The following examples of questionable refund program fraud investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Detroit Loan Officer Goes to Jail for Conspiracy to Defraud IRS
On September 19, 2008, in Detroit, Mich., Bobby “Sweets” Coward, Jr., a loan officer, was sentenced to 15 months in prison, followed by two years of supervised release as the result of pleading guilty to aiding others in the filing of false claims with the Internal Revenue Service (IRS). According to court records, between January and April 2003, Coward, Jr., conspired and agreed with Vassalo Russell and Eric Tyler, among others, to submit false federal income tax returns claiming false, fictitious, and fraudulent income, tax withholdings, and refunds from the IRS. Specifically, Coward, Jr. provided false Forms W-2 to taxpayers
Connecticut Women Who Filed False Tax Returns Sentenced to 24 Months in Prison
On September 15, 2008, in Hartford, Conn., Sonia D. Cruz was sentenced to 24 months of in prison, followed by three years of supervised release, for filing false claims with the United States Government. Cruz pleaded guilty to the charge on June 4, 2008. According to documents filed with the court, from April 2002 through January 2005, Cruz filed with the Internal Revenue Service (IRS) a series of fraudulent income tax returns in her name and in the name of others, seeking refunds to which she was not entitled. Specifically, Cruz submitted false federal personal income tax returns for the tax years 2001 through 2004, falsely claiming dependents and other related credits on those returns when she knew that she had no children or dependents during those tax years. As a result, Cruz underreported her taxable income by approximately $50,850, which resulted in the payment of refund checks by the IRS to which she was not entitled. A correct calculation reflects an additional tax due and owing the IRS of approximately $19,373. In addition, from 2002 through 2005, Cruz prepared and filed approximately 53 federal personal income tax returns for others or using the names of others, intentionally falsifying dependents and overstating federal withholding on the returns, seeking refunds that she knew were not really owed. The false claims for refunds relating to the misrepresentations on these returns totaled approximately $207,000. Cruz is required to pay to the government restitution in the amount of $102,373.
Florida Resident Sentenced to 42 Months in Prison on Tax Fraud Charges
On August 27, 2008, in West Palm Beach, Fla., Martti Antila, of Lake Worth, Florida, was sentenced to 42 months in prison, to be followed by two years of supervised release. Antila was charged in a seven count indictment with preparing and presenting false claims for refunds to the IRS on April 10, 2008. Antila pleaded guilty on June 25, 2008, to willfully preparing and presenting a fraudulent income tax return to the Internal Revenue Service (IRS). According to court documents and in court testimony, in 2004, Antila willfully prepared and presented to the IRS more than 100 fraudulent individual income tax returns for tax years 2000 through 2003. The fraudulent tax returns claimed thousands of dollars in refunds, of which approximately $200,000 was issued and later seized by the IRS from an investment account under the control of the defendant.
Mother and Daughter Sentenced in Fraudulent Tax Scheme
On August 25, 2008, in Greenville, S.C., Martha Vernon, and her daughter, Tiffany Dunbar, were sentenced for their roles in a fraudulent tax scheme. Vernon was sentenced to 40 months in prison, to be followed by three years of supervised release and the payment of restitution. Dunbar was sentenced to 33 months in prison, to be followed by three years of supervised release and the payment of restitution. According to court documents, between 2004 and 2006, Vernon and Dunbar conspired with each other to file false tax returns and collect the refunds. Vernon admitted that she recruited her daughter, Dunbar, to steal from her place of employment, the names and social security numbers of individuals to which Dunbar had access. Vernon would then use this information to fabricate W-2 forms using the stolen names and social security numbers and file false 1040 forms requesting tax refunds. Each refund was then sent electronically to Vernon’s bank account.
Defendant Sentenced for Filing False Tax Returns
On August 18, 2008, in Buffalo, N.Y., Mialea Porter of Statesville, North Carolina, was sentenced to 12 months and one day in prison. Porter pleaded guilty on May 14, 2008, to submitting a false claim to the Internal Revenue Service (IRS). According to court documents, Porter filed a number of false and fraudulent tax returns in her own name, as well as on behalf of others, using online tax preparation software. As a result of the false claims, the IRS suffered a loss exceeding $123,000.
Father and Son Sentenced for Filing False Claims for Tax Refunds
On August 4, 2008, in Riverside, Calif., Paul Hansen was sentenced to 84 months in prison and ordered to pay $115,862 in restitution to the Internal Revenue Service (IRS). His son, Adam Hansen, was sentenced to 12 months in custody, to include six months in a community corrections center and six months of home confinement, and ordered to pay $93,865 in restitution to the IRS. According to court documents, from February 2002 through August 2002, the Hansens conspired with others to obtain social security numbers, primarily from homeless people in Los Angeles and the Inland Empire, and to file fraudulent documents with the IRS, including papers supposedly documenting gambling winnings and tax withholdings. In his plea agreement, Paul Hansen admitted that he filed false claims with the IRS, claims that totaled approximately $629,000 in just seven months in 2002. Additionally, Paul Hansen admitted to engaging in a second scheme in 2005 in which he filed claims seeking nearly $300,000 in refunds. In an attempt to develop a “duress” defense after IRS investigators uncovered the tax fraud scheme, Paul Hansen shot his son and then claimed that another man had engineered the tax scheme and threatened him with death if the Hansens did not participate.
Two Federal Inmates Sentenced in Scheme to Defraud the IRS of $360,000
On August 1, 2008, in Trenton, N.J., two federal inmates were sentenced for their role in a scheme to defraud the IRS of approximately $360,000 through the filing of 178 false individual income tax returns which contained fraudulent claims for refunds. George Herman Ruth, nephew of Major League Baseball Hall of Famer George Herman “Babe” Ruth, Jr., and William Robert Pilkey were convicted in January 2008 on one count of conspiracy to file false claims and 60 counts of filing false claims. According to court documents, Ruth was sentenced to 84 months in prison, three years of supervised release, and ordered to pay $59,105 in restitution and a special assessment fee of $6,100. Pilkey was sentenced to 84 months in prison, three years of supervised release, and ordered to pay $59,105 in restitution and a special assessment fee of $6,100. Testimony and evidence at trial indicated that Ruth and Pilkey operated their tax fraud scheme from January 2003 to December 2004 while they were inmates being held at the Ft. Dix Federal Correctional Institution. The jury found that the two defendants, along with others, conspired to prepare false United States individual income tax returns in their names and the names of others, including the names of other inmates and former inmates, for tax years 2000 through 2003. The fraudulent tax returns included: false information and documentation which included false addresses, false forms 4852 (substitute for Form W-2), false statements and information concerning income earned, false information on federal tax withheld, and false claims for refunds. In convicting the defendants, the jury found that Ruth and Pilkey mailed the false returns to third parties, who then mailed the returns to various IRS service centers. Ruth and Pilkey instructed the third parties to deposit the refunds into various bank accounts and then transfer a portion of the funds into their commissary accounts at the prison.
East St. Louis Tax Preparer Sentenced for Falsifying Information on Client's Tax Returns
On July 29, 2008, in Benton, Ill., Luvina Kidd was sentenced to 27 months in prison and ordered to pay $104,537 in restitution to the IRS for her convictions on 16 counts of filing false federal income tax returns. According to the Indictment, Kidd supplemented her income by holding herself out as a professional tax preparer. She operated "Excellence Income Tax Service" in the East St. Louis area from 1999 through 2005 and solicited low-income clients who had little knowledge of the federal tax laws. She promised large tax refunds and to deliver on that promise, she assisted in preparing false returns that falsified her clients' dependents, income sources and income amounts. She also fabricated material items on her clients' tax returns without their knowledge. In March 2008, Kidd pleaded guilty to 16 counts of preparing false returns with which she was charged in the indictment.
Detroit Resident Goes to Jail for Helping Others Defraud the IRS
On July 8, 2008, in Detroit, Mich., Demario D. Walk was sentenced to 12 months and one day in prison and ordered to pay $78,308 in restitution to the IRS as a result of his guilty plea to aiding in the preparation of a false tax return. According to court records, during 2001 and 2002, Walk created false W-2s for taxpayers in order to maximize the Earned Income Credit, which would result in significant income tax refunds. Walk then sent the taxpayers to a legitimate tax preparation service who would then rely on the false W-2s in the preparation of their tax returns. When the refund checks became available at the office where the tax return had been electronically filed, they were picked up and cashed, with the loan proceeds split between the taxpayers and Walk. In one of the cases, Walk received $2,000 in return for preparing the false W-2 which created a fraudulent claim of $5,000. Walk was responsible for the filing of 40 false tax returns that claimed approximately $187,908 in tax refunds.
Two Sentenced in Tax Fraud Scheme
On July 1, 2008, in Statesboro, Ga., two defendants were sentenced for their roles in a tax refund fraud scheme. Lester Freeman was sentenced to 96 months in prison, three years of supervised release, and ordered to pay $363,728 in restitution. Michael Elkins was sentenced to 30 months in prison, three years of supervised release, and ordered to pay $43,789 in restitution. Evidence offered at the guilty plea proceedings showed that during the years 2002 through 2004, Lester Freeman conspired separately with Aundrey Douglas, Sandra Dunston and Stanley Freeman in a scheme to file false income tax returns involving the use of fictitious W-2 forms. Lester Freeman and Douglas caused the filing of 138 false income tax returns claiming refunds totaling $1,298,497. Lester Freeman and Dunston caused the filing of 20 false income tax returns that claimed refunds of $91,370. Elkins caused the filing of eight false income tax returns that claimed refunds of $69,955. Lester Freeman and Stanley Freeman caused the filing of five false income tax returns claiming refunds of $25,000. In June 2008, Aundrey Douglas was sentenced to 40 months in prison, three years supervised release, and ordered to pay $285,975 in restitution to the IRS. Sandra Dunston was sentenced to 17 months in prison, three years of supervised release and ordered to pay restitution of $57,251 to the IRS. On July 1, 2008, Stanley Freeman, originally charged in the same indictment, entered a plea of guilty to one count of conspiracy to file false claims against the U.S. government. His sentencing date will be set after the completion of a pre-sentence investigation and report.
Georgia Woman Sentenced to Prison for Conspiracy to Submit Fraudulent Income Tax Returns
On June 27, 2008, in Atlanta, Ga., Majalai Wisdom was sentenced to 30 months in prison to be followed three years of supervised release. According to information presented in court, during the 2000 through 2004 tax seasons, Wisdom ran a scheme by which she prepared fraudulent income tax returns for taxpayers and collected a percentage of the fraudulent refunds. Wisdom prepared false returns by generating phony W-2 statements that contained false employment and income information. She indicated that the taxpayer worked for an employer for whom the taxpayer never worked, or she typed in inflated salary and withholding information in an effort to increase the expected refund. Wisdom also claimed credits and exemptions illegitimately, in order to inflate refunds. In some returns, Wisdom would claim children as dependents who had no relation whatsoever to the taxpayer. She also prepared returns bearing false Earned Income Tax Credits and false claims for education credits. Over the course of the scheme, Wisdom prepared fraudulent returns that claimed over $200,000 in phony refunds.
Chicago Area Tax Preparer Sentenced for Filing False Tax Returns
On June 25, 2008 in Chicago, Ill, Gregory B. Sams of Naperville, Illinois was sentenced to 78 months in prison and ordered to pay $571,331 in restitution to the U.S. Treasury for filing false federal tax returns. Sams, an income tax preparer who operated GBS & Associates, pleaded guilty in April 2008, admitting to altering some of his clients' tax returns to inflate tax refund amounts paid by the IRS. Without the clients' knowledge, Sams allegedly instructed the IRS to deposit the clients' refunds into GBS & Associates' bank account. When Sams received the refunds, he would give clients only the amounts originally claimed on their tax returns before the fraudulent alterations, and keep the rest of the refund amounts. Sams was further ordered, as a special condition of his supervised release, to refrain from preparing any tax returns or handling financial matters for any other person or entity.
Two Defendants Sentenced to Prison in Tax Refund Fraud Scheme
On June 19, 2008, in Statesboro, Ga., two defendants were sentenced for their roles in a tax refund fraud scheme. Aundrey Douglas was sentenced to 40 months in prison, three years of supervised release, and ordered to pay $285,975 in restitution. Sandra Dunston was sentenced to 17 months in prison, three years of supervised release, and ordered to pay $57,251 in restitution. According to the indictment, Douglas and Dunston allowed several bank accounts to be used to have tax refunds electronically deposited and allowed their mailing addresses to be used on the false income tax returns that were created by co-conspirators. Both defendants pleaded guilty one court of conspiracy to file a false federal claim.
Former Florida Prison Psychologist Sentenced to Five Years in Tax Refund Fraud Scheme
On June 13, 2008, in Tampa, Fla., Daniel Goodheart, an ex-Florida prison psychologist, was sentenced to 60 months in prison, to be followed by three years of supervised release, and ordered to pay $902,487 in restitution to the Internal Revenue Service (IRS). Goodheart was indicted on July 27, 2006, along with Frankie Jackson, Debra Robinson, John Palmer, Tammi Sailem (aka Tammi Austin), Tammy Hutchinson and Vallis Sprenkle on conspiracy charges for attempting to defraud the United States by filing fraudulent tax returns in an attempt to generate false tax refunds. According to court documents, during the period from February 2002 to May 2003, Goodheart was employed by Wexford Health Associates and was a prison counselor at Okeechobee Correctional Institution in Okeechobee, Florida. Goodheart accessed the Florida Department of Corrections (DC) intranet to retrieve names and social security numbers of Florida DC inmates. These names and numbers were then used in the preparation of false income tax documents and returns for prisoners at Okeechobee and other Correctional Institutions, the South Florida Reception Center in Doral and the Regional Medical Center in Lake Butler. These returns were then filed with the IRS and some refunds were generated and distributed to the conspirators. Goodheart’s co-defendants were sentenced as follows: Frankie L. Jackson, Jr, was sentenced on May 30, 2008, to 30 months in prison; Tammy Hutchinson was sentenced on May 28, 2008, to 60 months probation; John Harvey Palmer was sentenced on March 12, 2008, to 51 months in prison; Vallis Sprenkle was sentenced on March 31, 2008, to 57 months in prison; Debra Robinson was sentenced on September 27, 2007, to 60 months probation; and Tammi Sailem is scheduled to be sentenced in September 2008.
New Jersey Woman Sentenced for Filing Tax Returns in the Names of Deceased Individuals
On March 26, 2008, in Camden, N.J., Candy L. Atohi, of Buena Vista Township, was sentenced to 24 months in prison and ordered to pay $42,537 in restitution. Atohi pleaded guilty in October 2007 to one count of making a false claim for a refund of taxes and one count of knowingly transferring without legal authority the identity of a deceased individual. At her plea hearing, Atohi admitted that she prepared tax returns for calendar year 2002 using the names and Social Security numbers of 28 individuals who were deceased, claiming a total of approximately $108,694 in false refunds. She admitted to having the Internal Revenue Service (IRS) electronically transfer false refunds into a bank account in the name of her mother. In addition, Atohi admitted that on January 14, 2003, she prepared and filed an individual income tax return for herself for the calendar year 2002, on which she falsely claimed to be entitled to a tax refund of $9,272. Atohi also admitted preparing a tax return in her sister’s name, in which she fraudulently claimed a refund of $2,214.
Three Texas Men Sentenced to Prison for Role in False Income Tax Return Scheme
On March 14, 2008, in Lubbock, Texas, Paul Emile Ntahonkiriye was sentenced to 18 months in prison and Carl Riley, Jr., received a 10 month prison sentence for conspiracy to defraud the United States with regard to tax claims. Co-defendant Martin Fungai Mandegu, a tax return preparer, was sentenced earlier to 16 months in prison after pleading guilty to conspiracy to defraud the government. The three defendants were also ordered to pay $100,725 in restitution. According to court documents, Paul Emile Ntahonkiriye operated an income tax preparation business in Abilene, Texas, known as PNT Tax Service (PNT). In January 2005, Mandengu, Ntahonkiriye and Riley began preparing tax returns through PNT. For the 2005 tax filing season, PNT prepared approximately 100 income tax returns. Approximately 57 of those returns were fraudulent and claimed false income tax refunds. Mandengu, Ntahonkiriye, and Riley told clients that in order to get a larger refund, one or two false dependents could be listed on the return as either a nephew or niece, and in some instances the wages earned were increased to raise the amount of the Earned Income Tax Credit. Mandengu, Riley, and Ntahonkiriye did not have the clients sign any documents and often would not furnish them with copies of the return or any documents or forms used in the preparation and filing of the tax return. The total amount of the fraudulent income tax refunds was $100,725.
Georgia Men Sentenced in Tax Refund Scheme
On March 13, 2008 in Macon, Ga., Stevie Davis and Walter Solomon were sentenced to 15 months and 24 months respectively, for conspiracy to defraud the government with respect to claims. Davis was also ordered to pay $38,123 in restitution and Solomon was ordered to pay $19,492 in restitution. The two defendants admitted to participating in a scheme in which they allowed false tax refunds to be deposited in their bank accounts. Their co-defendant, Melvin Ward, Jr., obtained the names and Social Security numbers of individuals in order to create false W-2 forms and prepare and file false tax returns. Davis and Solomon kept a portion of the tax refunds as part of the agreement they had with Ward. Ward filed 25 false tax returns claiming $155,451 in refunds with the Internal Revenue Service (IRS). He pleaded guilty in September 2007 and was sentenced to 78 months imprisonment in December 2007. He was also ordered to pay $83,456 restitution to the government.
Prison Inmate Sentenced in Refund Fraud Scheme
On March 12, 2008, in Tampa, Fla., John Palmer was sentenced to 51 months in prison, to be followed by three years of supervised release, and ordered to pay $902,487 in restitution and a $100 special assessment. According to court documents, Palmer was an inmate at Okeechobee Correction Institute. He was indicted on conspiracy charges for attempting to defraud the United States by filing fraudulent tax returns in an attempt to generate false tax refunds. As part of the conspiracy outlined in the indictment, Palmer and other co-conspirators accessed the Florida Department of Corrections (DOC) intranet to retrieve names and social security numbers of Florida Department of Corrections inmates. These names and numbers were used in the preparation of false Forms W-2 and false income tax returns for prisoners.
Detroit Man Goes to Jail for Defrauding the Internal Revenue Service
On March 11, 2008, in Detroit, Mich., Kenneth Felder, Jr. was sentenced to 21 months imprisonment and was ordered to pay restitution to a financial institution based on the losses from Refund Anticipation Loans (RAL) received through the use of fraudulent tax returns. Felder pleaded guilty to conspiracy to defraud the Internal Revenue Service on December 2007. Felder recruited unemployed people to file at least nine fraudulent federal income tax returns. He provided them with false Forms W-2 listing employers who did not employ them, along with fabricated income and tax withholding totals. Felder sent the people with their fabricated Forms W-2 to a commercial tax return preparer, who unknowingly prepared and filed false income tax returns on their behalf. These taxpayers also applied for RALs and in some cases, received the advance loan money on their anticipated refunds. The tax returns falsely claimed more than $41,000 in refunds, but there was no actual tax loss since the IRS quickly identified the scheme and stopped the refund payments.
Four Sentenced in Louisiana for Conspiring to File False Claims for Refunds
On March 6, 2008, in Baton Rouge, La., four individuals were sentenced for their participation in a tax fraud scheme. For their pleas to a conspiracy count, Darrin Keith Williams was sentenced to 18 months in prison; Joshua Ramon Williams was sentenced to 12 months in prison; and Karlos D'Andrea Patton was sentenced to five months in prison. Each defendant was also sentenced to serve three years of supervised release following confinement. During his supervised release, Patton will serve five months in home detention with electronic monitoring, at his expense. All three defendants were jointly ordered to pay restitution totaling $102,763, of which $56,269 is to be paid to the U.S. Department of Treasury and $46,494 to Santa Barbara Bank and Trust (SBBT). For his plea to two counts of making and causing to be made false claims for income tax returns, Reginald Drummer was sentenced to three years of probation and ordered to pay a $2,000 fine. He was also ordered to pay $1,830 in restitution to SBBT and $3,768 to the U.S. Department of Treasury. A fifth defendant, Faraun Kennotis Pruitt, of Houston, Texas, is set to be sentenced in April 2008. All five defendants were charged in a 21-count indictment with conspiring to file false claims for federal income tax refunds and they were also charged in varying, separate counts of making and causing to be made false claims for income tax refunds, each of which was connected with the conspiracy. According to court documents, the five defendants were charged with causing 107 fraudulent income tax returns to be filed over the internet between December 2001 and April 2002, almost all seeking Refund Anticipation Loans, also known as 'RALs.' All RALs were sought through SBBT, a California bank authorized by the Internal Revenue Service to participate in such a program in order for a taxpayer to get near instant access to anticipated refund amounts. The defendants persuaded other people to provide their names, social security numbers, and dates of birth, thereafter causing fraudulent returns to be filed with false employment, wage, and withholding amounts. The conspiracy charged the 107 false tax returns sought $249,188 in unauthorized funds from the United States.
Connecticut Woman Sentenced to Five Years in Federal Prison for Tax and Mail Fraud
On February 27, 2008, in New Haven, Conn., Laura Figueroa, of Bristol, Conn., was sentenced to 60 months in prison, followed by three years of supervised release, and ordered to pay $181,641 in restitution to the Internal Revenue Service and to pay $130,004 in restitution to the Connecticut Department of Labor. Figueroa pleaded guilty on July 20, 2007, to one count of conspiracy to file false claims for a tax refund and one count of mail fraud. According to court documents and statements made in court, from 2003 until 2005, Figueroa was involved in two schemes to defraud the federal and state governments. In the first scheme, Figueroa and others prepared false Form W-2s and submitted them to commercial tax preparers for fraudulent refunds. Figueroa and others also conspired to prepare false tax returns, claiming false refunds by electronically filing returns with false income and tax withholding information. Over the course of the conspiracy, 59 false tax returns were submitted, reflecting three refund claims totaling $267,541. In the second scheme, Figueroa defrauded the Connecticut Department of Labor by filing false claims for unemployment insurance. Figueroa and others filed with the Connecticut Department of Labor various forms that established the registration of two companies, Bad Boyz Cleaning and Rough Edges, LLC, for the purposes of collecting unemployment taxes and the paying of unemployment insurance claims filed by employees. Figueroa filed false forms reporting several individuals as employees of those companies, and false wages earned by those individuals, when, in fact, those individuals were not employed by the companies. Thereafter, Figueroa and her associates filed fraudulent claims for unemployment insurance compensation on behalf of individuals who were not employed by the companies. The Connecticut Department of Labor paid benefits of approximately $130,000 in response to fraudulent claims made on behalf of individuals alleged to have been employees of the companies.
Three Defendants Sentenced in Fraudulent Tax Refund Scheme
On February 26, 2008, in Boston, Mass., two Lynn women and a Lynn man were sentenced for their roles in a conspiracy and scheme to file false federal tax returns to obtain fraudulent tax refunds. Esther Arias was sentenced to 60 months in prison, to be followed by three years of supervised release, and ordered to pay $70,148 in restitution to federal and state tax authorities; Esther Percel, mother of Arias, was sentenced to 36 months in prison, followed by three years of supervised release, and ordered to pay $69,592 in restitution; Edwin Gonzalez, former boyfriend of Arias, was sentenced to 42 months in prison, to be followed by three years of supervised release, and ordered to pay $64,664 in restitution. Percel pleaded guilty on October 9, 2007. Arias and Gonzalez were convicted on November 1, 2007, after an 8-day jury trial. The evidence presented at the change of plea hearing and at the jury trial proved that from February 1999 to April 2004, the defendants jointly participated in a scheme to use stolen identities to file more than 45 fraudulent tax returns in the names of other individuals. The defendants illegally claimed more than $200,000 in federal and state tax refunds.
San Francisco Resident Sentenced to Prison for Filing False Tax Returns Using Names and Social Security Numbers Purchased from Craigslist
On February 25, 2008, in San Francisco, Calif., Roger Lexin Mai was sentenced to two years in prison and ordered to pay restitution of $57,481 for filing false claims with the Internal Revenue Service. Mai pleaded guilty in November 2007 admitting that he filed 17 false tax returns with the IRS from about January through April 2003. He bought names and social security numbers through an internet site called “Craigslist” for $20 per identity. He created false Forms W-2 using the identities he purchased and then created and e-filed false income tax returns that claimed tax refunds worth $107,049. The individuals to whom the identities belong did not authorize the sale or use of their identities. Mai also admitted that he electronically filed an additional 125 false Forms 1040 and Forms W-2, claiming refunds totaling $734,448. This scheme was identified through research conducted at seven IRS Criminal Investigation Fraud Detection Centers across the country.
Alabama Man Sentenced on Tax Fraud and Firearm Charges
On February 7, 2008, in Montgomery, Ala., Michael R. Jones was sentenced to 36 months in prison. Jones had previously pleaded guilty to one count of conspiring to defraud the United States and one count of being a felon in possession of a firearm. According to his plea agreement, between August and October 2006, Jones paid individuals approximately $100 in exchange for their social security numbers and dates of birth. He provided this information to an individual who filed federal tax returns using the bought social security numbers claiming false refunds. The refunds were direct deposited into Jones' bank account. The total false refunds claimed through this conspiracy was approximately $76,869.
Former Girl Scout Troop Leader Sentenced to 10 Years in Federal Prison for Filing False IRS Claims and Identity Theft
On Jan. 24, 2008, in Pensacola, Fla., Holley M. Barnes was sentenced to 120 months (10 years) imprisonment and was ordered to pay $87,976 in restitution to the Internal Revenue Service (IRS) and to pay $5,720 in restitution to the Navy Exchange Service. In October 2007, Barnes pleaded guilty to 19 counts of filing false and fictitious tax refund claims to the IRS, 15 counts of identity theft and one count of theft of government property. In her October plea hearing, Barnes admitted to having used her position of trust as a Girl Scout leader in Pea Ridge, Fla., to obtain personal history information from the members of her Girl Scout Troop. Barnes created a fraudulent “Girl Scout Medical Release” form in order to get personal information, such as the children’s Social Security Numbers (SSN). Barnes used the SSN’s of the children to prepare and file electronic federal income tax returns with the IRS, submitting false information regarding income and employment. The false refunds were then transferred into five bank accounts which Barnes controlled. Barnes filed false claims totaling more than $187,000 from which she obtained more than $87,000 from the IRS as a result of fraudulently using the identity of these children, including her own children.
Las Vegas Man Sentenced for Assisting Individuals in Filing False Tax Returns
On January 16, 2008, in Las Vegas, Nev., Keith Carthon was sentenced to 27 months in prison for creating and executing a scheme to create and file false income tax returns on behalf of himself and others. On October 18, 2007, Carthon pleaded guilty to two counts of false, fictitious, or fraudulent claims and aiding and abetting. According to his plea agreement, in 2003 and 2004, Carthon and a co-defendant, Ramona Brock, obtained blank W-2 forms and completed them with false information indicating that an individual had been employed and earned income during the tax years 2002 and 2003 by “Great Eats” and “Great Western Drywall,” respectively. Carthon admitted that he knew the individual had no earnings or withholdings as reflected on the W-2s' however, he directed the individual on how to file her tax returns and then to pay a portion of any tax refund received to Carthon and Brock in exchange for their assistance in the scheme. The individual submitted the tax returns along with the false W-2s to the Internal Revenue Service (IRS). At sentencing, Carthon admitted assisting other individuals in filing a total of 11 false tax returns by providing those individuals with false W-2s with a total intended loss to the IRS of $36,905. Ramona Brock is scheduled to begin trial in February 2008.
Georgia Man Sentenced to 78 Months in Prison for Filing False Tax Returns
On December 18, 2007, in Macon, Ga., Melvin Ward, Jr. was sentenced to 78 months in prison, to be followed by three years of supervised release, and ordered to pay $83,456 in restitution. On September 24, 2007, Ward pleaded guilty to one count of conspiracy to defraud the government and one count of making a false claim against the government. According to court documents, Ward devised a scheme whereby he obtained the names and Social Security numbers of various individuals. He then used the information to prepare false W-2 forms and then prepare and file fictitious and fraudulent income tax returns. From on or about December 31, 2003, through on or about September 19, 2005, Ward filed more than 25 false claims totaling approximately $155, 451 with the Internal Revenue Service.
Tennessee Man Sentenced for Filing False Tax Returns
On November 16, 2007, in Crossville, Tenn., Chadwick McElhaney was sentenced to 24 months in prison, three years of supervised release, and ordered to pay $51,390 in restitution. McElhaney pleaded guilty on August 21, 2007, to three counts of filing false claims against the government. McElhaney admitted that from February 2003 to April 2004, he prepared and filed fraudulent federal income tax returns both in his name and the names of others, which contained materially false statements and facts. The claims included false or inflated information concerning wages, income tax withholdings, dependents for earned income credit, or education credits. McElhaney admitted during his guilty plea that while employed as a professional tax return preparer, he prepared 44 false federal income tax returns for tax years 2002 and 2003 using TurboTax Software in an attempt to obtain $98,245 in fraudulent refunds.
Three Defendants Sentenced for Tax Fraud Crimes
On November 15, 2007, in Raleigh, N.C., Dennis Lee Best was sentenced to 41 months in prison; Karen Renay Raynor was sentenced to 24 months in prison; and Linda Davis Sutton was sentenced to 12 months and one day in prison. Raynor and Sutton were long-time employees and managers of a Jackson Hewitt tax preparation site in New Bern, North Carolina when, in early 2003, they conducted an extensive conspiracy to defraud the Internal Revenue Service. Using fake employment information supplied by Best, and personal identification information supplied by recruits, the three defendants submitted false personal tax returns requesting refunds in excess of $150,000.
California Woman Sentenced to 30 Months in Prison and Ordered to Pay Over $1 Million in Restitution
On October 22, 2007, in Los Angeles, Calif., Uzeegoa Makeba Sayles was sentenced to 30 months in prison, to be followed by three years of supervised release, for filing over $1 million in false claims with the Internal Revenue Service (IRS), seeking income tax refunds in the names of deceased individuals. In addition to prison, Sayles was ordered to pay over $600,000 in restitution. According to her guilty plea, Sayles admitted that from January 2001 through October 2006 she had filed at least 204 false federal income tax returns claiming income tax refunds totaling $1,070,308 from the government. Further, the complaint details that 203 of the 204 returns that were linked to Sayles were filed in the names of people who were deceased at the time the returns were filed.
Defendant Sentenced to 30 Months in Prison; Stole the Identities of Family Members and Tax Return Preparation Customers
On October 22, 2007, Seattle, Wash., Kandi Rose Roberts, aka Kandi Kroon, of Las Vegas, Nev., was sentenced to 30 months in prison, to be followed by five years of supervised release, and ordered to pay $62,270 in restitution. According to the plea agreement Roberts signed in March 2007, she and her then husband, Ernest M. Roberts, were involved in a conspiracy between 2002 and 2004 to defraud the United States by submitting fraudulent tax returns in the names of others. The Roberts collected more than $40,000 in tax refunds they were not entitled to receive. In addition to the scheme of filing fraudulent returns, the couple also conspired to commit bank fraud. The Roberts made use of personally identifying information of family members and others who had used Kandi Roberts' tax preparation services to open bank and credit accounts. They forged checks on accounts belonging to family members and ran up large credit card bills in the names of family members and others. Kandi Roberts deposited forged checks into her bank account from the line of credit on her widowed mother’s home. Ernest Roberts was sentenced earlier this month to 21 months in prison.
Former CPA and Tax Preparer Sentenced to 30 Months in Prison for Submitting False Tax Returns
On October 12, 2007, in Los Angeles, Calif., James Michael Jerra, aka James Michael Porter, a former Lomita CPA and tax return preparer, was sentenced to 30 months in federal prison for his August 2007 conviction on three counts of subscribing to false federal income tax returns for the 2002 tax year. According to the indictment, Jerra falsely claimed a refund of over $3 million from the IRS on the returns he filed. Evidence presented at trial showed that Jerra filed two false 2002 employment tax returns for his business Jandel Corporation, which falsely claimed that the corporation paid wages and compensation of $9,986,724. Additionally, Jerra claimed that from those payments, income taxes of $3,854,875 had been withheld for 2002. However, Jandel Corporation had not paid any wages or compensation in 2002, nor had the company withheld any income taxes. Jerra also filed a false 2002 personal federal income tax return which falsely reported wages of $9,986,724 and withholding of $3,854,875. Then Jerra offset the reported wages on his tax return with a false gambling loss of over $7 million. Based upon the fabricated personal tax return, Jerra falsely claimed a refund for 2002 of $3,089,460 when, in fact, he had not received any wages, nor had any taxes withheld from him in 2002.
Tax Preparer Sentenced for Filing False Claims for Refunds
On October 11, 2007, in Little Rock, Ark., Arnold Chris Parker was sentenced to 27 months in prison, to be followed by three years of supervised release, and ordered to pay $73,887 in restitution to the Internal Revenue Service (IRS). Parker, a former employee of both H & R Block and Jackson-Hewitt tax preparation businesses, pleaded guilty on April 30, 2007, to filing false claims against the United States. According to his plea agreement, Parker admitted that he filed false federal income tax returns for other individuals based upon fraudulent Forms W-2, from false and non-existent employers, prepared or altered by Parker. Parker was indicted in March 2006 and charged with 16 counts of filing false claims against the United States. The indictment alleged that Parker prepared income tax returns for H & R Block in Trumann, Ark., in 2002 and for Jackson-Hewitt in Jonesboro, Ark., in part of 2003. According to the indictment, Parker caused approximately 36 materially false and fraudulent tax returns to be filed with the IRS, claiming inflated tax refunds totaling more than $150,000.
Seattle Man Sentenced in Tax Fraud Case; Recruited Low-Income Women to File False Tax Returns
On October 5, 2007, in Seattle, Wash.,, Donald Shawn Vinson, was sentenced 24 months in prison, to be followed by three years of supervised release, and ordered to pay $20,095 in restitution for conspiracy to defraud the United States. Vinson pleaded guilty in June 2007, admitting that in 2003, he worked with at least eight other people to defraud the Internal Revenue Service (IRS) by submitting false W-2 forms and claiming false dependants on tax returns. According to documents filed in the case, Vinson recruited other people (“filers”) to file fraudulent tax returns in their own names, addresses and social security numbers. He created false Forms W-2, with fabricated amounts of tax withholdings, in the names and social security numbers of these filers. Further, he caused the filers to claim dependents on their tax returns in order to fraudulently obtain the Earned Income Tax Credit (EITC). Vinson knew that these filers were not entitled to the EITC either because the named dependents were not actual dependents of the filer or because the wages reflected on the returns were reported in fraudulent amounts permitting the unlawful application of the EITC. The fraudulent federal income tax returns were filed for the 2003 and 2004 tax years. In some cases, Vinson drove the filers to tax preparation offices so they could make their false filings, and then took half of the money the filers got as a tax refund. The filers, many of them single mothers or low-income women on public assistance, will have to repay the IRS for the refunds including penalties and interest, and they will have their tax accounts flagged for any irregularities for years to come.
Pennsylvania State Inmate Sentenced for Filing False Tax Returns from Prison
On October 1, 2007, in Harrisburg, Pa.,, Kevin William Small was sentenced to 150 months in prison for committing fraud while in state prison. According to court documents, Small had been an inmate in the Pennsylvania State Correctional System and has been incarcerated since 1991. While a state inmate, Small was unemployed, earned no income and paid no taxes. During this time, however, Small filed three Forms 1040 for tax years 2003, 2004 and 2005. In these federal tax returns, he reported tax refunds due to him of over $1 million for tax years 2002 through 2004.
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