Examples of International Investigations - Fiscal Year 2011

Criminal Investigation (CI) is increasing its focus on international tax compliance. 

International investigations encompass a wide range of activities such as abusive tax schemes, narcotics, non-filers, money laundering, and terrorism funding. IRS Criminal Investigation works closely with international law enforcement partners as well as federal, state, and local law enforcement agencies to investigate financial fraud.

The following examples of investigations with international links are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted. 

Abusive Tax Schemes

Doctor Sentenced to Prison for Tax Evasion

On September 29, 2011, in Pittsburgh, Pa., Dr. David P. Alan was sentenced to 21 months in prison, three years of supervised release, and ordered to pay a $40,000 fine for his conviction of tax evasion.  According to information presented to the court, Alan engaged in a scheme to inflate cost of goods sold deductions for his limited liability corporation for tax year 2004 using an offshore shell corporation and bank account to reduce the income from his business reportable on his individual tax returns. Alan employed the same scheme in tax years 2001-2003, filing false individual joint tax returns for tax years 2001 and 2002.

Former North Carolina Business Owners Sentenced for Tax Fraud

On September 1, 2011, in Charlotte, N.C., Duane Hamelink and his wife, Eileen Hamelink, formerly of Mooresville, N.C., were sentenced to 27 months and 21 months in prison respectively, to be followed by three years of supervised release for each.  In addition, the Hamelinks were ordered to pay $1,086,815 in restitution to the Internal Revenue Service (IRS).  According to court documents and statements made during court proceedings, from about 1992 to about 2005, Duane and Eileen Hamelink owned and operated a trim carpentry business. The Hamelinks failed to file income tax returns despite earning substantial income and they took numerous steps to conceal their income and assets from the IRS. For example, the Hamelinks obtained several sham trusts and related nominee bank accounts to conceal their ownership of their trim carpentry business. In addition, the Hamelinks used a sham trust to obtain a foreign bank account in Cyprus and transferred approximately $285,327 of income into the account over a three year time period. The Hamelinks also concealed approximately $654,344 derived from the sale of their home using a series of false liens, bogus trusts, and a foreign bank account. Chris Hughes, of Charlotte, N.C., was also sentenced today to six months in prison and six months of home confinement for obstructing and impeding the IRS criminal investigation of Duane and Eileen Hamelink.  According to court records, in 2005, Hughes engaged in a real estate transaction with the Hamelinks and directed the proceeds of the transaction, approximately $655,100, to an offshore bank account at First Curacao International Bank. Hughes provided false statements to IRS special agents conducting a criminal investigation of Duane and Eileen Hamlink’s tax evasion scheme concerning facts related to the real estate transaction.

Los Angeles Lawyer Sentenced for Tax Evasion and Passport Fraud in Connection with Quellos Tax Shelter Scheme

On June 10, 2011, in Seattle, Wash., Matthew G. Krane, of Los Angeles, California, was sentenced to 32 months in prison and two years of supervised release for tax evasion and false statement in a passport application.  Krane has also agreed to forfeit approximately $23.1 million to the U.S. Treasury and return approximately $17.9 million in illegal fees to his former client, Haim Saban.  In June 2009, Krane was indicted along with the former Chief Executive Officer of Quellos Group L.L.C., Jeffrey I. Greenstein, and an attorney and principal of the investment firm, Charles H. Wilk, in connection with a fraudulent tax shelter scheme.  Krane pleaded guilty in December 2009 and agreed to cooperate with the government in its prosecution of Greenstein and Wilk.  Subsequently, in January 2011, Wilk and Greenstein pleaded guilty, paid $7 million in penalties to the IRS, and were each sentenced to 50 months in prison.  According to court documents, Greenstein and Wilk agreed to secretly split Quellos’ fees with Krane in exchange for Krane’s assistance in enrolling a wealthy client in the tax shelter scheme.  The client, Haim Saban, had more than $1 billion in capital gains in 2001, and Greenstein and Wilk promised Krane a cut of the fees if Saban purchased the tax shelter scheme.  Saban was never informed of the fee arrangement, or illegal nature of the scheme.  Between March 2001 and October 2001, the men drafted false fee agreements that made it appear that Saban was paying $46 million to Quellos to participate in the tax shelter strategy.  In fact, nearly $36 million of that fee was actually diverted by Wilk and Greenstein to an offshore account controlled by Krane.  Krane failed to pay taxes on the income.  In addition, when Krane learned of the criminal investigation of Quellos in February 2008, he applied for a passport in a false name, using a false social security number and California drivers’ license number.

Owner of Tradex Sentenced for Concealing Income in Foreign Shell Companies and Overseas Bank Accounts

On May 4, 2011, in Los Angeles, Calif., Arthur Allen Ferdig, owner of Tradex, a foreign exchange investment company, was sentenced to 18 months in prison and three years of supervised release.  Ferdig pleaded guilty on September 28, 2010, to tax evasion for the 2002 tax year.  In addition, Ferdig agreed to pay taxes owed for 2002, inclusive of the civil fraud penalty and statutory interest.  According to the plea agreement, during 2002 and 2003, Ferdig, a U.S. citizen, lived in Jamaica and the Bahamas where he owned and controlled Tradex, a purported foreign exchange investment company based in the Caribbean island of Dominica.  To conceal and disguise his income from Tradex, Ferdig admitted that he knowingly and intentionally failed to file a U.S. tax return for 2002, directing his income from Tradex to be wired into offshore bank accounts that were held in the names of various shell companies under his control, including Industrial Metals and Mining, a mining venture in Nevada.  According to court documents, Ferdig admitted that he failed to report as income approximately $529,000, resulting in tax due of approximately $148,000 to the Internal Revenue Service. 

International Businessman Sentenced for Filing False Tax Returns and Failing to File FBARs

On March 29, 2011, in South Bend, Ind., James A. Simon was sentenced to 72 months in prison, followed by three years of supervised release and ordered to pay $886,901 in restitution to the Internal Revenue Service (IRS).  Simon was convicted at trial of filing false federal income tax returns, failure to file reports of foreign bank and financial accounts, mail fraud involving private financial aid, and fraud involving federal financial aid.  According to court documents, from 2003 to 2006, Simon received money from five business entities with which he was affiliated.  He did not report the funds received from these entities on his federal tax returns and failed to report a total of over $3.1 million to the IRS.  Simon also did not disclose that he had an interest in foreign bank accounts and did not file required Report of Foreign Bank and Financial Accounts (FBARs) with the Treasury Department regarding the foreign accounts. Further, Simon provided false information regarding his family’s income and expenses on applications for private financial aid to two different schools and on applications for federal financial aid to one college.  He will also pay restitution of $48,070 to the Department of Education, $17,000 to Canterbury School, and $101,600 to Culver Academy.

Owners of Arizona Substance Abuse Treatment Center Sentenced on Tax Charges

On February 17, 2011, in Phoenix, Ariz., William Steiniger, a doctor, was sentenced to 42 months in prison; his wife, Diane Steiniger, was sentenced to 8 months in prison followed by 6 months of home confinement.  The Steinigers were convicted at trial in December 2009 of four counts of tax evasion and one count of conspiracy to impede and impair the Internal Revenue Service (IRS).  According to court documents, William and Diane Steiniger operated the Desert Canyon Treatment Center, a substance abuse treatment facility in Sedona, from 1998 to December 2008.  Evidence presented at trial showed the Steinigers channeled their Desert Canyon incomes into sham entities they created.  William Steiniger’s earnings went to a phony trust called National Career & Life Institute.  Diane Steiniger’s income was directed to Flair International, Ltd., a company she established in the nation of Belize. Testimony at trial revealed the two defendant’s evaded assessment and payment of more than $390,000 in federal income tax from 2002 to 2005.  In addition, neither defendant paid any federal income tax from at least 1997 through 2005.

Father and Son Miami Beach Hotel Developers Sentenced for Tax Fraud

On February 4, 2011, in Miami, Fla., Mauricio Cohen Assor and his son, Leon Cohen-Levy were both sentenced to 120 months in prison after having been convicted of conspiring to defraud the United States and filing false tax returns.  Cohen Assor was ordered to pay $9,379,849 in restitution and Cohen-Levy was ordered to pay $7,761,959 in restitution.  According to court documents and trial testimony, the father and son concealed more than $150 million in assets, including Miami Beach mansions, yachts, luxury automobiles, and bank accounts containing tens of millions of dollars.  The defendants also failed to report more than $49 million in income to the Internal Revenue Service (IRS).  The two men and their co-conspirators used nominees and shell companies formed in the Bahamas, the British Virgin Islands, Panama, Liechtenstein and Switzerland, to conceal their assets and income from the IRS.  To further conceal their assets and income from the IRS, the defendants also provided false documents to banks, opened bank accounts in the names of nominees, titled their personal residences and luxury vehicles in the name of shell companies, filed false and fraudulent tax returns, failed to file other tax returns, suborned perjury in a civil matter pending before the New York Supreme Court by directing individuals to testify falsely under oath, and induced other individuals to make false statements to federal law enforcement agents.  Among the nominees the defendants used were their personal secretary and their limousine driver. Mauricio Cohen Assor and Leon Cohen-Levy were the developers and owners of several residential hotels known by the trade name Flatotel International.  Flatotel had locations in France, Spain, Brussels, and New York City.  In 2000, the defendants sold their New York hotel and generated proceeds of $33 million. The defendants directed that the sale proceeds be transferred to a bank account at HSBC in Switzerland that was opened in the name of a Panamanian bearer share company.  The Cohens and their related entities never reported the income earned from the sale of the hotel on their United States tax returns. Among the assets and income the Cohens concealed from the IRS were a $45 million investment portfolio, a condominium at Trump World Tower in New York City that was worth as much as $10 million, the personal residence of Mauricio Cohen Assor on Fisher Island in Miami Beach worth approximately $20 million, the personal residence of defendant Leon Cohen-Levy in Miami Beach worth approximately $26 million, and additional properties, luxury vehicles, and a $1.2 million helicopter.

Promoters of Sham Tax Elimination Scheme Sentenced to 20 and 15 Years in Prison; Sold Schemes through Pinnacle Quest International (PQI)

On October 27, 2010, in Pensacola, Fla., the last two promoters of a fraudulent tax- and debt-elimination scheme were sentenced for tax fraud, wire fraud and money laundering charges.  Claudia Hirmer was sentenced to 240 months in prison; Mark Hirmer was sentenced to 180 months in prison.  On March 31, 2010, a federal jury convicted the Hirmers and six other individuals who promoted fraudulent schemes through Pinnacle Quest International, also known as PQI and Quest International.  According to court documents, PQI was an umbrella organization for numerous vendors of tax and credit card debt elimination scams.  Some of the PQI vendors sold bogus theories and strategies for tax evasion, assisted customers in the creation of sham business entities in the United States and Panama, and provided customers with a "reliance defense."  The “reliance defense” consisted of a paper trail of frivolous correspondence which could allegedly be used as evidence of good faith if the client were prosecuted.  Evidence presented at trial established that Claudia Hirmer was a member of the executive council of PQI which selected vendors, guided the day-to-day operations of the company, and planned offshore conferences.  Mark Hirmer managed PQI’s finances on a day-to-day basis. Claudia and Mark Hirmer were convicted for evading the payment of over $2 million in income taxes, penalties, and interest for years 1996 through 2001. The Hirmers sought to evade their tax liability in numerous ways, including extensive use of cashier’s checks and cash and extensive use of nominee companies and offshore accounts.

IRS Receives Unprecedented Amount of Information in UBS Agreement

For information pertaining to the Union Bank of Switzerland (UBS), UBS clients, and former bankers, visit the IRS webpage: Offshore Tax-Avoidance and IRS Compliance Efforts.

Employment Tax

Final Defendant Sentenced In Illegal Worker Scheme

On April 25, 2011, in Pittsburgh, Pa, Alexander Litt, the sixth and final defendant of an illegal worker scheme was sentenced to 56 months in prison, followed by three years supervised release, on his conviction of conspiracy to harbor illegal aliens for commercial gain and money laundering conspiracy. The court also ordered the forfeiture of cash and property to the United States.  According to information presented to the court, Litt, through his company, ARRA Corporation, of Cincinnati, Ohio, conspired to furnish out-of-status alien employees to various hotels in the Cincinnati, Cleveland, Columbus, and Pittsburgh areas as housekeeping personnel between 1998 and 2006.  Litt, along with a co-conspirator, received a kickback of $1.50 per hour per employee for hours worked.  Agents estimate that over 100 such out-of-status aliens were employed in the Pittsburgh area alone by the Pittsburgh franchise of the company, Citiwide Management Group (CMG) and that, during peak season, the aliens worked up to 20 hours per day.  While working for CMG, the aliens, typically from former Soviet countries, were forced to live together in rented housing chosen by CMG, for which they were required to pay the rent. The aliens were transported to and from the hotels in a company van, for which they paid a transportation fee.  Five other defendants pleaded guilty to their roles in the conspiracy and have received prison terms ranging from 33 to 56 months.   

Brooklyn Man Sentenced to Prison for Harboring Aliens, Money Laundering and Tax Evasion

On March 3, 2011, in Pittsburgh, Pa., Yaroslav Rochniak was sentenced to 51 months in prison, followed by three years supervised release on his conviction of conspiracy to harbor aliens, money laundering, and tax evasion. According to information presented to the court, Rochniak was the President of Citiwide Management Group (Citiwide), the Pittsburgh subsidiary of a company which supplied housekeeping staff to Pittsburgh-area hotels. Over 100 of the employees provided were out-of-status aliens who had initially entered the United States legally, but had either overstayed the term limits of their visas or were not authorized to work in the United States under the terms of their visas. Thus, they had illegally remained in the United States. Most of the aliens were citizens of former Soviet bloc countries. Rochniak and his co-conspirators made kickbacks of $1.50 per hour per employee to ARRA Corporation, the parent company in Cincinnati. Citiwide housed the employees in company-leased apartments. They also transported the employees to and from the hotels, charging them both rent and transportation fees.  The employees’ first two weeks’ wages were retained by the company as a security deposit, which the company kept as a penalty if the employees did not work at least six months. Citiwide paid no overtime or benefits and failed to pay taxes on the employees' wages, resulting in a tax loss of $1.5 million. In addition, the parent company maintained offices in Cleveland and Columbus, Ohio. Rochniak was also in charge of the Cleveland branch of the company during part of the conspiracy.

Money Laundering

California Woman Sentenced in Bribery and Money Laundering Scheme

On June 2, 2011, in Los Angeles, Calif., Maria Gabriela Kallas was sentenced to 48 months in prison followed by two years of supervised release.  According to court documents, Maria Kallas and her husband, Constantine Kallas, a senior attorney with U.S. Immigration and Customs Enforcement (ICE), took bribes from immigrants who were promised immigration benefits that would allow them to remain in the United States.  Maria and Constantine Kallas told illegal aliens that Constantine Kallas was an immigration official and that he could obtain immigration benefits for the aliens in exchange for bribes.  They accepted payments from aliens that totaled at least $425,854.  Kallas took bribes from some illegal aliens who were offered “jobs” at companies the couple set up.  As part of the scheme, Maria Kallas had three family members open nominee bank accounts in which she and her husband used to launder the bribe payments.  According to court documents, the bank records for the Kallases showed that, beyond his salary, approximately $950,000 had been deposited into the couple’s bank accounts since 2000. 

Narcotics

International Narcotics Trafficker and Money Launderer Sentenced to 20 Years in Prison

On August 12, 2011, in Manhattan, N.Y., Hector Dominguez-Gabriel, an international narcotics trafficker and money launderer based in Mexico, was sentenced to 240 months in prison, followed by five years supervised release and ordered to pay a $300 special assessment as a result of his conviction in December 2010 on narcotics importation and money laundering charges.  Forfeiture, to be paid to the United States, will be determined at a later date.  According to court documents, evidence presented at trial, and statements made at the sentencing, from 2006 to June 2009, Dominguez-Gabriel orchestrated an extensive narcotics-trafficking and money laundering organization that imported and distributed hundreds of kilograms of cocaine into the United States and then laundered millions of dollars of narcotics proceeds back into Mexico where his company was based. Working from Mexico, Dominguez-Gabriel sent at least 300 kilograms of cocaine into the United States using a variety of means, including secreting it aboard cruise ships and in hidden compartments of vehicles, as well as hiding it within flower shipments. Additionally, Dominguez-Gabriel directed his associates to pick up millions of dollars of narcotics proceeds in locations throughout the United States, including Atlanta, Georgia, Winston-Salem, North Carolina, and New York City, and then make small, structured deposits into U.S. bank accounts. This was done to evade the Internal Revenue Service’s reporting requirements and thereby launder the drug proceeds back to Mexico. In February 2007, Dominguez-Gabriel even attempted to bribe a federal agent after an associate, who picked up $1.5 million in cash, was arrested in New York City.     

Former Federal Officer Sentenced for Smuggling Guns and Drug Money Through the Airport

On June 2, 2011, in Atlanta, Ga., Devon Samuels of Stockbridge, Georgia, was sentenced to 96 months in prison, followed by three years of supervised release. In March 2011, Samuels, a former U.S. Customs and Border Protection officer, pleaded guilty to conspiring to launder drug money and attempting to smuggle guns onto an airplane. The charges against Samuels were in connection to three undercover sting operations with smuggling drug money and guns through Atlanta's Hartsfield-Jackson International Airport.  During two of the undercover operations, Samuels accepted purported drug money, bypassed airport security and screening using his badge, and traveled outside of the U.S. to deliver the purported drug money to undercover police officers. During the third undercover operation, Samuels accepted and smuggled firearms and alleged drug money into the airport using his badge to bypass security. Once inside the airport, Samuels gave the firearms and money to an undercover officer who had told Samuels that she was going to transport the firearms and money to Arizona for a meeting with members of a Mexican drug cartel.

Two Dallas Men Sentenced to Life in Prison

On February 18, 2011, in Waco, Texas, Robbie Padilla and Jeremias Hernandez each were sentenced to life in prison on drug and money laundering charges.  According to court documents, between 2003 and 2006, the defendants distributed 90 kilograms of methamphetamine and one-half kilogram of cocaine in the Dallas area. Evidence presented during trial revealed that the defendants conspired with others to distribute over 500 pounds of methamphetamine and 80 kilograms of cocaine in North and Central Texas, Oklahoma, Louisiana and elsewhere.

Minnesota Man Sentenced for Smuggling Firearms

On January 25, 2011, in Minneapolis, Minn., Paul Giovanni De La Rosa was sentenced to 36 months in federal prison after earlier admitting he had illegally purchased more than 100 firearms, which he then smuggled into Mexico. Some of those weapons were later recovered during investigations into Mexican drug cartels.  According to court documents,  De La Rosa admitted that on November 11, 2009, while buying two handguns from a licensed firearms dealer in Albert Lea, Minnesota, he made false statements on the required firearms application, claiming to be the actual buyer of the firearms, when, in fact, he was making the purchase for individuals in Mexico. De La Rosa later admitted he had been conducting similar “straw purchases” of firearms since 2007. In fact, from 2007 through November 16, 2009, he purchased more than 100 firearms. De La Rosa also admitted that after buying the weapons, he routinely smuggled them into Mexico. Between 2007 and November 16, 2009, he crossed the U.S.- Mexican border 20 times for that purpose. During that time period, he received approximately $70,000, via wire transfers, to pay for the weapons.

Omaha Man Sentenced to Prison

On December 9, 2010, in Omaha, Neb., Lee A. Weinstein, of Omaha, was sentenced to serve 180 months in prison on each of one count of conspiracy to distribute more than 1,000 kilograms of marijuana and money laundering, to be served concurrently. Weinstein was the leader/organizer of a drug trafficking operation with ties to Nebraska, Arizona, California and Mexico.  At the time of his March 2010 arrest, agents were able to attribute over 13,000 pounds of marijuana and 2.9 million dollars to Weinstein’s drug operation. Agents in Nebraska and Arizona have seized over $400,000 and numerous vehicles, including a 1967 Cessna--U206B, as part of this investigation.  

Nonfiler Investigations

New Mexico Farmer Sentenced for Tax and Other Charges

On August 30, 2011, in Albuquerque, N.M., Bill Melot, a farmer from Hobbs, N.M., was sentenced to 60 months in prison, to be followed by three years of supervised release, and ordered to pay $18,493,099 in restitution to the Internal Revenue Service (IRS) and $226,526 in restitution to the U.S. Department of Agriculture (USDA).  Melot was convicted in April 2010 of tax evasion, failure to file tax returns, making false statements to the USDA, and impeding the IRS. According to the indictment and evidence presented at trial and at sentencing, Melot has not filed a personal income tax return since 1986.  In addition, Melot improperly collected more than $225,000 in federal farm subsidies from USDA by furnishing false information to the agency.  Specifically, Melot provided the USDA with a false Social Security Number (SSN) and fictitious Employer Identification Number (EIN) to collect federal farm aid.  According to the indictment and evidence presented at trial, Melot took numerous steps to conceal his ownership of 250 acres in Lea County, N.M., including notarizing forged deeds and titling the property in the name of nominees.  The evidence also showed that Melot used false SSNs and fictitious EINs to hide his assets from the IRS.  Additionally, Melot maintained a bank account with Nordfinanz Zurich, a Swiss financial institution, which he set up in Nassau, Bahamas, in 1992.  Melot failed to report the Swiss bank account to the U.S. Treasury Department as required by law.

Florida Man Sentenced for Immigration Fraud Scheme and Tax Evasion

On March 10, 2011, in Tampa, Fla., Richard A. Murdoch of Florida was sentenced to 30 months in prison, to be followed by three years of supervised release, and ordered to pay $189,852 in back taxes. The judge also ordered Murdoch and his co-defendants to pay $2.3 million in restitution to United Kingdom (U.K.) visa applicants who were defrauded through a Florida property development company called  Royal Development. On April 7, 2010, Murdoch was indicted with Hugh Morgan, a U.K. national residing in Ontario, Canada, and Christopher A. Barrett, a U.K. national residing in Florida, on one count of conspiracy to commit immigration fraud and four counts of immigration fraud in relation to Royal Development.  The indictment also charged Murdoch with three counts of tax evasion. On December 10, 2010, all three defendants pleaded guilty.  On March 9, 2011, Morgan was sentenced to three months in prison and three years of supervised release.  On March 10, 2011, Barrett was sentenced to one month in prison and two years of supervised release.  According to court documents, from approximately June 2003 to November 2006, the defendants conspired to commit immigration fraud through Royal Development, which purportedly sold Florida-based home construction companies to foreign nationals.  The conspirators represented that the purchase of a company would enable foreign nationals to qualify for and obtain either a treaty investor visa or intracompany transferee visa.  Along with the sale of the companies, the conspirators generally represented that they would submit the required visa paperwork to U.S. authorities, help the foreign nationals run the company, and help the foreign nationals adjust to life in the United States.  According to court documents, Murdoch admitted that he knowingly presented required applications, affidavits and other documents that contained materially false statements to U.S. immigration authorities.  In addition, Murdoch admitted that from approximately June 2003 to April 2006, he received approximately $536,593 in income from Royal Development and failed to file his federal income tax returns for 2003, 2004 and 2005.  The total tax due on this taxable income is $189,852.  Murdoch also admitted that he used the taxable income from Royal Development for personal expenses such as hang gliding, cigars, and the purchase of a 1987 Porsche.

International Computer Hacker Sentenced to 82 Months

On February 28, 2011, in Boston, Mass., Asu Pala was sentenced to 82 months in prison, followed by two years of supervised release and fined $12,500 for his role in an international computer hacking conspiracy and failure to file income tax returns. Pala was also ordered to forfeit $7.9 million and to repay the IRS $2.2 million in back taxes. In April 2010, Pala pleaded guilty to one count of conspiracy to commit computer fraud and five counts of failure to file a United States income tax return. According to court documents, from 2003 through 2007, Pala and his co-conspirators infected German citizens’ computers with a program that would force the computers’ telephone modems to surreptitiously dial premium telephone numbers rented from German telephone companies by Pala’s co-conspirators. The premium telephone lines operated like 1-900 numbers: the telephone companies charged callers for added expenses on top of standard connection fees and sent a portion of the added expenses to those who rented the premium lines; in this case Pala’s co-conspirators. The victims were generally unaware that their computers' telephone modems were calling these numbers and charging them these expenses. Victims paid the added charges if they did not notice them on their telephone bills. The telephone companies then sent the added charges to the premium telephone line renters, who divided the proceeds among the co-conspirators, including Pala. Although Pala participated in the scheme while based in Massachusetts and elsewhere in New England, he did not target United States’ computers or computer users. Instead, Pala focused solely on computers and computer users in Germany and possibly other European countries, in order, he thought, to avoid prosecution in the United States.

Husband and Wife Tax Evaders Go To Prison

On November 17, 2010, in Spokane, Wash., Scott D. Haynes and his wife Kristin W. Haynes, formerly from Colbert, were sentenced to prison after each pleaded guilty to five counts of failing to file tax returns for the years 1999 through 2003. Scott Haynes was ordered to serve 40 months in prison and Kristin Haynes was ordered to serve 24 months in prison. Each will be under one year of court supervision after they are released from prison and both were ordered to pay $833,751 to the IRS for their unpaid taxes. Kristin Haynes is an artist who is known internationally for her creation of the Dreamsicles line of figurines cast in porcelain and sold as collectibles. Scott Haynes was a 50 percent shareholder with his wife in a corporation that managed the figurine business and collected royalties. During 2004, the Haynes left Colbert, Washington and relocated to Roatan, Honduras. During the five years the Haynes refused to file tax returns, their income was $2,722,098.

Questionable Refund Investigations

Second Californian Sentenced On False Tax Refund Conspiracy

On September 21, 2011, in Riverside, Calif., Haroon Amin, of Upland, Calif., was sentenced to 30 months in prison, three years of supervised released and ordered to pay $258,594 in restitution for conspiracy to defraud the United States.  In December 2008, Amin and Ather Ali of Diamond Bar, Calif., were indicted on charges of engaging in a scheme to file false returns with the IRS using the names and social security numbers of deceased individuals. Amin pleaded guilty on January 25, 2010.  Ali subsequently pleaded guilty on February 12, 2010. According to the indictment,  in 2002 and 2003, Amin and Ali filed at least 250 fraudulent returns falsely stating that these deceased individuals earned wages from which income tax was withheld.  Amin and his co-conspirators created fake W-2 Forms using employer identification numbers that they had obtained from an acquaintance of Amin’s, who was a certified public accountant.  These false returns claimed more than $2 million in income tax refunds.  Although the IRS rejected the bulk of these refund claims, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali and their co-conspirators.  Most of these refund checks then were delivered overseas to be deposited in bank accounts in Armenia and Pakistan.  Ali is currently serving a 37-month prison term.

Illinois Woman Sentenced for Tax Fraud

On August 5, 2011, in Chicago, Ill., Maribel Juarez was sentenced to 18 months in prison, two years of supervised release and ordered to pay $43,636 in restitution to the Internal Revenue Service. In May 2011, Juarez pleaded guilty to conspiracy to defraud the United States and theft of United States property. According to court records, Juarez was indicted in July 2010, along with ten other defendants, for participating in a conspiracy to file fraudulent tax returns with the Internal Revenue Service. The fraudulent returns were filed using the names and social security numbers of Romanian nationals, including Romanian citizens who had traveled to the United States on J-1 visas. The returns included various false and fictitious items including deductions and W-2 wage statements designed to claim tax refunds that the filers were not entitled to receive. The conspirators found bank accounts that could be used to receive the fraudulently obtained tax refunds. Maribel Juarez was one of these account holders. She kept a portion of the money for herself and turned the remainder of the deposited money to other conspirators. For tax years 2007, 2008 and 2009, the conspirators filed over 440 fraudulent income tax returns claiming tax refunds and economic stimulus payments of over $2.25 million.

Belarusian National is Sentenced to 41 Months in Prison for Participating in International Online Scheme to Steal U.S. Tax Refunds

On June 22, 2011, in Boston, Mass., Mikalai Mardakhayeu, of Nantucket, Mass., was sentenced to 41 months in prison, followed by two years supervised release and ordered to pay $209,000 in restitution for his participation in an international online scheme to steal income tax refunds from U.S. taxpayers.  Mardakhayeu pleaded guilty in January 2011 to one count of conspiracy and nine counts of wire fraud.  According to court documents and information presented at the change of plea hearing, from 2006 through 2007, Mardakhayeu’s co-conspirators lured victims by operating websites that falsely claimed to be authorized by the IRS to offer lower-income taxpayers free online tax return preparation and electronic tax return filing (e-filing).   After taxpayers inputted and uploaded their tax information, co-conspirators in Belarus collected the data and altered the returns to increase the refund amounts and to direct the refunds to U.S. bank accounts controlled by Mardakhayeu. 

Fiscal Year 2012 - International Investigations