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Examples of Abusive Return Preparer Investigations - Fiscal Year 2012

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.

Owner of Louisiana Tax Preparation Service Sentenced on Tax and Other Charges
On September 26, 2012, in Baton Rouge, La., Ronald Wilkerson, of Baton Rouge, was sentenced to 92 months in prison, two years of supervised release, a forfeiture of $470,000, a judgment of $485,939, and ordered to pay $500,959 in restitution to HSBC Bank. Wilkerson was convicted by a jury on June 1, 2012 of endeavoring to impede the Internal Revenue Service, assisting the preparation of false tax returns, bank fraud, engaging in monetary transactions with criminally derived funds, and money laundering. According to court documents, Wilkerson prepared 635 false tax returns claiming approximately $1,415,388 in false telephone excise tax refunds. Many of the false tax returns were submitted to HSBC Bank for the purpose of obtaining refund anticipation loans for taxpayers. The bank approved approximately 250 loans and ultimately lost about $500,959 as a result of the false tax returns.  Wilkerson also collected approximately $485,939 in tax preparation fees.

Dallas Tax Preparer Sentenced in Tax Fraud Scheme
On September 26, 2012, in Plano Texas, Douglas Zinyama was sentenced to 30 months in prison, three years of supervised release and ordered to pay restitution of nearly $777,952 for filing fraudulent tax returns. According to court documents, between November of 2006 and January of 2007, Zinyama and other individuals, through a company called Tax Expedia, falsified tax return information on approximately 318 tax returns which resulted in excess of $805,181 in tax refund.

California Man Sentenced for Preparing and Filing False Returns
On September 24, 2012, in Los Angeles, Calif., Stephen Andre Mitchell was sentenced to 24 months in prison, three years of supervised release, and ordered to pay restitution of $71,091 to the IRS. Mitchell pleaded guilty in June 2012 to a one-count information charging him with preparing and filing with the IRS a false 2007 income tax return for an individual reporting false wages and tax withholdings from an employer for which the individual never worked. According to court documents, Mitchell admitted that for the 2005, 2006 and 2007 tax years, he knowingly filed at least 74 fraudulent income tax returns, falsely claiming refunds of at least $200,000. The income tax returns fraudulently claimed refunds based on false Forms W-2 which either inflated or completely fabricated the individual’s salary and withholdings.  Additionally, many of the false returns prepared by Mitchell also claimed false dependants, false Earned Income Tax Credits, and false Child Tax Credits. Per his plea agreement, Mitchell agreed to the entry of a binding civil injunction, barring him for life from aiding in the preparation of federal income tax returns for anyone other than himself and his legal spouse, and barring him from representing other individuals before the IRS.

California Tax Preparer Sentenced for Preparing False Tax Returns and Stealing Tax Refunds and Stimulus Checks
On September 24, 2012, in Riverside, Calif., Javier Francisco Vega, owner of One Stop Tax Service of Redlands, was sentenced to 18 months in prison, one year of supervised release and ordered to pay $114,691 to the IRS and $19,524 to various taxpayer clients.  On June 4, 2012, Vega pleaded guilty to one count of preparing a false tax return. According to the plea agreement and court documents, from approximately 2005 to 2009, he knowingly prepared at least 45 fraudulent federal tax returns for at least 20 clients claiming false deductions, expenses or credits for which the taxpayer was either not entitled to claim or only entitled to claim substantially less than the reported amount. In most cases, Vega arranged for the client’s inflated refunds to be sent to his office or deposited into bank accounts for a Refund Transfer transaction without the clients’ knowledge. Vega also sometimes forged the clients’ signature on the refund checks and informed his clients that they were entitled to no refund or to a refund lower than the amount he had obtained. Vega also provided some of the clients with artificial tax returns. In addition, Vega stole five refund checks and two stimulus checks intended for his clients, for whom he had filed accurate tax return information.

Three Alabama Defendants Sentenced in a Multi-Million Dollar Stolen Identity Refund Fraud Scheme
On September 19, 2012, in Montgomery, Ala., Chiquanta Davis was sentenced to 66 months in prison, Terrence Davis was sentenced to 18 months in prison, and Laurekshia Blakely was sentenced to 6 months in prison.  All three were also sentenced to three years of supervised release. In May 2012, the three defendants had pleaded guilty to various charges in a superseding indictment: Chiquanta Davis pleaded guilty to conspiracy to file false claims, theft of public funds, and aggravated identity theft. Terrence Davis and Blakely each pleaded guilty to one count of theft of public funds. According to court documents, Chiquanta Davis operated a sham tax business in 2010 out of her home called It’s Tax Time. Davis opened a bank account in the name of It’s Tax Time and directed a total of $1,458,600 in fraudulent refunds to that bank account. Davis used the funds, among other things, to purchase a Cadillac Escalade. As part of her plea agreement, Davis agreed to forfeit the Cadillac Escalade. Court records also establish that in 2011, Chiquanta Davis assisted with the filing of false tax using stolen identities. Between January and June of 2011, over 190 false returns were filed from her home.

Alabama Woman Sentenced for Stolen Identity Refund Fraud
On September 13, 2012, in Montgomery, Ala., Crystal Sayles was sentenced to 64 months in prison and three years of supervised release for filing false claims, access device fraud and aggravated identity theft. In addition, Sayles was ordered to pay over $1 million in restitution. She also agreed to forfeit a Mercedes Benz as part of her plea agreement.  According to her plea agreement, between January 2010 and July 2011, Sayles and others were involved with the filing of at least 482 fraudulent tax returns using stolen identities. These returns sought over $2 million in tax refunds. All of the returns were filed through a tax preparation business, Simmons Financial, which Sayles opened in another individual’s name to conceal her own involvement. The indictment alleged that the refunds were often directed to prepaid debit cards, and in the plea agreement, Sayles admitted to using a debit card loaded with a fraudulently obtained refund to receive cash.

Georgia Siblings Sentenced for Tax Fraud Conspiracy
On September 6, 2012, in Atlanta, Ga., Kathleen Russo was sentenced to 16 months in prison and three years of supervised release for her participation in a conspiracy to commit income tax fraud. On the same day, her brother, Joseph T. Russo, was sentenced to 15 months in prison and three years of supervised release for his participation in the same conspiracy. The defendants were also ordered to pay $159,783 in restitution to the IRS. According to the indictment, the conspiracy began around April 2006 and continued until about September 2009. Kathleen and Joseph Russo were employees of a tax preparation company in Riverdale, Georgia. To claim excessive tax refunds for their clients, Joseph and Kathleen Russo prepared and filed tax returns containing false and inflated Schedule A deductions, including charitable contributions, Schedule C losses, education credits and tuition deductions.

Mother and Daughter Sentenced on Tax Convictions
On August 31, 2012, in Lubbock, Texas, Patricia Zavala and her daughter, Janie Pena, were sentenced to 71 months and 57 months in prison, respectively. In addition, they were sentenced to three years of supervised release, fined $10,000 and ordered to pay $411,395 in restitution. According to court documents, Zavala was the office manager for a Bookkeeping and Tax Service that assisted and advised taxpayers in the preparation and filing of their federal income tax returns. As office manager, Zavala was in charge of day-to-day operations and in her absence, Pena handled those responsibilities. Zavala and Pena recruited others to solicit individuals to do business with them. From January 2008 to April 15, 2010, Zavala and Pena conspired to commit tax fraud and make false statements by preparing and submitting fraudulent and false tax returns claiming approximately $411,395 in false and fraudulent refunds. Zavala and Pena falsely told taxpayers that their refund would be a certain amount, which was usually substantially less than what was actually reported on the tax return. They instructed taxpayers to apply for a refund anticipation loan (RAL) so that they could receive their refunds quickly and instructed taxpayers to cash their RAL check and return a portion of the income tax refunds to them. In many instances, Zavala and Pena forged taxpayers’ signatures on the RAL checks and cashed them at a pawn shop in Lubbock.

New Jersey Tax Preparer Sentenced in Tax Fraud Case
On August 29, 2012, in Trenton, N.J., Rigot Joseph, a Bloomfield, N.J., tax preparer, was sentenced to 18 months in prison and two years of supervised release. Joseph pleaded guilty to aiding and assisting in the preparation and presentation of false tax returns. According to documents filed in this case and statements made in court, Joseph, the sole owner of RJM Professional Tax Services, prepared fabricated and inflated Schedule A itemized deductions for his clients. For filing years 2003 through 2007, Joseph prepared client tax returns that claimed deductions based on false gifts to charity, false job expenses and other false miscellaneous expenses, to obtain large refunds to which his clients were not entitled. He then filed the tax returns with the IRS.

Ohio Tax Preparer Sentenced for Preparing and Filing False Tax Returns
On August 27, 2012, in Cleveland, Ohio, Clerge Frazil, of East Cleveland, Ohio, was sentenced to 18 months in prison and one year of supervised release. Frazil pleaded guilty to tax charges related to filing 21 false income tax returns for clients, claiming $124,038 in refunds they were not entitled to receive. According to court documents, Frazil prepared clients’ returns that included fraudulent credits for federal excise on fuels, fraudulent student loan interest deductions or education credits, incorrect filing status, false or falsely inflated Schedule A deductions, false residential energy efficient property credit, and false Schedule C businesses to maximize the earned income credit. In addition, Frazil filed false individual income tax returns for his 2007 and 2008 taxes. For the tax year 2007, Frazil fraudulently claimed payment credit for withheld income taxes, falsely claimed a tuition and fees deduction for his wife, fraudulently claimed a mortgage interest credit, and failed to report a $9,800 taxable distribution, as documented by Form 1099-R from Hartford Life Insurance. For the tax year 2008, Frazil fraudulently claimed payment credit for withheld income taxes, falsely claimed a gas tax credit and a mortgage interest credit, fraudulently claimed a carryover-gifts to charity deduction, and fraudulently omitted a $2,583 taxable distribution, as documented by Form 1099-R from Hartford Life Insurance, as well as income derived from his tax preparation business.

New York Woman Sentenced for Preparing False Tax Returns
On August 22, 2012, in Central Islip, N.Y., Nellie Intriago was sentenced to 12 months and one day in prison, one year of supervised release and ordered to pay $100,139 in restitution to the IRS. She was also prohibited from engaging in any employment involving the preparation of income tax returns. According to court documents, Intriago owned and operated Latin Insurance Brokerage in Hempstead, New York. She prepared United States Individual Income Tax Returns (Forms 1040) and accompanying schedules in exchange for fees. She also hired an employee to prepare federal tax returns. Many of the Forms 1040 Intriago and her employee prepared for the tax years 2003 through 2006 were false. These false tax returns contained fictitious and inflated business expenses, charitable contributions and other expenses, which resulted in overstated deductions, falsely understated tax liabilities and falsely inflated tax refund claims.

Florida Tax Preparer Sentenced for Preparing False Tax Returns
On August 13, 2012, in Fort Myers, Fla., Alfred Ferreras, of Cape Coral, Fla., was sentenced to 24 months in prison and one year of supervised release for preparing false and fraudulent income tax returns. Ferreras was also ordered to pay $711,206 in restitution. Ferreras pleaded guilty in May 2012. According to the plea agreement, Ferreras prepared false tax returns for approximately 192 clients. Some of the returns he prepared contained false net losses from businesses. In some instances, Ferreras claimed first time home buyer credits knowing that the clients did not qualify for the credits.

Alabama Return Preparer Sentenced for Tax Conspiracy Involving Stolen Identity Refund Fraud
On August 8, 2012, in Montgomery, Ala., Yumeitrius Manuel was sentenced to 81 months in prison for filing false tax returns using stolen identities. Manuel was also ordered to pay $52,242 in restitution to the IRS. Manuel pleaded guilty on January 11, 2012, to charges of conspiracy to defraud the government and aggravated identity theft. According to court documents, Manuel and his co-conspirator, Margaret Kirksey, each owned and operated a tax preparation business in Montgomery, located in the same physical place. The two fraudulently inflated tax refunds by placing false information on their clients’ tax returns. They also filed tax returns in the names and social security numbers of individuals who did not know and did not authorize the filing of tax returns on their behalf. Both Manuel and Kirksey admitted that their respective crimes involved over $1 million in tax loss and more than 50 victims of identity theft.  Kirksey was sentenced on May 8, 2012, to 81 months in prison.

Ohio Income Tax Preparer Sentenced for Filing False Claims for Refunds  
On August 8, 2012, in Cincinnati, Ohio, Sylver Gunn, aka Sylver Karatz, was sentenced to five years probation, of which 21 months will be served in home confinement, and ordered to pay $100,287 in restitution to the IRS and $18,299 in restitution to the Cincinnati Metropolitan Housing Authority. Gunn pleaded guilty in April 2012 to filing false claims for fraudulent income tax refunds and theft of government funds. According to court documents, between January 2009 and February 2010, Gunn filed at least 24 false claims for income tax refunds totaling at least $100,287. Gunn prepared and filed the false claims through her employment as an income tax preparer at Instant Tax Service. To fraudulently claim income tax refunds for her clients that they were not entitled to receive, Gunn used fraudulent Forms W-2 and fraudulent Schedule C business information with false income amounts to qualify for the Earned Income Tax Credit. By doing so, Gunn was able to maximize her income tax preparation fees. In addition, Gunn split the amount from the fraudulent income tax refund claims with her clients.

Texas Woman Sentenced for Preparing False Tax Returns
On August 6, 2012, in San Antonio, Texas, Rebekah Walters was sentenced to 12 months home confinement and five years probation for filing false tax returns.  According to court documents, Walters was a tax preparer who from 2007 through 2009 prepared false tax returns for clients by claiming deductions they were not entitled to receive. Walters led her clients to believe that she specialized in tax form preparation and that she could maximize their deductions and income tax refunds. She also told her clients she used to work for the IRS and sold them audit insurance. On her client’s tax returns, Walters either inflated or fabricated deductions for her clients without her client’s knowledge and without explaining those deductions. The deductions included medical and dental expenses, sales tax paid, gifts to charities and unreimbursed employee expenses.

Texas Tax Preparer Sentenced for Tax Evasion
On August 2, 2012, in Dallas, Texas, Roberta Olaka, of Richardson, Texas, was sentenced to 46 months in prison and ordered to pay $1,264,243 in restitution for tax evasion. According to court documents, since 2006, Roberta Olaka and her husband, Cyril Olaka, owned and operated Business Dynamics, a tax preparation business. Both Roberta and Cyril Olaka filed federal tax returns on behalf of individual taxpayers and used a bank in Louisville, Kentucky, as a refund anticipation loan bank. IRS-issued refunds were directed to a designated account at the bank, which deducted Business Dynamics’ preparation fee and then paid the taxpayer the balance of the refund, either by wire transfer or check. The bank then transferred the preparation fee to a Business Dynamics’ account at Bank of Texas. Many of these fees resulted from returns Roberta and Cyril Olaka prepared that included false or inflated deductions and credits which inflated both the refund to the taxpayer and the preparation fee. In addition, Roberta and Cyril Olaka failed to declare as gross receipts on their joint income tax returns a substantial portion of the deposits made by the bank in Louisville into the Bank of Texas account.

Two Texas Women Sentenced for Tax Violations
On August 1, 2012, in Beaumont, Texas, Elizabeth Bailey and Patricia Sheard, both of Spurger, Texas, were sentenced to 30 months in prison each and ordered to jointly pay restitution of $437,984 for income tax violations.  According to court documents, Bailey founded Gayle's Taxes in 1999 and employed Sheard as a bookkeeper. The defendants prepared numerous personal income tax returns for clients, deliberately overstating numerous expenses and deductions causing the taxpayers to receive a larger refund or pay less tax than actually owed. The clients were given a copy of an electronic return as it should have been filed, but the defendants actually filed a false return with inflated deductions and expenses and diverted the inflated portion of the refunds into bank accounts controlled by defendants. From 2006 to 2008, the defendants caused the filing of over 100 false personal income tax returns and diverted the fraudulent refund portion to the defendants' bank accounts causing a loss of over $465,000.

Alabama Return Preparers Sentenced for Tax Conspiracy
On July 26, 2012, in Montgomery, Ala., James E. Moss, the owner of a tax preparation business named Flash Tax, was sentenced to 160 months in prison for his involvement in a fraudulent tax return scheme. Avada L. Jenkins, a Flash Tax employee, was sentenced to 41 months in prison. Moss and Jenkins were also ordered to pay over $120,000 in restitution to the IRS. On November 2, 2011, both Moss and Jenkins were found guilty of conspiracy and aiding and assisting the preparation of false tax returns. The evidence at trial proved that both Moss and Jenkins prepared false tax returns for customers that fraudulently inflated the amount of refunds due to the customers. Together, the conspirators prepared false tax returns requesting fraudulent refunds totaling over $7 million dollars. Three other employees of Flash Tax had been sentenced previously for their roles in preparing false income tax returns. Chiquita Broadnax and Lutoyua Thompson were each sentenced to 18 months in prison, and Melinda Lambert was sentenced to 6 months in prison and 6 months home confinement.

Texas Return Preparer Sentenced for Preparing False Tax Returns
On July 24, 2012, in Houston, Texas, Eddye Lovely was sentenced to 57 months in prison for filing false tax returns.  According to court documents, Lovely was a tax preparer in Tomball, Texas, and owned and operated The Tax Master tax return business. Lovely prepared tax returns that contained fabricated Schedule C losses for businesses that the taxpayers did not own or operate, as well as false or inflated Schedule A deductions for charitable contributions and other expenses.  

Florida Tax Preparer Sentenced for Stolen Identity Refund Fraud
On July 23, 2012, in Miami, Fla., Ernst Pierre, a tax preparer, was sentenced to 51 months in prison for wire fraud and aggravated identity theft. Pierre was charged with a scheme to file false federal income tax returns using stolen identity information. Pierre was also ordered to pay over $266,000 in restitution to the IRS. According to the indictment and Pierre’s admissions as part of his guilty plea, from October 2009 through May 2011, Pierre filed false tax returns for clients of Tax Max, a Port St. Lucie tax return preparation business he owned and operated. Pierre obtained the names and social security numbers of relatives of clients for whom he had prepared and submitted federal income tax returns and then fraudulently used those names and social security numbers as “dependents” on other client tax returns and on his own tax return. Pierre used these dependents to fraudulently inflate tax refunds.

California Woman Sentenced for Tax Fraud and Identity Theft
On July 9, 2012, in Fresno, Calif., Juanita Munoz was sentenced to 84 months in prison in two separate cases for making false claims against the United States and identity theft. In addition, Munoz was ordered to pay $361,093 in restitution to the United States. According to court documents, in the first case, Munoz prepared income tax returns that contained false taxpayers’ names, false social security numbers, and false employment information. The false tax returns requested tax refunds that were then sent to bank accounts under Munoz’s control. In the second case, Munoz used the name and social security number of another person to obtain a credit card and used the credit card to pay for various goods and services. She has been ordered to pay of $54,231 in restitution to the victim.

Texas Tax Preparer Sentenced for Helping to Prepare False Tax Returns
On July 5, 2012, in El Paso, Texas, Charles Showery, owner of Showery Services & Associates, Inc., was sentenced to 24 months in prison and one year of supervised release. On March 28, 2012, Showery pleaded guilty to three counts of aiding and abetting the preparation of false tax returns. According to court documents, from January 2008 thru April 2010, Showery prepared tax returns that included false claims for deductions that the taxpayers were not entitled to claim.

Texas Return Preparer Sentenced for Filing False Returns
On July 3, 2012, in Del Rio, Texas, Juan Guerrero, of Crystal City, Texas, was sentenced to 36 months in prison, one year of supervised release and fined $7,500. On November 23, 2011, Guerrero pleaded guilty to one count of preparing false tax returns. According to court documents, Guerrero, doing business as Juan’s Tax Service, prepared tax returns for clients from 2005 thru 2007.  Those returns falsely and fraudulently claimed Schedule C losses from business the clients did not have and deducted business expenses to falsely reduce their total income.

Alabama Man Sentenced for Preparing False Tax Returns
On July 2, 2012, in Birmingham, Ala., Dennis D. Franklin was sentenced to 15 months in prison and ordered to pay $34,031 in restitution to the IRS. Franklin, who operated a tax preparation service in Jefferson County, pleaded guilty to tax fraud charges in March 2012. Franklin admitted that he caused false tax returns for seven of his clients to be filed with the IRS for the tax years 2005-2007. According to his plea agreement, Franklin manipulated Forms 1040 and 1040A to reflect false filing status, number of dependents, expenses and/or child tax credits and submitted the forms to the IRS. The misrepresentations caused his clients to obtain larger tax refunds than they were entitled to receive.

Alabama Woman Sentenced in Tax Fraud Case
On June 19, 2012, in Montgomery, Ala., Shenita James was sentenced to 21 months in prison for filing false and fraudulent federal income tax returns. James was also ordered to pay $113,951 in restitution to the United States.  Evidence presented at the guilty plea and sentencing hearings established that between 2009 and 2010, James filed over 450 tax returns with the IRS, claiming a total of more than $2 million in refunds.  

Georgia Man Sentenced for Filing False Tax Returns Seeking Over $1.3 Million in Refunds
On June 19, 2012, in Atlanta, Ga., Roddrick Morris, of Atlanta, Ga., was sentenced to 33 months in prison, three years of supervised release and ordered to pay $231,650 in restitution. Morris pleaded guilty in February 2012.  According to information presented in court, Morris, assisted by at least one other person, prepared and mailed individual income tax returns to the IRS for almost 80 individuals falsely claiming over $1.3 million in refunds. The false tax returns claimed refunds based on fabricated Form 1099s and W-2s and false deductions. Morris received the refunds and cashed them, keeping a portion for himself before distributing the remaining funds to the individuals who had gave him with false documentation or taxpayer information.

Tax Preparer Sentenced for Preparing False Tax Returns
On June 12, 2012, in Philadelphia, Pa., Miguel Vazquez, a native of Puerto Rico and resident of Philadelphia, was sentenced to 120 months in prison and ordered to pay $1.6 million in restitution to the IRS and a special assessment of $5,400. Vazquez pleaded guilty in February 2012 to 52 counts of aiding or assisting in the presentation of false income tax returns, two counts of filing false federal income tax returns, and aiding and abetting. According to court documents, Vazquez first worked as an income tax preparer for another company and then created his own tax preparation business called Credit Connections. He prepared, or assisted in the preparation of, 1,654 fraudulent federal income tax returns for the tax years 2007 through 2009, resulting in the payment of $7,456,470 in refunds. He also lied on his own tax returns, failing to pay more than $250,000 in taxes on his illegally gained income. Vazquez employed four recruiters who brought him local clients, as well as the names and social security numbers of their friends and family who lived in Puerto Rico. Vazquez prepared returns for his clients and their friends and family using fraudulent addresses on many of the returns. Each return contained the false claim that the filer was a business owner, included a Schedule C, and applied for and received a refund based upon an Earned Income Tax Credit, to which the filer was not entitled. Vazquez also provided names and social security numbers to another tax preparer who used the information to prepare false returns and then shared the illicit refunds with Vazquez. In his personal tax returns, Vazquez falsely and willfully reported an adjusted gross income of $12,500 for tax year 2008 and $15,500 in 2009, which he claimed was generated from Schedule C gross receipts. He knew these claims were false because he netted approximately $500,000 in income during each of those years. Vazquez used his illegally obtained gains to buy homes and cars.

Indiana Tax Preparer Sentenced for Tax Fraud and Identity Theft
On June 4, 2012, in Indianapolis, Ind., Tracy Knight, aka Tracy Hamilton, was sentenced to 21 months in prison, two years of supervised release and ordered to pay $177,191 in restitution to the IRS. Knight pleaded guilty in November 2011, to five counts of filing false claims and identity theft. According to the Indictment, during 2008 and 2009, Knight operated a tax preparation business. In 2009, Knight prepared and electronically submitted approximately 65 federal income tax returns that contained false and fictitious information, including false Forms 1099, Schedule C information, false self-employment and business expenses, and fraudulent claims for the Earned Income Tax Credit. In certain instances, individuals authorized Knight to prepare and file their 2008 federal tax returns; however, Knight failed to inquire and ignored information provided by these individuals and filed fraudulent returns on their behalf. In other instances, Knight was not authorized by individuals to prepare and file 2008 federal tax returns, but she used their identity to file returns and claims for refunds. In these instances, Knight used the names, birth dates and social security numbers without the taxpayers' consent to file fraudulent 2008 tax returns. Knight directed that all or part of the fraudulent refunds be deposited into bank accounts she directly or indirectly controlled. Knight kept all or a substantial part of the refunds issued for her personal use.

Two Texas Women Sentenced for Preparing Fraudulent Tax Returns

On June 1, 2012, in Lubbock, Texas, Anita Montelongo was sentenced to 24 months in prison, one year of supervised release and ordered to pay $16,632 in restitution to the IRS. Montelongo pleaded guilty to one count of tax fraud on March 8, 2012. On May 25, 2012, Susan Tijerina Gloria was sentenced to 30 months in prison, one year of supervised release and was ordered to pay $194,966 in restitution to the IRS. Gloria pleaded guilty to one count of tax fraud on February 6, 2012. According to court documents, from February 2008 through April 2010, Gloria and Montelongo worked as tax preparers for Z & Z Bookkeeping & Tax Service. Both Gloria and Montelongo admitted that they knowingly prepared fraudulent income tax returns that contained false W -2s and false "Other Income" amounts. They admitted that the intent was to increase the amount of the refunds for the taxpayers and maximize eligibility for the Earned Income Credit. The majority of the income tax returns reported false wages from Zavala Environmental Solutions (ZES), an asbestos abatement business owned and operated by Patricia Zavala and her husband, Juan Zavala. Other fraudulent and false tax returns would reflect false "Other Income" amounts from babysitting that the taxpayer did not perform or earn. All but one of the fraudulent tax returns were electronically filed with the taxpayer requesting a Refund Anticipation Loan (RAL). Z & Z would tell taxpayers that their refunds were substantially less than what was on the income tax returns. The majority of taxpayers did not receive the full refund as reflected on the income tax return. After the refund checks were issued through the RALs, Z & Z cashed many of the checks at Huber's Pawn Shop in Lubbock.

Return Preparer Sentenced for Tax Fraud

On May 31, 2012, in San Jose, Calif., Samuel S. Fung, of Medford, Ore., was sentenced to 27 months in prison and ordered to pay more than $1.7 million in restitution to individual victims and the IRS. Fung pleaded guilty on September 14, 2011, to conspiring to defraud the United States. According to court documents, Fung provided services for clients of National Trust Services, including preparing tax returns, under his business names Cortland Tax Management and Professional Business Consultants, LLC. From August 1997 through March 2006, Fung and others agreed to defraud the United States by impeding or obstructing the lawful government functions of the IRS in the assessment and collection of federal income taxes. Fung and others established fictitious business names through which they received income and held assets in order to conceal their assets and income from the IRS. Fung admitted to preparing at least 65 false fraudulent income tax returns for taxpayers and entities for tax years 1998 through 2002.

Alabama Sisters Sentenced for Their Roles in Stolen Identity Refund Fraud Scheme

On May 16, 2012, in Montgomery, Ala., Loretta Fergerson and her sister, Tracey Fergerson, were each sentenced to 115 months prison for their involvement in a conspiracy to file claims for false income tax refunds using stolen identities.  The Fergerson sisters were also ordered to pay $504,305 in restitution to the IRS.  According to court documents, Loretta Fergerson owned and operated a tax return preparation business called Fast Tax Cash in Montgomery, Ala. From 2005 through 2008, Loretta and Tracey Fergerson filed tax returns using stolen identities to claim fraudulent tax refunds. Additionally, Loretta Fergerson and her employees filed tax returns for Fast Tax Cash customers that contained false information to obtain higher refunds for customers.  Court records established that Tracey Fergerson participated in the scheme by gathering stolen personal information and cashing refund checks for tax returns that were filed using the stolen personal information. Tracey Fergerson also recruited customers and coached them to provide false information. She further admitted that she improperly obtained personal information to have false tax returns prepared at Fast Tax Cash.

Illinois Tax Service Operator Sentenced in $1.6 Million Fraudulent Refund Scheme

On May 11, 2012, in East St. Louis, Ill., Delaun Leflore, of Belleville, Illinois, was sentenced to 90 months in prison and three years of supervised release.  In addition, Leflore was ordered to cooperate with the Internal Revenue Service and prohibited from being in the tax preparation service business in the future. On May 4, 2012, his co-conspirator, Carey Herron was sentenced to 46 months in prison.  According to court documents, from at least 2009 through April 2011, Leflore and Herron, dba Prime Time Tax Services, participated in a tax preparation scheme to obtain, and to help others obtain, fraudulent refunds. As part of the conspiracy, they created fraudulent Schedule C information to falsely inflate the tax refund amount taxpayers were entitled to receive. When certain individuals received their refunds, a representative of Prime Time Tax Services would escort them to a check cashing business to cash the refund check and pay the representative an extra fee, generally $500 in cash. Leflore was not authorized to e-file tax returns and used another tax preparer’s electronic identification number to file the false returns. Over 460 false federal tax returns were filed as part of the scheme.

Alabama Return Preparer Sentenced for Tax Conspiracy Involving Stolen Identity Refund Fraud

On May 8, 2012, in Montgomery, Ala., Margaret Kirksey, of Montgomery, Ala., was sentenced to 81 months in prison for filing false tax returns using stolen identities.  Kirksey was also ordered to pay $52,242 in restitution to the IRS.  In January 2012, Kirksey pleaded guilty to charges of conspiracy to defraud the government and aggravated identity theft.  According to court documents, Kirksey and her co-conspirator, Yumeitrius Manuel, each owned and operated a tax preparation business in Montgomery in the same location.  The two fraudulently inflated tax refunds by placing false information on their clients’ tax returns.  They also filed tax returns in the names and social security numbers of individuals who did not know about, and did not authorize, Kirksey or Manuel to file tax returns on their behalf.  Both Manuel and Kirksey admitted that their respective crimes involved over $1 million in tax loss and more than 50 victims of identity theft.  Manuel has also pleaded guilty to a tax conspiracy and is scheduled to be sentenced at a later date.

Nevada Tax Preparer Sentenced on Tax Charges

On April 30, 2012, in Las Vegas, Nev., Vernon K. Newson was sentenced to 33 months in prison, three years of supervised release, and ordered to pay a $5,000 fine.  Newson was convicted by a jury on November 21, 2011, of 22 counts of preparing false tax returns, one count of obstructing the enforcement of the tax laws, and two counts of presenting a false tax return to the government.  According to the court records, Newson operated a business in Las Vegas called Perdiem, Inc., dba “The Money Man,” and provided payday loans, bill-paying services, DMV registration, and tax return preparation.  Between tax years 2002 and 2006, Newson filed 22 false tax returns for 10 clients.  Newson padded customers’ tax returns with false deductions and credits, invented businesses to create business losses, and inflated W-2 wages and itemized deductions.  Newson also attempted to cover up his activities by telling clients to lie to auditors and presented two other false tax returns in 2006  for “undercover” businesses which were being tracked by the IRS.  The tax loss to the government was approximately $142,949.

Kansas Tax Preparer Sentenced for False Returns

On April 26, 2012, in Kansas City, Kan., Carlos Cruz was sentenced to 27 months in prison for filing false tax returns.  According to court documents, Cruz, who conducted business from his home through the unincorporated entity Carlos Income Tax Services, prepared thousands of federal income tax returns since 1992, although he had never been enrolled as a tax preparer with the IRS and is not a public accountant.  Cruz admitted that he engaged in results-based tax return preparation, where the goal is to maximize refunds rather than accurately report his customers’ actual income and allowable credits and deductions. Although many of Cruz’s customers would bring copies of their tax documents, such as Forms W-2 and 1099 and receipts for potentially deductible expenses, Cruz often ignored them and instead reported unsupported amounts on customers’ federal income tax returns.  Cruz admitted that he prepared more than 7,000 federal income tax returns for tax years 2004 to 2008.

New York Tax Return Preparer Sentenced for Tax Fraud

On April 26, 2012, in Central Islip, N.Y., Howard Levine was sentenced to 37 months in prison and ordered to pay $320,998 in restitution to the IRS.  Levine pleaded guilty on January 5, 2012, to obstructing the internal revenue laws and aiding in the preparation of false income tax returns for clients. According to the plea agreement and statements made in court, Howard Levine owned and operated Milaur Associates, aka Milaur Inc. Many of the tax returns Levine prepared for 2004 through 2009 were false and contained fictitious deductions, business expenses and corporate losses. Levine admitted to preparing no fewer than 56 false income tax returns, resulting in a tax loss of more than $620,000.  In 2009, the U.S. District Court for the Eastern District of New York issued an injunction that barred Levine from preparing federal income tax returns for anyone other than himself.  According to the plea agreement, Levine violated that court injunction and continued to prepare false income tax returns for clients. To obstruct and mislead the IRS from determining his role in preparing the returns, Levine provided false information in the paid preparer section of the returns he prepared.

California Return Preparer Sentenced for Defrauding IRS of Nearly $8 Million

On April 24, 2012, in Los Angeles, Calif., Mario Placencia, an accountant and tax return preparer, was sentenced to 60 months in prison and ordered to pay $1,213,789 in restitution to the Internal Revenue Service (IRS).  Placencia pleaded guilty in July 2011 to two counts of aiding and assisting in the preparation of fraudulent tax returns and one count of submitting false documents to the IRS in an attempt to substantiate the false deductions taken on tax returns.  According to the plea agreement, for the tax years 2003 through 2009, Placencia admitted that he caused the government to incur a tax loss of $7,982,043 by intentionally inflating the amounts of home mortgage interest that he reported on his clients’ federal income tax returns.  Some of Placencia’s clients received notices of audits for the 2004, 2005, and 2006 tax years.  During the audits, Placencia provided the IRS with false documents to convince auditors that the clients had incurred expenses that he knew the clients had not incurred and were entitled to deductions that Placencia knew had been fabricated.

California Tax Preparer Sentenced for Mortgage Fraud and Tax Fraud

On April 23, 2012, in Fresno, Calif., Patricia Ann King, of Bakersfield, was sentenced to 37 months in prison, three years of supervised release, and ordered to pay $530,300 in restitution to the victim lenders and $174,002 in restitution to the Internal Revenue Service (IRS).  According to court documents, King admitted to willfully aiding and counseling a taxpayer in preparing and presenting a fraudulent income tax return to the IRS. The 2005 tax return falsely claimed Schedule A and Schedule C expenses that King knew were not valid.  In the mortgage fraud case, King admitted that from October 2005 to July 2006, she helped other defendants submit false documentation in support of loan applications to defraud mortgage lenders. During this time, King was a tax return preparer and owned The Tax Kings, a tax return business in Bakersfield. King prepared and provided to her co-defendants false and misleading verification letters that purported to verify loan applicants’ self-employment history and income, among other information. King also falsely claimed to be a CPA. King received compensation payments from the co-defendants for providing the verification letters.

Former Partner at Major International Accounting Firm Sentenced for Tax Crimes

On April 16, 2012, in Newark, N.J., Stephen A. Favato, of Point Pleasant Beach, N.J., was sentenced to 18 months in prison for tax crimes. Favato was convicted in August 2010 by a jury of one count of corruptly endeavoring to obstruct and impede the Internal Revenue laws and one count of aiding and assisting in the preparation and filing of a false income tax return.  Trial evidence proved that from late 2001 through April 2005, Favato attempted to obstruct the IRS by, among other conduct, advising his client on how to include false items on the 2002, 2003 and 2004 joint income tax returns for the client and his then-wife.  Additionally, Favato knowingly prepared and signed false joint income tax returns for the client resulting in an over $114,000 tax loss to the IRS for 2002 and attempting to cause an over $70,000 tax loss for tax years 2003 and 2004. Favato advised the client to significantly reduce his salary payments from his corporation and to instead have this compensation paid to a limited liability company, Great Escape Yachts LLC, in the form of purported lease payments for the client's yacht.  However, his corporation had not leased the yacht.  This course of action enabled the client to fraudulently deduct his personal yacht expenses as business expenses.  In addition, Favato advised the client on how to falsely increase his expenses to fraudulently eliminate a portion of the gain on three properties he sold in 2002 and 2004. Favato also advised the client to report inflated charitable contributions on his 2003 tax return. 

New Jersey Woman Sentenced for Defrauding IRS by Preparing False Tax Returns

On April 9, 2012, in Newark, N.J., Jane Beasley, of Paterson, N.J., was sentenced to 19 months in prison and two years of supervised release, during which time she is prohibited from working as a tax preparer.  Beasley  pleaded guilty to an Information charging her with aiding and assisting in the preparation and presentation of a false 2008 individual income tax return. According to court documents and statements made in court, from 2006 through April 2010, Beasley owned and operated JB’s Tax & Bookkeeping Services, a tax preparation business in Paterson. In each of the tax years 2005 through 2009, Beasley prepared false tax returns for her clients by fabricating and inflating itemized deductions for medical expenses, charitable contributions, and unreimbursed business expenses, so her clients could obtain larger refunds than they were entitled to receive.

Husband and Wife Owners of Texas Tax Preparation Business Sentenced for Defrauding the U.S.

On April 6, 2012, in Fort Worth, Texas, Sanford Taylor Hobbs, III, was sentenced to 60 months in prison.  Hobbs and his wife, Crystal La Von Mason-Hobbs, pleaded guilty to one count of conspiracy to defraud the U.S. by impeding, impairing and obstructing the Internal Revenue Service (IRS) in determining, computing, assessing and collecting clients’ income taxes.  Crystal Mason-Hobbs was sentenced to 60 months prison in March 2012. The court also ordered Hobbs and Mason-Hobbs to pay more than $4 million in restitution. According to the indictment, the defendants owned and operated CMH Enterprise, also known as CMH Tax and Notary Service, in Everman, Texas. According to the factual resume filed in the case for Mason-Hobbs, she and Sanford Hobbs prepared and filed income tax returns for tax years 2005-2008 with Schedule C business income and expenses for businesses that did not exist, exemptions and credits for fictitious dependents, falsely claimed earned income and education credits and various other false statements.

Florida Woman Sentenced for Preparing and Filing Fraudulent Income Tax Returns

On March 29, 2012, in Miami, Fla., Marvel Ebanks was sentenced to 42 months in prison and one year of supervised release.  In December 2011, Ebanks was found guilty of 25 counts of assisting and advising in the preparation and presentation of fraudulent income tax returns to the IRS and five counts of willfully subscribing to false Form 1040 Individual Income Tax Returns and filing the tax returns with the IRS.  According to the charges and evidence presented at trial, Ebanks owned and operated Marvelous Enterprises Inc, a tax return preparation business in Palm Beach County, Florida.  Ebanks operated her business from her various residences in Palm Beach County.  Ebanks prepared and caused the submission of Individual Income Tax Returns claiming tax refunds on behalf of various taxpayers, knowing that these returns contained materially false information. Specifically, Ebanks claimed nonexistent expenses or inflated itemized deductions, thus making it appear that the taxpayers would be due a larger tax refund than was allowed from the IRS.  The taxpayers were typically only sent the signature page of their returns and were unaware of the false information that Ebanks used to inflate their refunds.  Ebanks also under-reported her gross receipts from 2003 to 2007, and filed tax returns with the IRS knowing that the returns contained materially false information.  Specifically, Ebanks failed to report income she received from the operation of her income tax preparation business.

Alaska Woman Sentenced on Tax Charges

On March 20, 2012, in Anchorage, Alaska, Frances Yvonne Rowland, aka Yvonne Rowland, Frances Yvonne Carter and Frances Leary, was sentenced to 75 months in prison, three years of supervised release, and ordered to pay a $25,000 fine.  Rowland pleaded guilty in August 2011 to one count of obstructing the Internal Revenue Service (IRS), one count of credit card fraud, and one count of aggravated identity theft.  According to court documents, between 2005 and 2008, Rowland owned and operated several businesses in Anchorage and Wasilla which provided accounting and tax preparation services.  The evidence showed that using her businesses, Rowland prepared tax returns on behalf of her clients. When her clients owed taxes, Rowland persuaded many of them to pay their tax monies to her "trust" account, promising that she would then transfer the funds to the IRS. In all, Rowland persuaded at least nine separate clients to transfer over $700,000 to accounts that she controlled. Rather than paying her clients' monies to the IRS, Rowland transferred the funds to accounts that she controlled and used the money to pay business and personal expenses. To conceal the fact that she was falsely obtaining and using her client’s money, Rowland filed false documents with the IRS. These included forms requesting extensions of time to file returns or preparing and filing tax returns with the IRS that were different than the original returns she had prepared and provided copies of to her clients. After clients became aware of the fact that the payments to the IRS had not been made, Rowland delinquently paid the taxes, accrued interest and penalties, often with funds she had obtained from other clients who mistakenly thought that the money was being used to pay their own taxes.  In addition, Rowland filed a false personal income tax return in her own name in which she claimed to be a low-income taxpayer who qualified for the earned income tax credit. The return alleged multiple false items. Rowland also stole a family member's identity and used it to commit credit card fraud. Using the stolen identity, Rowland opened numerous credit card accounts and ultimately caused over $300,000 to be charged to the cards.

Alabama Woman Sentenced for Identity Theft and Tax Fraud Scheme

On March 13, 2011, in Montgomery, Ala., Melinda Clayton was sentenced to 61 months in prison and ordered to pay $494,424 in restitution. According to court records, Clayton was involved in a conspiracy with Veronica Dale, Alchico Grant, Valerie Byrd and Stephanie Adams to defraud the United States by filing false claims, wire fraud and aggravated identity theft. The conspiracy involved using stolen identities to file false tax returns.  Dale, Grant, Adams and Byrd have all pleaded guilty to federal crimes. According to the indictment and plea agreement, Clayton stored tens of thousands of stolen means of identification (names and social security numbers) at her house, which came from numerous sources, including private companies, health clinics and prisons. Dale and Clayton used the stolen identities to file false returns that fraudulently claimed tax refunds. They directed the refunds to bank accounts and debit cards. Grant and Dale would buy debit cards to use in the scheme, while Clayton, Adams and Byrd all provided bank accounts to receive fraudulent refunds. Between January 2011 and April 2011, the conspirators filed returns claiming almost $500,000 in fraudulent refunds.

Tax Return Preparer and Co-Conspirators Sentenced for on Federal Charges

On March 8, 2012, in Detroit, Mich., Carolyn Renee Moore was sentenced to 35 months in prison her role in filing fraudulent returns and an insurance fraud scheme. In addition, Moore was ordered to pay more than $260,000 in restitution to the IRS and approximately $70,000 to Progressive Michigan Insurance.  Moore was convicted in 2011 of willfully assisting in the preparation of false tax returns, wire fraud for electronically transmitting false tax returns to the IRS and mail fraud conspiracy.  According to court records, Moore operated her tax preparation business out of her home in Saginaw for several years. The tax returns prepared by Moore between 2004 and 2006 contained claims for tax deductions that Moore knew were false. Moore fabricated the false deductions because she knew that doing so reduced her customers' tax liability or increased the tax refunds. Consequently, Moore developed a reputation in her community for being able to increase her customers' refunds, bolstering her business. Also sentenced were Leana McGee and Tiara Baskin, of Saginaw, for their roles in the insurance fraud scheme. Each was sentenced to six months of home confinement and five years of probation, as well as ordered to pay restitution of more than $25,000 to Progressive Michigan Insurance.  Both were convicted at trial of conspiracy to defraud Michigan Progressive Insurance Company.  Co-conspirator Tawhona Hunt, of Saginaw was also sentenced 36 months of probation.  At trial in August 2011, Moore, McGee and Baskin were convicted by a federal jury for mail fraud conspiracy. According to court records, from 2006-2008, Moore, McGee, Baskin and Hunt participated in preparing claim forms seeking payment from Progressive Michigan Insurance Company for home health care services provided to Moore. The insurance claims contained false information that fabricated the hours worked and services provided to Moore by McGee, Baskin and Hunt. As a result, the insurance company issued checks totaling more than $61,000 to McGee, Baskin and Hunt.  In addition, Moore prepared tax returns for McGee, Hunt and Baskin using false information to eliminate the taxes that should have been paid on the income they received by participating in the fraud scheme.

Return Preparer Sentenced for Preparing False Tax Returns

On March 6, 2011, in Memphis, Tenn., Debra Davis was sentenced to 18 months in prison, one year of supervised release and ordered to pay $175,268 in restitution. Davis was indicted on April 21, 2010, and charged with 26 counts of aiding and assisting in the preparation of false income tax returns. She pleaded guilty on November 15, 2011, to one count of aiding and assisting in the preparation of a false income tax return. According to the indictment, Davis prepared federal income tax returns for other individuals that were filed with the Internal Revenue Service (IRS) for tax years 2004 through 2007. Many of the returns contained fictitious deductions for medical/dental expenses, cash and noncash charitable contributions, real estate taxes, child care expenses, mortgage interest, uniform expenses, job seeking expenses, gambling losses, personal property taxes, and unreimbursed employee expenses. Other returns reflected that an individual had a Schedule C business when no business existed. Some returns claimed dependents whom the individuals were not entitled to claim.

Unlicensed California Tax Preparer Sentenced for Preparing False Tax Returns

On February 29, 2012, in Oakland, Calif., Diane Lipina Tuiono was sentenced to 18 months in prison, one year of supervised release and ordered to pay $135,803 in restitution. Tuiono pleaded guilty on November 23, 2011 to aiding and assisting in the preparation of false tax returns.  As part of her plea, Tuiono admitted she prepared tax returns from 2006 through 2009 although she was not a licensed return preparer and did not sign the returns she prepared. Many of her clients were low income families who were unaware of the details of state and federal tax laws. Sometimes her clients brought Forms W-2, 1098, and 1099 to prepare their tax returns and other times they did not have verifiable income or did not earn income at all during the year, but they would still ask her to prepare their returns.  In those situations, Tuiono would input an amount of income on the tax return in order to maximize the amount of the refunds. This resulted in her clients obtaining the Earned Income Credits and/or Child Tax Credits. Tuiono also admitted that she inflated refunds or reduced her clients’ tax liabilities by using several methods including: claiming false filing status, ineligible dependents, non-existent Household Help Income, false wages, exaggerated or fictitious Schedule A itemized deductions, false Schedule C businesses and expenses.  Sometimes she had the married couples file separate tax returns. Each return unlawfully listed each spouse as “Single” or “Head of Household.” In some cases Tuiono split the couples’ children between the two parents or listed ineligible dependents and claimed false income on each of the returns.  These fraudulent acts allowed each spouse to receive the highest refundable Earned Income Credit. For the tax years 2006 through 2009, Tuiono prepared 33 returns on behalf of 16 different people, resulting in a tax loss of $135,803. Tuiono received between $100 to $300 for the preparation of each tax return, which she did not report on her tax returns.

Two Sentenced for Conspiring to File False Claims for Refunds

On February 10, 2012, in Austin, Texas, Audrey Moncada was sentenced to 37 months in prison, three years of supervised release, and ordered to pay $165,747 in restitution to the Internal Revenue Service (IRS).  Moncada pleaded guilty in August 2011 to conspiracy to defraud the United States by filing and aiding in the filing of false claims.  On January 10, 2012, Jennifer Ramos, aka Jennifer H. Bermudez, was sentenced to 12 months in prison, three years of supervised release, and ordered to pay $92,519 in restitution to the IRS.  Ramos pleaded guilty in August 2011 to conspiracy to defraud the United States by filing and aiding in the filing of false claims.  According to court documents, Moncada was a tax preparer and Ramos worked as an office assistant at Cantu Professional Tax Services.  Beginning on or about January 1, 2007 through on or about February 28, 2007, Moncada and Ramos conspired to file false claims for tax refunds.  Ramos recruited individuals to file fraudulent federal income tax returns under their own names and social security numbers. Moncada used those names and social security numbers to create false Forms W-2.  Moncada than prepared false 2006 income tax returns that were electronically filed with the IRS.

West Virginia Tax Return Preparer Sentenced for Preparing False Tax Returns

On February 12, 2012, in Wheeling, W.Va., Vincent Tyrone Glover, of Martinsburg, was sentenced to 12 months and one day in prison and three years of supervised release. Glover pleaded guilty on August 22, 2011, to one count of conspiracy to prepare false tax returns and one count of preparing false tax returns. Glover took advantage of his position as a tax return preparer to prepare false returns that he submitted to the IRS through which he received $141,298 in false tax refunds.

California Tax Preparer Sentenced for Presenting False Income Tax Returns

On February 6, 2012, in Fresno, Calif., Bertha Renell Vaughn, aka Bertha Renell Milton, of Bakersfield, was sentenced to 30 months in prison, one year of supervised release, and ordered to pay more than $1 million in restitution to the Internal Revenue Service (IRS).  Vaughn pleaded guilty in November 2011 to aiding and assisting in the presentation of  false income tax returns.  According to court documents, Vaughn owned and operated a tax preparation business, Nationwide Tax Solution, also referred to as Vaughn’s Tax Service.  Vaughn willfully prepared the false income tax returns by adding false items in the return, such as deductions, losses, income, wages, and withholdings. The added items were not claimed by the taxpayers, but were fabricated and created by Vaughn. The more complicated the return, the more Vaughn charged in professional fees to her clients. Vaughn added the false items on the tax return to have the IRS generate a refund to the taxpayer and to charge her clients the higher fees. Documents filed with the court showed that over 90 percent of the taxpayers using Vaughn’s services received a tax refund from the IRS.

Texas Tax Preparer Sentenced to Prison

On February 2, 2012, in Houston, Texas, Kendrick Baker, a former franchisee of Colbert/Ball Tax Service, was sentenced to 12 months and one day in prison. Baker was convicted in October 2011 of 16 counts of willfully aiding and assisting in the preparation and presentation of false U.S. Individual Income Tax Returns. According to the indictment, Baker included false and inflated business expenses and other deductions on 16 income tax returns that he had electronically filed for eight clients for tax years 2005 through 2007. During the trial, the jury heard testimony from the clients that they were unaware that various business expenses and personal deductions had been included in their tax returns or that their business expenses had been inflated. The jury also heard testimony that the false and inflated deductions in the 16 tax returns had generated excessive refunds totaling approximately $42,000.
 

Washington Man Sentenced for Assisting in the Filing of False Tax Returns

On February 1, 2012, in Seattle, Wash., Timothy Garrison, a previously convicted felon, was sentenced to 42 months in prison, two years of supervised release, and ordered to pay $95,626 in restitution.  Garrison, of Mt. Vernon, Wash., pleaded guilty in November 2011 to two counts of assisting with the filing of false tax returns.  According to court documents, Garrison, as a tax preparer, prepared more than 50 returns with false or fraudulent information, resulting in a tax loss of more than $2.5 million. Garrison has been active in the “County Ranger” and “Sovereign Citizen” movements.  Activists in these groups believe state and federal laws do not apply to them.  Garrison’s activities include making threats to “arrest” law enforcement officers and filing bogus liens against the homes of law enforcement officers.  Garrison is the second of six defendants being prosecuted in the Western District of Washington for crimes tied to the “Sovereign Citizen” movement.  In January 2012, David Russell Myrland was sentenced to 42 months in prison for making threats against the Mayor and City Attorney of Kirkland, Washington.

Former Arkansas Tax Return Preparers Sentenced on Multiple Charges

On January 27, 2012, in Little Rock, Ark., James Bruce Morris and Karen Sue Morris, tax return preparers who for several years operated B. Morris Ltd. in Ash Flat, Ark., were sentenced to 48 months and 24 months in prison, respectively.  In addition, the Morrises were sentenced to three years of supervised release and prohibited from engaging in tax preparation business.  On April 26, 2011, the Morrises were convicted of 44 charges, which included filing false tax returns for themselves and their clients in which income was under-reported, deductions were overstated and, in some cases, the earned income tax credit was fraudulently received.

Owner of Alabama Tax Business Sentenced for Identity Theft and Tax Fraud Scheme

On January 24, 2012, in Montgomery, Ala., Marsha Elmore, of Wetumpka, Ala., was sentenced to 184 months in prison and ordered to pay $1,157,241 in restitution.  Elmore, the owner of a tax preparation business called Community Tax, used her business to run a scheme to steal tax refunds by filing false tax returns with stolen identities.  She pleaded guilty in November 2011 to one count each of filing false claims, wire fraud and aggravated identity theft. Elmore had previously been sentenced to 60 months in prison for a violation of supervised release, which was based on the same conduct. The current sentence of 184 months will to run consecutively to her previous sentence of 60 months. According to court documents, Elmore’s fraudulent activity ran from at least 2009 until July 2011. She unlawfully obtained the names, social security numbers and dates of birth of various individuals and used them to file false tax returns through Community Tax. Those tax returns claimed refunds that were directed to bank accounts and debit cards that Elmore controlled. Elmore also filed false tax returns using online filing websites.  All together, Community Tax and Elmore were linked to almost 1,400 tax returns during this time period. In her plea agreement, Elmore admitted that she personally filed many of the returns, a number of which were false.

Former Texas Tax Preparer Sentenced for Filing a Fraudulent Tax Return

On January 17, 2012, in Fort Worth, Texas, Iris Smith was sentenced to 48 months in prison and ordered to pay $104,044 in restitution for filing a false claim.  According to court documents, Smith was in the tax preparation business from 2005 to 2008.  In February 2007, Smith electronically filed a fraudulent federal income tax return for an individual, inflating that individuals’ W-2 wage information to $22,278.  The individual actually earned less than $4,000 in tax year 2006 and did not receive a W-2 from any employer.  The false and fraudulent information submitted by Smith resulted in that individual claiming a federal income tax refund of approximately $7,231.

Florida Return Preparer Sentenced for Filing False Personal Tax Returns

On January 5, 2012, in Miami, Fla., Thomas Michael O’Rourke, of Plantation, Fla., was sentenced to 24 months in prison, one year of supervised release and ordered to cooperate with the IRS in the filing of corrected tax returns and pay approximately $358,364 in taxes for tax years 2002 through 2006.  According to court documents, O’Rourke represented himself to clients and potential clients as a Certified Public Accountant although he never held such a license.  During the years 2002 through 2008, O’Rourke prepared two sets of tax returns for his clients.  The first return, which he showed to the client, generally reported a refund due to the client. This tax return was not actually filed with the IRS.  O’Rourke then prepared a second, false return, and filed it with the IRS through a third party (an “E-filer”) that he had retained to submit returns electronically.  This second return showed a larger refund due to O’Rourke’s client. The difference between the expected refund and the larger, fraudulently obtained refund actually paid by the IRS was disbursed by the E-filer to O’Rourke as tax preparation and other fees that the E-filer had been led to believe were owed to O’Rourke.  O’Rourke failed to report as part of his gross income at least $1 million he had received from the dual tax return scheme.

Mississippi Tax Return Preparer Sentenced for Filing False Tax Returns

On December 21, 2011, in Oxford, Miss., Mary Wesley, of Hollandale, was sentenced to 120 months in prison, three years of supervised release, and ordered to pay $5,500,000 in restitution to the Internal Revenue Service (IRS).  Wesley was convicted in January 2011 on four counts of preparing and transmitting false and fraudulent tax returns and one count of conspiracy to defraud the United States and the IRS.  According to court documents, Wesley conspired with three others, through a tax preparation business that she owned, to create tax returns for individuals using information known to be false to fraudulently obtain earned income credits those individuals were not entitled to receive. Wesley also was found to have created returns for a taxpayer using the names of dependents which she knew were not in fact the taxpayer’s dependents. Wesley had supplied the names of these false dependents to taxpayers for $500 each.

South Carolina Woman Sentenced for Filing False Tax Returns

On December 7, 2011, in Columbia, S.C., Melissa S. Woods, of Bishopville, was sentenced to 21 months in prison for aiding and assisting in the preparation of a false federal income tax return.  Woods was also ordered to pay over $43,000 in restitution to the Internal Revenue Service. Evidence presented at the guilty plea established that Woods was a tax preparer working under the name Tax Services Plus.  Between 2005 and 2007, Woods falsified Forms 1040 by inflating federal withholdings and falsifying various credits and deductions, which reduced her clients' tax liability and allowed claims for inflated refunds.  She generally was provided with W-2s and then made up the rest.  Many of the refunds were deposited directly into her bank account, and some she kept entirely for herself.

Former Tennessee Tax Return Preparer Sentenced

On December 5, 2011, in Nashville, Tenn., Elmer Virula, formerly of Nashville,
was sentenced to 24 months in prison, one year of supervised release, and ordered to repay the IRS $167,535 for false claims, credits, and deductions he fraudulently obtained.  Virula was also ordered to cease and desist from representing himself as a certified public accountant and he is not allowed to prepare tax returns for others.  According to the indictment, Virula primarily catered to Nashville’s Hispanic community, preparing fraudulent federal income tax returns for others to be filed with the IRS for calendar years 2003 through 2006. The returns claimed numerous false deductions and various credits for fuel, education, and telephone excise tax credits for which the clients were not entitled.  Virula owned and operated three tax preparation businesses in the middle Tennessee area.  During the sentencing hearing, numerous witnesses testified that Virula represented himself to the immigrant, particularly Hispanic, community as a minister and CPA, even though he had no accounting license or college degree. Additionally, Virula trained his employees to enter tax credits on clients’ tax returns even when they were not entitled to claim them, thus generating larger refunds.

California Woman Sentenced for Filing False Tax Returns that Claimed 20 Non-Existent Dependents

On December 5, 2011, in Los Angeles, Calif., Norma Coronel, of Livermore, California, who is an illegal alien from Mexico, was sentenced to 18 months in prison and ordered to pay $302,186 in restitution to the Internal Revenue Service (IRS).  Coronel pleaded guilty in September 2011 to aiding and assisting in the preparation of fraudulent federal income tax returns, fraudulently using social security numbers obtained with false information, and theft of government property.  According to her plea agreement, Coronel admitted that in 2003 she applied for and obtained social security numbers for at least 20 fictitious children, falsely claiming that the children had been born to her at a Los Angeles hospital on December 11, 2002.  Using these bogus identities, Coronel prepared and filed fraudulent federal tax returns for family members and friends that claimed dependent deductions and fraudulently sought refunds.  Coronel admitted in the plea agreement that she had frequently directed the IRS to send the refund checks to her own residence or to accounts that she controlled.  Coronel either failed to provide the taxpayers with copies of the returns that she had filed, or gave them copies of fake returns that had never been filed. As a result, the taxpayers were not aware that Coronel had filed fraudulent returns in their names or that Coronel was using the returns to obtain the refunds for her own benefit.

Arizona Tax Preparer Sentenced for Stealing Refund Money from Her Clients

On November 29, 2011, in Phoenix, Ariz., Cecilia C. Hidalgo, of Avondale, Arizona, was sentenced to 18 months in prison.  Hidalgo pleaded guilty in September 2011 to wire fraud after IRS investigators discovered that she had been stealing money from clients of her own tax return preparation business, La Esperanza Servicios Legales. According to court documents, many of Hidalgo’s clients had limited English-language skills and were inexperienced about income tax matters. For these clients, Hidalgo would prepare two sets of tax returns, one correct return to file with the IRS and another incorrect return with a lower refund amount to show the client.  Hidalgo then provided the client with the incorrect return and the lower refund amount, but she filed the correct tax return with the IRS and kept the additional tax refund amount for herself.  Hidalgo victimized more than 50 different clients during the course of the scheme and stole a total of $97,728 from her clients.

Tennessee Man Sentenced for Defrauding the U.S. Treasury Through Filing of Fraudulent Income Tax Returns

On November 28, 2011, in Memphis, Tenn., James Conard Burks was sentenced to 64 months in prison and three years of supervised release for his involvement in a conspiracy to defraud the United States through the filing of fraudulent tax returns and money laundering.  Burks was also ordered to pay $3,455,249 in restitution to the IRS and forfeit his interest in an automobile and a house.  According to court documents, Burks ran a scheme through his business, "Money In Your Hand Tax Service," in which he and other preparers under his direction falsely included first time home buyer credits, as well as other tax credits and falsehoods on his clients' tax returns.  Burks received a cut of the fraudulent refund by having the IRS electronically deposit a portion of his clients' tax refunds directly into accounts that were either in his name or under his control. For tax year 2008, Burks submitted and caused to be submitted more than 490 fraudulent tax returns.

Georgia Tax Return Preparer Sentenced for Filing Fraudulent Tax Returns

On November 28, 2011, in Columbus, Ga., Gregory L. Carter was sentenced to 33 months in prison, one year of supervised release and ordered to pay $245,572 in restitution to the IRS.  Carter pleaded guilty in June 2011 to aiding and assisting in the preparation of a false and fraudulent return.   According to the plea agreement, Carter assisted in the preparation of individual federal income tax returns at a tax preparation business in Columbus.  Carter assisted in the preparation of 46 fraudulent returns for tax years 2006, 2007 and 2008, resulting in a total tax loss to the IRS of $245,573.  According to the indictment, Carter prepared returns which fraudulently claimed deductions or credits for which he knew the taxpayers were not entitled.  The tax returns contained, among other misrepresentations, false Schedule C business losses, first-time homebuyer credits and education credits.

California Tax Return Preparer Sentenced for Filing Fraudulent Tax Returns

On November 28, 2011, in Los Angeles, Calif., Simon Jenkins, owner of Jenkins Tax Service, was sentenced to 15 months in prison, one year of supervised release, and ordered to pay $238,024 in restitution to the Internal Revenue Service (IRS).  Jenkins pleaded guilty in August 2011 to preparing and filing false tax returns.  According to court documents, during the 2005 through 2009 tax filing seasons, Jenkins prepared at least 45 tax returns that contained false information by overstating the amount of one or more items claimed on the tax return.  Jenkins prepared tax returns which included false deductions and expenses to obtain larger refunds with the IRS. 

Tax Preparer Sentenced for Preparing False Federal Tax Returns

On November 23, 2011, in Chicago Ill., Lillie Ingram was sentenced to 12 months in prison and one year of supervised release for preparing false tax returns. According to court documents, Ingram and her husband, Horace, prepared federal income tax returns on behalf of clients of their south side tax preparation business.  The Ingrams prepared Forms 1040 for 2004, 2005 and 2006 with various inflated deductions and tax credits that reduced their clients’ apparent tax liability and purported to qualify them for refunds to which they were not entitled. Among the false entries were inflated charitable contributions, false education expenses, and false unreimbursed business expenses, including uniform expenses, job supply expenses, and business mileage expenses. In total, the 14 returns prepared by Horace Ingram falsely claimed $49,518 in refunds, and the eight returns prepared by Lillie Ingram falsely claimed $47,370 in refunds.  Horace Ingram is awaiting a trial.

South Carolina Tax Return Preparer Sentenced for Tax Fraud

On November 22, 2011, in Columbia, S.C., Mary A. Porter was sentenced to 18 months in prison and ordered to pay a $40,000 fine for assisting in the preparation of false and fraudulent tax documents. Porter also is precluded from acting as a tax preparer for the duration of her post-incarceration supervised release. Evidence presented at the change of plea hearing established that Porter was a tax preparer living and working in Dalzell doing business as Porter's Taxes.  Porter made up false expenses in order to reduce her clients' tax obligations. Porter prepared at least 67 false tax returns for her clients in 2006, 2007, and 2008.  She intentionally inflated itemized deductions and created fictitious Schedule C businesses.  The false deductions included medical expenses, charitable contributions, un-reimbursed employee business expenses, and other expenses.   

Alabama Return Preparer Sentenced for Preparing False Income Tax Returns

On November 18, 2011, in Montgomery, Ala., Chiquita Q. Broadnax, of Montgomery County, Ala., was sentenced to 18 months in prison for her involvement in a fraudulent tax return scheme.  According to court documents, from December 2004 through January 2007, Broadnax was employed by James E. Moss as a tax return preparer at a tax return preparation business, known as Flash Tax.  During her employment at Flash Tax, Broadnax prepared and filed at least 900 tax returns, the majority of which contained false information designed to illegally obtain higher refunds to which her clients were not entitled.  Moss trained Broadnax to prepare false tax returns in order to obtain higher tax refunds for Flash Tax clients by inflating or deflating specific numbers and/or by adding totally fictitious numbers to the return.  Moss was convicted in early November 2011 for orchestrating this fraudulent tax return preparation scheme and is awaiting sentencing.

Former Washington, D.C., Tax Return Preparer Sentenced for Preparing False Returns

On November 18, 2011, in Washington, D.C., Onuoha “Iggy” Nwokoro was sentenced to 36 months in prison and ordered to pay $510,389 in restitution to the IRS.  Nwokoro pleaded guilty in August 2011 to willfully aiding and assisting in the preparation of a false tax return for 2004.  According to court documents, from January 2005 through April 2007, Nwokoro operated BBC Tax Services, also known as BBC Tax and Medical Billing Services. For tax years 2004, 2005 and 2006, Nwokoro prepared and electronically filed tax returns for his clients that included fictitious business income and expenses for what purported to be a computer systems business. Nwokoro admitted to preparing at least 41 false returns, causing a tax loss of more than $530,000.  According to the plea agreement, Nwokoro also admitted that his own 2004, 2005 and 2006 personal tax returns were false in that they under-reported his income by $585,537.

North Carolina Tax Preparer Sentenced for Preparing False Returns

On November 14, 2011, in New Bern, N.C., Tyrone Lenard Sanders was sentenced to 36 months in prison, one year of supervised release and ordered to pay $1,480,414 in restitution to the IRS.  According to the sentencing memorandum, Sanders opened his own tax preparer business in 2004.  Sanders worked out of his home and charged his customers to prepare and file their individual tax returns. In an effort to generate larger refunds for his customers, Sanders falsified information on the tax returns. According to the criminal information, the tax returns Sanders prepared contained a number of categories of false information.  Specifically, certain returns had false information regarding the number of eligible dependents that could be claimed as exemptions.  Also, certain returns listed false Schedule C and Schedule A itemized deductions and false education credits. 

Former Florida Tax Preparation Business Owner Sentenced

On November 7, 2011, in Miami, Fla., Jacqueline Rhaheed was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $727,729 in restitution to the Internal Revenue Service.  Rhaheed, the former owner of First Premium Financial Services, a tax preparation business with offices in Ft. Pierce and Vero Beach, Florida, previously pleaded guilty to conspiring to defraud the United States in connection with filing fraudulent income tax returns.  According to court documents and testimony, Jacqueline Rhaheed and her husband, Inuka Rhaheed, owned and worked at First Premium Financial Services.  Inuka Rhaheed was a former police detective.  Co-defendant Wilens Bertrand worked at the Ft. Pierce office of First Premium Financial Services as a tax preparer. According to the testimony of some of First Premium’s clients, the defendants 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 approximately 98 percent of those returns made a claim for a tax refund.  On September 8, 2011, Inuka Rhaheed was sentenced to 78 months in prison and Wilens Bertrand was sentenced to 41 months in prison.

New York Tax Preparer Sentenced for Preparing False Tax Returns

On October 18, 2011, in Manhattan, N.Y., Patricia Carter, a former Bronx-based tax preparer, was sentenced to 36 months in prison for preparing false tax returns.  According to court documents and statements made during her guilty plea in June 2011, Carter owned and operated a tax preparation business, known as "Pat's Tax Services," out of her home in the Bronx, New York. For the tax years 2002 through 2005, Carter prepared approximately 1,500 returns on behalf of her clients, of which nearly 98% resulted in refunds that totaled at least $7 million. To achieve larger refunds for her clients, Carter inflated or created fictitious expenses and deductions in order to decrease their tax liabilities.  Carter is the 16th defendant to be sentenced as part of Operation Brass Tax.  The other fifteen defendants have been sentenced to terms ranging from 72 months in prison to 5 months probation.

Tax Preparer Sentenced for Fraudulent Tax Refund Scheme

On October 17, 2011, in Atlanta, Ga., Deidra McClendon, of Conley, Georgia, was sentenced to 18 months in prison, three years of supervised release and ordered to pay $784,000 in restitution.  McClendon pleaded guilty in April 2011 to filing fraudulent tax returns, identity theft and unauthorized use of another person’s Social Security number. According to court documents and information presented in court, from March 2007 to approximately February 2008, McClendon conducted a fraudulent tax filing scheme in which false 1099 employer earnings statements were submitted in support of tax returns for various individuals, some of whom were unaware that their personal information was being used to file and obtain tax refunds. McClendon also filed a tax return on behalf of her mother who died prior to the tax year for which a return was filed. Her scheme generated several hundred thousand of dollars of fraudulent refunds and was discovered after McClendon’s employer conducted an audit, noticed suspicious transactions and reported them to the IRS.

California Tax Return Preparer Sentenced for Filing False Claims and Stealing Client Tax Refunds

On October 14, 2011, in Sacramento, Calif., Shannon Elaine Ford, of Redding, was sentenced to 21 months in prison, three years of supervised release, and ordered to pay $20,665 in restitution.  According to court documents, Ford admitted that she created and filed false claims with the Internal Revenue Service (IRS) on behalf of her clients.  As part of the false claims, Ford submitted false information in order to generate bigger refunds. Then, unknown to her clients, Ford diverted the fraudulently inflated tax refunds from her clients into her personal credit union account and into her husband’s personal bank account. The scheme operated from February 2004 to March 2007, and involved more than 20 victim taxpayers and more than $130,000.

Iowa Woman Sentenced for Tax Fraud

On October 13, 2011, in Cedar Rapids, Iowa, Karla Myles was sentenced to 18 months in prison, three years of supervised release and ordered to pay restitution for preparing false tax returns for her clients.  According to court documents, Myles admitted that, from 2006 through 2008, she knowingly and willfully made and presented to the Internal Revenue Service (IRS), at least 22 federal tax returns which she knew to be false, fictitious and fraudulent.  Myles prepared the federal tax returns for clients on her personal computer and electronically filed them with the IRS.  All of the tax returns filed claimed a refund for the Earned Income Tax Credit. These returns resulted in excess tax refunds of more than $70,000 for tax years 2006 and 2007. In some cases, Myles received payments from the taxpayers for her tax preparation services. In other cases, Myles received payments by directing the deposit of refund payments into specified bank accounts.
 

Oklahoma Tax Preparer Sentenced to Prison for Filing False Tax Return

On October 5, 2011, in Oklahoma City, Okla., Gail S. Tucker, of Newcastle, Oklahoma, was sentenced to 18 months in prison and ordered to pay $155,311 in restitution to the Internal Revenue Service for filing a false tax return. According to court records, Tucker falsely understated her income on her 2006 tax return to be $13,300 when she knew it was in excess of $124,000. Tucker was self-employed as a tax preparer in Newcastle. 
 

 

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