accusing him of everything from using racial slurs to sexual harassment. The once-booming yoga empire, which attracted high-profile teachers and celebrities, has since fallen into disrepute. Allegations of discrimination, racial slurs, and sexual misconduct have painted a picture of an organization built on more than just unfiled tax forms. 

Is This the End for Yoga to the People? 

With Gumucio’s plea, Yoga to the People seems to have reached the end of its road. Once celebrated for its accessible, pay-what-you-can model, the chain shut down in 2020 amidst scandal and controversy. For many, Gumucio’s courtroom confession marks the closing chapter of a story where bending not just yoga poses but financial and ethical norms ultimately led to ruin. 

As Gumucio exited the courthouse last Friday, head low and lips sealed, his story became a cautionary tale of what happens when a business owner tries to outmaneuver the IRS. While the IRS typically audits less than 1% of taxpayers annually, high earners and businesses that flaunt compliance face a higher level of scrutiny. The message is loud and clear: when it comes to paying taxes, taking shortcuts will eventually catch up to you. 

For professionals, Gumucio’s case underscores the importance of honest record-keeping, proper tax filings, and ethical business practices. A recent IRS report highlighted that the top 1% of earners contribute over 27% of the total tax gap, showing why the agency has ramped up efforts to crack down on high-profile tax evasion cases. Whether you’re running a yoga studio, a small tech startup, or a larger corporation, it’s wise to stay compliant. Cutting corners may seem like an easy way to maximize profit in the short term, but in the long run, those choices could spell disaster for your business – and your freedom. Stay informed with the latest in tax, accounting, and finance—subscribe to MY-CPE Insights newsletter for expert updates straight to your inbox!