Examples of Abusive Return Preparer Investigations - Fiscal Year 2014
The following examples of abusive return preparer investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
Owners of Tax Preparation Business and Others Sentenced for Roles in Tax Refund Scheme
On Feb. 14, 2014, in Dallas, Texas, Rickel Shine was sentenced to 34 months in prison and ordered to pay nearly $115,000 in restitution. Jarrod Phread Altman was sentenced to eight months’ home confinement as part of a three-year term of probation and restitution will be determined at a later date. Shine and Altman were the last of six defendants convicted for their respective roles in a tax refund scheme involving the misuse of the First-Time Homebuyer Tax Credit. Three other defendants Jason Phread Altman, Emanuel James Harrison and Fread Jamille Jenkins were each recently sentenced to 84 months in prison. Jason Altman, Harrison, and Jenkins were each ordered to pay restitution of more than $860,000. Billy Hamilton was sentenced to 13 months in prison and ordered to pay nearly $52,000 in restitution. Beginning in March 2009, Jason and Jarrod Altman, Jenkins, Harrison, Shine and Hamilton conspired to defraud the IRS by using Tax On the Run, a tax preparation business, to file false Forms 1040, in the names of numerous clients, which overstated and fabricated income and tax deductions on Schedule C and Forms 5405 by falsely representing that the taxpayers were entitled, under the provisions of the Housing and Economic Recovery Act of 2008, to claim a tax credit as a first-time homebuyer. As part of the scheme, Shine and Hamilton acted as intermediaries to recruit clients, and were paid after they recruited impoverished taxpayers to allow their names and social security numbers to be used to file fraudulent tax returns. The fraudulent returns were routinely filed even though the tax preparers never met the taxpayers and with the full knowledge that none of the taxpayers qualified to claim the credit. Tax On the Run used a bank to process refund anticipation loans based on the fraudulent returns filed. After electronically filing the false tax returns, Tax On the Run would be notified by the bank that the loan had been approved and a check could be printed and provided to the taxpayer. Once the check was printed, the taxpayer was transported to a local check cashing business and instructed to cash the refund check. After it was cashed, members of the conspiracy paid the taxpayer a small percentage of the refund and kept the remainder of the proceeds. Jarrod Altman admitted, that during tax year 2009, he failed to report approximately $71,133 in taxable income that was obtained from his business, Tax On the Run. Of that amount, Jarrod Altman admitted that he received $53,140 in the form of a payment by check from Jason Altman for a 2007 Mercedes Benz S550, which was purchased in June 2009. He further admitted that he falsely reported $57,207 in taxable income for tax year 2009 that did not include the $71,133 income described above, and as a result of his false statements regarding his taxable income, caused $20,135 in tax harm to the IRS.
Former Georgia Tax Return Preparer Sentenced for Tax Fraud
On Feb. 13, 2014, in Macon, Ga., Irene Tamika Smith, a former professional tax return preparer, was sentenced to 33 months in prison and ordered to pay $566,171 in restitution to the IRS. Smith pladed guilty to conspiring with her co-workers to defraud the United States by filing false tax returns in order to receive fraudulently inflated refunds for clients. According to court documents, Smith worked at Quick Tax, a tax preparation business in Cordele, Ga. From 2006 through 2009, Smith conspired with her co-workers Greene Wylie Sheppard, Sabrina Johnson-Lavant and Chandra Henderson to obtain higher refunds on their clients’ returns by falsely inflating clients’ wages in order to exploit certain tax credits. Smith and her co-conspirators also purchased other people’s identities which they then offered to sell to clients so that the clients could obtain higher refunds by falsely claiming additional dependents on their tax returns. Smith and her co-conspirators maintained notebooks that kept track of the identities they sold and how much clients owed them for the false dependents. Over the course of the conspiracy, which spanned four years, Quick Tax claimed over $500,000 in fraudulent refunds. Smith’s co-conspirators were sentenced in 2013. Sheppard was sentenced to serve 56 months in prison, Henderson was sentenced to serve 18 months in prison and Johnson-Lavant was sentenced to serve eight months in prison.
Texas Woman Sentenced for False Claims in Connection with Fraudulent Tax Returns
On Feb. 4, 2014, in Houston, Texas, Alisa Grisson was sentenced to 30 months in prison and three years of supervised release. Grisson stipulated that the tax loss to the government was $674,284 and has agreed to pay that in restitution to the United States. Grisson further agreed never again to aid or assist in preparing or presenting tax returns for any taxpayer except herself and not to oppose any civil action brought by the United States seeking to enjoin her from preparing income tax returns for others. According to court documents, Grisson prepared tax returns in her name and in the names of others. She knew the returns were false and fraudulent when she prepared them and caused them to be filed with the IRS. These returns reported income that had not been earned and/or expenses that had not been incurred, thus claiming tax refunds to which she and the other taxpayers were not entitled. Specifically, she falsely claimed a refund of more than $7.4 million for the 2009 tax year.
Owner of Tax Return Preparation Business Sentenced on Tax Charges
On Feb. 4, 2014, Raleigh, N.C., Larry D. Hill, Jr., of Rocky Mount, N.C., was sentenced to 100 months in prison and three years of supervised release. On August 5, 2013, Hill pleaded guilty to one count of conspiring to submit false claims for federal income tax refunds to the IRS and one count of filing a false 2010 federal income tax return. According to the court documents, Hill owned and operated Hill’s Tax Service (HTS), a tax return preparation business. Between 2010 and 2012, Hill and his co-conspirators filed over 2,000 federal income tax returns for HTS customers that claimed, collectively, over $14 million in tax refunds. A significant number of the returns reported materially false information, including false dependents, income, and withholdings, in order to maximize the earned income tax credit and otherwise cause the issuance of inflated refunds. Hill and his co-conspirators pocketed a portion of every fraudulent tax refund that was issued. Hill collected, on average, $1,000 or more from each unlawful refund.
Tax Preparer Sentenced For Making False Statements to IRS
On February 4, 2014, in Raleigh, N.C., Eugenio M. David-Martinez, of Wilmington, was sentenced to 57 months in prison and three years of supervised release. On July 11, 2013, David-Martinez pleaded guilty to making false statements to a federal agency and making false claims of United States citizenship. According to court documents, David-Martinez came to the United States from Cuba in 1980 and has since illegally resided in the United States. Since at least January 2007, David-Martinez provided tax and accounting services in Wilmington, N.C. The majority of his clients were residing in the United States illegally. In order to file income tax returns, David-Martinez’s clients required Individual Taxpayer Identification Numbers (ITINs). To obtain an ITIN, the applicant must submit proof of identification and a tax reason for filing a return, which includes earning wages in the United States. The IRS authorizes individuals, known as acceptance agents, to assist applicants in the ITIN process. To become an acceptance agent, the individual must prove that he is a citizen or a legal resident and pass a suitability background check. In his applications to become an acceptance agent, David-Martinez falsely stated that he was a United States citizen and by-passed the suitability background check by falsely representing he had previously been authorized to practice before the IRS as an Enrolled Agent. For the years 2007 through 2012, David-Martinez filed approximately 18,536 ITIN applications for which he received $15 per application. He also filed approximately 12,985 income tax returns for individuals with ITINs for which he charged on average $90 per return. David-Martinez also negotiated the IRS refund checks issued to the ITIN taxpayers.
Tax Return Preparer Sentenced for False Return Scheme
On Feb. 3, 2014, in Tucson, Ariz., Margarita Gomez was sentenced to 30 months in prison and ordered to pay $200,408 in restitution to the IRS. Gomez pleaded guilty to corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws. According to court documents, Gomez operated a tax return preparation service, M & M Tax Service, in Tucson, Ariz. Gomez solicited clients who did not have legal status to work or reside in the United States, prepared false W-7 Forms and manufactured other fraudulent documentation. She also intentionally filed clients' federal individual income tax returns without signing the tax returns as the paid tax return preparer. Gomez directed certain federal income tax refunds issued to her clients to be transmitted to either her personal bank account or to a mail drop over which she had control.
Texas Tax Preparer Sentenced for Preparing False Tax Returns
On January 31, 2014, in Fort Worth, Texas, Michelle Johnson, of Mansfield, was sentenced to 36 months in prison and ordered to pay more than $1.6 million in restitution. Johnson pleaded guilty in August 2013 to one count of aiding and assisting in the preparation of false tax returns. According to court documents, Johnson is the owner of 3D Tax Services, a tax preparation business. In January 2010, Johnson prepared a 2009 federal tax return for an individual that was false and fraudulent in that it grossly inflated expenses associated with this individual’s auto detailing business. This individual’s business expenses were thousands of dollars less than what Johnson claimed on the Schedule C which she prepared and attached to the return without the taxpayer’s knowledge.
Louisiana Tax Preparer Sentenced or Filing False Tax Returns
On January 31, 2014, in Alexandria, La., Lashanda E. Harris, of Natchitoches, was sentenced to 18 months in prison, one year of supervised release and ordered to pay $101,795 in restitution. Harris pleaded guilty on October 29, 2013 to aiding and assisting in making and subscribing a false return. According to evidence presented in court, from January 2012 to April 2012, Harris, a tax preparer, assisted customers in preparing false tax returns for tax year 2011. The returns contained false information concerning W-2, federal tax withholdings, Earned Income Tax Credit and the American Opportunity Tax Credit. Based on the false statements in the tax returns, individuals were able to obtain in excess of $100,000 in fraudulent tax refunds. As part of the scheme, Harris received “kickbacks” from the customers.
Pennsylvania Tax Preparer Sentenced for Falsifying Tax Returns
On January 28, 2014, in Philadelphia, Pa., Shawn Sisco was sentenced to 12 months and one day in prison and one year of supervised release for preparing false federal income tax returns. Sisco was also ordered to pay a $10,000 fine and a $2,800 special assessment. According to court documents, Sisco, who owned Sisco Accounting, a home-based tax preparation business, falsified the itemized deductions on her clients' returns in order to obtain refunds in amounts larger than the filers would have otherwise received. Sisco prepared between 250 and 300 federal income tax returns annually, and charged a fee of between $150 and $250 per return. Some of Sisco’s clients have been audited as a result of the fraud and have entered into payment agreements with the IRS.
Ohio Woman Sentenced for Tax Conspiracy
On January 24, 2014, in Cleveland, Ohio, Kenyada Spates, of Euclid, Ohio, was sentenced to 19 months in prison and ordered to pay $74,904 in restitution. Spates was convicted at trial to one count of conspiracy to make false claims and nine counts of making false claims. According to court documents, Spates helped prepare 35 false income tax returns. Spates recruited friends and relatives to use as income tax refund claimants. Part of the refund money was deposited into accounts controlled by Spates.
Florida Resident Sentenced in Tax Preparation Fraud Scheme
On January 24, 2014, in Miami, Fla., Rigoberto Cabrera, of Miami-Dade County, was sentenced to 292 months in prison, three years of supervised release and ordered to pay $1,526,622 in restitution. A federal jury previously convicted Cabrera on one count of conspiracy to defraud the government with respect to claims, one count of conspiracy to commit wire fraud, 18 counts of making false claims to the IRS, four counts of wire fraud, one count of conspiracy to commit money laundering and four counts of money laundering. According to court records, Cabrera and co-conspirator Carlos Perez recruited individuals and offered to prepare their individual income tax returns with the promise that the defendants could obtain substantial tax refunds for the taxpayers. The recruited taxpayers agreed to pay Cabrera and Perez a percentage of the refunds they received. The defendants then prepared fraudulent 2008 and 2009 federal income tax returns on behalf of the recruited taxpayers, claiming tax credits or deductions to which the taxpayers were not entitled. After the taxpayers received the fraudulent refunds from the IRS, Cabrera and Perez collected a percentage of the funds from the taxpayers through checks payable to companies that the defendants controlled and shell companies. Through this scheme, the defendants claimed approximately $10,242,667 in tax refunds from the IRS. Carlos Perez was sentenced on December 5, 2013 to 33 months in prison and three years of supervised release.
Georgia Tax Return Preparer Sentenced for Filing False Tax Returns
On January 22, 2014, in Atlanta, Ga., Roberta L. Allen, of Lawrenceville, Ga., was sentenced to 33 months in prison, one year of supervised release and ordered to pay $641,421 in restitution. Allen pleaded guilty to filing false tax returns that claimed over $600,000 in fraudulent refunds. According to information presented in court, Allen prepared fraudulent federal income tax returns at a tax preparation business named Refund Now Tax Services from 2009 through 2010. On the tax returns, Allen claimed fictitious capital losses and taxes paid which resulted in her clients receiving fraudulent tax credits. Allen also charged her clients exorbitant fees for preparing the returns.
California Man Sentenced for Tax Fraud and Identity Theft Scheme
On January 22, 2014, in Los Angeles, Calif., Jerry Anthony Gregoire, a former Palmdale resident, was sentenced to 65 months in prison, one year of supervised release and ordered to pay $140,205 in restitution. Gregoire was convicted in October 2013, following a jury trial, of six counts of making false claims to the government, six counts of theft of government property and one count of aggravated identity theft. The evidence presented at trial showed that Gregoire filed fraudulent 2009 and 2010 federal income tax returns in the names of other individuals using the victim taxpayers’ names and Social Security numbers without the victim taxpayers’ knowledge or consent. The returns contained false information regarding the victim taxpayers’ residence addresses, incomes, expenses, and deductions, and claimed that the victim taxpayers were entitled to the tax refunds. The returns directed the IRS to deposit the refunds to a prepaid debit card account controlled by Gregoire. The false returns were either mailed or electronically transmitted to the IRS. Gregoire’s filing of fraudulent returns resulted in a total attempted tax loss amount of $294,487.
Texas Man Sentenced for Preparing and Filing Fraudulent Tax Returns
On January 22, 2014, Dallas, Texas, Adnan Z. Khan, of Wylie, Texas, was sentenced to 12 months and one day in prison and ordered to pay $102,836 in restitution. Khan pleaded guilty in October 2013 to one count of aiding and assisting in the preparation of fraudulent tax returns. According to court documents, Khan used his parents’ residence in Dallas to prepare federal tax returns and supporting schedules and forms for clients. However, Khan falsified items on the clients’ returns, without their knowledge, to obtain large tax returns. On many of the filed returns, Khan listed one of his personal bank accounts. Many of the tax refunds were paid to those accounts, and Khan kept a large portion of the refund, without the client’s knowledge. On several returns, Khan changed the taxpayer’s address to his address so that any IRS correspondence would be mailed to him and not the client. The copy of the return Khan provided to the client, however, reflected the client’s correct address.
Texas Tax Return Preparer Sentenced for Preparing False Tax Returns
On January 21, 2014, in Pecos, Texas, Merced Garcia Ramos was sentenced to 24 months in prison, one year of supervised release and ordered to pay $68,178 in restitution. According to court records, Ramos prepared false tax returns while working at Xpress Tax in Monahans, Texas for tax years 2006 through 2008. Ramos admitted to preparing at least 24 tax returns that were materially false in significant ways. During these same years, Ramos also directly prepared or assisted in preparing an additional tax returns that claimed refunds in excess of $1.8 million.
Hawaii Tax Preparer Sentenced on Tax Charges
On January 21, 2014, in Honolulu, Hawaii, Merla Balubar, of Ewa Beach, was sentenced to 24 months in prison and ordered to pay $326,799 in restitution. According to court documents, Balubar provided tax preparation services while doing business as Filcom Tax Services LLC. According to court documents, Balubar would prepare returns for clients for a fee during tax years 2006 through 2009, with specific returns being prepared and submitted to the IRS from 2007 through 2010. The returns contained materially false information that resulted in refunds, to which the clients were not entitled, or reduced the tax liability for the filer. This was accomplished by including within the returns false overstatements of deductible expenses. In addition, Balubar prepared a Joint Individual Income Tax Return, Form 1040, for herself and her husband, for tax year 2007 which contained materially false statements of fact by under-reporting income from business operation, income from rental property and gambling income. The return also contained false itemized deductions. Balubar also admitted to filing false returns for tax years 2008 and 2009.
South Carolina Woman Sentenced for Tax Fraud
On January 10, 1014, in Charleston, S.C., Latasha Failey, of North Charleston, was sentenced to 12 months in prison and one year supervised release. Failey pleaded guilty to fraudulent tax preparation. Evidence presented at the guilty plea established that Failey owned and operated Failey's Tax Service, a tax preparation business in North Charleston, S.C. Failey caught the attention of the IRS after an IRS fraud detection center identified a pattern of suspicious deductions on the tax returns that she prepared. Based on this information, a search warrant was executed at Failey's business in March 2011, and her client files were seized. After a thorough investigation, the IRS identified at least 145 false tax returns prepared by Failey and her employees in 2009 through 2011.
New Jersey Tax Preparer Sentenced for Preparing Fraudulent Tax Returns
On December 30, 2013, in Trenton, N.J., Jean Desrosiers was sentenced to 18 months in prison, one year of supervised release and ordered to pay $168,424 in restitution to the IRS. Desrosiers pleaded guilty on June 25, 2013 to aiding and assisting in the preparation of false tax returns. According to court documents, Desrosiers was the sole owner and operator of Jean Multiple Services which operated over time at various locations in New Jersey. For the tax years 2007 through 2011, a portion of the tax returns Desrosiers prepared for his clients were fraudulent. Desrosiers fabricated and inflated itemized deductions on Schedule A of tax returns in order to obtain tax refunds for his clients greater than those they were lawfully entitled to receive. Desrosiers also prepared certain false and fraudulent returns for his clients by fabricating and inflating Education Credits on Form 8863 and Child and Dependent Care Expenses on Form 2441. Desrosiers prepared the initial version of the false and fraudulent returns in the presence of his clients. However, on certain fraudulent tax returns, Desrosiers filed a different version of those returns with the IRS. These tax returns filed with the IRS contained higher Education Credits in order to obtain refunds in amounts even greater than the refunds claimed on the initial version of the fraudulent returns.
Florida Tax Return Preparer Sentenced for Filing False Tax Returns
On December 20, 2013, in Fort Lauderdale, Fla., Mazincia Ductant, of Sunrise, Fla., was sentenced to 36 months in prison, one year of supervised release and ordered to pay $1,317,508 in restitution. Ductant previously pleaded guilty to one count of tax fraud. According to court documents, Ductant was the owner of Ninote Tax Services, a tax preparation business in Margate, Florida. During the years 2007 through 2009, Ductant filed hundreds of tax returns on behalf of her clientele. Ductant falsified a high percentage of the returns she prepared by inflating or completely fabricating Schedule A deductions, Schedule C losses, First Time Home Buyers credits, and Household Help wages. Ductant was responsible for preparing fraudulent tax returns for approximately 125 people.
Florida Man Sentenced for Preparing False Tax Returns
On December 17, 2013, in Fort Pierce, Fla., Ventrell Bouie was sentenced to 24 months in prison, one year of supervised release and ordered to pay $288,478 in restitution. Bouie has agreed to be permanently enjoined by a Consent Judgment and Order filed in a parallel civil case, barring him in the future from ever preparing federal income tax returns for other persons. Bouie was sentenced on charges of aiding and assisting the preparation and presentation of false tax returns. According to statements made in open court and court documents, Bouie prepared multiple fraudulent tax returns for customers from January 2008 through December 2012. He supplied false income and deduction figures, failed to review the returns in detail with the taxpayers, and then electronically filed the returns for those taxpayers.
Texas Tax Preparer Sentenced for Federal Tax Violations
On December 16, 2013, in Sherman, Texas, Wellington Mandhlazi, of McKinney, Texas, was sentenced to 21 months in prison and ordered to pay $147,851 in restitution. Mandhlazi pleaded guilty on May 16, 2013 to aiding and assisting in the preparation of fraudulent tax returns. According to the court documents, in 2009, Mandhlazi operated an income tax preparation business. Mandhlazi assisted in the preparation of false federal income tax returns and included false items for educational expenses and education tax credits. Mandhlazi also admitted that his false statements were made for the purpose of defrauding the IRS. The estimated tax loss related to the false federal income tax returns prepared as a result of Mandhlazi’s fraudulent conduct, on behalf of himself and other taxpayers, was $147,851.
Florida Woman Sentenced for Preparing False Tax Returns
On December 16, 2013, in Fort Pierce, Fla., Maria Garcia, of Okeechobee County, was sentenced to 18 months in prison and one year of supervised release for aiding and assisting in the preparation and presentation of false tax returns. Garcia was also ordered to pay restitution of $534,946 and a special assessment of $100. In addition, Garcia is permanently barred from ever preparing federal income tax returns for other persons. According to statements made in court and documents filed in the case, Garcia prepared multiple fraudulent tax returns for customers from January 2008 through May 2013, first while working for other tax preparers and then in her own tax preparation business. She prepared the returns, supplied false income and deduction figures, failed to review them in detail with the taxpayers, and then electronically filed the returns for those taxpayers.
Michigan Tax Preparer Sentenced for Filing false Tax Returns
On December 12, 2013, in Detroit, Mich., Frank Sumpter, of Belleville, Mich., was sentenced to 13 months in prison, one year of supervised release and ordered to pay $190,704 in restitution to the IRS. In June 2013, Sumpter pleaded guilty to knowingly aiding and assisting in the preparation of false tax returns. According to court documents, Sumpter was a tax return preparer who operated Maxsum Express Tax Services in Ypsilanti, Mich. Sumpter prepared federal income tax returns in the name of various taxpayers for tax years 2005 to 2008, which he knew were fraudulent at the time he filed them with the IRS. Sumpter admitted preparing 25 false Form 1040 returns for his clients resulting in a tax loss of approximately $104,000. The refunds ranged from $1,200 to over $17,000. Additionally, Sumpter filed his own false individual tax returns for 2007 and 2008 resulting in a tax loss of approximately $85,000.
Former Accountant Sentenced for Tax Fraud
On December 11, 2013, in Washington, D.C., John T. Hoang, of Woodbridge, Va., was sentenced to 48 months in prison, two years of supervised release and ordered to pay $331,896 in restitution to the IRS. Hoang pleaded guilty on July 31, 2013 to willfully aiding and assisting in the preparation of false income tax returns for the 2004 tax year. According to court documents and statements made in court, Hoang was a certified public accountant (CPA) and an attorney. From January 2005 through April 2007, Hoang operated John T. Hoang CPA, a tax return preparation business, and was one of two partners who owned Tax-Smart Technology Services. In 2008, a federal district court in Virginia barred Hoang from preparing federal tax returns. Hoang prepared and supervised the preparation of client tax returns to be filed with the IRS and various state taxing authorities. For the tax years 2004, 2005 and 2006, Hoang prepared hundreds of U.S. Individual Income Tax Returns and earned substantial income from his tax preparation activities. Hoang further received a substantial portion of the refunds issued by the IRS to his clients through his businesses. Despite earning revenue through his businesses of approximately $6 million in 2004, 2005 and 2006, Hoang failed to file any federal income tax returns or pay any federal income taxes for himself or his businesses. Hoang prepared and caused the preparation of false and fraudulent 2004, 2005 and 2006 income tax returns for his clients. When preparing these false tax returns and related schedules for his clients, Hoang created wholly fictitious business income and expenses for what seemed to be a technology licensing business. The false information resulted in the client reporting fake losses from business activity and receiving either refunds larger than those they were entitled or decreases in the amount of taxes due. Hoang admitted that the tax loss caused by certain false returns he prepared was greater than $30,000 per return, and that he prepared at least 24 such false returns for the 2004 through 2006 tax years. As part of the plea agreement, Hoang admitted that the total tax loss caused by his criminal conduct was greater than $1.5 million.
Indiana Tax Preparer Sentenced for Filing False Claims
On December 10, 2013, in Evansville, Ind., Steve Pirnit was sentenced to 37 months in prison, three years of supervised release and ordered to pay more than $222,000 in restitution for filing false claims. According to court documents, from 2009 until 2011, Pirnat provided tax preparation services even though he was not a registered tax preparer with the IRS and did not have an identification number that would allow him to file tax returns on behalf of other people. Instead, Pirnat would file the tax returns he prepared and classify them as self-prepared. IRS received a complaint from a taxpayer who had retained Pirnat to prepare her tax returns for 2009 and 2010. The taxpayer had received an audit notice from the IRS in June 2011 notifying her that she needed to provide information to support her claim that she had a dependent as listed on her 2010 tax return. The taxpayer did not have any dependents and was not aware that any dependent had been listed on her tax return. IRS records showed that the taxpayer was issued a $5,633 refund related to her 2010 return and that the refund was split up and deposited into more than one account. Only $1,815 (the amount listed on the victim’s copy of the tax return) was deposited into the taxpayer’s bank account. The remaining $3,818 of the refund was electronically deposited into a bank account controlled by Pirnat.
Tax Return Preparer Sentenced for Filing a False Tax Return
On December 9, 2013, in Los Angeles, Calif., Rathana Ung, of Coto De Caza in Orange County, was sentenced to 12 months and one day in prison, one year of supervised release and ordered to pay $103,736 in restitution to the IRS. Ung, the former director and officer of Lim’s Income Tax and Lim’s Tax, Inc., pleaded guilty in July 2013 to one count of filing a false federal income tax return. According to court documents, between 2006 and 2010, Ung filed at least 60 false Forms 1040 with the IRS containing false deductions and false business losses. The tax returns contained false deductions for mileage, meals and entertainment expenses, and other unreimbursed employee business expenses. Some of the tax returns contained false Schedules C (Profit or Loss from a Business) and at least one return contained a false deduction for tuition and fees. Ung prepared the false returns so that she could gain more clients by obtaining and maintaining a reputation in the community as a return preparer who would secure large refunds for her clients.
Tax Return Preparer and Assistant Sentenced for Filing False Returns
On December 3, 2013, in Tucson, Ariz., Imelda Arredondo, of Rio Rico, Ariz., was sentenced to 39 months in prison and ordered to pay $191,702 in restitution. Arredondo pleaded guilty to conspiring to defraud the United States by filing false federal income tax returns and aggravated identity theft. Yadira Moreno, of Nogales, Ariz., was sentenced to 12 months and one day in prison and ordered to pay $113,213 in restitution. Moreno pleaded guilty to conspiring to defraud the United States by filing false federal income tax returns. According to court documents, Arredondo, a tax return preparer, filed false individual federal income tax returns with the IRS for the tax years 2008 through 2010. The returns claimed at least $186,561 in false refunds. Arredondo used her clients’ tax returns to file and receive inflated federal tax refunds by falsely inflating her clients’ wages, adding false dependents, and using false filing status all without her clients’ knowledge or permission. Moreno, Arredondo’s sister, was her tax preparation assistant.
Tax Return Preparer Sentenced for Conspiring to File False Claims for IRS Tax Refunds
On December 3, 2013, in Pocatello, Idaho, Lawrence Sikutwa, of Dallas, Texas, was sentenced to 21 months in prison, three years of supervised release and ordered to pay $1,466,799 in restitution to the IRS. Sikutwa pleaded guilty on August 28, 2013 to conspiracy to file false claims. According to the plea agreement, Sikutwa operated a tax preparation business in Dallas. He conspired with others to solicit clients for him. The co-conspirators contacted persons who needed tax preparation services, obtained their tax documents from them, and then shipped the information to Sikutwa to prepare the tax returns. Sikutwa added false dependents and false income, falsely claimed head-of-household status, and made other entries to increase the amount of the refund. Sikutwa distributed a small portion of the actual refund to the taxpayer, representing it was the entire refund, and failed to provide copies of the returns to the taxpayers. During 2006, Sikutwa filed 168 tax returns for tax year 2005, resulting in refunds of $654,368. In 2007, he filed 124 tax returns for tax year 2006, resulting in refunds of $588,982. Under the name of Harris Tax Services, Sikutwa prepared and filed 99 returns for tax year 2007, resulting in refunds of $456,888.
South Carolina Woman Sentenced for Tax Fraud
On November 22, 2013, in Columbia, S.C., Penny Maria Smith, aka Penny Maria Gardner, aka Penny Gardner Faile, of Kershaw, S.C. was sentenced to 30 months in prison, three years of supervised release and ordered to pay $82,665 in restitution. Smith pleaded guilty to fraud related to identification documents. According to evidence presented at the change of plea hearing, Smith, a tax preparer, filed false tax returns using others’ identifying information without their authority. Some of the victims had employed Smith as their tax preparer to file their taxes in previous years. However, Smith used their information or their dependents’ identifying information during additional tax years without their permission. Smith admitted to filing 86 false claims with the IRS, totaling $82,665 in loss.
Iowa Return Preparer Sentenced for Preparing and Filing Fraudulent Tax Returns
On November 19, 2013, in Cedar Rapids, Iowa, Victoria Jones, of Waterloo, was sentenced to 15 months in prison, one year of supervised release and ordered to pay $4,833 in restitution to the IRS. On August 16, 2013, Jones pleaded guilty to one count of aiding and assisting the preparation and filing of a false and fraudulent tax return. According to court documents, Jones, who owned and operated a tax return preparation business, prepared and filed a false tax return on behalf of a client, fraudulently increasing the amount of the client’s refund by falsely claiming inflated business expenses and itemized deductions and falsely claiming the client was entitled to a tax credit. Jones also filed multiple similarly false tax returns between 2007 and 2010. Finally, Jones admitted that the false and fraudulent tax returns she prepared and filed resulted in at least $30,000 in unwarranted refunds for her clients.
Owner of Mo’ Money Tax Franchise Sentenced on Conspiracy Charges
On November 19, 2013, in St. Louis, Mo., Jimi Clark, of Memphis, Tenn., was sentenced to 20 months in prison, three years of supervised release and ordered to pay $352,224 in restitution to the IRS. In July 2013, Clark pleaded guilty to conspiracy to commit tax fraud and aiding and abetting the preparation of false tax returns. According to court documents, Jimi Clark supervised the preparation of tax returns at his Mo' Money Tax franchise. The office filed at least 47 returns with false and inflated American Opportunity (AO) Credit line items. On each of the 47 returns, the taxpayers did not incur the educational expenses claimed and were not entitled to the AO credits. On the vast majority of the line items on which AO credits were claimed on the false returns, Clark and his preparers claimed exactly $3,765 in qualified education expenses. Out of 494 tax returns prepared for the 2009 tax year at Clark’s franchise, 288 returns claimed AO credits.
Texan Sentenced for Federal Tax Violations
On November 8, 2013, in Tyler, Texas, Racyna Antoinette Henry, of Longview, Texas, was sentenced to 24 months in prison and ordered to pay $277,364 in restitution. Henry pleaded guilty on May 14, 2013, to aiding and assisting in the preparation of fraudulent tax returns. According to information presented in court, in 2006, Henry began working out of her home as a tax return preparer with a company known as Preyear’s Tax and Check Cashing Services, LLC, which is based in Alabama. Around October 2007, Henry also managed and operated a company known as Henry’s Tax Service LLC out of her home. At some point in 2006, Henry admits that she began assisting in the preparation of false federal income tax returns. The false items contained false dependents, false child tax credits, false child and dependent care expenses, false losses on farming activities, and false earned income tax credits. The estimated tax loss related to the false federal income tax returns prepared with assistance from Henry from 2006 to 2010 was between $200,000 and $400,000.
Owner of Tax Service Sentenced for Tax Crimes
On November 5, 2013, in Columbus, Ohio, Neville Lyimo was sentenced to 18 months in prison, one year of supervised release and ordered to pay $4,471 in restitution to the IRS. On May 21, 2013, Lyimo was convicted of 10 counts of aiding and assisting in the filing of false federal income tax returns with the IRS. According to court documents, from 2003 through 2007, Lyimo was the owner, operator and a tax return preparer at Netask Tax Services located in Columbus, Ohio. Lyimo willfully prepared and filed his clients’ tax returns claiming false exemptions, deductions and credits for tax years 2004, 2005 and 2006. Lyimo did not review or explain the false items to his clients after the preparation was complete. The clients relied upon Lyimo to accurately prepare their tax returns. The false items resulted in larger refunds. Lyimo benefited from the larger refunds by receiving increased word-of-mouth referrals, which generated increased business volume and preparation fees.
Tax Preparer Sentenced for Filing More Than 1,300 Fraudulent Tax Returns
On November 5, 2013, in Tacoma, Wash., Cleo J. Reed, a tax preparer, was sentenced to 30 months in prison, three years of supervised release, of which six months will be served as home detention, and ordered to pay $2.4 million in restitution. Reed pleaded guilty in March 2013. According to court documents, Reed operated We 'B' Tax Service from October 2007 until July 2010. During that time period Reed filed more than 1,300 fraudulent tax returns resulting in a tax loss of $4.2 million. Reed had co-conspirators recruit low income clients for whom he could prepare false tax returns. He paid the recruiters a fee for each person they brought in to the scheme. Reed would inflate the wages that clients allegedly earned, so they could maximize their refund under the Earned Income Tax Credit. He submitted their tax returns at times without even meeting or speaking to the client.
Pennsylvania Tax Preparer Sentenced for Tax Fraud
On October 30, 2013, in Philadelphia, Pa., Friday James, of Yeadon, Pa., was sentenced to 36 months in prison and one year of supervised release. James was previously convicted on 26 counts of willfully aiding and assisting in the preparation of materially false federal income tax returns which attempted to defraud the government of more than $200,000. James was the owner of Frika Tax Services, which has since been barred from preparing federal tax returns for others. James prepared materially false federal income tax returns for tax years 2008 and 2009 which claimed that his clients were entitled to the First Time Homebuyer’s Credit and that they had incurred unreimbursed business expenses which resulted in tax refunds that the filers were not entitled to receive.
Nebraska Accountant Sentenced for Preparing Fraudulent Returns
On October 28, 2013, in Lincoln, Neb., Donald Ray Ondrak, of Lexington, was sentenced to 12 months and one day in prison, one year of supervised release and ordered to pay a $5,000 fine. According to court documents, Ondrak was a Certified Public Accountant in Lexington, Neb., who prepared tax returns for many farmers, businessmen, and businesses. In 2007, Ondrak filed a Form 1120 tax return for a medical equipment business that reflected a fraudulent $800,000 management fee expense as a “cost of labor.” This had the effect of lowering taxable income for the business, thereby reducing its tax liability by $254,715.
Michigan Tax Preparer Sentenced for Aiding In Fraudulent Returns
On October 17, 2013, in Detroit, Mich., Anthony Womack was sentenced to 12 months and one day in prison and ordered to pay $74,000 in restitution. Womack was previously convicted for preparing and filing false income tax returns. According to court documents, from 2008 through 2010, Womack prepared tax returns in Southfield, Michigan, under the name “Tax Consultants Inc.” Womack prepared and filed federal income tax returns in the name of various taxpayers for 2008 through 2010, which he knew were fraudulent. The returns were filed with inflated charitable contributions, false unreimbursed employee expenses and false education credits. In addition, Womack did not claim the income from his tax preparation business on his personal income tax returns.
Former Alabama Tax Return Preparer Sentenced for Tax Fraud and Aggravated Identity Theft
On October 24, 2013, in Montgomery, Ala., Bridgett Terry-Sankey was sentenced to 24 months and one day in prison. Terry-Sankey pleaded guilty on June 18, 2013, to one count of filing a false claim and one count of aggravated identity theft. According to court documents, Terry-Sankey worked as a tax preparer at a professional tax business in Montgomery. She prepared and electronically filed four false 2010 federal income tax returns using the means of identification of actual individuals without their knowledge or permission. Terry-Sankey then caused the false refunds to be deposited onto debit cards or issued as refund anticipation loans. She used the false refunds for her personal benefit.
Tax Preparer Sentenced for Defrauding the IRS
On October 21, 2013, in Los Angeles, Calif., Peter Chavez, a return preparer, was sentenced to 37 months in prison. In May 2013, Chavez pleaded guilty to two counts of aiding and assisting in the preparation of fraudulent tax returns. According to court documents, Chavez operated Tax Care 4 Less and later known as Tax Care For Less, in Burbank, Calif. Between 1999 and 2002, Chavez prepared, or supervised the preparation of, thousands of federal income tax returns for clients of his business, which he filed by electronic means with the IRS. In preparing these tax returns, Chavez claimed false or fraudulent itemized deductions, including false mortgage interest expenses, inflated state, local and personal property tax deductions, inflated deductions for charitable contributions and miscellaneous deductions, and false educational credits, which resulted in a reduced tax liability for Chavez’ client-taxpayers and inflated tax refunds.
Virginia Accountant Sentenced for Tax Fraud and Making False Statements to the Government
On October 18, 2013, in Alexandria, Va., Mohammad T. Al-Suqi, of Annandale, Va., was sentenced to 36 months in prison, two years of supervised release and ordered to pay $73,870 in restitution to the IRS. Al-Suqi was convicted by a trial jury on July 12, 2013, of aiding the preparation of a false income tax return, filing his own false income tax returns, and making false statements to federal agents. According to court records and evidence at trial, Al-Suqi owned and operated the tax preparation businesses, Ideal Accounting Solution and Mass Accounting and Tax Corp. For the tax years 2007 through 2010, Al-Suqi prepared and filed on behalf of his clients federal income tax returns that contained materially false and fraudulent information, including false itemized deductions on Schedule A and fraudulent education credits on Form 8863, all of which resulted in large tax refunds for the taxpayers. Al-Suqi received fees of between $100 and $250 per return and prepared thousands of federal income tax returns during the relevant time period. Al-Suqi also prepared a fraudulent tax return in 2011 for an undercover IRS agent posing as a taxpayer. In addition, Al-Suqi included false and fraudulent expenses and credits on his own 2008 and 2009 federal income tax returns. In 2013, after the IRS revoked his ability to file electronic tax returns, Al-Suqi continued to prepare and electronically file tax returns using an electronic filing number assigned to his wife. He lied to IRS agents when questioned about the activities.
Return Preparer Sentenced for Submitting False Claims
On October 2, 2013, in Madison, Wis., Rosella Collins, of Hollywood, Fla., was sentenced to 30 months in prison, three years of supervised release and ordered to pay $224,293 in restitution to the IRS and the Wisconsin Department of Revenue. Collins pleaded guilty on June 11, 2013, to submitting a false claim to the IRS. According to court documents, Collins, formerly of Janesville, held herself out as a tax preparer. Collins prepared accurate returns that she showed to her clients, but then never submitted to the IRS or the Wisconsin Department of Revenue. She then prepared and filed false returns with fictitious business expenses, withholdings, and other false entries that inflated the amount of the tax refund. Collins directed that the electronic payment of the refund be split into two amounts to go to two different accounts. One payment would go to the client and reflected the amount the client expected to see and the remainder went to an account belonging to Collins.