Examples of Abusive Return Preparer Investigations - Fiscal Year 2011
The following examples of abusive return preparer investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Florida Return Preparer Sentenced for Preparing False Income Tax Returns
On September 20, 2011, in Miami, Fla., Tomeka Wimberly was sentenced to 22 months in prison, one year of supervised release and ordered to pay $44,682 in restitution. A jury found Wimberly guilty of 24 counts of aiding and assisting in the preparation of fraudulent income tax returns. The evidence at trial revealed that Wimberly was a self-taught tax preparer who prepared thousands of false tax returns between 2004 and 2005, which resulted in her clients receiving thousands of dollars in unearned refunds. The false returns reported fictitious and/or inflated deductions for un-reimbursed employee business expenses, charitable contributions, mortgage interest, and investment deductions, as well as false education, child care, and child and dependent expenses. During her first year in business, Wimberly prepared more than 700 tax returns and obtained more than $2 million in refunds. By 2006, Wimberly prepared more than 1000 tax returns and obtained more than $4 million in refunds.
California Tax Preparer Sentenced for Filing False Tax Returns
On September 19, 2011, in Los Angeles, Calif., Willena Stargell, of Moreno Valley, was sentenced to 42 months in prison, three years of supervised release and ordered to pay $362,796 in restitution after being convicted at trial of tax fraud, financial fraud, and identity theft. According to court documents, from 2003 through mid-2005, Stargell was a state certified tax preparer. Stargell had worked at Liberty Tax Service and later opened her own tax preparation business called Liberty Bell Tax Service that she operated out of her home. The indictment alleged that Stargell carried out two distinct fraudulent schemes. In the first scheme, the affected taxpayers knew that Stargell filed a tax return in their names, and in the second scheme, the taxpayers did not know that Stargell used their names and social security numbers to file a tax return in their names. The tax returns Stargell prepared contained false information, including false wages, withholding amounts, education expenses, child credits, and dependents. The most common falsehoods contained in the returns Stargell prepared were wages, withholding, and dependents, which together establish eligibility for the Earned Income Tax Credit. The tax refunds generated by Stargell’s returns came in the form of Refund Anticipation Loans (RALs). Stargell accessed the financial rewards of her tax fraud in several ways. In situations where the taxpayer knew that Stargell had filed the tax return, Stargell sometimes would meet the taxpayer at a check-cashing store and demand a substantial part of the tax refund in cash. In situations where the taxpayer did not know that the return had been filed or that a refund check had been issued, Stargell sometimes deposited the refund checks into her personal bank account, with a forged endorsement signature. Some of the illicit refund checks were improperly obtained duplicate checks printed by Stargell from the stock of check paper given to her by the bank issuing the RAL. Other checks were outright counterfeit checks Stargell fabricated using the bank’s stock of check paper.
Manhattan Tax Preparer Sentenced for Filing False Tax Returns
On September 14, 2011, in Manhattan, N.Y., Gloria Gaviria was sentenced to 12 months and one day in prison. Gaviria pleaded guilty in April 2011 to 12 counts of aiding and assisting in the preparation of false and fraudulent United States Individual Income Tax Returns and various accompanying schedules and forms. According to court documents, Gaviria owned and operated La Riviera Enterprises, a/k/a “Burbuja Tours,” a tax return preparation business located in Manhattan, New York. From 1999, Gaviria was a full-time tax return preparer from January through April of each year, and worked part-time for the business for the rest of each year. Beginning with at least the 2004 tax year, Gaviria helped prepare hundreds of tax forms in return for fees, resulting in millions of dollars of tax refunds every year. In 2008, the defendant prepared a fraudulent return for an undercover special agent from the IRS, using the same types of deceptive tactics that she had used in prior years. While running her business, the defendant developed a pattern of deceptive practices to perpetrate tax fraud, including: claiming false deductions in the form of fictitious and/or inflated gifts to charities, taxes on personal property, and job expenses, as well as other miscellaneous deductions such as nonexistent “gambling losses;” falsely claiming credits for education expenses; and falsely claiming credits for child care expenses. This pattern of fraud amounted to between $80,000 and $200,000 in tax losses.
Michigan Woman Sentenced to Prison for Preparing False Tax Returns
On September 14, 2011, in Flint, Mich., Chandra Hicks, of Flint, was sentenced to 33 months in prison, one year of supervised release and ordered to pay a $3,700 fine. Hicks was convicted on May 13, 2011, of 37 counts of preparing and filing false tax returns. According to evidence presented at trial, Hicks operated a tax preparation service called Unlimited Prosperity Tax Service in Flint from 2005 through 2009. During this time, Hicks prepared 37 false tax returns by claiming a variety of false deductions on the returns, including false gifts to charities, false job and medical expenses, false child care credits and earned income credits, and false business losses. The tax loss to the government was over $110,000.
Former Police Detective and Tax Preparer Sentenced for Tax Fraud
On September 8, 2011, in Fort Pierce, Fla., Inuka Rhaheed, a former detective with the Fort Pierce, Fla., Police Department, was sentenced to 78 months in prison and ordered to pay $727,729 in restitution. Wilens Bertrand, a tax preparer at First Premium Financial Services, was sentenced to 41 months in prison and ordered to pay $539,954 in restitution. Rhaheed and Bertrand were convicted in June 2011 for conspiring to defraud the United States in connection with fraudulent tax returns they prepared for clients. According to evidence introduced at trial, Inuka and his wife , Jacqueline Rhaheed, owned and worked at First Premium Financial Services, a tax preparation business with offices in Fort Pierce and Vero Beach, Fla. Bertrand worked at the Fort Pierce office of First Premium Financial Services as a tax preparer. They placed false deductions on client tax returns without the clients’ knowledge or consent. In addition, evidence revealed that First Premium prepared and filed approximately 5,500 tax returns for the 2006-2008 tax years and that approximately 98 percent of those returns made a claim for a tax refund. Clients included many law enforcement officers who went to First Premium because they knew Inuka Rhaheed was a former law enforcement officer and trusted him and his business to prepare their taxes. In addition, other clients testified that they went to First Premium because they had heard through word of mouth that First Premium allowed deductions that other tax preparation services would not consider. Jacqueline Rhaheed pleaded guilty to one count of conspiring to defraud the United States on June 2, 2011, and is awaiting sentencing.
Bronx Tax Preparer Sentenced In Manhattan Federal Court to 63 Months in Prison for Preparing False Tax Returns Using Personal Information of Deceased Children
On September 7, 2011, in Bronx, N.Y., Davis Jackson, a Bronx-based tax preparer, was sentenced to 63 months in prison, followed by one year of supervised release and ordered to pay $60,515 in restitution. Jackson was convicted on April 4, 2011, of eleven counts of aiding and assisting in the preparation of false tax returns and one count of corruptly endeavoring to impede the Internal Revenue laws. According to evidence presented at trial and at the sentencing proceeding, Jackson ran a tax preparation business from his home in the Bronx, New York, from which he prepared fraudulent tax returns to generate large tax refunds for his clients. For the 2002 tax year, Jackson used a variety of techniques to enable his clients to claim tax deductions, including listing as dependents on his clients' returns the real names and social security numbers of deceased children. The deceased children had never been dependents of the taxpayers whose returns Jackson filed. In the 2003 to 2005 tax years, Jackson invented phony businesses and filed returns falsely stating that his clients ran those money-losing businesses from their homes, when in fact, the taxpayers did not own businesses. In addition, Jackson fabricated expenditures, such as charitable gifts, childcare expenses, and tuition payments, to get his clients tax deductions and credits that increased the size of their tax refunds. Jackson concealed the false information on the returns from some of his clients, and told others to lie or file false documents to support the false accounts on their returns. In addition, as a special condition of supervised release, Jackson is also prohibited from engaging in work related to tax preparation.
Former Chicagoan Sentenced To Prison for $65.8 Million Tax Fraud
On July 29, 2011, in Chicago, Ill., Marvin Berkowitz, a former Chicago resident who lived in Israel, was sentenced to 220 months in prison, ordered to pay $10,232,800 in restitution to the IRS and various states and to forfeit $5 million. Berkowitz pleaded guilty in January 2011 to orchestrating a tax fraud conspiracy that tried to obtain at least $65.8 million in fraudulent federal and state income tax refunds using the identities of at least 2,900 prisoners and deceased persons. According to court documents, Berkowitz directed a fraud ring that obtained at least $3.7 million in actual tax refunds from the Internal Revenue Service and an additional $6.5 million from the tax agencies of at least 33 states. Berkowitz, who fled to Israel in 2003 and was arrested in Jerusalem by Israeli authorities in 2009, directed at least 58 individuals, who controlled some 90 different address and 42 bank accounts, in obtaining the bogus tax refunds. The IRS was able to detect, freeze or intercept the additional false claims for refunds totaling approximately $50 million that were not actually paid. Berkowitz, two of his sons, a son-in-law, and seven other defendants were indicted and arrested in 2009. Eight defendants, including all of Berkowitz’s family members, have either pleaded guilty or been convicted at trial; charges remain pending against two other defendants and one is a fugitive. According to Berkowitz’s plea agreement, between 2003 and August 2009, he directed a conspiracy to file thousands of fraudulent state and federal income tax returns using the names and social security numbers of federal inmates and deceased persons without their or their families’ knowledge or consent. The false returns included various fictitious and false items, including addresses and phone numbers, deductions, business losses and expenses, credits, and W-2 wage and 1099 income statements of earnings from employers. Berkowitz forged the signatures of the purported taxpayers on the returns, and then mailed packages from Israel containing the false returns, together with stamped envelopes, addressed to the IRS and state taxing agencies, to individuals working for him in the United States. Berkowitz instructed those individuals to mail the envelopes from different mailboxes to avoid raising suspicion. Berkowitz recruited individuals to accept fraudulent tax refunds at addresses and bank accounts they controlled. Berkowitz then instructed the individuals to mail the tax refunds to him in Israel or to distribute the proceeds to his co-conspirators. In addition, Berkowitz directed at least $1.5 million in proceeds from the refunds to his family members. As part of the conspiracy, Berkowitz variously misrepresented to a number of individuals that he worked with that he was a tax preparer, a certified public accountant, a rabbi, an attorney, and/or that he operated a tax preparation business. In some cases, Berkowitz provided these individuals with letters purporting to confirm that he was employed by a company managing the tax returns of clients stationed in the Middle East, as well as with documents purporting to be powers of attorney authorizing Berkowitz, or Berkowitz’s co-conspirators, to act on behalf of the taxpayer. Many of Berkowitz’s recruits were individuals for whom he had previously prepared income taxes in violation of a permanent injunction entered against him in 1984, in United States v. North American Investment Group et al, 84 C 3683, which prohibited Berkowitz from acting, directly or indirectly, as a tax preparer.
Two Georgia Men Sentenced for Arson of Tax Preparation and Loan Financing Center
On July 28, 2011, in Atlanta, Ga., Noelan Dudley, of Lithonia, Georgia, and Brandon Dobbs, of Decatur, Georgia, were sentenced for the arson of a tax preparation and loan finance business in a DeKalb County strip mall. Dudley was sentenced to 60 months in prison, three years of supervised release, and ordered to pay approximately $2.16 million in restitution. Dobbs was sentenced to 37 months in prison, three years of supervised release, and ordered to pay approximately $2.16 million in restitution. Dudley was an assistant manager of a tax preparation and loan finance business. On February 25, 2008, Dudley, with help from co-conspirator Brandon Dobbs, set fire to the strip-mall offices of Dudley’s employer. The fire and a resulting explosion caused more than $2 million in damage to the other tenants of the strip mall and nearby buildings. The motive was to conceal a fraudulent tax filing scheme, which involved Dudley and a former manager who was fired four days before the arson because the company had begun to discover financial irregularities.
Illinois Man Sentenced to Prison for Participating in Refund Fraud Conspiracy
On July 12, 2011, in Chicago, Ill., Eric Berkowitz was sentenced to 24 months in prison and three years of supervised release. On January 18, 2011, Berkowitz pleaded guilty to one count of conspiracy to defraud the Internal Revenue Service and state taxing agencies. According to his plea agreement, from around 2003 and continuing to around August 2009, Eric Berkowitz conspired with his father-in-law, Marvin Berkowitz, and others to defraud the IRS and numerous state departments of revenue by filing over 4500 fraudulent state and federal tax returns using the names and social security numbers of federal inmates and deceased persons without the inmates' or decedents' knowledge claiming over $54 million in tax refunds. The false returns included various fictitious and false items, including addresses and phone numbers, deductions, business losses and expenses, credits, and W-2 wage and 1099 income statements of earnings from employers. Marvin Berkowitz forged the signatures of the purported taxpayers on the returns, and then mailed packages from Israel containing the false returns, together with stamped envelopes, addressed to the IRS and state taxing agencies, to individuals working for him in the United States. Berkowitz instructed those individuals to mail the envelopes from different mailboxes in order to avoid raising suspicion at the IRS and state taxing agencies. Berkowitz recruited individuals to accept fraudulent tax refunds at addresses and bank accounts they controlled. Berkowitz then instructed the individuals to mail the tax refunds to him in Israel or to distribute the proceeds to his co-conspirators. In addition, Berkowitz directed at least $1.5 million in proceeds from the refunds to his family members. Eric Berkowitz and his wife received in excess of $925,000 from Marvin Berkowitz and others acting on Marvin Berkowitz's behalf while knowing that the money was the proceeds of some form of illegal tax fraud scheme orchestrated by Marvin Berkowitz. Also as part of his plea agreement, Berkowitz agreed to an order of forfeiture of approximately $5 million in Israeli property, including funds contained in financial institutions, real estate and stock that constitute proceeds of the criminal activity.
Montana Man Sentenced on Tax Fraud Charge
On June 29, 2011, in Missoula, Mont., Al Benavides, of Kalispell, was sentenced to 12 months and a day in prison, followed by one year of supervised release and ordered to pay a $25,000 fine. According to court documents, Benavides owned and operated Benavides and Company, a tax preparation and accounting business in Kalispell. In this capacity, Benavides prepared false tax returns that saved his clients thousands in tax by routinely inflating the basis of property, fabricating false assets on the depreciation schedules and improperly claiming substantial personal expenses to be deducted as business expenses. In addition, Benavides established a scheme whereby the client would ostensibly pay him “fees” for certain accounting or consulting work that would ultimately be used by Benavides to purchase personal items for the client. Specifically, the client would write a check to Benavides for “fees” and characterized the check as a legitimate business expense and deducted it on his corporate books. Then, Benavides used the money to purchase certain personal items, such as jewelry, for the client. Thus, the client received both the business deduction and possession of a personal item, while Benavides turned a profit.
Texas Tax Preparer Sentenced For Filing False Tax Returns
On June 7, 2011, in Tyler, Texas, Charles Hollie, of Tyler, was sentenced to 24 months in prison, one year of supervised release, and was ordered to pay $84,668 in restitution to the IRS. Hollie was indicted for aiding and assisting in the preparation of false tax returns on April 7, 2010, and subsequently pleaded guilty on November 9, 2010. According to the indictment, plea agreement and other court documents, between 2004 and 2007, Hollie worked as an independent contractor at the Tyler and Athens offices of Preferred Choice Income Tax, holding himself out to the public as a Tax Consultant and expert in preparing individual income tax returns. Hollie prepared more than 1,300 returns that claimed fictitious itemized deductions, home businesses, Earned Income Credits and–in the case of each return for the 2006 tax year–inflated telephone excise tax refund (TETR) credits, a one-time credit available to taxpayers to refund excise taxes paid on long distance and bundled service for the 41-month period from February 2003 to August 2006.
Alabama Tax Preparer Sentenced for Identity Theft and Filing False Tax Returns
On May 24, 2011, in Montgomery, Ala., Sharon Thurman, of Elmore, was sentenced to 60 months in prison, to be followed by three years of supervised release, for stealing identities and using them to file false tax returns. According to the indictment and evidence introduced during trial, Thurman owned and operated Sharon’s Tax Service in Elmore. Between January and April 2008, Thurman filed 14 fraudulent tax returns in which she unlawfully attempted to obtain tax refunds intended for individuals whose identities she stole. Two victims in whose name she received payment from the IRS testified that they never received any money from Thurman. All 14 victims testified at trial that, to the best of their knowledge, they had never met Thurman and had never been to Sharon’s Tax Service.
North Carolina Tax Return Preparer Sentenced for Tax Fraud
On May 19, 2011, in Charlotte, N.C., Monica Vinson Smith was sentenced to 30 months in prison. Smith was also ordered to pay $525,270 in restitution to the Internal Revenue Service (IRS), representing the tax loss from unlawful conduct. According to official court documents and information brought out in court proceedings, from 2006 to 2008, Smith engaged in a false tax refund and identity theft scheme in Charlotte by holding herself out to the public as a professional tax return preparer. Smith filed approximately 151 false tax returns during the scheme which contained numerous falsities, including bogus withholdings, fictitious dependents, and false child tax credits, education credits, and dependent care expenses, among others. Smith also utilized social security numbers to file false tax returns which generated bogus tax refunds for individuals who did not authorize or request her services. Smith retained a portion of the bogus tax refunds as a “tax preparation fee.” Moreover, to conceal the scheme from the IRS, Smith frequently changed business locations and falsely obtained and utilized multiple electronic filers’ identification numbers.
New York Return Preparer Sentenced for Preparing False Income Tax Returns
On May 9, 2011, in Buffalo, N.Y., Robert Zeigler was sentenced to 12 months in prison following his conviction of offering aid or assistance in the preparation of a false income tax return. According to court records, Zeigler fraudulently prepared 22 income tax returns for 14 clients while he was employed as a tax preparer for H&R Block. Zeigler falsified the returns by brokering false dependents so that the taxpayers would obtain larger refunds. He also reported that taxpayers were self employed in businesses that he knew did not exist which led to a larger refund. Additionally, Zeigler solicited and received kickbacks from his clients in return for obtaining larger returns. Zeigler agreed to pay full restitution to the IRS. H&R Block brought these allegations to the attention of the IRS and cooperated fully with this investigation.
Louisiana Woman Sentenced for Filing False Tax Returns
On April 27, 2011, in Baton Rouge, La., Clarissa T. Ayo was sentenced to 94 months in prison, followed by three years of supervised release and ordered to pay $76,763 in restitution. Ayo pleaded guilty in June 2010, to conspiracy to file false claims for tax refunds, wire fraud, and aggravated identity theft. Ayo conspired with others, including Sheila Cage and Levonne Stewart, to obtain the names and social security numbers of various individuals and to prepare false and fraudulent federal income tax returns for filing with the IRS. Some of these names and social security numbers were of residents at area nursing homes. The conspiracy also included falsely claiming that taxpayers had been self-employed and had earned income to maximize the refund amount obtained. In all, Ayo’s participation in this scheme involved approximately 42 false tax returns claiming refunds totaling $136,077. Levonne Stewart was previously sentenced to 48 months in prison. Sheila Cage is scheduled for sentencing in May 2011.
Louisiana Tax Preparer Sentenced to Prison for Aiding in Preparation of False Tax Returns
On April 26, 2011, in Washington, La., Cynthia Peters was sentenced to 27 months in prison followed by one year of supervised release and ordered to pay restitution to the IRS in the amount of $76,908. Peters pleaded guilty to one count of willfully aiding and assisting in the preparation and filing of a false income tax return. Peters prepared fraudulent tax returns for 23 clients that reported falsely inflated telephone excise tax refund (TETR) credits totaling $92,932. The TETR credit was a one-time credit available to taxpayers for the 2006 year. The tax loss, including all relevant conduct, was approximately $501,376.
Florida Tax Violators Sentenced
On April 21, 2011, in Tampa, Fla., Jerron Johnson and Daleshawn Smith, both of Lakeland, Florida, were each sentenced to 30 months in prison followed by three years of supervised release, and each was ordered to pay restitution to the IRS totaling $146,895, collectively. Smith and Johnson obtained names and social security numbers of individuals and then used that personal information, along with false and fraudulent wage and withholding information, to prepare the fraudulent returns and falsely claim refunds. They filed the returns and received income tax refund checks made payable to the individuals named in the fraudulent returns. Smith and Johnson ultimately received all or a portion of the refund checks. All total, they collectively prepared and filed 123 false and fraudulent income tax returns, seeking over $625,000 in fraudulent income tax refunds.
Ohio Tax Preparer Sentenced
On April 21, 2011, in Columbus, Ohio, Abimbola O. Adeyemo was sentenced to 24 months in prison, followed by one year of supervised release, and ordered to pay $201,561 in restitution to the Internal Revenue Service (IRS). Adeyemo pleaded guilty on January 20, 2011, to willfully aiding and assisting in the preparation of false federal income tax returns. According to court documents, between 2003 and 2005, Adeyemo operated mini-markets in Columbus, Ohio, where he prepared and filed income tax returns for some of his customers. Adeyemo charged a fee for his service, typically between $200 and $1,000 per income tax return. Adeyemo willfully prepared and presented to the IRS federal income tax returns for those customers that contained false claims such as the filing status, IRA deductions, moving expense deductions, tuition and fees deductions, Schedule C business losses and education expense credits. In doing so, the various taxpayers received significantly larger federal income tax refunds.
Two Sentenced in IRS Fraud Case
On April 20, 2011, in Columbia, S.C., Yolanda Poz, of Boiling Springs, South Carolina, and Victor Angel Quiez Poz, also of Boiling Springs, were sentenced to 46 months and 24 months in prison, respectively, for their roles in a multi-million dollar IRS fraud case. Both were also ordered to pay $319,000 in restitution. Mr. Poz is an illegal alien from Guatemala and will be deported upon his release from prison. A total of fifteen persons have been convicted in connection with this fraud, which involved preparing false U.S. Income Tax returns. According to court documents and information presented in court, Yolanda Poz operated a tax preparation business under the name of Poz Servicios Para Hispanos in Boiling Springs for approximately one year. During this time she prepared hundreds of fraudulent tax returns which generated refunds to which the filers were not entitled. Further, in many cases it is questionable as to whether the filers even existed. Mr. Poz, although involved to a lesser degree, assisted her in this fraudulent operation.
Tax Preparer Sentenced for Filing Fraudulent Tax Returns
On April 19, 2011 in McAllen, Texas, Israel E. Gonzalez Jr., of Mission, Texas, was sentenced to 30 months in prison, followed by one year of supervised release, and ordered to pay $936,159 in restitution to the IRS for filing fraudulent U.S. Income Tax returns. According to the indictment, Gonzalez prepared and presented to the IRS 16 U.S. Individual Income Tax Returns for income tax years 2004 through 2006 for clients claiming various false deductions, including various Form 1040 Schedule C deductions such as business depreciation. Gonzalez pleaded guilty on January 28, 2011. As part of his plea agreement, Gonzalez admitted to the court that he submitted a false U.S. Income Tax return for one of his clients on April 1, 2006, in which he falsely claimed his client had business depreciation in the amount of $109,550, knowing his client was not entitled to such a deduction.
Hawaiian Tax Preparer Sentenced for Falsifying Information on Tax Returns
On April 18, 2011, in Honolulu, Hawaii, Dennis Nimkie, a Kauai tax preparer, was sentenced to 18 months in prison and ordered to pay $165,117 in restitution to four of his former clients and the United States. Nimkie pleaded guilty in August 2010 to preparing a false income tax return for another person. According to the information presented to the court, Nimkie had several businesses which performed bookkeeping and tax preparation services, one of which was Kauai Bookkeepers and Tax Preparation. Nimkie admitted to the court that he prepared individual tax returns for clients that he knew contained false expenses in order to obtain tax refunds or reduce their tax liability. The indictment alleged 26 such offenses from 2003 to 2005, with tax losses of up to $18,300 for each count.
California Return Preparer Sentenced for Preparing False Income Tax Returns and Wire Fraud
On April 18, 2011, in Los Angeles, Calif., Benjamin Aparicio, owner of B.A. Income Tax Services, located in Santa Paula, was sentenced to 18 months in prison and ordered to pay $176,100 in restitution, plus pay $185,000 which is the loss associated with a defaulted residential home loan. Aparicio pleaded guilty in October 2010 to aiding and assisting in the preparation of false income tax returns and committing wire fraud with respect to helping an individual secure a home loan they were not qualified to obtain. According to his plea agreement, Aparicio aided and assisted clients in the preparation of a false partnership tax return and a false individual income tax return for the tax year 2003. Furthermore, in 2006, Aparicio falsely verified by telephone the contents of a tax reference letter used to secure a residential home loan for an unidentified individual, knowing that the tax reference letter contained false information which caused the home loan to be funded. According to court documents, in the months before Aparicio was first contacted by the IRS’s Criminal Investigation Division in 2005, he was put on notice that his tax return preparation activities were under scrutiny by the IRS. The IRS’s civil division proposed civil penalties against Aparicio for understating the tax liabilities of his clients. Aparicio continued to prepare false tax returns that understated the tax due.
California Tax Return Preparer Sentence to Prison
On April 8, 2011, in San Diego, Calif., Saleh Mahmoud Zahran, a tax return preparer, was sentenced to 132 months in prison and ordered to pay $36,051 to cover the costs of prosecution and to pay $3,200 in special assessments. In addition, Zahran will pay restitution in an amount to be determined by the Court in future proceedings. Zahran was convicted by a trial jury in March 2010 of 32 felony counts including tax evasion, conspiracy to defraud the United States, filing false claims, social security fraud, aggravated identity theft, Medi-Cal fraud, and witness tampering. According to court documents, Zahran was a return preparer licensed by the State of California. His return preparation business gave him the opportunity to help the Arabic community with their federal tax matters. The evidence introduced at trial established that Zahran filed 40 fraudulent federal income tax returns with the Internal Revenue Service (IRS). Zahran obtained social security numbers for false identities for himself, as well as other family members, and used the names and social security numbers of several of his clients’ minor children and the business names and Employer Identification Numbers of his clients’ businesses, without the knowledge or consent of his clients. Zahran also evaded over $245,000 in federal income tax for the years 1997 through 2004 by holding bank accounts and property under false names and fraudulently obtained social security numbers, by filing false income tax returns that grossly understated income, and by lying to the IRS special agents regarding his income and assets. The evidence further showed that Zahran filed a fraudulent application to obtain over $38,000 in medical care under Medi-Cal for the year 2002; fraudulently obtained $53,595 in Cash Aid and Food Stamps, and $40,711 in subsidized housing benefits.
New Jersey Tax Preparer Sentenced to Prison for Making Materially False Statements to the IRS
On March 30, 2011, in Trenton, N.J., Rommel Amante was sentenced to 20 months in prison followed by two years of supervised release and ordered him to pay $32,599 in restitution to the IRS. Amante previously plead guilty for making materially false statements to the IRS in connection with a 2007 Income Tax Return. According to court records, Amante admitted that he paid another individual $5,000 to create Montgomery Tax Services so that he could prepare and electronically file Federal income tax returns while hiding his identity from the IRS. Amante admitted that he presented false claims against the IRS, which included fabricated education tax credits for his clients for the tax year 2007. In all, the false tax returns Amante filed resulted in approximately $941,659 in fraudulent education tax credits.
Husband and Wife Tax Return Preparers Sentenced to Prison for Tax Fraud
On March 29, 2011, in Houston, Texas, Donald and Tonya Womack were sentenced for preparing false tax returns and ordered to pay restitution of nearly $162,000. According to court documents, Donald received 60 months in prison and three years of supervised release, while Tonya received 33 months in prison and three years of supervised release. As part of their releases both are prohibited from working as tax preparers. The Womacks were convicted in March 2010 for filing false Schedule A deductions and deductions for tuition, fees and education expenses for years 2003, 2004 and 2005, as well as amended tax returns.
Tax Preparer Serving Life Sentence Gets 37 Months for Filing False Tax Returns
On March 21, 2011, in Los Angeles, Calif., Yasith Chhun was sentenced to 37 months in prison on tax fraud charges. Chhun is currently serving a life sentence for his involvement in attempting to overthrow the Cambodian government. On November 13, 2008, Chhun pleaded guilty to charges that he conspired to defraud the United States and that he aided and assisted in the preparation of false tax returns. According to court documents, Chhun was the owner of CCC Professional Accounting Services in Long Beach, California, a tax preparation business. Chhun prepared federal income tax returns for members of the Cambodian community who were often on welfare or another form of government assistance. Chhun assisted in the preparation of federal income tax returns for clients that falsely stated the clients earned between $8,000 and $10,000 as income for sewing work - and requested an Earned Income Credit (EIC) of between $2,000 and $3,000 per return – when, in fact, the clients did not earn such income and were not entitled to the requested EIC. In total, the improperly claimed credit from the numerous fraudulent federal income tax returns was more than $400,000.
Memphis Resident Sentenced to Prison for First Time Home Buyers Credit Scheme
On March 17, 2011, in Memphis, Tenn., Lacrecia Ward, of Memphis, was sentenced to 18 months confinement (nine months in prison and nine months in a half-way house), three years of supervised release, and was ordered to pay $255,538 in restitution to the Internal Revenue Service (IRS). In addition, Ward was ordered to amend her 2008 federal tax return and to file a 2009 return claiming income from the scheme in which she participated. Ward pleaded guilty on December 22, 2010, to one count of conspiracy to file a false claim against the United States. According to an Information filed with the court, from January 1, 2009, until July 14, 2009, Ward and Kenneth Harris conspired with each other to defraud the United States by filing false tax returns with the IRS that falsely claimed First Time Home Buyers Tax Credits. Ward worked as a runner for Harris, helping to locate individuals to participate in the scheme. On December 15, 2010, Harris pleaded guilty to one count of conspiracy to file a false claim against the United States and is awaiting sentencing.
Operator of Tax Preparation Business Sentenced to 17 ½ Years in Prison in Fraudulent Tax Shelter Conspiracy
On March 17, 2011, in Greenbelt, Md., Irvin Hannis Catlett, Jr., of Crownsville, Maryland, was sentenced to 210 months in prison, followed by three years of supervised release, and was ordered to pay $3,810,244 in restitution for tax offenses in connection with a scheme to prepare individual income tax returns for clients which reported bogus tax losses from a purported car leasing company. Catlett was convicted on November 4, 2010. According to testimony at the trial, Catlett operated Tax Resolutions, Inc., located in Laurel, Maryland. He falsely held out Motors Holding Company, Inc., Motors Holding Company II through VI, Inc. and Rentown, Inc., (the tax shelter entities) to his clients as operating businesses involved in automobile leasing and sales. Catlett knew, however, that these entities were not engaged in automobile leasing and sales, or in any other legitimate, profit making business. From 1999 to 2009, Catlett worked with others to sell to clients purported “investments” in the tax shelter entities. These investments were payments to Catlett to purchase bogus tax losses purportedly generated by the tax shelter entities’ operations. Catlett, Walter Cullum and James Unterreiner prepared fraudulent tax returns for their clients that included the fictitious business losses, thereby reducing the amount of taxable income and total tax reported by the clients and resulting in the clients falsely claiming refunds from the IRS. Trial testimony further showed that Catlett paid Mark Hunt, an IRS revenue officer, for providing Catlett with IRS taxpayer information on Tax Resolutions’ clients and for allowing Catlett to introduce Hunt to clients and potential clients as Catlett’s connection at the IRS, to assure them their tax returns would not be subject to adverse IRS actions. As a result of the scheme, approximately 275 tax returns were filed with the IRS which reported $22,009,021 in bogus Schedule E losses, which resulted in a tax loss to the United States of $3,810,244. Maryland residents Walter Cullum, Jr., of Columbia; Mark E. Hunt, of Baltimore; and James Unterreiner II, of Bowie, pleaded guilty to participating in the tax evasion scheme and were each sentenced to three years probation. Tressa Nivens, of Frederick, Maryland, also pleaded guilty to her role in the scheme and was sentenced to two years probation.
Alabama Man Sentenced for Conspiring to Defraud the Government
On March 14, 2011, in Birmingham, Ala., Michael O. Dumas, of Birmingham, was sentenced to 21 months in prison, three years of supervised release, and was ordered to pay $45,489 in restitution to the Internal Revenue Service. Dumas pleaded guilty in June 2010 to conspiring with Kasanta Stewart, of Montgomery, to use stolen identities to generate tax refunds from the IRS. Stewart was sentenced in September 2010 to seven months in prison.
North Carolina Return Preparer Sentenced to Prison for Tax Fraud
On March 11, 2011, in Greensboro, N.C., Bobby Terrill Parks, of Salisbury, was sentenced to 12 months and one day in prison, followed by one year of supervised release with six months of home confinement, and was ordered to pay $140,215 in restitution to the Internal Revenue Service (IRS). Evidence presented in court documents established that Parks was employed by Rapid Tax, a tax preparation firm located in Salisbury, North Carolina from 2004 through 2007. Parks met with clients, obtained their tax information, then prepared and electronically filed the returns with the IRS. Parks prepared approximately 2,170 returns during the years of his employment. The IRS Fraud Detection Center analyzed some of the returns Parks prepared and found a pattern of suspicious deductions and credits that were statistically improbable. Due to the suspicious deductions and credits, IRS-Criminal Investigation special agents interviewed some of the taxpayers and confirmed that Parks had made false claims on returns for charitable contributions, education credits, job expenses and other items.
Alabama Women Sentenced to 46 Months in Prison for Tax Fraud and Identity Theft
On March 10, 2011, in Montgomery, Ala., Ora Mae Adamson, of Montgomery County, Ala., was sentenced to 46 months in prison and ordered to pay $621,738 in restitution. According to court documents, between March 2009 and September 2009, Adamson conspired with others to defraud the United States by filing 158 false federal income tax returns. As part of the scheme, Adamson and her co-conspirators fraudulently obtained the names and social security numbers of individuals. Adamson would then file false tax returns in these individuals’ names, without their authorization. The tax returns falsely claimed the first-time homebuyer’s credit and fuel tax credit. The refunds from the false returns were deposited into bank accounts controlled by Adamson and other co-conspirators. One of Adamson’s co-conspirators, Jeffery Ceaser, was sentenced to 36 months in prison on March 2, 2011.
Utah Man Sentenced for Preparing False Tax Returns
On March 3, 2011, in Salt Lake City, Utah, Gary Ward was sentenced to 12 months in prison to be followed by three years of supervised release. Ward pleaded guilty in September 2010 to one count of tax evasion in connection with efforts he took to evade income tax due to the United States on behalf of two individuals. As a part his plea agreement, Ward admitted that on April 15, 2007, he prepared a U.S. individual income tax return for two individuals which reported five fictitious transactions that reduced the clients’ taxable income by $2 million.
Alabama Man Sentenced to 36 Months in Prison for Tax Fraud and Identity Theft
On March 2, 2011, in Montgomery, Ala., Jeffery Leon Ceaser, of Montgomery County, Ala., was sentenced to 36 months in prison, to be followed by three years of supervised release, and was ordered to pay $621,738 in restitution to the United States. According to court documents, between March 2009 and September 2009, Ceaser conspired with others to defraud the United States by filing 158 false federal income tax returns. Ceaser fraudulently obtained names and social security numbers of individuals and provided that information to Ora Mae Adamson, who filed the false tax returns without authorization from the individuals. The tax returns falsely claimed the first-time home buyer credits and fuel tax credits. The refunds from the false tax returns were deposited into bank accounts controlled by Ceaser and other co-conspirators. Adamson has also pleaded guilty to conspiracy and identity theft charges and is awaiting sentencing.
South Carolina Tax Preparer Sentenced To 30 Months in Prison for Preparing False Returns
On March 1, 2011, in Greenville, S.C., Teresa Little Moss, a tax return preparer from McCormick, S.C., was sentenced to 30 months in prison. On October 14, 2010, Moss, formerly known as Teresa Waller Little, pleaded guilty to two counts of aiding and assisting in the preparation of false tax returns. According to court documents, Moss owned and operated The Little Tax Shop, a tax return preparation business with locations in McCormick and Abbeville, S.C. The business served clients from throughout the state. For tax years 2004 through 2007, she prepared, aided and assisted in the preparation of materially false tax returns for numerous clients. The charges to which Moss pleaded guilty relate to the 2005 and 2006 tax returns of a particular client.
Cincinnati Area Return Preparer Sentenced to 30 Months in Prison for Preparing False Tax Returns
On February 23, 2011, in Cincinnati, Ohio, Idrissa Bassoum was sentenced to 30 months in prison for aiding and assisting in the preparation of false client tax returns and for filing a false individual income return. According to court documents, Idrissa Bassoum began offering tax preparation services under the name Bassoum’s Consulting Service (BCS) in February 2003, operating out of his residence and catering primarily to immigrants. Through BCS, Bassoum prepared and filed hundreds of false tax returns for clients claiming fraudulent expenses and deductions relating to, among other things, moving expenses, all done to lower his clients’ tax liabilities and increase their refunds. In addition to preparing false client tax returns, Bassoum fraudulently avoided the payment of any income taxes due on his business activities when he failed to report any earnings from his tax preparation activities on his personal income tax returns. Bassoum admitted that he caused between $400,000 and $1 million in tax loss to the U.S. government. Bassoum’s tax preparation fees were typically subtracted from the refund amounts he obtained for his clients after arranging for Refund Anticipation Loans (RALs), a short-term consumer loan secured by the taxpayer’s expected tax refund. For each RAL approved for a client, Bassoum’s tax preparation fees were directly wired into his personal bank account. As part of his plea agreement, Bassoum admitted receiving at least $69,915 in unreported income during tax year 2004 and $80,771 in unreported income during tax year 2005. In addition to the prison term, Bassoum was ordered to serve one year of supervised release with special conditions that he not prepare any tax returns for others and to file amended personal tax returns for the years of prosecution and pay $44,887 in restitution, representing the tax loss caused by his personal income tax fraud, as well as a $300 special assessment.
Owner of Professional Tax Service Sentenced to Prison
On February 22, 2011, Newark, N.J., Zenobia Williams was sentenced to 21 months in prison, followed by one year supervised release and ordered to pay $205,506 in restitution after failing to report over $600,000 in gross receipts from her tax preparation business. Williams previously pleaded guilty to one count of subscribing to a false tax return for failing to report income from her business on her 2006 return. According to courts documents, Williams was in the business, under the name Sunrise Professional Tax Service, of preparing and filing individual income tax returns with the Internal Revenue Service. In tax years 2003 through 2006, Williams failed to disclose and report more than $600,000 in gross receipts that she received from her income tax return preparation service, on which she owed more than $200,000 in taxes. Williams was also ordered to file any outstanding tax returns and pay any taxes, penalties, and interest due.
Three Augusta Tax Preparers Sentenced to Prison for Filing False Tax Returns
On February 22, 2011, in Augusta, Ga., Gary Hugh Hammond and Linda Perkins Ziegler were sentenced to prison for their roles in a conspiracy to defraud the federal government by preparing and filing false tax returns. Hammond was sentenced to 19 months in prison and Zeigler to 18 months in prison. A third co-conspirator, Kisha Kuwanda McCladdie, was sentenced on January 6, 2011, to 20 months in prison. Evidence presented during the sentencing hearings showed that McCladdie, Ziegler, and Hammond prepared fraudulent tax returns from 2006 through 2008 at various tax preparation businesses, including The Tax Professional, which had offices in Thomson and Augusta, Georgia. In addition to their prison sentences, these former tax preparers were ordered to pay $59,800 in restitution to the Internal Revenue Service and to serve three years of supervised release.
Plano, Texas, Tax Preparer Sentenced to 30 Months in Federal Prison
On February 18, 2011, in Dallas, Texas, Luciano Martinez was sentenced to 30 months in prison for preparing false tax returns. According to court documents, Martinez worked as a tax preparer for “Twin Tax,” a tax preparation business. Martinez personally met with clients and prepared their tax returns based on information that he received in these face-to-face meetings. Martinez would add additional deductions, namely false and inflated itemized Schedule A deductions and false Schedule C business losses, as well as tax credits, such as false Hope Education Credits, to Twin Tax clients’ tax returns without their knowledge. According to the factual resume, a reasonable estimate of the tax loss attributable directly to Martinez’s conduct at Twin Tax is between $400,000 and $1 million. The factual resume also states that Martinez willfully failed to file accurate personal income tax returns. Martinez failed to report approximately $104,000 in wages from Twin Tax on his 2003 return and nearly $400,000 on his personal tax return for 2004.
Illinois Tax Preparer Sentenced
On February 10, 2011, in Chicago, Ill., Joann Joyner-Williams was sentenced to 41 months in prison, two years of supervised release, ordered to pay nearly $2,700 in restitution, and $2,200 in special assessment fees. According to court documents, in September 2010 Joyner was found guilty of all 22 counts of an indictment charging her with preparing false returns and making false statements to the IRS. Joyner-Williams was a self employed tax preparer who claimed multiple false deductions and credits for taxpayers who did not tell Joyner-Williams they qualified for such deductions and credits.
Ohio Tax Return Preparer Sentenced to 24 Months in Prison for Preparing False Returns
On February 10, 2011, in Cincinnati, Ohio, Thierno M. Diallo was sentenced to 24 months in prison for aiding and assisting in the preparation of false tax returns. In addition to the prison term, Diallo was ordered to serve one year of supervised release and was barred from engaging in the business of tax return preparation. On August 6, 2010, a jury found Diallo guilty of seven counts of aiding and assisting in the preparation of false tax returns. According to court documents and testimony presented during the trial, for the 2005-2007 tax years, Diallo prepared materially false U.S. Individual Income Tax Returns (Forms 1040) for customers of his return preparation business, Madina Consulting Services. These returns caused the IRS to issue refunds that his customers were not entitled to receive. Witnesses testified that Diallo, a U.S. citizen originally from Guinea, used his knowledge of West African culture and language to recruit customers from other West African nations who live in the Cincinnati area. These witnesses testified that Diallo included false items on their returns without their knowledge. The intended tax loss to the government associated with this scheme was $95,370.
Atlanta Area Tax Return Preparers Sentenced To Federal Prison for U.S. Virgin Islands Tax Fraud Conspiracy
On February 8, 2011, Atlanta, Ga., Vernon A. Roberts, of Conyers, Georgia; Gregory A. Shepherd, of Stone Mountain, Georgia; and Guillermina Carmona, of Kissimmee, Florida (formerly of Fredericksted, Saint Croix, U.S. Virgin Islands) were sentenced to prison on charges of conspiracy to prepare and electronically file (“e-file”) hundreds of false tax returns with the Internal Revenue Service. Roberts was sentenced to 78 months in prison, to be followed by three years of supervised release, and ordered to pay $443,864 in restitution. On September 24, 2010, Roberts was convicted on one count of Conspiracy and eight counts of Aiding or Assisting the Preparation of False Tax Returns. Shepherd was sentenced to nine months in prison, to be followed by three years of supervised release, and ordered to pay $163,161 in restitution. Shepherd pleaded guilty to one count of Conspiracy on September 13, 2010, and testified at Roberts’ trial. Carmona was sentenced to 18 months in prison, to be followed by three years of supervised release, and ordered to pay $512,070 in restitution. Carmona pleaded guilty to one count of Conspiracy on May 26, 2010, and also testified at Roberts’ trial. According information presented at trial, between 2003 and 2007, Roberts was the Chief Executive Officer of “PC Tax Service” (also known as Liberty Tax Service), a tax return preparation business headquartered at 6844 Main Street, Lithonia. In late 2003, Roberts hired Carmona to recruit clients for PC Tax Service in Saint Croix, U.S. Virgin Islands, where Carmona lived. In early 2004, Roberts hired Shepherd to be the Office Manager of PC Tax Service. Beginning with the 2004 tax season, Carmona provided U.S. Virgin Islands client information to Roberts and Shepherd to prepare Form 1040 U.S. income tax returns. Roberts and Carmona made up false Georgia addresses, false income amounts, and other false information for the returns. Then, with Shepherd’s assistance, Roberts electronically prepared the false returns and Roberts e-filed them with the IRS. The fraudulent information was designed, in part, to make it appear that the clients were eligible for the Earned Income Tax Credit. After Roberts e-filed the fraudulent returns, the co-conspirators used a bank refund anticipation loan process to expedite the payment of the refunds to the clients within two weeks after filing the returns. This process also permitted Roberts to control the printing and distribution of refund checks, which were as much as $6,000 per return, and to deduct preparer fees from the refunds up front. Roberts deducted preparation fees for PC Tax Service of as much as $950 per return, part of which he shared with Carmona, Shepherd, and others in the form of commissions and salaries. Roberts and others, acting at his direction, then mailed the refund checks to Carmona in Saint Croix, where she distributed them to the clients. At some point during the 2007 tax season, Roberts stopped preparing the fraudulent U.S. Virgin Islands returns, but Shepherd and Carmona continued the scheme that season using a company that Shepherd established named GLM Tax service, also based in Lithonia, Georgia. During 2007, Shepherd e-filed dozens of additional false returns seeking nearly $100,000 in fraudulent refunds. In total, the conspiracy involved more than 200 tax returns claiming $586,689 in fraudulent refunds from the United States Treasury between 2004 and 2007. U.S. Virgin Islands taxpayers are not eligible for the Earned Income Tax Credit in returns filed with the IRS in the U.S. unless they lived in the 50 states or the District of Columbia for more than six months of the tax year.
California Return Preparer Sentenced to Serve 5 ½ Years in Federal Prison
On February 7, 2011, in Riverside, Calif., Robert Dean Larsen, of Riverside, was sentenced to 66 months in federal prison, three years of supervised release, and ordered to pay restitution of $204,099 to the IRS. On August 26, 2010, Larsen pleaded guilty to conspiring to defraud the IRS and two counts of aiding and abetting in the preparation of a false tax return. According to his plea agreement, Larsen operated Larsen’s Tax Pros at several locations in San Bernadino County from 2002 through 2004. In 2003, Larsen hired Christopher Daniel Laza to assist him in preparing tax returns. In 2004, Larsen and Laza began to operate their tax preparation business through a partnership, Laza’s Tax Service, which was located in Apple Valley. As a part of their scheme to defraud the IRS, Larsen admitted that he and Laza prepared income tax returns for clients that contained one or more false statements. When a client asked either Larsen or Laza about the falsified items listed on their tax returns, the client was sometimes told that Larsen possessed specialized knowledge about tax preparation or that receipts could be obtained to justify the expense in question. From 2002 through 2006, tax return preparers at Larsen's businesses filed at least 1,162 tax returns with the Internal Revenue Service that were false with a tax loss of more than $3.6 million. Larsen’s co-defendant, Christopher Laza, is scheduled to be sentenced in May.
Memphis Return Preparer Sentenced
On February 1, 2011, in Memphis, Tenn., Cassandra Jordan, of Memphis, was sentenced to 22 months in prison, followed by one year of supervised release, and was ordered to pay $75,000 in restitution to the Internal Revenue Service. Jordan, a Memphis return preparer, was indicted on December 16, 2009, charged with 12 counts of aiding and assisting in the preparation of false tax returns. According to the indictment, from January 31, 2006, until February 10, 2007, Jordan prepared tax returns for individuals that claimed tax refunds they were not entitled to receive. The returns were filed for calendar years 2005 and 2006 and the refunds ranged from $3,716 to $6,620. The fraudulent refunds claimed in the scheme totaled $62,374.
Philadelphia Return Preparer Sentenced to 170 Months in Prison
On January 26, 2011, in Philadelphia, Pa., Lawrence Murray was sentenced to 170 months in prison, followed by five years of supervised release and ordered to pay $3,331,825 in restitution following his conviction on conspiracy, assisting in the filing of false tax returns and other related offenses. Murray operated a fraudulent tax preparation and financial services business in which he prepared and directed others to prepare hundreds of false and fraudulent returns for his customers, including both individuals and businesses, for which he was paid millions of dollars. Murray used a variety of methods to commit tax fraud, including setting up shell corporations that incurred fictitious management fees or "contracted services", understating taxpayers' income and deducting personal expenses by falsely calling them business expenses. For his services, clients were charged a substantial percentage, usually between 20 and 35 percent, of the money they would save in taxes if they followed the scheme.
Leaders of $28 Million Tax Fraud Scheme Plead Guilty in Manhattan Federal Court
On January 24, 2011, in New York, N.Y., Lester Morrison, one of the leaders of a tax fraud scheme that netted more than $28 million in refunds by filing thousands of fraudulent tax returns, was sentenced to 72 months in prison, followed by three years supervised release and ordered to pay $17,340,000 in restitution. On August 13, 2010, Morrison pleaded guilty to one count of conspiracy to defraud the IRS, and one count of obstructing the administration of internal revenue laws. According to the Superseding Indictment and statements made during the plea proceedings, Morrison, together with other defendants, filed more than 7,500 returns, most of them fraudulent, through a tax preparation business with locations in the Bronx and New Jersey. Morrison, along with others, employed a variety of deceptive practices such as using stolen identities of deceased children to falsely claim them as dependents on clients' returns; claiming "business losses" from fictitious businesses; claiming as deductions thousands of dollars in non-existent charitable contributions and miscellaneous job expenses; falsely claiming credits for education expenses; and falsely claiming credits for child-care expenses. Each of the defendants earned inflated commissions and fees related to the fraudulent refunds they generated.
South Carolina Woman Sentenced To Prison for Tax Fraud
On January 20, 2011, in Charleston, S.C., Scennie Murdaugh, of Hollywood, South Carolina, was sentenced to 12 months in prison, 12 months home detention with electronic monitoring, and one year of supervised release. Evidence presented in this case established that Murdaugh owned and operated Murdaugh’s Tax Service, a tax preparation business in Hollywood, S.C. Murdaugh caught the attention of the Internal Revenue Service after an IRS fraud detection center identified a pattern of suspicious deductions on the tax returns that she prepared. Due to these suspicious deductions, an undercover operation was initiated, and an undercover agent went to Murdaugh’s business in April 2006. The undercover agent provided Murdaugh information that should have resulted in a tax due of $762. Murdaugh prepared the undercover agent’s tax return and claimed more than $10,000 in false charitable deductions and moving expenses. Based on this information, a search warrant was executed at Murdaugh’s business in May 2006, and her client files were seized. After a thorough investigation, the IRS identified 254 false tax returns prepared by Murdaugh in 2004-2005 that caused a tax loss of more than $600,000 to the U.S. Treasury.
Mississippi Tax Preparer Sentenced for Preparing False Tax Returns
On January 5, 2011, in Jackson, Miss., Patricia Ann Sullivan, aka Patricia Hallmon Sullivan and aka Patricia Odom, was sentenced to 36 months in prison to be followed by one year of supervised release. Sullivan was convicted in September 2010 of eight counts of preparing false tax returns. According to evidence presented at trial, Sullivan had been preparing tax returns for over twenty years, including work at a number of different tax preparation businesses in the Jackson, Mississippi, area. The taxpayers whose returns Sullivan falsely prepared testified that they never told her to claim large itemized deductions and did not give her any documents to support the large amounts claimed for itemized deductions. In addition, Sullivan had included fraudulent business expenses for two taxpayers who did not even own a business. She also fraudulently listed “foster children” on various taxpayers’ returns in order for those taxpayers to claim dependents and the Earned Income Credit, when in fact these taxpayers did not have foster children. Sullivan also attempted to obstruct justice during the audit of one of her clients by directing the creation and submission of false receipts to justify false deductions and expenses which she had claimed on her client’s tax returns.
Chicago Tax Preparer Receives Large Sentence
On December 15, 2010, in Chicago, Ill., LaShawn Littrice was sentenced to 42 months in prison and one year supervised release for falsifying tax returns. According to court documents, Littrice was the sole owner and president of Diamond Accounting and Financial Services. From 2002 thru 2005, in her capacity as a return preparer, Littrice would increase her clients’ refunds by fraudulently overstating or misrepresenting their filing status, tax credits, expenses and deductions on Form 1040, Schedule A, Schedule C and Schedule E resulting in a tax loss to the U.S. government of more than $145,000.
Maryland Tax Preparer Sentenced for Filing False Tax Returns
On December 21, 2010, in Baltimore, Md., Arnold Wood, of Edgewood, Maryland, was sentenced to 24 months in prison, followed by three years of supervised release, one year of which is to be served in home detention with electronic monitoring, and ordered to pay $45,000 in restitution. According to his plea agreement, Wood operated a tax return business known as Arnold’s Tax Service (ATS) from his home, which was initially located in Baltimore and later in Edgewood. From 2006 to 2009, Wood routinely prepared federal individual tax returns for his clients in which he fabricated or inflated deductions and credits to increase the refund due to his clients or decrease their tax liability. Wood advertised ATS with flyers and business cards promising that his services would enable his clients to “keep your money where it belongs,” or to “keep more for yourself!!!” As a result of this advertising and the substantial refunds that were falsely generated, the number of tax returns Wood prepared for his clients increased from approximately 240 for the tax year 2005, to over 500 in the tax years 2007 and 2008. According to the statement of facts, almost all of the tax returns filed by Wood resulted in refunds. The tax loss caused by Wood’s preparation of client tax returns is between $1 million and $2.5 million. In the same way, Wood prepared his personal tax returns for tax years 2005 through 2008, fabricating or inflating deductions and credits, substantially overstating the amounts of charitable contributions he made and claiming substantial losses from operating a farm that he neither owned, nor operated.
Tax Preparer Gets 30 Months’ Prison for Tax Fraud
On December 20, 2010, in Cedar Rapids, Iowa, Latanya Bailey was sentenced to 30 months in prison, one year of supervised release and ordered to pay $1,921 for the costs of her prosecution. According to court documents Bailey worked as a tax preparer for a national tax preparation chain and filed false tax returns for herself and others in Waterloo. At the guilty plea on September 3, 2010, Bailey admitted she knowingly provided false information on her own tax return in 2010 and helped another person provide false information on their tax return. She also admitted she helped many more people file false tax returns when she was working as a tax preparer. At the sentencing hearing, the Court found the amount of loss caused by Bailey’s fraud was over $80,000.
Mississippi Tax Preparer Sentenced for Preparing False Tax Returns
On December 7, 2010, in Gulfport, Miss, Carolyn T. Lilly, of Carriere, Mississippi, was sentenced to 36 months in prison, followed by one year of supervised release, and ordered to pay $250,000 in restitution. According to court documents, Lilly prepared a return that was falsely claiming $323,449 in casualty loss deductions taxpayers who were not entitled to that deduction. Lilly’s entire fraudulent tax preparation scheme extended over a number of years, encompassed thousands of taxpayers - primarily in Louisiana and Mississippi - and represented a total intended loss to the federal government of between $20 million and $50 million.
Mississippi Woman Sentenced on Tax Charges
On December 3, 2010, in Oxford, Miss., Sheanika Faulkner, of Lamar, was sentenced to 12 months and a day in prison, followed by three years of supervised release, and ordered to pay $91,031 in restitution to the Internal Revenue Service (IRS). As an additional condition of her supervised release, Faulkner is prohibited from preparing any tax returns or advising or assisting anyone else in any tax matters or tax return preparation. Faulkner pleaded guilty on May 18, 2010, to one count of an indictment charging her with preparing and transmitting fraudulent and material information to the IRS using a fraudulent Form W-2.
North Carolina Tax Preparer Sentenced for Filing False Income Tax Returns
On December 2, 2010, in Greensboro, N.C., Beverly Dianne Vazquez, an income tax preparer from Sanford, North Carolina, was sentenced to 37 months in prison, followed by one year of supervised release, and ordered to pay $42,232 in restitution to the Internal Revenue Service (IRS). Vazquez pleaded guilty in July 2010 to 12 counts of preparing and filing false U.S. Individual Income Tax Returns for the years 2004 through 2006 on behalf of clients of the tax preparation service where she worked. According to court documents, Vazquez prepared and filed over 600 federal tax returns for clients. Most of those false returns claimed non-existent or grossly inflated education credits and charitable contributions, as well as inflated unreimbursed business expenses for uniforms, cell phones, mileage, meals and entertainment expenses.
Florida Man Sentenced for Making Hoax Threats and Tax Fraud
On November 30, 2010, in Orlando, Fla., Nicholas Barbati, of Daytona Beach, was sentenced to 48 months in prison and ordered to pay $117,065 to the United States Coast Guard (USCG) and $96,220 to the Internal Revenue Service (IRS). Barbati was charged in three separate cases. He pleaded guilty in each case. The first two cases involved conveying hoax information and making hoax distress calls. According to court documents, a search and forensic evaluation of Barbati’s computers revealed at least 584 harassing and hoax calls that were made by Barbati between May and June 2009. One hoax call threatened danger to the Space Shuttle Endeavor; another hoax call was a false distress call from a 'fictitious' yacht sinking in the New York harbor. In both these cases, the USCG were sent to search and secure the waters. In the third case, Barbati pleaded guilty in October 2010 to filing false claims with the IRS. According to court documents, Barbati filed tax returns for prostitutes employed by the internet escort service he was operating out of his residence. Barbati filed 20 false claims totaling $106,707 for deductions that the persons were not entitled to take.
Woman Sentenced To Prison for Involvement in Tax Fraud Scheme
On November 23, 2010, in Denver, Colo., Manikhone Saignaphone was sentenced to 26 months in prison, three years of supervised release, and ordered to pay restitution of $51,481 to the Colorado Department of Revenue and $172,806 to the Internal Revenue Service for her participation in a scheme to submit false tax returns to the Internal Revenue Service (IRS) and the Colorado Department of Revenue (CDR). According to her plea agreement, Saignaphone worked for Olympia Financial and Tax Services, Inc. (“Olympia”), a Colorado corporation owned and operated by Jeffrey Harris. Olympia’s primary business was to seek tax refunds for customers by preparing and filing amended individual tax returns with the IRS and CDR on behalf of such customers. Saignaphone worked as a salesperson for Olympia. Saignaphone, along with other salespersons, falsely claimed that Olympia was able to amend customers' tax returns based on its ability to identify and legally claim deductions missed by other tax preparers; that the tax professional used by Olympia were former IRS employees and/or uniquely qualified to make such amendments; and that Olympia was a legitimate business that only used legal methods and truthful information when amending customers' tax returns. After obtaining a customer's income tax returns for the previous three years and asking basic background information, Saignaphone would turn the information over to a preparer who would falsify information on an amended return to generate a refund from the IRS and CDR. After Olympia ceased operations in March 2006, Saignaphone and two other former Olympia employees continued in the tax preparation business operating under various business names, including MLM Financial, LJ Financial, GP Financial & Tax Services and Second Option Tax Services. From January 24, 2006, through September 4, 2006, Saignaphone and others made the same false representations as with Olympia and prepared fraudulent amended tax returns that were submitted to the IRS and CDR. Co-defendants also sentenced in this scheme include: Manivone Saignaphone, sentenced on September 15, 2010, to eight months in prison, three years of supervised release, and to pay $52,868 in restitution; Jeffrey Harris, sentenced on June 30, 2010, to 108 months in prison, three years of supervised release, and to pay $351,920 in restitution; LouAnn Savala, sentenced on April 30, 2010, to 30 months in prison, three years supervised release, and to pay $224,287 in restitution; Annalisa Whittaker, sentenced on May 3, 2010, to five years probation and to pay $52,868 in restitution.
North Carolina Tax Preparer Sentenced for Filing False Tax Returns
On November 12, 2010, in Greensboro, N.C., Anna Alexander Gainey, a tax preparer from Madison, was sentenced to 27 months in prison, to be followed by one year of home detention, to run concurrent with one year of supervised release. Gainey was also ordered to pay $79,992 in restitution. According to court documents, Gainey who is the owner of J&A Tax Consultants, pleaded guilty to one count of preparing and presenting false tax returns to the Internal Revenue Service (IRS) and one count of filing a false personal income tax return. Specifically, Gainey prepared a 2005 income tax return for one client falsely claiming a dependent exemption for a child. She also filed a false personal income tax return for 2007 omitting approximately $115,000 in gross receipts earned from her income tax preparation business.
Former Social Security Administration Employee Sentenced on Tax and Identity Theft Charges
On November 10, 2010, in Little Rock, Ark., Sharon Meyers-Washington was sentenced to 42 months in prison, followed by three years of supervised release, and ordered to pay $85,807 in restitution to the Internal Revenue Service (IRS). Meyers-Washington, a former Case Intake Specialist with the Social Security Administration, Office of Disability, Adjudication and Review, pleaded guilty in May 2010 to aggravated identity theft, aiding and assisting in the preparation of a false tax return, and misuse of a social security number. At her plea hearing, Meyers-Washington admitted that she worked as a tax return preparer for Jackson Hewitt for tax years 2005 and 2006 and for JBL Rapid Refunds in 2007. While employed, Meyers-Washington prepared federal tax returns for others that contained fraudulent deductions that they were not entitled to claim. These false items included: fraudulent itemized deductions; false filing status; false dependents; fraudulent earned income credits; fraudulent child tax credits; false child care expenses; and false education credits. Additionally, Meyers-Washington admitted that from January 2007 through or about June 2008, she retrieved identification from the Social Security Administration which exceeded her authority and fraudulently used and disclosed this information as part of her tax fraud scheme.
California Casino Worker Sentenced for Tax Fraud
On November 5, 2010, in San Francisco, Calif., Editha Viray Bonifacio was sentenced to 12 months and one day in prison, followed by one year of supervised release and ordered to pay restitution in the amount of $19,254 for filing false tax returns. Bonifacio pleaded guilty on July 8, 2010, to four counts of filing false tax returns on behalf of her clients. According to court documents and statements made in court, Bonifacio admitted that she prepared tax returns for clients where she included information that she knew to be false. The false information affected their tax liability. Bonifacio was charged in a superseding indictment on June 17, 2010, with 54 counts of filing false tax returns on behalf of her clients and two counts of filing false individual income tax returns for herself. According to the indictment, Bonifacio willfully aided and assisted in the preparation of U.S. Individual Income Tax Returns, Forms 1040 and 1040A, for the tax years 2004 through 2008. The false items included the number of exemptions claimed, child tax credit, child and dependent care expense, earned income credit, IRA deduction, student loan interest deduction and education credits. Bonifacio was also charged with willfully and knowingly making and subscribing to individual income tax returns for 2005 and 2007, which failed to disclose that she was engaged in the operation of a business activity from which she derived gross receipts and received income.
Michigan Accountant Sent to Prison On Tax and Wire Fraud Charges
On November 4, 2010, in Detroit, Mich., Robert DenBoer was sentenced to 51 months in prison and ordered to pay more than $1.1 million in restitution for filing a false tax return and wire fraud. According to court documents, DenBoer was president of DenBoer Accountants, Inc., which provided general accounting and tax preparation services. Starting in 2000, DenBoer devised a scheme to defraud some of his tax clients. As part of this scheme, he would prepare two returns, with only one being accurate. The second return would intentionally understate the refund amount. The second return was given to his client, along with a Refund Anticipation Loan based on the incorrect, smaller refund amount. When the true, higher refund was received, DenBoer stole the difference by moving the refund to a bank account controlled by his company. Between 2003 and 2006, he misappropriated over $187,000 in refunds owed to 70 clients. During an IRS investigation in 2004, DenBoer prepared and gave his attorney copies of checks that he claimed to have sent to all of his defrauded clients, along with letters admitting the fraud. DenBoer’s attorney provided these documents to the IRS. The IRS later discovered that most of these letters and checks had never been mailed to the clients, and that DenBoer had continued to execute the same scheme during 2004 through 2006. DenBoer also operated Payroll Specialists, L.L.C., a payroll processing business. During 2006 and 2007, DenBoer prepared and filed with the IRS Quarterly Withholding Forms 941 for various clients. These forms were false in that some of the federal tax deposits listed on them had not been deposited with the IRS. Instead, DenBoer stole nearly $950,000, defrauding at least 39 of his business clients.
Florida Tax Return Preparer Sentenced in Fuel Tax Credit Scheme
On November 2, 2010, in Miami, Fla., Tashanna McFarland, of Miami Gardens, was sentenced to 18 months in prison, followed by one year of supervised release, and ordered to pay $92,373 in restitution to the Internal Revenue Service (IRS). According to court documents, McFarland operated a tax preparation business at the Liberty Flea Market in Miami during the years 2005 through 2007. McFarland prepared false tax returns that claimed a fuel tax credit on her clients' returns. IRS allows taxpayers to receive credits for the taxes paid for the purchase of gasoline if that gasoline is for an off-highway purpose, such as the operation of farm equipment. After interviewing many of McFarland’s clients, the IRS found that, except for one taxpayer who used a small amount of gasoline for his car wash business, none of McFarland’s clients who claimed fuel tax credits had purchased gasoline for off-highway use. In fact, some clients did not own or drive a car. On her own 2004 individual income tax return, McFarland claimed that she purchased an amount of gasoline that would have cost more to purchase than the gross income that she reported for that year. In addition, McFarland failed to file a federal income tax return in 2006 when she had gross income of more than $179,000.
Tennessee Tax Preparer Sentenced for Preparing False Returns
On October 28, 2010, in Chattanooga, Tenn., Reginald Hadley was sentenced to 24 months in prison, followed by one year of supervised release and ordered to pay $308,952 in restitution to the Internal Revenue Service (IRS). Hadley pleaded guilty on May 13, 2010, to one count of preparing and filing a false income tax return for another. According to a factual basis, Hadley was employed as a tax return preparer for Rapid Refunds in Chattanooga from 2004 into 2008, and he prepared a number of tax returns knowing that they contained materially false statements. Hadley admitted to preparing a false 2007 tax return for a married couple that claimed a $9,719 refund they were not entitled to receive. He also admitted to preparing a fraudulent tax return that contained two Schedule C businesses with false business expenses, while he knew that no businesses existed. These false items on their return caused the taxpayers to receive a refund instead of owing tax.
Florida Return Preparer Sentenced for Preparing False Tax Returns
On October 28, 2010, in Miami, Fla., Darryl B. Henley, of Goulds, was sentenced to 15 months in prison to be followed by three years of supervised release. Henley pleaded guilty in August 2010, to 22 counts of aiding and assisting in the preparation of false tax returns. According to the court documents, Henley held himself as a tax preparer. During tax years 2005 through 2007, Henley assisted in the preparation and electronic filing of more than 22 false U.S. Individual Income Tax Returns for numerous individuals. The tax returns contained, among other misrepresentations, false Schedule C deductions.
Two Sentenced in Mortgage Fraud and Tax Fraud Schemes
On October 27, 2010, in Madison, Wis., Cole Solis was sentenced to 12 months and a day in prison and Marty Mendez was sentenced to 18 months in prison for their roles in mortgage and tax fraud schemes. According to court documents, Solis, Mendez and three others, Gail Mendez, Amy Strait and David Knickmeier all pleaded guilty to various charges related to the schemes. Gail Mendez and Strait are awaiting sentencing and Knickmeier was sentenced September 23 to 12 months and a day in prison. During 2006 and 2007 Gail Mendez worked as a tax preparer doing business as Mendez Connection. Amy Strait was employed as a mortgage loan officer at Park Bank. Carlos Solis did business as a real estate agent. Park Bank had a mortgage loan program that allowed borrowers to apply for a loan using an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number. From February 2006 to October 2007, Gail Mendez, Strait, and Solis engaged in a scheme to defraud Park Bank by fabricating false tax returns to obtain approximately 50 ITIN loans totaling more than $8 million. When Park Bank discovered the scheme, Gail Mendez, Carlos Solis, and Amy Strait, conspired to obstruct the investigation. After Gail Mendez learned from Solis and Strait which loans were under investigation, she directed her employees to destroy evidence of the scheme. The scheme resulted in losses to Park Bank exceeding $400,000. Marty Mendez was employed as a tax preparer at Mendez Connection, a tax preparation business owned by his mother – Gail Mendez. On various dates from 2005 to 2008, Gail Mendez and her employees, including Marty Mendez and David Knickmeier, willfully aided and assisted taxpayers in filing U.S. Individual Income Tax Returns that falsely and fraudulently claimed dependents and child tax credits to which they were not entitled. At sentencing the Court found that the tax loss was in excess of $900,000. On December 7, 2007, Gail Mendez learned that the IRS was investigating the claiming of child tax credits on returns prepared at Mendez Connection. At her direction, employees of Mendez Connection removed from the Mendez Connection files and destroyed any notes referring to the fraudulent child tax credits.
New York Tax Preparer Sentenced to 27 Months in Prison
On October 19, 2010, in Brooklyn, N.Y., Kertena Seabrook, a tax return preparer, was sentenced to 27 months in prison and ordered to pay $171,152 in restitution. Seabrook, who operated Future Star Digatech, a tax preparation business, was convicted by a jury in January 2010 on 20 counts of aiding and assisting in the preparation of false tax returns. According to court documents, Seabrook prepared individual tax returns claiming false itemized deductions, including false entries for charitable gifts, job expenses, and medical and dental expenses.
Texas Tax Preparer Sent to Prison for Federal Income Tax Violations
On October 14, 2010, in Beaumont, Texas, Marscha Griffin was sentenced to 28 months in prison and ordered to pay restitution of more than $317,000 for filing a false tax return. According to court documents, Griffin operated a tax preparation service, Griffin & Associates, where she prepared numerous personal income tax returns for clients. For tax years 2004 and 2005, she deliberately overstated numerous expenses and deductions causing the taxpayers to receive a larger refund or pay less tax than they actually owed. According to a factual basis presented in open court and additional correspondence audits by the IRS relating to over 1000 clients of Griffin's tax preparation business, for tax year 2004 - 2005 Griffin caused the disallowance of expenses and the clients' refunds and instead resulted in an additional tax liability owing from those clients of approximately $2,250,000. Griffin pleaded guilty on May 10, 2010, and the statements in open court supporting the guilty pleas showed that Griffin under reported her own personal income from her tax preparation business in 2003, 2004, and 2005 which resulted in a further total tax liability of $317,000.
Dallas Tax Preparer Sentenced in Tax Fraud Scheme
On October 6, 2010, in Plano Texas, Elton Gutura was sentenced to 51 months in prison and ordered to pay restitution of nearly $778,000 for filing fraudulent tax returns. According to court documents, between November of 2006 and January of 2007, Gutura, and other individuals, through a company called Tax Expedia, falsified tax return information in approximately 318 tax returns in order to receive tax refund payments or increased tax refund payments in excess of $805,000.