The following examples of Questionable Refund investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.

Two Sentenced for Filing False Tax Returns Seeking Millions of Dollars in Bogus Refunds

On September 30, 2010, in Atlanta, Ga., Michael Romeo St. Romain, of Decatur, Georgia, and Brian Dupress, of Miami, Florida, were each sentenced to 57 months in prison, followed by three years of supervised release, and ordered to pay $451,735 in restitution to the Internal Revenue Service (IRS). Both pleaded guilty on June 9, 2010, to charges of conspiring to defraud the United States by filing false tax returns.  According to court documents and information presented in court, St. Romain and Dupress filed 44 false income tax returns in 2006 and 2007 on behalf of other taxpayers. These returns included fabricated information, and sought excessive refunds that the taxpayers were not eligible to receive. Specifically, the returns contained a false Schedule C, which is used to report business income and expenses.

Former Dallas Tax Preparer Sentenced to 15 Years on Conspiracy and Obstruction of Justice Convictions

On September 16, 2010, in Dallas, Texas Herbert Jena was sentenced to 180 months in prison and ordered to pay more than $485,000 in restitution for conspiracy to defraud the IRS and obstruction of justice.  According to court documents, Jena owned and worked as a tax preparer at two tax preparation business; Monfront and Jackson Hubbert.  From December of 2006 through February 2007, Jena, 33, conspired with others to defraud the U.S. by impeding, impairing, obstructing and defeating the lawful functions of the IRS.  From 2004 through 2006, Jena obtained and used approximately 15 Electronic Filer Identification Numbers (EFINs) to electronically file tax returns.  Jena and his co-conspirators submitted fraudulent income tax returns to the IRS that included false claims for refunds and credits.  Witnesses testified that Jena instructed his employees to “make up” numbers for the Telephone Excise Tax Refund (TETR) and false Fuel Tax Credit (FTC) claims, which resulted in false credits and fraudulent refunds.  The scheme also resulted in refund and credit overpayments by the IRS and unearned and fraudulent tax preparation fees paid to Jena.  Jena directed his co-conspirators and others to hide the portions of the tax returns that showed the true amount of Jena’s tax preparation fees from the taxpayers.  For the 2006 tax season, Jena and his co-conspirators solicited and recruited approximately 1600 individual taxpayers to file returns with Jena’s tax preparation businesses.  Between January 12, 2007, and February 29, 2007, Jena used his multiple EFINs to electronically file a total of approximately 1681 individual tax returns.  Of that amount, approximately 1400 contained fraudulent and false information.  Approximately 1236 contained requests for false TETR credits, totaling more than $1.61 million.  Approximately 774 of the tax returns contained requests for false FTC credits, totaling approximately $1.166 million.  The government also presented evidence that during the conspiracy, Jena earned more than $500,000 in tax return preparation fees.  With regard to the obstruction of justice charge, the government presented evidence that in June 2007, during the pre-trial discovery process, Jena caused his former attorney to produce fraudulent documents to the government.  Trial testimony showed that these documents were fictitious employee termination letters and altered employee training records.

Woman Sentenced for Her Role in South Carolina Refund Fraud Scheme

On September 7, 2010, in Columbia, S.C., Katy Rivera, from Mexico, was sentenced to 57 months in prison, followed by three years of supervised release, and ordered to pay $658,601 in restitution. According to court documents, between 2006 and November 2009, two tax preparation businesses, Seguros Internacional, operating in Spartanburg, South Carolina, and Forest City, North Carolina, and Poz Servicios Para Hispanos, operating in Boiling Springs, South Carolina, along with affiliated individuals, filed more than 10,000 fraudulent federal income tax returns claiming more than $22 million in refunds. The tax preparers knowingly claimed tax credits or deductions to which filers were not entitled.  One such tax credit that was improperly claimed on a majority of the false returns was for child care expenses.  Rivera and others were described as “runners,” who solicited others to have their returns falsely prepared or assisted in obtaining false documents from which to prepare the returns. 

Florida County Jail Inmate Sentenced on Tax Fraud Charges

On September 1, 2010, in Miami, Fla., Shawn Clarke, an inmate in the Monroe County Jail, in Key West, Florida, was sentenced to 51 months in prison, to be followed by three years of supervised release.  In addition, Clarke was ordered to pay $40,345 in restitution to the Internal Revenue Service (IRS). Clarke pleaded guilty to conspiracy to file false tax returns with the IRS claiming fraudulent tax refunds.  According to court documents, Clarke submitted false tax return forms in the name of fellow inmates, former inmates and relatives for tax years 2004 through 2007.  These returns falsely claimed that the purported taxpayers had been employed and paid withholding taxes during the years in question.  To execute the scheme, Clarke recruited Sally Frost, his mother; Deanna Heder, his sister; and William Clarke, his brother, to receive the resulting IRS refund checks.  Clarke instructed the co-defendants to cash the checks, sometimes using fraudulent powers of attorneys.  Once the checks were cashed, the co-defendants gave the cash to Clarke, who divided the proceeds between himself, the co-defendants, and the participating  inmates.  Sally Frost and Deanna Heder were each sentenced to two years’ probation, to include 6 months home confinement with electronic monitoring. William Clarke was sentenced to 7 months in prison, followed by three years of supervised release.  Together Frost, Heder, and William Clark were ordered to pay a total of $65,508 in restitution.

Former New Jersey DYFS Employee Sentenced to 41 Months in Prison for Stealing $800,000 via False Tax Returns in the Names of Clients

On August 30, 2010, in Trenton, N.J., Ugochkwu Madubuike was sentenced to 41 months in prison, two years of supervised release and ordered to pay nearly $617,000 in restitution for filing fraudulent tax returns and cashing forged tax refund checks.  According to court documents, Madubuike, a former employee of the New Jersey Department of Children and Families, Division of Youth and Family Services (DYFS) pleaded guilty to charges of mail fraud, conspiracy to pass forged United States Treasury checks, and making false claims to the U.S. Treasury Department.  Madubuike and his associate, Onyinye M. Nwokeji, were arrested in November 2008 by federal agents. The arrests followed a tip from a Bank of America employee regarding the suspicious deposit of a United States Treasury tax refund check issued in the name of someone other than Madubuike into Madubuike’s bank account. The investigation soon uncovered numerous fraudulently-endorsed tax refund checks being deposited into the bank accounts of both Madubuike and Nwokeji. Madubuike, while working for DYFS as a Family Services Specialist from June 2004 to November 2007, had access to the personal information of those individuals served by DYFS and certain other state agencies. Madubuike admitted using that information without authorization, either from the agencies or the individuals, to prepare and submit fraudulent tax returns to the IRS. The fraudulent returns resulted in over 200 U.S. Treasury tax refund checks totaling over $800,000 being issued and mailed to various addresses that he controlled. Madubuike then forged the signatures of the payees on those checks in order to deposit them into his and Nwokeji’s accounts. Nwokeji, who pleaded guilty in February to misprision of a felony, and is scheduled to be sentenced on October 21, 2010.

Inmate Sentenced For Fraud Committed While In Federal Prison

On August 26, 2010, in Florence, S.C., Thomas J. Dalton, originally of Hialeah, Florida, was sentenced to 120 months imprisonment to be served after Dalton finishes a prison sentence that he is currently serving.  Dalton must also repay $356,320 to the United States.  On February 10, 2010, Dalton pleaded guilty and admitted that he enlisted several other people into a scheme to obtain fraudulent income tax refunds from the Internal Revenue Service.  Three other members of the conspiracy have previously been sentenced for their roles in the case.  They are Randall Lewis Smith, of Summerville, South Carolina; Georgia M. Adams, of Harleyville, South Carolina; and Misha Danyell Cleckley, of Orangeburg, South Carolina.  Cleckley and Adams were placed on probation for five years, and Smith received a prison sentence of 12 months and one day.  By enlisting these defendants, as well as other people, several of whom were inmates with Dalton at federal prison facilities, Dalton caused the filing of over 160 fraudulent tax returns seeking approximately $1.43 million from which the IRS paid over $415,000 in refunds.  During his guilty plea and sentencing, Dalton admitted that he devised this scheme while he was serving a 105 month federal prison sentence that he received for a 2003 conviction for credit card fraud. 

Georgia Tax Preparer Sentenced for Bank Fraud and Filing False Claims with the IRS

On August 11, 2010, in Atlanta, Ga., Cynthia Annette Elliott, of College Park, Georgia, was sentenced to 10 years and one month in prison to be followed by five years of supervised release and was ordered to pay $948,648 in restitution.  On May 26, 2010, Elliott pleaded guilty to bank fraud and filing false claims with the IRS. According to the indictment, and other information presented in court,  Elliott acquired more than 100 checks belonging to others, including economic stimulus checks and income tax refund checks, knowing that the checks either had been stolen from their rightful owners or had been obtained by filing false claims with the IRS. Under the 2008 Economic Stimulus Act, individuals who filed a 2007 individual income tax return and met certain eligibility requirements were entitled to receive a one-time rebate or “stimulus payment” from the United States Treasury ranging from $300 to $1,200.  Taxpayers who did not request direct deposit for their 2007 refund were supposed to receive a paper check by mail.  The checks obtained by Elliott, all of which were issued by the United States Treasury, had a total face value of more than $350,000.

Canadian Sentenced to Prison for Trying to Falsely Claim Large IRSTax Refund

On August 6, 2010, in Seattle, Wash., Donald J. Mason, a Canadian citizen who resides in Fort Saskatchewan, Alberta, Canada, was sentenced to 33 months in prison, two years of supervised release and $387 in restitution for Theft of Public Money.  Mason submitted fraudulent documentation claiming he was entitled to a tax refund of more than $350,000.  A check was sent to his home in Canada, but alert bank employees in Bellingham, Washington put a hold on the check and all but $387 of the money was recovered. The jury convicted Mason April 13, 2010, following a two day trial.  According to records filed in the case, Mason was arrested on October 29, 2009, at the Bank of America branch in Bellingham where he deposited a U.S. government check for $359,926. The check had been mailed to Mason’s home in Alberta, Canada, after he submitted fraudulent tax forms indicating that various financial institutions had withheld federal income tax on his behalf.  Based on the phony forms, the IRS sent Mason the check.  Mason’s wife had also submitted similar forms claiming more than $333,000 in income tax had been withheld.  The IRS caught that fraud and sent her a letter warning about frivolous tax filings.  After depositing the check in the Bank of America account, Mason returned to the bank over the next few days and attempted to withdraw large sums in cash.  After he was arrested, law enforcement recovered a laptop from Mason.  The laptop revealed that Mason had downloaded IRS publications about the fraudulent scheme and that someone had sent him an FBI warning about the scheme. Even after he was convicted, Mason continued to claim that he was entitled to the money, and attempted to stop the return of the funds to the U.S. Treasury by filing a claim in the related forfeiture action.  

Man Who Participated In Tax Fraud and Identity Theft Scheme Sentenced To Nearly Five Years in Federal Prison

On August 2, 2010, in Los Angeles, Calif., Luis Rodriguez Ortega, of Downey, was sentenced to 57 months in federal prison.  Ortega, who used the name “Miguel Valedon” and claims to be a Mexican national, was also ordered to pay more than $780,000 in restitution to the United States Treasury. Ortega pleaded guilty in April to three counts of filing false claims with the United States and one count of using a false identification document for his role in a scheme that caused the IRS to suffer actual losses of approximately $800,000. As part of the scheme, Ortega and his associates used the names and social security numbers of residents of Puerto Rico to file more than 1,000 false federal income tax returns that sought tax refunds based on the earned income credit. Using bogus out-of-state drivers’ licenses, Ortega and his associates opened private mail boxes, listed the legitimate taxpayers as authorized mail recipients, and asked the IRS to send the fraudulent tax refund checks to the private mail boxes.

California Man Sentenced to 71 Months in Prison for Claiming a $5 Million Fraudulent Refund from IRS

On July 23, 2010, in San Jose, Calif., Seth Sundberg was sentenced to 71 months in prison; three years supervised release; and ordered to pay a $100,000 fine and restitution of nearly $2.5 million for filing a false tax return and mail fraud.  According to court documents, Sundberg filed a false Form 1040 Individual Income Tax Return for 2008 with the Internal Revenue Service.  In his return, Sundberg falsely claimed to have paid $5,732,441 in tax as a result of receiving purported original issue discount income.  As a result of this claim, Sundberg received a $5,083,609 refund check from the IRS in May 2009.  According to a criminal complaint filed by an IRS special agent, the refund check issued by the IRS was deposited into a Borel Private Bank & Trust account under Sundberg’s name.  Sundberg made numerous withdrawals from that account.  The withdrawals included wire transfers of nearly $3.7 million from that account to other accounts controlled by Sundberg.  In addition, Sundberg delivered three cashier’s checks payable to Acts Revival Center in San Jose which totaled $429,000.  Levies have been placed on Sundberg’s bank accounts at Borel Private Bank & Trust, Bank of America, and Citibank.

Georgia Man Sentenced in Tax Fraud Scheme

On July 14, 2010, in Atlanta, Ga., Rico Lampkin was sentenced to 27 months in prison, followed by three years of supervised release, and ordered to pay a $100 special assessment.  Lampkin pleaded guilty in April 2010 to conspiracy to defraud the government with respect to tax claims.  According to information presented in court, Lampkin and two co-conspirators submitted over 100 fraudulent tax returns, claiming over $1 million in fraudulent tax funds in only a four month period from June through October 2004. Using word of mouth and recruiting people around their neighborhoods, Lampkin and others worked together to obtain social security numbers and other information from people who typically earned insufficient income to submit tax returns. They then filed federal returns for those people which included false income and withholding information. Many of the false returns included a fraudulent 1099-R form, representing that the taxpayer had received pension income from the U.S. Railroad Retirement Board, and had substantial amounts withheld from these payments, to justify thousands of dollars in tax refunds.

Two Sentenced in Multi-Million Dollar Tax Fraud Scheme

On July 12, 2010, in Columbia, S.C., two individuals were sentenced for their roles in a four-year, $13 million fraud against the Internal Revenue Service (IRS).  Ariano Canseco-Orozco was sentenced to 18 months in prison and ordered to pay $382,500 in restitution; Omar Maldonada-Cardenas was sentenced to 46 months in prison and ordered to pay $1,200,000 in restitution.  According to court documents, between 2006 and November 2009, two tax preparation businesses, Seguros Internacionales, operating in Spartanburg, South Carolina, and Forest City, North Carolina, and Poz Servicios Para Hispanos, operating in Boiling Springs, South Carolina, along with affiliated individuals, filed more than 10,000 federal income tax returns claiming more than $22 million dollars in refunds.  It was estimated that at least 20 people were involved in operating the scheme in which tax preparers knowingly claimed tax credits or deductions to which filers were not entitled.  One such tax credit that was improperly claimed on a majority of the false returns was for child care expenses.  This credit can result in a refund even if no taxes were ever paid.  Eight other defendants involved in the scheme have been sentenced to terms between 24 months in prison to seven months in prison, as well as making restitution of over $1 million.

Two Conspirators Sentenced in Million Dollar Tax Fraud Scheme

On June 25, 2010, in Atlanta, Ga., Jamil Flowers, of Las Vegas, Nevada, and Jason Stoudemire, of Houston, Texas, were sentenced for their roles in a million-dollar tax fraud scheme. Flowers was sentenced to 51 months in prison, followed by three years of supervised release, and ordered to pay $1,002,451 in restitution.  Stoudemire was sentenced to 24 months in prison, followed by three years of supervised release, and ordered to pay $1,002,451 in restitution.  According to court documents, Flowers and Stoudemire worked together to obtain social security numbers and other information from people who typically earned insufficient income to submit tax returns. They filed federal returns on these people’s behalf which included false income and withholding information. In particular, many of the false returns included a fraudulent 1099-R form, representing that the taxpayer had received pension income from the “U.S. Railroad Retirement Board” and had substantial amounts withheld from these payments so as to justify thousands of dollars of tax refunds.  Instead of depositing the fraudulent refunds into the taxpayers' accounts, Flowers and Stoudemire recruited others to open bank accounts where the two defendants directed the deposit of the fraudulent refunds and kept the vast majority of the proceeds for themselves.  Flowers and Stoudemire submitted over 100 fraudulent tax returns, claiming over $1 million of public funds in a four-month period from June through October 2004.

New Hampshire Man Sentenced to Seven Years for Filing False Tax Returns

On June 15, 2010, in Concord, N.H. Todd R. Silver, formerly of Hollis, was sentenced to 84 months in prison, followed by three years of supervised release, and ordered to pay $851,478 in restitution. According to court documents, from about February 2007 through about February 2008, Silver filed 13 fraudulent tax returns with the Internal Revenue Service (IRS) claiming a total of over $4 million in tax refunds. On ten of the returns, Silver misappropriated the use of identities of five people, four of whom were minors.  Silver filed returns under his true name, as well as a return under an alias “Todd R. Farro.” On all of the returns, Silver listed fraudulent amounts of investment income and falsely claimed that the IRS owed tens of thousands of dollars in tax refunds. He also directed that the refunds be wired into bank accounts he either controlled or to which he had access.

Three Illegal Aliens Sentenced in Multi-Million Dollar Tax Fraud Case

On June 10, 2010, in Columbia, S.C., three individuals were sentenced for their roles in a multi-million dollar tax fraud case.  Luis Gerardo Mora-Vargas was sentenced to 18 months in prison and ordered to pay $388,668 in restitution.  Juan Carlos Carrillo-Roy and Miguel Angel Carrillo-Borjas were each sentenced to serve 12 months in prison and each ordered to pay $112,500 in restitution.  Upon their release from prison, Miguel Angel Carrillo-Borjas and Juan Carlos Carrillo-Roy will be deported back their home country of Mexico, and Luis Gerardo Mora-Vargas will be deported back to his home country of Costa Rica.  According to court documents, between 2006 and November 2009, two tax preparation businesses, Seguros Internacionales, operating in Spartanburg, S.C. and Forest City, N.C., and Poz Servicios Para Hispanos, operating in Boiling Springs, S.C., along with affiliated individuals, filed more than 10,000 federal income tax returns claiming more than $22 million in refunds.  At least 20 people were involved in operating the scheme, in which tax preparers knowingly claimed tax credits or deductions to which filers were not entitled. One such tax credit that was improperly claimed on a majority of the false returns was for child care expenses.  The three defendants sentenced were characterized in court as “runners” who solicited others to have their returns falsely prepared and then assisted them in getting their refund checks cashed.  

Missouri Man Sentenced for Bank Fraud, Tax Fraud; Conspirators Passed More Than $100,000 in Counterfeit Checks

On June 1, 2010, in Springfield, Mo., Max Snodgrass was sentenced to 55 months in prison and ordered to pay more than $91,000 in restitution for bank fraud and tax fraud.  According to court documents, Snodgrass admitted that, from April thru November 2008, he participated in a conspiracy to steal checking account information and personal identity information from various victims. That information was used to produce counterfeit identification documents (such as driver’s licenses) and counterfeit personal, business and organizational checks that were cashed or used to make purchases.  Some of the counterfeit checks bore fictitious account information, while others were drawn on actual accounts, including one belonging to the Greene County Sheriff’s Office. Snodgrass used the counterfeit identification documents and checks on multiple occasions to fraudulently obtain property and money.  Co-defendants John Dennis Sedersten, Karen Ann Harris, and Bryan Ray also pleaded guilty to their roles in the bank fraud conspiracy. Ray was sentenced on May 14, 2010, to 51 months in federal prison and ordered to pay nearly $83,000 in restitution. Sedersten and Harris await sentencing.  Snodgrass also admitted that, in a separate scheme, he assisted others in obtaining fraudulent tax refunds from the Internal Revenue Service by filing false 2007 federal income tax returns.  Snodgrass created false W-2 forms for a sham business, claiming earnings and withholdings for employees who never actually worked for the business. Snodgrass and others involved in the conspiracy took the false W-2 forms to tax preparers and electronically filed federal income tax returns in order to receive large refunds resulting from the falsely reported withholdings. 

Battle Creek Tax Return Preparer Sent to Prison on Tax Charge

On June 3, 2010, in Grand Rapids, Mich., Yolanda Hudson was sentenced to 15 months in prison, followed by one year supervised release, and ordered to pay restitution of nearly $67,000 for filing false tax returns.  According to court documents, for tax years 2005 through 2007, Hudson, doing business as Hudson and Hargrove Consulting LLC, prepared and filed 23 fraudulent tax returns with the Internal Revenue Service. Hudson prepared simple income tax returns for low income individuals who did not have mortgages or other deductions. Most of Hudson’s clients lived on some form of public assistance and would not have been entitled to a tax refund. These tax returns overstated income earned by the taxpayers, which allowed them to obtain the Earned Income Tax Credit, resulting in fraudulent refunds being issued to the taxpayers. Many of her clients stated that they did not realize that Hudson was deducting a $500 fee from their refunds. The false income claimed on the tax returns totaled over $280,000 and the fraudulent refunds claimed by the taxpayers totaled over $90,000.

Former Postal Carrier Sentenced in Tax Fraud Scheme

On June 2, 2010, in Philadelphia, Pa., Tyree Harrell was sentenced to 12 months and one day in prison, to be followed by two years of supervised release, and ordered to pay $41,230 in restitution. Harrell pleaded guilty on November 12, 2009, to conspiracy to defraud the government with respect to claims and theft of mail by a United States Postal Service employee. According to court document, Harrell admitted that he would give his co-defendants, Angel Collazo and Aphleen Quinonez, the addresses of postal customers on his route for them to use in filing false income tax returns.  Collazo and Quinonez were purchasing stolen or otherwise unlawfully obtained names, dates of birth, and social security numbers of residents of Puerto Rico.  They then created phony federal individual income tax returns using the stolen names and the addresses provided by Harrell.  As part of his sentencing terms, Harrell has been ordered to never seek employment with the U.S. Postal Service.  Collazo has pleaded guilty and is awaiting sentencing; Quinonez is currently a fugitive.

Kansas City Man Sentenced for Counterfeit Checks, False Tax Returns

On May 19, 2010, in Kansas City, Kan., Christopher Summers was sentenced to 51 months in prison for counterfeiting and tax charges.  According to court documents, Summers pleaded guilty to one count of conspiracy to commit wire fraud, three counts of possessing a counterfeit security, and one count of conspiracy to defraud the government. Summers admitted that from May 2007 through May 2009 he prepared forged payroll checks in the names of co-conspirators who cashed the counterfeit checks at Walmarts in the Kansas City metro area.  Also, in January 2008, Summers launched a separate scheme where he prepared false W-2 tax forms for conspirators who were not employed. The forms falsely stated the conspirators were working and were entitled to a tax return. Summers had the conspirators go to an H&R Block tax preparer to electronically file a tax return with the Internal Revenue Service and to obtain an instant loan in anticipation of a tax refund.

Canadian Sentenced to Prison for Theft of U.S. Funds

On May 14, 2010, in Seattle, Wash., John Chung, a Kelowna, British Columbia, welder, was sentenced to 12 months and one day in prison, three years of supervised release, and $291 in restitution for theft of government funds in connection with a widely advertised tax fraud scheme. Chung has already forfeited to the government most of the $369,534 he sought to steal with the phony tax filings. According to filings in the case, Chung attempted to execute what is referred to as “1099-OID fraud” -- falsely claiming that he was owed $369,534 in federal income tax that had been withheld on his behalf. On September 8, 2009, Chung filed a 1040NR tax return and phony 1099-OID forms with the Internal Revenue Service. The IRS initially did not detect the fraud and sent Chung a check. Chung then traveled to Bellingham, Washington and opened a bank account to deposit the check. An alert bank employee notified the IRS when she became suspicious about the size of the refund check.

Flint Man Recruits Homeless to File False Tax Returns Goes to Jail

On April 21, 2010, in Detroit, Mich., Roger Lawrence was sentenced to 36 months in prison and ordered to pay more than $12,000 in restitution for preparing false tax returns.  According to court documents, during 2007, Lawrence targeted homeless or transient individuals, along with relatives with little or no income, providing them with a false Form W-2 containing fictitious wages and withholdings. The false Forms W-2 listed their employers as either General Motors Corporation, McDonalds, or Handleman Corporation, when in fact, none of the filers were ever employed by these companies.  Lawrence, along with other co-conspirators, directed the filers to return preparation businesses who unwittingly prepared the filers' returns using the fraudulent Forms W-2. The returns claimed total refunds due of over $90,000.

Missouri Man Sentenced for Claiming $3 Million in Fraudulent Tax Refunds

On March 30, 2010, in Kansas City, Mo., Gary Ross was sentenced to 42 months in prison and ordered to pay more than $1.9 million is restitution.  According to court documents, Doss owned and operated several Smithville businesses; Global Air Logistics LLC and Global Purchasing Corp. LLC which provided third-party transportation brokerage services.  Another business, Mark VIII, applied ISO quality standards to the health care industry.  Doss admitted that he filed false claims for the tax years 2000 through 2005, receiving personal federal income tax refunds of approximately $3 million. Court documents show that Doss created false W-2 forms that included inflated salaries and withholdings for himself from Global Air Logistics and Global Purchasing, which resulted in substantial refunds.  Doss did not pay the withholdings listed on his W-2 forms during any of those tax years and was not entitled to any of the refunds he claimed and received.  Doss also admitted that, in 2007 and 2008, he interfered with the administration of Internal Revenue laws by providing Internal Revenue Service (IRS) agents with two false letters attempting to show he had a more than $3 million overpayment of taxes in 1998. Doss wrote both letters with the intent to impede the pending IRS criminal investigation. During the investigation of this case, Doss provided two IRS agents with fraudulent correspondence purportedly from the IRS in order to substantiate his claim that an IRS Taxpayer Advocate instructed him to inflate his salary and withholdings. Doss also provided his attorney with another fraudulent letter to substantiate his claim that he relied on advice from an IRS Taxpayer Advocate when inflating his salary and withholdings.

Upstate New York Woman Sentenced in Tax Refund and Student Loan Fraud Case

On February 18, 2010, in Buffalo, N.Y., Raymonda Shallowhorn was sentenced to 36 months in prison and ordered to pay $141,129 in restitution to the Internal Revenue Service and to the United States Department of Education.  Shallowhorn pleaded guilty to making false claims for tax refunds and  student loan fraud on November 9, 2009.  In her written plea agreement, Shallowhorn admitted to filing more than 17 federal income tax returns falsely claiming approximately $86,000 in tax refunds. Shallowhorn admitted causing the tax returns to be filed in the names of several persons, sometimes with their knowledge and sometimes without.  Shallowhorn also admitted to receiving 25 checks worth a total of about $44,000 in student loan proceeds.  The student loans were applied for by Shallowhorn on behalf of at least five different persons.  The loan applications were made over the Internet for correspondence courses that were attended by neither Shallowhorn nor the nominal applicants. Shallowhorn split the loan proceeds with the nominal applicants. According to court documents, the tax returns prepared by Shallowhorn or with her assistance contained false claims for the Earned Income Credit, the Child Tax Credit, and the Child Care Tax Credit.  Several of the tax returns prepared by Shallowhorn were for tax filers who did not actually have earned income.

Three Sentenced in South Carolina for their Roles in a Fraudulent Tax Refund Scheme

On January 27, 2010, in Columbia, S.C., three individuals were sentenced for their roles in a conspiracy to defraud the United States.  Randall Lewis Smith, of Summerville, was sentenced to 12 months in prison to be followed by three years of supervised release.  Georgia M. Adams, of Harleyville, and Misha Danyell Cleckley, of Orangeburg, were sentenced to probation for five years, with the first six months to be served on home confinement.  Each defendant will also be required to pay restitution in amounts ranging from around $9,000 to $33,000.  All three defendants pleaded guilty in connection with a $400,000 fraudulent tax refund scheme operated by a federal inmate who has also been charged.  Smith, Adams, and Cleckley assisted in the scheme by allowing their names and addresses to be used in connection with fraudulent tax returns that were submitted to the Internal Revenue Service.  When they received the refunds, they kept a portion of the money and sent the rest to the inmate or to others at his direction.

Six Sentenced in Multi-Million Dollar Tax Fraud

On January 13, 2010, in Raleigh, N.C., Robert Coombs was sentenced to 106 months in prison and ordered to pay the Internal Revenue Service (IRS) more than $1.6 million in restitution for filing false tax returns.  Co-defendants previously sentenced were Timothy Daniel Trott to serve 37 months imprisonment; Charles Lewis Critzer to serve 21 months imprisonment; Lewis A. Shelton was ordered to serve 21 months imprisonment; Tami E. Shelton was sentenced to five years probation; and Timothy M. Desfonds was ordered to serve 15 months imprisonment. In addition, all were ordered to pay restitution to the IRS. According to court documents, Coombs and his co-defendants filed approximately 500 false individual income tax returns with the IRS, claiming in excess of $3 million in refunds. The returns typically claimed large tax refunds based on false statements concerning the payment of federal gasoline taxes, and false occupations that would make reported payments appear legitimate. The fraudulent returns generated at least $1.6 million in “refunds” from the IRS.  Coombs and his co-defendants not only used their own identities, they also stole identities to generate additional false claims.

Tacoma Husband and Wife Sentenced for Filing False Claims for Federal Income Tax Refunds

On December 15, 2009, in Tacoma, Wash., Deborah S. Satcher was sentenced to 12 months and one day in prison, to be followed by 36 months of supervised release, for conspiracy to file false claims for income tax refunds with the Internal Revenue Service (IRS).  She was ordered to pay $61,016 in restitution to the IRS.  Darryl Satcher, her husband, was sentenced on December 17, 2009, to time served plus up to 120 days in a half-way house, as a condition of 36 months of supervised release, for filing false claims for refund with the IRS.  He was ordered to pay $2,163 in restitution to the IRS.  According to court documents, Deborah Satcher pleaded guilty to the conspiracy charge on July 31, 2009.  Deborah Satcher assisted approximately 22 individuals in filing 29 false income tax returns claiming refunds to which they were not entitled.  In addition, Deborah and Darryl Satcher filed false returns in their own names.  In creating the false tax returns, Deborah Satcher typically falsely identified the filers’ employers as being one of three businesses for which she and members of her family had previously worked.  In total, Deborah Satcher fraudulently claimed $130,039 in refunds to which she and the filers were not entitled.  Darryl Satcher pleaded guilty to two counts of filing false claims.

Russian Citizen Sentenced for Conspiracy

On December 7, 2009, in San Diego, Calif., Maxim Maltsev of Novosibirsk, Russia, who resided in San Diego between May 26, 2006, and September 27, 2006, was sentenced to 18 months in prison and ordered to repay $136,000 to the Internal Revenue Service (IRS).  Maltsev was charged on April 16, 2009, with one count of conspiracy to defraud the United States regarding claims and pleaded guilty in July 2009. According to the indictment, and part of his guilty plea, Maltsev admitted that he was part of a conspiracy to obtain federal income tax returns requesting refunds before they were electronically filed with the IRS. The conspirators then changed the bank account information on the returns to divert the refund payments from the taxpayers to accounts opened by members of the conspiracy. Maltsev opened bank accounts at four banks in San Diego between June 29, 2006, and August 30, 2006, where approximately $105,000 in tax refund payments were illegally deposited.  According to court documents, the scheme depended upon taxpayers tricked into using free electronic tax return filing services that were not affiliated with the IRS sponsored “Free File” program, which allows for the preparation and electronic filing of federal tax returns for free for eligible taxpayers. The conspirators manufactured web sites that appeared to be Free File affiliates and advertised them on the Internet and through electronic mail. Taxpayers who used these services may have thought that they were using approved affiliates, but they were not. Taxpayers filled out their income tax returns online with the bogus services. The bogus services then changed the banking information and submitted the income tax returns to the IRS through approved Free File affiliates. All of the modified tax returns were submitted to the various Free File affiliates from Internet Protocol addresses originating in Belarus.

Inmate Sentenced for Filing False Tax Return

On December 3, 2009, in Madison, Wis., Darnell Moon, an inmate at the Federal Correctional Institution at Oxford, Wisconsin, was sentenced to 14 months in prison for filing a false tax return.  Moon pleaded guilty to this charge on September 23, 2009.   According to court documents, between May and August 2008, Moon, while serving a 78-month sentence for armed bank robbery, prepared and mailed 26 tax returns to the Internal Revenue Service claiming tax refunds totaling $54,881.  Moon used the names and social security numbers of ten other inmates incarcerated with him at FCI-Oxford to prepare the false tax returns.  The IRS did not pay any of the illegally claimed tax refunds claimed in this scheme.

Alabama Man Sentenced for False Tax Refund Scheme

On December 3, 2009, in Birmingham, Ala., Cardale Leon Bates was sentenced to 57 months in prison, to be followed by three years of supervised release and ordered him to pay $56,946 in restitution.  Bates pleaded guilty in June 2009 to wire fraud, aggravated identity theft and filing a false claim for tax refund.  According to the plea agreement and statements made in court, from 2004 through 2005, Bates and others participated in a fraudulent scheme to obtain payment of false tax refunds presented to the IRS.  As part of the scheme, Bates acquired names and social security numbers for the purpose of using this information to assist in the preparation of false tax returns claiming refunds.  The false claims for refunds were ultimately filed electronically with the IRS and the proceeds of the scheme were directed into several bank accounts that Bates and others controlled.  The total false claims filed by Bates and others was $121,932.

St. Louis Area Man Sentenced on Charges Involving Electronically Filed Tax Returns

On November 24, 2009, in St. Louis, Mo., Kenneth Johnson was sentenced to 24 months in prison for defrauding the United States by filing false claims for tax refunds and was ordered to pay $331,000 in restitution to the Internal Revenue Service (IRS).  According to court records, Johnson solicited persons to assist in falsely claiming refunds by allowing the returns containing the pattern of false entries to be filed electronically under the solicited person’s name. The false refunds were claimed based on the improper application of the Earned Income Credit, falsely reported income, and falsely claimed dependency exemptions.  In many instances, the refunds were paid into bank accounts controlled by either Johnson or his co-conspirator and the solicited person received a cash payment for his or her assistance.   Approximately 100 Forms 1040A claiming refunds totaling in excess of $400,000 were electronically presented to the IRS based on this pattern of false entries.

Florida Man Sentenced for Filing a False Claim for Refund of More Than $9 Million

On November 18, 2009, in Miami, Fla., Marlon T. Moore, aka Dammon Green, aka Tyrone Moore, aka X-Large Moore, was sentenced to 24 months in prison to be followed by three years of supervised release.  Moore pleaded guilty to one count of filing a false claim with the Internal Revenue Service (IRS).  According to statements made in court, Moore was released as an inmate from the Federal Correctional Complex in Coleman, Florida, on December 28, 2007. After his release, Moore filed a 2007 Individual Tax Return, Form 1040, and requested a fraudulent refund of $9,087,987 from the IRS.  During 2008, Moore filed several other fraudulent Individual Income Tax Returns requesting refunds to which he was not entitled.

Florida Tax Preparer Sentenced for Preparing Returns Fraudulently Claiming the First-Time Homebuyers Tax Credit

On October 21, 2009, Jacksonville, Fla., James Otto Price, III, was sentenced to 30 months in prison for willfully preparing false tax returns. The court also entered a money judgment against Price for $216,454, the loss attributable to Price's fraudulent conduct. According to court documents, Price prepared numerous fraudulent tax returns. On at least 15 returns prepared for tax year 2008, Price falsely claimed that the taxpayers were eligible to receive the First-Time Homebuyer Credit.  A number of the taxpayers who Price claimed were eligible for the homebuyer credit were not even aware that Price had claimed the credit on their returns. Other clients were erroneously advised by Price that if they merely contemplated buying a house in the upcoming months, they were eligible for the credit. Price electronically debited fees of approximately $1,000 per fraudulent tax return. In addition to the fraudulent returns involving the First-Time Homebuyer Credit, Price fraudulently prepared 20 additional tax returns involving tax years 2004 and 2005 where he intentionally overstated or made up charitable contribution deductions and unreimbursed employee expenses. The total tax loss attributable to Price as a result of the 35 fraudulent tax returns was $216,454.

Former Fugitive Sentenced for Preparing False Tax Returns

On October 13, 2009, in St. Paul, Minn., after evading authorities for almost four years, Yahya Muhumed Shakal was sentenced to 72 months in prison and one year of supervised release.  Shakal was indicted on April 13, 2005, on four counts of aiding and assisting in the preparation of false tax returns. After his initial appearance, he was released from custody on bond, at which time, he fled the jurisdiction. He was apprehended by Canadian authorities in Edmonton, Alberta, and extradited to the U.S. in February 2009. On April 15, 2009, Shakal pleaded guilty to the four counts filed against him. In doing so, he admitted he willfully aided and assisted in the preparation and presentation of fraudulent federal tax returns. Shakal acknowledged that in 2003 and 2004, he was a tax preparer who did business under the names of Amal Tax Return and Salama Tax Service in Minneapolis. During that time, he prepared and filed more than 1,000 false federal and state individual income tax returns on behalf of others. Among his false tax claims, Shakal filed for excessive fuel tax credits on individual federal tax returns for tax years 2002 and 2003. In each of those cases, he prepared a Form 4136, Credit for Federal Tax Paid on Fuels, on which he claimed that the corresponding taxpayer had used gasoline for nontaxable uses, such as off-highway business and exports. In truth, however, he knew those taxpayers had not used gasoline for those purposes or any other nontaxable purposes. More than $2 million in fraudulent fuel tax credits were claimed on the more than 1,000 tax returns prepared by Shakal.

Minnesota Man Sentenced for Filing a False Tax Return

On October 9, 2009, in Minneapolis, Minn., Ellis Alance Banks, of Brooklyn Park, Minnesota, was sentenced to 21 months in prison and three years of supervised release.  Banks pleaded guilty on June 11, 2009, to one count of filing a false tax claim. According to the plea agreement, Banks prepared and submitted to the federal government a U.S. Individual Income Tax Return that claimed a false refund of $4,563. While Banks pleaded guilty to the charge relating to his return for tax year 2004, he also admitted submitting false returns for tax years 2005 through 2008, resulting in a tax loss of $375,000.

North Carolina Tax Refund Conspirators Sentenced to Prison; Ordered to Pay Over $12 Million in Restitution

On October 2, 2009 in Charlotte, N.C., Jose Peralta, Miguel Loria, Richard Varela and Marino Martinez were sentenced to prison and ordered to pay more than $12.3 million in restitution for their roles in a large scale tax refund scheme. Peralta received 98 months in prison, Loria was sentenced to 63 months in prison, Varela received 47 months in prison, and Martinez was sentenced to 40 months in prison.  All defendants were sentenced to three years supervised release at the conclusion of their prison time.  According to court documents, the four defendants used stolen identities and social security numbers of Commonwealth of Puerto Rico residents to file fraudulent tax returns.

Fiscal Year 2011 - Questionable Refund Investigations

Table of Contents - Questionable Refund Investigations

Criminal Investigation (CI) Home Page

How to Report Suspected Tax Fraud Activities?