Examples of Questionable Refund Investigations - Fiscal Year 2011

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

Two Sentenced in Tax Refund Fraud Conspiracy

 On September 28, 2011, in Atlanta, Ga., Peter Raymond Williams, of Newark, N.J., was sentenced to 63 months in prison, three years of supervised release, and ordered to pay $812,000 in restitution.  Keith Lamone Richard, of Decatur, Ga., was sentenced to three years probation, with the first six months in home confinement with electronic monitoring, and ordered to pay $249,022 in restitution.  According to court documents, between December 2005 and March 2007, Rahman Hill, Williams, and Richard filed 123 false income tax returns for more than $1.6 million in fraudulent claims for refunds. The evidence showed that the co-conspirators obtained personal identifying information from people in homeless shelters, jails, and other locations. The information was then used to file income tax returns with falsely inflated claims for refunds.  Hill is awaiting sentencing.  A fourth co-defendant in this case, Kelcey Miller, was sentenced in July 2011 to 75 months in prison, three years of supervised release, and ordered to pay $1,660,152 in restitution. A fifth co-defendant in the case, Jabbar Ivan Pender, aka James Earl Pender, of Newark, remains in federal custody on other pending charges in New Jersey.

Woman Sentenced in Tax Refund Fraud Scheme

On September 27, 2011, in Atlanta, Ga., Lashanze Sharief, of Snellville, Ga., was sentenced to 36 months in prison, three years of supervised release, and ordered to pay $34,619 in restitution.  According to court documents, between January 2008 and January 2009, Sharief filed 176 federal and state tax returns containing identifying information for individuals who died in 2007 and 2008.  She obtained the names, social security numbers, and dates of birth and death for individuals deceased during 2007 and 2008 from public data published by the U.S. Social Security Administration. The tax returns filed contained fictitious information regarding the identity of the filer and the income and withholding claimed.

Louisiana Tax Preparer and Former Sheriff’s Deputy Sentenced

On September 22, 2011, in New Orleans, La., Tamara Scott-Landry and her husband Warren Lebeauf, Jr., both of St. Charles Parish, Louisiana, were sentenced to prison. Scott-Landry was sentenced to 87 months in prison for conspiracy to defraud the United States, wire fraud and aggravated identity theft. Lebeauf was sentenced to 30 months in prison for his role in the conspiracy. According to court documents, on or about February 19, 2004, Scott-Landry, doing business as Scott’s Accounting Service, applied for and was granted an Electronic Filers Identification Number (EFIN) by the IRS. As part of her business practices, Scott-Landry, used a computer to electronically file tax returns. Warren S. Lebeauf, Jr. was employed by the St. Charles Parish Sheriff’s Office. In his position as a St. Charles Parish Sheriff’s Deputy, Lebeauf had the ability to obtain individuals’ personal information to include names, dates of birth, and social security numbers through the Louisiana Law Enforcement Telecommunications System (LLETS). To assist Scott-Landry, Lebeauf abused his position and exceeded his authority by collecting the personal information of individuals so that false tax returns could be filed. The tax forms filed with the IRS made the returns payable to cashier’s checks and stored value cards. The funds were then deposited into bank accounts controlled by Lebeauf and Scott-Landry. The money funded to the stored value cards was then withdrawn by Scott-Landry at ATM machines. In one instance, after Scott-Landry withdrew nearly $26,000 in cash over a three-day period, Scott-Landry and Lebeauf went to a Chevrolet dealership and purchased a 2004 Chevrolet Suburban with a paper bag full of the cash.  

Georgia Tax Fraudster Sentenced

On September 21, 2011, in Atlanta, Ga., Dalawni Hollomon, of Snellville, Georgia, was sentenced to 72 months in prison, three years of supervised release, and ordered to pay $288,230 in restitution. According to court documents, between January 2008 and January 2009, Hollomon filed over 700 federal and state tax returns containing identifying information for individuals who actually had died in 2007 and 2008. Hollomon obtained names, social security numbers, dates of birth and death for individuals deceased during 2007 and 2008 from data published by the U.S. Social Security Administration on publicly available databases.  In July 2011, four months after Hollomon’s guilty plea to wire fraud, false claims, and aggravated identity theft, the IRS received evidence that she was continuing to engage in tax fraud and related criminal conduct.  Specifically, in March and April 2011, Hollomon submitted seven third-party checks, totaling $25,600 as payment towards two Ford Motor Credit auto loan accounts in her name.  When contacted by Ford Motor Credit about the checks, Hollomon stated that the payments were donations made on her behalf by members of her church.  Hollomon later faxed a letter from a minister to Ford Motor Credit indicating that the payments were made by church members. In fact, the third-party checks submitted by Hollomon were written from accounts using funds deposited from fraudulently obtained federal and state tax refunds. Further investigation by the IRS revealed that a friend of Hollomon paid a minister to write the letter to Ford Motor Credit on Hollomon’s behalf and that the letter was false to the extent it suggested that members from the church were responsible for the third-party checks submitted to Ford Motor Credit.

Second Californian Sentenced On False Tax Refund Conspiracy

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

Ohio Woman Sentenced in Fraud Case

On September 20, 2011, in Cleveland, Ohio, Sarah A. Fleming, of Macedonia, Ohio, was sentenced to 75 months in prison and ordered to pay more than $3 million in restitution after she pleaded guilty to mortgage fraud, tax fraud, aggravated identity theft, and credit card fraud. According to court documents, Fleming conspired to obtain mortgage loans for properties located in the Cleveland, Ohio and Waxhaw, North Carolina areas.  Fleming and her co-conspirators recruited straw or nominee borrowers who agreed to purchase homes and obtain mortgage loans in their names for a fee, even though they never had any intention of actually living in the homes. Fleming and her co-conspirators created false and fraudulent documents and related financial information to obtain the mortgage loans. These often included a false appraisal which significantly inflated the true value of the property; false income statements; false bank statements; and false verifications of funds on deposit by the buyer, according to court documents.  From in or about January 2009 to in or about March 2010, Fleming or one of her co-conspirators filed at least 141 false 2008 and 2009 federal income tax returns in the names of 125 individuals, resulting in $1,980,210 in false claims filed with the IRS. Fleming paid a “finder’s fee” to her co-conspirators for referring personal identifiers of real people that she could use for filing the false returns. Fleming attached a false Form W-2 to many of the fraudulent returns filed with the IRS and then submitted the false claims to the IRS electronically through Turbo Tax, according to court documents.  Fleming used the personal identifiers of 14 real people, including their social security numbers and dates of birth, to open 14 credit card accounts. She then used those fraudulent credit cards to obtain things of value totaling more than $1 million.

Tax Refund Conspirators Sentenced in Refund Fraud Scheme 

On September 19, 2011, in Charlotte, N.C., Harold Gonzalez Roque, of Lincolnton, North Carolina, was sentenced to 72 months in prison, three years of supervised release and ordered to pay $12,342,117 in restitution to the Internal Revenue Service (IRS).  According to the official court record, Roque and his co-conspirators used stolen identities and social security numbers of residents of the Commonwealth of Puerto Rico to file fraudulent tax returns claiming tax refunds. These fraudulent returns then caused the Treasury Department to mail false tax refund checks to various addresses throughout New York, North Carolina and elsewhere. Participants in the scheme then used fake identification documents to cash the fraudulently obtained tax refund checks.  To date, four other defendants have received prison terms and were ordered to pay $12,342,117 in restitution to in connection with this scheme:
• Jose Peralta - 98 months in prison and three years of supervised release
• Miguel Loria - 63 months in prison and three years of supervised release
• Richard Valera - 47 months in prison and three years of supervised release
• Marino Martinez - 40 months in prison and three years of supervised release

South Carolina Tax Preparer Gets Prison for Submitting Fraudulent Income Tax Returns

On September 14, 2011, in Columbia, S.C., Pamela McKenzie, of Spartanburg, South Carolina, was sentenced to 37 months in prison, three years of supervised release and ordered to pay over $125,000 in restitution for making a false claim for a tax refund and for identity theft. Evidence presented at her guilty plea hearing established that between 2007 and 2008 and in 2009, McKenzie, a tax return preparer, operated a business called U-Turn Tax Returns, in both North and South Carolina.  She prepared several hundred fraudulent tax returns.  The returns included false and inflated wage and withholding information, false dependants and false deductions. Based upon the returns, the IRS issued $125,193 in refunds.  McKenzie converted to her own use and retained a large portion of these refunds. In addition, evidence also revealed that McKenzie fraudulently obtained the identifying information of at least eleven taxpayers and used this information, without the permission of the taxpayers, to prepare and file fraudulent tax returns.  The tax refunds associated with these filings were deposited in bank accounts  McKenzie controlled.

Alabama Tax Preparer Sentenced for Filing False Claims

On August 31, 2011, in Montgomery, Ala., Pentoria Rice-Gray was sentenced to 18 months in prison, two years of supervised release and ordered to pay $42,779 in restitution to the IRS.  According to her plea agreement, Gray owned and operated a tax return business known as Quick Taxes in Montgomery, Alabama.  In 2008, Gray prepared and filed approximately 111 tax returns using her IRS assigned electronic filer's identification number (EFIN). In 2008, Gray unlawfully obtained the personal identifying information of actual persons. She used this information to prepare and electronically file tax returns that claimed numerous false items to obtain tax refunds, including claims that the taxpayers received household help income and were entitled to the earned income tax credit. Gray knew that the tax returns were false and filed without the taxpayers' consent or authorization.  She also prepared false social security cards and driver's licenses using the unlawfully obtained personal indentifying information and placed them into her client files. Gray requested false tax refunds totaling $257,513.  She requested refund anticipation loans for many of the false tax refunds and printed the refund anticipation loan checks from her office. She then provided the checks to other individuals who went to cash checking stores to cash the checks and return the money to her.

Rochester Woman Sentenced For Aiding in the Preparation of False Federal Income Tax Returns

On September 8, 2011, in Rochester, N.Y., Rosemarie Robinson was sentenced to 24 months in prison and ordered to pay $54,000 in restitution.  According to court documents, Robinson prepared false Wage and Tax Statements, Form W-2s, for 12 individuals. These false W-2s were submitted to the Internal Revenue Service for the tax years 2005 and 2006 and enabled the tax filers to fraudulently claim tax refunds. Robinson previously pleaded guilty to preparing false W-2s for two individuals and agreed to pay restitution, jointly and severally with the individual tax filers, to the Internal Revenue Service.

Alabama Woman Sentenced for Role in Tax Fraud Conspiracy

On September 7, 2011, in Montgomery, Ala., Laquanta Grant was sentenced to 33 months in prison and ordered to pay $2,326,738 in restitution for conspiring to defraud the United States.  Along with four other defendants, Grant was indicted on December 14, 2010, on a variety of charges stemming from a large-scale tax fraud and identity theft conspiracy.  According to court documents, the conspirators used stolen identities to file millions of dollars in false tax returns claiming fraudulent refunds over a two-year period in 2009 and 2010.  During the conspiracy, Grant was responsible for funneling more than $100,000 in fraudulent refunds to her co-conspirators.  In February 2009, Grant caused another person to open a bank account that was used to deposit the fraudulent tax refunds.  Between March 2010 and May 2010, Grant accompanied that individual to the bank to ensure the individual withdrew the fraudulent refunds from the bank account and provided the monies to Grant and her co-conspirators.  Between March 2010 and July 2010, Grant received more than $100,000 in checks from Betty Washington, who was also helping move fraudulent refunds, and provided some of the money to others.

Georgia Man Sentenced for Filing Fraudulent Tax Returns

On September 6, 2011, in Atlanta, Ga., Michael Thornton, of Union City, Georgia, was sentenced 20 months in prison, one year of supervised release, and ordered to pay $319,242 in restitution. Thornton pleaded guilty in June 2011 to tax charges.  According to court documents, Thornton worked as an operations manager at a collection agency from 2005 through 2007.  While in that position, he prepared and filed fraudulent tax returns for numerous co-workers and associates.  Disregarding the information given to him by the taxpayers, Thornton inflated their incomes and fabricated deductions on the returns to obtain tax refunds that were not truly owed. Thornton charged between $150 and $650 for each return, and also had some of the refund checks deposited in his personal bank account.  When the IRS requested verification from Thornton’s company for the wages claimed on the fraudulent returns, Thornton attempted to submit a fraudulent verification consistent with the bogus wages, but was caught by the company’s owner and fired before he could do so.  Thornton filed over 340 returns for the 2005 and 2006 tax years.  IRS agents examined a number of those returns and identified over $1.8 million in false items claimed by Thornton, resulting in a tax loss to the government of nearly $320,000.  Thornton also filed a fraudulent personal return for himself in the 2005 tax year.

Louisiana Woman Sentenced for Filing False Claims for Refunds

On September 6, 2011, in New Orleans, La., Tarshia McGary was sentenced to 12 months and a day in prison, three years of supervised release and ordered to pay $80,298 in restitution to the Internal Revenue Service (IRS).  McGary pleaded guilty in June 2011 to conspiracy to defraud the government by filing false claims for refunds. According to court documents, McGary used identifying information such as social security numbers, dates of birth, etc. to prepare and file fraudulent tax returns with the IRS, to obtain fraudulent tax refunds.  McGary received the stolen identities from individuals that stole the documents from an office building that was being cleaned after Hurricane Katrina. These individuals then brought the stolen documents back to McGary where they discussed filing tax returns in the names on the list. They discussed ways to maximize the tax refunds by preparing the tax returns with fraudulent self-employment income, generally ranging from $11,000 to $13,000 and by adding false dependents to achieve the maximum Earned Income Tax Credit, usually generating a refund of approximately $2600 to $4500.  McGary then opened prepaid debit card accounts using the stolen identities to deposit the fraudulent refunds. They used the Turbo Tax website to file the fraudulent tax returns. Once the returns were filed and the refunds processed, McGary, and others, directed the debit card company to mail the debit cards to different addresses, including post office boxes to avoid the suspicion that would have accompanied mailing all of the debit cards to one address. Once they received the cards, they could use the cards to generate cash, as well as to purchase personal items.

North Carolina Tax Preparer Sentenced for Fraudulent Tax Preparation

On September 2, 2011, in Greensboro, N.C., Pamela Denise Elliott, of Laurinburg, North Carolina, was sentenced to 30 months in prison, one year of supervised release and ordered to pay $46,848 in restitution to the Internal Revenue Service.  According to the indictment, Elliott operated an income tax preparation business called Z&T Tax Service in Laurinburg where she prepared federal and state income tax returns for clients for a fee. Elliott was authorized by the IRS to electronically file tax returns and issue refund anticipation loans. In 2010, the Fraud Detection Center of the IRS noticed a pattern of suspicious Schedule C income that was statistically improbable. The Fraud Detection Center notified the Criminal Investigation Division of the IRS that suspicious tax returns were being filed through Elliott’s tax preparation business. The criminal investigation revealed that, from 2006 through 2008, many of the returns Elliott prepared had inflated wages or fictitious Schedule C income from operating a business. These inclusions were intended to qualify the clients for the earned income credit and obtain tax refunds.     
 

Alabama Woman Sentenced for Tax Fraud

On August 31, 2011, in Birmingham, Ala., Joann Smith Choat, of Tuscumbia, Alabama, was sentenced to 12 months and one day in prison for a tax fraud conspiracy she helped a prison inmate conduct.  Choat was also ordered to pay $148,685 in restitution to the IRS. Choat pleaded guilty to conspiracy to defraud the Internal Revenue Service, mail fraud and conspiracy to commit mail fraud in June 2011. Choat was involved in the tax fraud scheme with Ricky Walter Denton, of Tuscumbia. Denton pleaded guilty to the conspiracy and mail fraud charges in August.  According to court records, the couple defrauded the IRS of $148,685 through falsified income tax forms between January 2007 and May 2010. Denton obtained social security numbers and other identifying information of fellow inmates and used that information to create false tax forms, which he mailed to post office boxes in Tuscumbia that Choat had opened at his request, according to Denton and Choat’s plea agreements. Choat submitted the fraudulent tax forms to the IRS, and when she received refunds on them, deposited the $148,685 in U.S. Treasury checks into her personal credit union account, according to court records.

Previously Convicted Fraudster Sentenced for Participating in Tax Fraud Scheme

On August 24, 2011, in Atlanta, Ga., Joseph Dominic Flowers was sentenced to 80 months in prison, five years of supervised release and ordered to pay $672,553 in restitution ($73,551 of which is jointly and severally due from Flowers’ co-conspirators).  Flowers was the fourth, and last, co-conspirator from this scheme to be sentenced.  Flowers’ co-conspirators, Kazeem Ajala of Atlanta, Georgia; Michael Sapp of Hopewell, Virginia; and Britten Wilder of Atlanta, Georgia, were sentenced on July 27, 2011. The four co-conspirators met in federal prison and hatched a criminal scheme to file false income tax returns after they were released from custody. According to information presented in court, in or around 2009, after their release from prison, Ajala, Sapp, and Wilder devised the fraudulent tax fraud scheme where they prepared fraudulent returns using the names and personal identifiers of current prison inmates, created fraudulent W-2 forms using fake business names, and requested that the IRS send the refunds by mail to an address they controlled.  Ajala then recruited Flowers to the conspiracy to illegally cash the fraudulent refund checks.  On June 27, 2011, Flowers pleaded guilty to charges of mail fraud, filing false claims with the government, and aggravated identity theft.

Former Arizona Resident Sentenced for Tax Refund Fraud

On August 23, 2011, in Tucson, Ariz., Michael Thomas McQuillen, of Fort Worth, Texas, was sentenced to 27 months in prison, three years of supervised release, and ordered to pay $155,986 in restitution to the Internal Revenue Service (IRS).  McQuillen pleaded guilty on March 3, 2011, to filing two false claims for federal income tax refunds.  According to court documents, McQuillen, who previously resided in Tucson, Arizona, filed false claims for federal income tax refunds of $65,906 for 2005 and $90,080 for 2006.

California Man Sentenced for Preparing False Tax Returns

On August 22, 2011, in Los Angeles, Calif., Nestor Bermudez, of West Covina, was sentenced to12 months in prison, six months of home confinement, and  ordered to pay $170,005 in restitution to the Internal Revenue Service (IRS).  Bermudez pleaded guilty in January 2011 to preparing and submitting to the IRS a false tax return in the name of another individual.  According to his plea agreement, Bermudez admitted that between January 2009 and April 2010, he agreed to prepare false and fraudulent tax returns seeking tax refunds in exchange for a fee of up to $500 per tax return.  The returns were fraudulent in that they falsely reported filing status, income, and number of dependants and falsely claimed tax refunds based upon the earned income tax credit, child care credit and/or recovery rebate credit.   Bermudez prepared 127 fraudulent tax returns for calendar years 2007, 2008, and 2009. 

Alabama Man Sentenced for Role in Tax Fraud Conspiracy

On August 9, 2011, in Montgomery, Ala., Eric Bernard Caldwell was sentenced to 30 months in prison and ordered to pay $386,100 in restitution to the Internal Revenue Service (IRS).  According to court documents, Caldwell was part of a conspiracy to file false federal tax returns using stolen identities. Caldwell would provide identity information to co-conspirator Ora Mae Adamson, who would file the returns, in exchange for a cut of the illicit refunds generated by the false tax returns. Adamson was sentenced to 46 months in prison on March 10, 2011, while another co-conspirator, Jeffrey Leon Ceaser, was sentenced to 36 months in prison on March 2, 2011.

Wisconsin Man Sentenced to Prison for Filing False Claims for Income Tax Refunds

On August 5, 2011, in Madison, Wis., Jan Sollman, of New Richmond, Wisconsin, was sentenced to 12 months in prison for filing a false refund claim with the IRS. Sollman pleaded guilty on May 23, 2011, to one count of filing a false income tax return for tax year 2005 that requested a refund of $34,394. According to his plea agreement, Sollman filed false claims for refunds for tax years 2003-2008 totaling $170,863. He agreed to cooperate with the IRS in determining his correct civil tax liability for those years.

Former VA Employee Sentenced in Identity Theft Case

On August 5, 2011, in Wilmington, N.C., Michael Ray Woods, of Fayetteville, North Carolina, was sentenced to 132 months in prison, three years of supervised release and ordered to pay $464,000 in restitution. In February 2011, a jury convicted Woods of preparing false tax returns, wire fraud, identity theft and aggravated identity theft. Woods was employed by the U.S. Department of Veterans Affairs as a Data Warehouse Manager. In this position, Woods was responsible for transferring large amounts of electronic patient data held by VA hospitals in North Carolina and Virginia to a “data warehouse” computer in Richmond, Virginia. Woods worked for the VA from home in Fayetteville under a “tele-commuting” arrangement. Simultaneously, Woods was operating an extensive tax return preparation business out of his house. The evidence at trial showed that Woods repeatedly prepared and submitted false personal income tax returns to the IRS on behalf of customers. These false returns typically included claims for fake education credits, fake business expenses and fake dependents to increase deductions and generate earned income credits. The evidence at trial showed that Woods stole personal identification information of disabled veterans and used them, as well as others, as fake dependents. Woods profited from his scheme by automatically taking fees out of the resulting fraudulent customer refunds, but also by demanding $500 cash payments for the use of fake dependents. Woods’ tax return scheme grew dramatically by generating the fraudulent refunds, which in turn generated “word-of-mouth” publicity by customers. By 2007, Woods was filing over 800 returns a year and taking automatic fees of over $150,000.

Illinois Woman Sentenced for Tax Fraud

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

Arizona Man Sentenced for Conspiracy to Defraud the Government

On August 1, 2011, in Phoenix, Ariz., Jaron Todd West was sentenced to 12 months and a day in prison, three years of supervised release and ordered to pay over $800,000 in restitution.  In addition, West was ordered to cooperate with the Internal Revenue Service (IRS) and the State of Arizona Department of Revenue to file correct income tax returns and pay all tax liabilities.  West pleaded guilty in February 2011 to conspiracy to defraud the government.  According to court documents, Jaron West conspired with Lynnesha West and others to file false income tax returns.  Jaron West and others would provide names and social security numbers to Lynnesha West who would fabricate information on the tax returns to generate refunds. The refunds would be deposited into bank accounts controlled by the co-conspirators.  Jaron West would also solicit clients for Lynnesha West who paid referral fees. Lynnesha West was sentenced on June 6, 2011, to three years probation.

Repeat Offenders Sentenced On Tax Fraud Charges

On July 27, 2011, in Atlanta, Ga., Kazeem Ajala of Atlanta, Georgia; Michael Sapp of Hopewell, Virginia; and Britten Wilder of Atlanta, Georgia, were sentenced on charges of mail fraud, filing false claims with the government, and aggravated identity theft relating to a joint scheme to file false income tax claims.  The three defendants, after meeting each other earlier in federal prison, hatched a scheme upon their release from custody to file false income tax claims.  Wilder was sentenced to 64 months in prison and three years of supervised release.  Sapp was sentenced to 54 months in prison  and three years of supervised release.  Ajala, who cooperated with the investigation, was sentenced to 30 months in prison and three years of supervised release.  According to information presented in court, in or around 2009, after their release from prison, Ajala, Sapp, and Wilder devised a fraudulent tax fraud scheme that involved preparing fraudulent returns using the names and personal identifiers of current prison inmates, creating fraudulent W-2 forms using fake business names, and asking the IRS to mail the refunds to addresses they controlled.  Ajala then recruited a fourth defendant, Joseph Flowers, to the conspiracy to cash the fraudulently obtained refund checks through illegal means.

Washington Man Sentenced for Filing False Claims for Income Tax Refunds

On July 27, 2011, in Spokane, Wash., Richard Ivan Vancil was sentenced to 23 months in prison, three years of supervised release, and ordered to pay $54,781 in restitution to the Internal Revenue Service (IRS).  Vancil pleaded guilty on April 19, 2011, to two counts of making a false claim for income tax refunds. According to court documents, while serving a custodial sentence for a state crime at Coyote Ridge Corrections Center in Connell, Washington, Vancil prepared and submitted approximately 63 false claims for income tax refunds totaling $92,798.  Vancil filed three claims for tax refunds in his name; the remaining 60 false claims were presented in the names of other inmates. The scheme was identified by the Washington State Department of Corrections and the IRS Fraud Detection Center.

Two New Jersey Men Sentenced to Prison for Fraud Conspiracy

On July 25, 2011, in Trenton, N.J., Johnson Coker, of Old Bridge, N.J., and Adebowale Sheba, of Somerset, N.J., were sentenced to 70 and 72 months in prison, respectively, and three years of supervised release. Both defendants pleaded guilty to conspiracy to defraud the United States. According to documents filed in this case and statements made in court: Beginning in January 2005, Coker, Sheba, and their co-conspirators purchased the personal identifying information of hundreds of identity theft victims – including their names, dates of birth, and social security numbers. The defendants and their co-conspirators then used the victims' personal information to create and file materially false and fraudulent individual income tax returns with the IRS in the victims’ names. Coker, Sheba, and their co-conspirators used their home addresses, or addresses they controlled, on the tax returns so they could receive the checks. In total, they used approximately 41 separate addresses for this purpose.  They would then deposit the checks into approximately 24 separate bank accounts and made cash withdrawals from the accounts or directed monies from those accounts to others they controlled.  From approximately January 2005 through October 2009, the conspirators filed thousands of returns that sought nearly $11.5 million in refund checks.  In addition to the prison terms, Coker was ordered to pay $976,030 in restitution; Sheba was ordered to pay $609,521.

California Man Sentenced for Filing False Tax Claims with IRS

On July 25, 2011, in Los Angeles, Calif., Dion Jones, of Westchester, California, was sentenced to 24 months in prison, followed by three years of supervised release and ordered to pay $92,854 in restitution.  Jones pleaded guilty on February 11, 2011, after being indicted on three counts of making fraudulent claims to the United States and conspiracy to defraud the government.  According to the indictment, Jones recruited individuals to file tax returns that sought tax refunds based on fictitious gambling winnings and losses.  False IRS Forms W-2G were given to tax return preparers, along with other information, for use in preparing false tax returns. The tax returns filed with the IRS claimed refunds, based upon fictitious gambling winnings, losses and withholdings, which Jones and his co-conspirators were not entitled to receive.  The tax return scheme operated over an 18-month period that ended in September 2007.    

New Jersey Man Sentenced to More Than Three Years in Prison for Fraud Conspiracy

On July 11, 2011, in Trenton, N.J., Taiwo Daisi was sentenced to 37 months in prison, followed by three years of supervised release and ordered to pay $690,532 in restitution for his role in a conspiracy to file thousands of false and fraudulent federal income tax returns.  Daisi previously pleaded guilty to an Information charging him with conspiracy to defraud the IRS.  According to documents filed in this case and statements made in court, Daisi, along with several co-conspirators, purchased the personal identifying information of hundreds of identity theft victims – including their names, dates of birth, and Social Security numbers. Daisi and his co-conspirators then used the personal information of the victims to create and file materially false and fraudulent individual income tax returns with the IRS in the victims’ names.  Daisi and his co-conspirators used their home addresses or addresses they controlled on the tax returns so they could receive the checks. In total, they used approximately 41 separate addresses for this purpose.  Daisi and his co-conspirators would deposit the checks into approximately 24 separate bank accounts. They then made cash withdrawals from the accounts or directed monies from those accounts to others they controlled.  From approximately January 2005 through October 2009, Daisi and his co-conspirators filed thousands of returns that, combined, sought nearly $11.5 million in refund checks.  Three of Daisi’s co-conspirators – Johnson Coker, Adebowale Sheba, and Adedemi Adenni – have pleaded guilty to the same charge and await sentencing.

Man and Woman Sentenced to Prison for Participating Scheme to Steal Refund Checks and Stimulus Payments

On June 29, 2011, in Chicago, Ill., Miklos Ilyes was sentenced to 36 months in prison, two years of supervised release, and ordered to pay $67,313 in restitution to the Internal Revenue Service. Ilyes pleaded guilty in March 2011 to conspiracy to defraud the U.S. government and theft of Treasury Department funds.  According to his plea agreement, from 2008 to about April 2010, Ilyes, together with his co-defendants, participated in a scheme to steal and convert to his own use federal income tax returns and economic-stimulus payments he was not entitled to receive. Specifically,  Ilyes gave co-defendant Ovidiu Isac his Chase bank account information, including account numbers and routing numbers. Ilyes also gave Isac information for bank accounts he opened at Fifth Third Bank and North Community Bank. In or about May 2008, Isac called Ilyes to inform him that money had been deposited into one of defendant’s bank accounts. Ilyes subsequently learned that the funds were from the U.S. Treasury representing income tax returns or economic stimulus payments. Ilyes wrote Isac checks for approximately 80-90 percent of each refund and kept the remaining 10-20 percent for himself knowing that neither he nor Isac was entitled to the funds. Ilyes also received five percent of the funds of another bank account that was also part of the scheme. On July 5, 2011, another defendant in the scheme, Virginia Talos, was sentenced to 20 months in prison, three years of supervised release, and was ordered to pay $67,896 in restitution..  Talos pleaded guilty to conspiracy to defraud the United States and theft of U.S. property. According to the indictment, Talos opened accounts to receive funds from the conspiracy and withdrew funds which she converted to her own use. 

Georgia Man Sentenced on Tax Fraud Charges

On July 7, 2011, in Atlanta, Ga., Kelcey Pierre Miller was sentenced to 75 months in prison, followed by three years of supervised release and ordered to pay $1,660,152 in restitution.  Miller pleaded guilty in April 2011 to charges of obtaining more than $1.6 million by filing false income tax returns and aggravated identity theft. According to information presented in court, Miller and four co-defendants obtained personal identifying information from people in homeless shelters, jails, and other locations, and used that information to file income tax returns with falsely inflated claims for refunds.  The conspirators filed 123 returns between December 2005 and March 2007, and received $1,660,152 in fraudulent refunds.

California Man Sentenced in $6.2 MillionTax Refund Fraud Scheme

On July 6, 2011, in San Francisco, Calif., Samuel Warren was sentenced to 21 months in prison, followed by three years of supervised release, and ordered to pay $64,140 in restitution.  According to his plea agreement, Warren admitted that, beginning in June 2008, he and others participated in obtaining tax refunds in the names of others individuals.  The co-conspirators used prisoners’ identities to file false returns.  Warren was charged while he was serving a sentence in state prison and is currently in custody.  Court documents showed that 790 fraudulent income tax returns were filed that resulted in more than $6.2 million in fraudulent refund claims.  Also sentenced in this tax refund scheme were Niyah Edwards, of Sacramento, Calif., who was sentenced on May 17, 2011, to 51 months in prison and Ayani Davis, of Antioch, Calif., who was sentenced on April 13, 2011, to 63 months in prison.  Three other defendants are awaiting sentencing.

Man and Woman Sentenced to Prison for Participating Scheme to Steal Refund Checks and Stimulus Payments

On June 29, 2011, in Chicago, Ill, Miklos Ilyes was sentenced to 36 months in prison, two years of supervised release, and ordered to pay $67,313 in restitution to the Internal Revenue Service. Ilyes pleaded guilty in March 2011 to conspiracy to defraud the U.S. government and theft of Treasury Department funds.  According to his plea agreement, from 2008 to about April 2010, Ilyes, together with his co-defendants, participated in a scheme to steal and convert to his own use federal income tax returns and economic-stimulus payments he was not entitled to receive. Specifically,  Ilyes gave co-defendant Ovidiu Isac his Chase bank account information including account numbers and routing numbers. Ilyes also gave Isac information for bank accounts he opened at Fifth Third Bank and North Community Bank. In or about May 2008, Isac called Ilyes to inform him that money had been deposited into one of defendant’s bank accounts. Ilyes subsequently learned that the funds were from the U.S. Treasury representing income tax returns or economic stimulus payments. Ilyes wrote Isac checks for approximately 80-90 percent of each refund and kept the remaining 10-20 percent for himself knowing that neither he nor Isac was entitled to the funds. Ilyes also received five percent of the funds of another bank account that was also part of the scheme. On July 5, 2011, another defendant in the scheme, Virginia Talos, was sentenced to 20 months in prison, three years of supervised release, and was ordered to pay $67,896 in restitution..  Talos pleaded guilty to conspiracy to defraud the United States and theft of U.S. property. According to the indictment, Talos opened accounts to receive funds from the conspiracy and withdrew funds which she converted to her own use. 

Alabama Man Sentenced in Income Tax Fraud Case

On June 29, 2011, in Montgomery, Ala., Michael T. Chappell was sentenced to  54 months in prison and ordered to pay over $7,000 in restitution to the United States.  In April 2011 Chappell pleaded guilty for filing false and fraudulent federal income tax returns. According to evidence presented at the guilty plea and sentencing hearings, Chappell operated a tax preparation business known as Rocket Refund with locations in Montgomery, Alabama.  Chappell and his employees prepared thousands of fraudulent federal income tax returns to maximize refunds for individuals by manipulating figures that resulted in maximum Earned Income Credit amounts.  Between 2005 and 2008, Chappell and his employees would obtain refunds for individuals, some of whom had no employment during the years in question, ranging from around $2,600 - $4,800 per return. The intended loss to the United States was determined to be over $7 million.

Former Los Angeles County Social Worker Sentenced in Identity Theft and Tax Scam

On June 27, 2011, in Los Angeles, Calif., Trang Van Dinh, a former employee with the Los Angeles County Department of Social Services, was sentenced to 46 months in prison and ordered to pay $667,034 in restitution to the Internal Revenue Service (IRS).  Dinh pleaded guilty in February 2011 to two counts of filing false claims against the United States for engaging in a large-scale identity theft and a false tax return scheme.  According to court documents, Dinh was employed as an Eligibility Worker II for Los Angeles County from 1999 through 2009 and had access to names and social security numbers belonging to individuals seeking public assistance through the county Department of Social Services.  Dinh filed fictitious tax returns using DSS clients' names in 2009 and 2010, typically claiming that the taxpayers suffered business losses or were entitled to a credit for having a dependent.  All of the returns requested direct deposit of the federal tax refunds to a bank account controlled by Dinh.  In each instance, Dinh filed 197 fictitious returns without the knowledge, consent or authorization of the person whose name he had used to file the return which sought refunds totaling $2,212,996.

Minnesota Man Sentenced for Preparing False Claims for Tax Refunds

On June 22, 2011, in Minneapolis, Minn., Tyrone Dwayne Houston was sentenced to eight months in prison and four months of home confinement with electronic monitoring on one count of making false claims for tax refunds. Houston was indicted on February 8, 2011, and pleaded guilty on March 16, 2011. In his plea agreement, Houston admitted that in preparing federal individual income tax returns for others, he falsely stated the wage information of individuals to obtain tax refunds that exceeded the amounts the various taxpayers were actually entitled to receive. Houston, who was paid for preparing tax returns for others, admittedly filed approximately 24 false returns, along with two for himself, for tax years 2005 and 2006.  

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

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

Alabama Women Sentenced for Roles in Tax Fraud Conspiracy

On June 16, 2011, in Montgomery, Ala., Betty Washington, of Montgomery County, Alabama, was sentenced to 21 months in prison and ordered to pay $1,440,632 in restitution for conspiring to file false claims for refunds.  Wendy Delbridge, also of Montgomery County, was sentenced to five days in jail, six months home confinement and ordered to pay $45,219 in restitution for her role in the same conspiracy. According to court documents, between October 2009 and September 2010, Washington conspired with others to fraudulently obtain tax refunds.  The conspiracy involved using stolen identities to file false income tax returns claiming refunds.  At the behest of a co-conspirator, Washington opened a bank account at a local bank to receive tax refunds from the scheme.  Sixteen different refunds, issued in the name of 16 different individuals, were deposited into the bank account.  When the bank closed the account because of the suspicious nature of the deposits, Washington opened new bank accounts at a credit union in her name and in the name of Central Alabama Financial Services.  Over the course of several months, more than 300 false refunds were deposited into these bank accounts, totaling more than $1.4 million in fraudulent refunds.  To distribute the fraudulent refunds, Washington wrote checks and obtained official checks payable to various co-conspirators and associates and withdrew refund money in cash as well.  She retained a portion of the refunds for herself.  Delbridge played a similar role.  At a co-conspirator’s direction, she also set up a bank account at a local bank to receive fraudulent refunds.  When the bank closed the account because it was receiving tax refunds that were not in Delbridge’s name, she opened a new bank account at a credit union.  Between February 2010 and June 2010, the two bank accounts received more than $50,000 in false tax refunds, which Delbridge withdrew in cash and provided to her co-conspirators.  In return, Delbridge was paid a portion of the fraudulently obtained refunds.

Illinois Woman Receives Prison Sentence for Filing a False Federal Income Tax Return

On June 10, 2011, in Fairview Heights, Ill., Brenda Mason, of Centreville, Illinois, was sentenced to 14 months in prison and one year of supervised release for her conviction for filing a false federal income tax return. As a condition of the supervised release, Mason must also pay $8,696 in restitution to the Internal Revenue Service and to the Illinois Department of Revenue.  As part of Mason’s guilty plea on February 28, 2011, to filing a false 2008 federal income tax return, she also admitted to helping relatives and other individuals obtain fictitious W-2s so they could also file false federal tax returns to obtain fraudulent refunds. She also admitted to filing a false 2008 federal income tax return to obtain a fraudulent refund that was based on falsified W-2 earnings.

Tennessee Man Sentenced in First Time Home Buyers Credit Scheme

On June 7, 2011, in Memphis, Tenn., Kenneth Harris was sentenced to 68 months in prison, followed by three years of supervised release and ordered to pay $2,520,744 in restitution. Harris pleaded guilty in December 2010 to one count of conspiracy to file a false claim against the United States. According to court documents, Harris owned and operated Harris and Associates Tax Service in Memphis, Tennessee.  Harris admitted during his plea hearing that from January 1, 2009, until July 14, 2009, he and another individual, Lacrecia Ward, also from Memphis, Tennessee, conspired with each other to defraud the United States by filing false tax returns with the Internal Revenue Service (IRS) that falsely claimed the First Time Home Buyers Tax Credit. Ward worked as a “runner” for Harris, helping to locate individuals to participate in the scheme. Ward pleaded guilty to one count of conspiracy to file a false claim against the United States in December 2010. She was sentenced on March 17, 2011, to serve 18 months confinement and ordered to pay $255,538 in restitution to the IRS.

Georgia Woman Sentenced for False Tax Return Scheme

On June 2, 2011, in Augusta, Ga., Charlene Hughes, of Waynesboro, Georgia, was sentenced to 30 months in prison, followed by three years of supervised release and ordered to pay $76,768 in restitution. Hughes pleaded guilty in October 2010 for her role in a conspiracy to defraud the federal government by preparing and filing false tax returns. Evidence presented during the guilty plea and sentencing hearings showed that Hughes assisted in the preparation of more than twenty-five fraudulent tax returns which falsely claimed more than $90,000 in refunds between April 2006 and August 2007.

Tax Preparer Sentenced for Preparing and Filing a False Tax Return

On June 1, 2011, in Savannah, Ga., Samantha Sanders was sentenced to 12 months and 5 days in prison, followed by one year of supervised release. Sanders pleaded guilty in February 2011 for her role in preparing and filing a false income tax return while working as a tax return preparer in Savannah. According to the evidence presented during the guilty plea hearing, Sanders admitted that from 2007 to 2008, while working at her mother’s tax preparation business in Savannah, Georgia, she falsified the income on dozens of tax returns for the purpose of inflating tax refunds for her clients.

IRS Revenue Agent Sentenced for Filing False Tax Returns

On May 25, 2011, in Los Angeles, Calif., Albert Bront, a revenue agent with the Internal Revenue Service (IRS), was sentenced to 36 months in prison and ordered to pay $127,116 in restitution to the IRS.  Bront pleaded guilty in January 2011 to one count of subscribing to a false return and two counts of assisting others in subscribing to false tax returns.  According to court documents, Bront admitted filing his own fraudulent 2005 tax return, as well as filing fraudulent tax returns for the tax years 2003 through 2007 that claimed excessive deductions and failed to report certain income. Bront also filed fraudulent tax returns on behalf of relatives, without their knowledge. In all, Bront admitted that he filed 15 false tax returns. He further admitted that he stole large tax refunds that were the result of the fraudulent tax returns filed on behalf of the unknowing relatives.  

Alabama Tax Preparer Sentenced for Identity Theft and Filing False Tax Returns

On May 24, 2011, in Montgomery, Ala., Sharon Thurman, of Elmore, was sentenced to 60 months in prison followed by three years of supervised release for stealing identities and using them to file false tax returns.  According to the indictment and evidence introduced during trial, Thurman owned and operated Sharon’s Tax Service in Elmore.  Between January and April 2008, Thurman filed 14 fraudulent tax returns in which she unlawfully attempted to obtain tax refunds intended for individuals whose identities she stole.  Two victims in whose name she received payment from the IRS testified that they never received any money from Thurman.  All 14 victims testified at trial that, to the best of their knowledge, they had never met Thurman and had never been to Sharon’s Tax Service.

North Carolina Tax Return Preparer Sentenced for Tax Fraud

On May 19, 2011, in Charlotte, N.C., Monica Vinson Smith was sentenced to 30 months in prison.  Smith was also ordered to pay $525,270 in restitution to the Internal Revenue Service (IRS), representing the tax loss from unlawful conduct.  According to official court documents and information brought out in court proceedings, from 2006 to 2008, Smith engaged in a false tax refund and identity theft scheme in Charlotte by holding herself out to the public as a professional tax return preparer. Smith filed approximately 151 false tax returns during the scheme which contained numerous falsities, including bogus withholdings, fictitious dependents, and false child tax credits, education credits, and dependent care expenses, among others. Smith also utilized social security numbers to file false tax returns which generated bogus tax refunds for individuals who did not authorize or request her services. Smith retained a portion of the bogus tax refunds as a “tax preparation fee.” Moreover, to conceal the scheme from the IRS, Smith frequently changed business locations and falsely obtained and utilized multiple electronic filers’ identification numbers.

California Woman Sentenced in $6.2 Million Tax Refund Scheme

On May 18, 2011, in San Francisco, Calif., Niyah Edwards was sentenced to 51 months in prison, followed by three years of supervised release and ordered to pay $131,486 in restitution for her role in a false tax refund scheme.  Edwards pleaded guilty in December 2010 to conspiracy to file false claims.  According to her plea agreement, Edwards admitted that beginning in April 2008, she helped obtain tax refunds based on tax returns that were filed using other individuals’ names.  She admitted that in some cases, names appearing on the tax returns were stolen identities used to claim false refunds.  In other cases, an individual would give Edwards their name to use on the return and false information was created to obtain a fraudulent refund for that person.  In 2008, a prison inmate agreed to provide her with the names of other prisoners to file false tax returns using that information.  Using the names given to her by the prison inmate and others, she assisted in filing the false tax returns electronically from the computer at her residence.

Two Women Sentenced for Identity Theft

On May 10, 2011, in Hammond, Ind., Rosetta Buchanan, of Chicago, Illinois, and Francesca Foster, of Milwaukee, Wisconsin, were each sentenced to 41 months in prison after pleading guilty to identity theft. Buchanan was also sentenced to three years of supervised release and Foster to two years of supervised release. Both Buchanan and Foster pleaded guilty in December 2010.  In their plea agreements, they acknowledged using information obtained illegally from a tax preparation business and others to file over 82 false income tax returns and used the names and identities of at least 260 individuals to file false claims for refunds.

Tennessee Resident Sentenced on Tax Fraud Charges

On May 12, 2011, in Memphis, Tenn., Andre Fields was sentenced to 52 months in prison, followed by 2 years of supervised release, and ordered to pay $163,839 in restitution to the Internal Revenue Service (IRS). Fields pleaded guilty in March 2011 to two counts of filing false claims against the United States. According to an Information filed with the court, Fields filed two 2007 federal tax returns with the IRS for individuals whose identity he had stolen. Fields inserted fictitious information on the tax returns, claiming refunds he was not entitled to receive. One return claimed a refund of $4,716 and the other claimed a refund of $2,113. As part of Fields’ plea agreement, he agreed to pay restitution to the United States for the full amount of the tax loss as well as other uncharged false claims he was responsible for creating as part of his scheme.

California Man Sentenced for Conspiring to Submit False Tax Returns in the Names of State Prisoners

On May 6, 2011, in Fresno, Calif., Abel Robledo was sentenced to 24 months in prison and ordered to pay $13,167 in restitution to the Internal Revenue Service (IRS).  Robledo pleaded guilty on March 4, 2011, to conspiracy to submit false income tax returns.  According to his plea agreement, Robledo admitted that from March 2005 to June 2007 while he was incarcerated at Corcoran State Prison and elsewhere, he conspired with Patricia Serbera-Robledo to submit false individual federal income tax returns in his name and in the names of other state prisoners.  The income tax returns claimed false wage earnings by the prisoners, and claimed false federal income tax withholdings that did not exist, thereby causing the prisoners’ income tax returns to fraudulently claim tax refunds. The prisoners actually either had no earnings or earned only a minimal amount, had no withholdings, and were not entitled to any tax refunds.

Woman Sentenced for Filing False Claims for Tax Refunds

On April 14, 2011, in San Francisco, Calif., Ayani Davis was sentenced to 63 months in prison, followed by three years supervised release, and ordered to pay $241,870 in restitution for her role in a false tax refund scheme.  According to her plea agreement, beginning in 2008, Davis helped obtain tax refunds from the Internal Revenue Service (IRS) based on tax returns that were filed using other individuals’ names, many of whom were prisoners whose personal identifying information she received from someone in prison.  The tax returns falsely claimed the person was entitled to a tax refund.  Davis also admitted to filing a false tax return in her own name.  Davis’s return stated that she earned social security benefits and taxes were withheld, when she did not have any federal taxes withheld and did not earn any social security income.  Co-conspirators who have pleaded guilty in this investigation are Niyah Edwards, Kwamina Davis, Latrece O'Neal, and Samuel Warren.  These defendants are awaiting sentencing.

New Jersey Man Sentenced for Tax Fraud Scheme Using Stolen Records

On April 11, 2011, in Newark, N.J., Jason Eaton was sentenced to 60 months in prison, three years of supervised release and was ordered to pay $299,809 in restitution for his role in a scheme to file false tax returns using the names and social security numbers of, among other victims, adult and pediatric cancer patients.  Eaton previously pleaded guilty to an Information charging him with conspiracy to file false claims against the United States and to commit credit card fraud.  Eaton admitted that he agreed with Steven Nelson and others to profit by using fraudulently obtained names, dates of birth, and social security numbers to file approximately 163 false federal income tax returns for the tax years 2005 – 2008.  They also used the personal identifiers of minors on those false returns in support of fraudulently claimed eligibility for EITCs or Child Tax Credits, all without the permission of the minors’ parents or legal guardians.  Nelson then directed the resulting refunds be sent to addresses in the Bronx that he controlled, including his house, his neighbors’ houses, and his child’s mother’s house. Eaton and others used counterfeit driver’s licenses and other identification documents in the names of the adults whose information they stole in order to cash United States Treasury checks.  Nelson pleaded guilty to the conspiracy in November 2010 and was sentenced to 10 years in prison on February 28, 2011.

State Prisoner Sentenced For False Tax Claims and Misuse of Social Security Numbers

On April 7, 2011, in Portland, Maine,  Troy D. Fears, of Mesa, Arizona, and formerly incarcerated at the Maine State Prison in Warren, was sentenced to 57 months in prison to be followed by three years of supervised release for filing false tax returns and misusing social security numbers.  On February 4, 2011, Fears pleaded guilty to the charges.  According to court records, between 2005 and December 2009, Fears, while incarcerated in Arizona and Maine, submitted 117 false individual income tax returns seeking refunds of more than $515,000 using the social security numbers of other prisoners without their permission.

Chicago Man Sentenced for His Role in Tax Refund Fraud Scheme

On April 6, 2011, in Chicago, Ill, David Berkowitz was sentenced to 33 months in prison, followed by two years of supervised release, and ordered to pay $285,761 in restitution.  According to court documents, Berkowitz was indicted in August 2009 with nine other defendants who conspired to defraud the IRS and state tax agencies.  Beginning no later than 2003 and continuing to February 2009, Marvin Berkowitz recruited and enlisted dozens of co-conspirators and associates to submit more than 2,900 federal income tax returns and more than 400 false state income tax returns, which were filed in the names and social security numbers of federal inmates without their knowledge or consent.  The false returns included various fictitious and false items, including addresses and phone numbers, deductions, business losses and expenses, credits, and W-2 wage and 1099 income statements of earnings from employers.  Specifically, beginning no later than June 2004 and continuing through August 2007, David Berkowitz received 64 income tax refund checks from the U.S. Treasury and numerous states based on the filing of false income tax returns.  The checks were payable to third parties, primarily federal inmates, and were mailed to David Berkowitz at his residences in Los Angeles and West Hollywood, California.

Two Sentenced for Filing False Claims for Refunds

On March 18, 2011, in Spokane, Wash., Melissa Nicole Sherrill of Walla Walla, was sentenced to 16 months in prison to be followed by three years of supervised release.  In December 2010, Sherrill's co-defendant, Earnest Jay Allen, of Walla Walla, was sentenced to 30 months in prison to be followed by three years of supervised release.  In addition, Sherrill and Allen were ordered jointly to pay $50,121 in restitution to the Internal Revenue Service (IRS).  According to court filings, Sherrill and Allen conspired to submit false claims for income tax refunds to the IRS. They used their own names and social security numbers (SSNs) and the names and SSNs of other individuals to create false tax returns and false claims for income tax refunds.  These individuals did not know a refund claim had been made using their names until they were contacted by the IRS. 

California Brothers Sentenced for Fraudulent Income Tax Refund Scheme

On March 14, 2011, in Fresno, Calif., Ysidro Moreno Lopez and Jose Antonio Moreno Lopez, both of Arvin, California, were sentenced to 24 months and 13 months in prison, respectively.  Ysidro and Jose, who are brothers, pleaded guilty on September 27, 2010, to conspiring to defraud the United States by submitting false and fraudulent income tax returns to the Internal Revenue Service (IRS) claiming more than $300,000 in tax refunds.  In their guilty pleas, the brothers admitted that from August 2007 to April 2009, they submitted more than 100 individual federal income tax returns in the names of third parties that contained false and fictitious information. They submitted false W-2 forms with the tax returns, claiming fraudulent wages and withholdings, thereby purportedly making the alleged taxpayers eligible for a tax refund. The W-2 forms contained false social security numbers and listed employers who did not employ the alleged taxpayers. In some instances, they submitted an application to obtain an Individual Taxpayer Identification Number (ITIN) simultaneously with the income tax returns.

St. Louis County Man Sentenced on Tax Charges

On March 2, 2011, in St. Louis, Mo., Mack Edwards was sentenced to 15 months in prison for a scheme to file false tax returns based on false W-2 forms for alleged workers of his construction company.  According to court documents, between January 2008 and April 2008, Edwards and Hestine Mason, an income tax return preparer, participated in a scheme to file false 2007 income tax returns based on false W-2 forms from MD Construction, owned by Edwards.  Edwards provided false W-2 forms to 12 taxpayers and instructed them to have their tax returns prepared by Mason to obtain a refund, and then share the refund with him.  The W-2's were false in that the named employee had not received the wages or made the withholding payments shown on the W-2's. Edwards paid Mason $300 to $500 per return, some of which was paid to her out of the false income tax return refunds.   Mason pleaded guilty and was sentenced to 12 months and one day in prison.

Bronx Man Sentenced to 10 Years in Prison for Tax Fraud Scheme Using Stolen Records

On February 28, 2011 in Newark, N.J., Steven Nelson was sentenced to 120 months in prison, followed by three years of supervised release, and ordered to pay $207,751 in restitution for his role in a scheme to file false tax returns using the names and Social Security Numbers of, among other victims, adult and pediatric cancer patients. Nelson pleaded guilty to conspiracy to file false claims against the United States.  According to court documents and statements made in court, Nelson admitted that he, along with others, used fraudulently obtained names, dates of birth, and social security numbers to file false federal income tax returns that claimed tax refunds.  Nelson also admitted that he prepared false federal income tax returns in the names of the adults whose information he had stolen. He also used the personal identifiers of the minors on those false returns in support of fraudulently claimed eligibility for Earned Income Tax Credits or Child Tax Credits, all without the permission of the minors’ parents or legal guardians.  The names and social security numbers of adults came from records at doctors’ offices, hospitals, nursing homes, health clinics, government offices, and other places in New York where other co-conspirators either worked or had access to such records. Several of the minors’ identifiers corresponded to records of pediatric cancer and other hospital and health clinic patients in New York City.  Once the returns had been filed, Nelson directed the resulting refunds be sent to addresses in the Bronx that he controlled.  Nelson admitted to causing approximately 163 false returns to be filed with the IRS for the tax years 2005 through 2008.

Senior Executive of Upper Manhattan Empowerment Zone Sentenced in Manhattan Federal Court to 27 Months in Prison for Fraudulent Tax Refund Scheme

On February 16, 2011, in Manhattan, N.Y., Kelvin Crucey was sentenced to 27 months in prison, followed by three years of supervised release, and was ordered to pay restitution of over $249,000 to the IRS for his participation in a fraudulent tax return scheme.  According to court documents and statements made during his guilty plea and sentencing proceedings, Crucey was employed from 1996 until 2010 by the Upper Manhattan Empowerment Zone ("UMEZ"), most recently as Senior Vice President of Finance and Administration.  In addition to his senior position at UMEZ, Crucey owned and operated a tax preparation business, Crucey and Associates.  In 2006 and 2007, through his tax preparation business, Crucey participated in a scheme to make money by filing fraudulent tax returns and seeking refund checks using social security numbers and other identification information stolen from residents of Puerto Rico.  In the fraudulent tax returns that Crucey prepared, he falsely claimed that the filers had earned taxable income outside of Puerto Rico, but within the 50 states of the United States, and were entitled to refunds. Crucey and his co-conspirators then cashed the fraudulently-obtained tax refund checks and pocketed the money.  To cash the checks, Crucey took advantage of banking relationships he had developed through his employment at UMEZ.  Crucey cashed, and had others cash, at least $249,600 in tax refund checks at the same banks where UMEZ maintained its accounts, with the aid of a banker whom Crucey knew through his position at UMEZ.  Crucey falsely represented to the banker that the checks were for clients of Crucey’s tax preparation business.

Women Sentenced for Preparing and Filing False Federal Income Tax Returns

On February 16, 2011, in Louisville, Ky., Brandy Latrice Shaw, of Killeen, Texas, was sentenced to 30 months in prison and three years of supervised release for her part in a scheme to defraud the Internal Revenue Service. Court records indicate that Shaw and Kimberly Dunham, of Fort Richardson, Alaska, participated in a scheme to file false 2005 federal income tax returns by claiming refunds to which the taxpayers were not entitled. Shaw solicited, instructed, and assisted others in falsely claiming federal income tax refunds totaling $212,026. On August 27, 2010, in Anchorage, Alaska, Dunham, formerly of Fort Campbell, Kentucky, pleaded guilty to conspiracy to defraud the United States by filing false claims. She was sentenced to five years of probation and ordered to pay $37,606 in restitution to the IRS. Shaw pleaded guilty to a 14 count indictment that alleged on March 2, 2006, she prepared a false federal income tax return for Dunham.  The return Shaw prepared and filed contained false information regarding Dunham’s wages and withholding amounts.  It was further part of the conspiracy that Dunham referred clients to Shaw so Dunham could prepare fraudulent returns.  Shaw and Dunham agreed to split the fees Shaw charged to prepare each return.  It was further part of the conspiracy that between January through April 2006, Dunham and Shaw conspired to prepare fraudulent returns of numerous individuals that contained false information regarding dependents, filing status, withholding amounts, and the earned income credit. Court records further indicate that from approximately February through September 2006, Shaw prepared false and fictitious federal income tax returns for six other individual clients.   Shaw made false representations on these returns to claim refunds for which her clients were not entitled.

Woman Sentenced For Filing False Tax Returns

On February 9, 2011, in Baton Rouge, La., Levonne Stewart, of Baton Rouge, was sentenced to 48 months in prison; three years supervised release, and was ordered to pay restitution of $70,485. Stewart pleaded guilty on October 26, 2010, to conspiracy to file false claims for tax refunds, wire fraud, and aggravated identity theft. Stewart conspired with others, including Sheila Cage and Clarissa Ayo, to obtain the names and social security numbers of various individuals and to prepare false and fraudulent federal income tax returns for filing with the IRS. Some of these names and social security numbers were of residents at area nursing homes. Other names and social security numbers were traded or purchased between co-conspirators. The conspiracy included falsely claiming that taxpayers had been self employed and had earned income to maximize the refund amount obtained. In all, Stewart’s participation in this scheme involved approximately 30 false tax returns claiming refunds totaling $102,913.

Atlanta Area Tax Return Preparers Sentenced To Federal Prison for U.S. Virgin Islands Tax Fraud Conspiracy

On February 8, 2011, Atlanta, Ga., Vernon A. Roberts, of Conyers, Georgia; Gregory A. Shepherd, of Stone Mountain, Georgia; and Guillermina Carmona, of Kissimmee, Florida (formerly of Fredericksted, Saint Croix, U.S. Virgin Islands) were sentenced  to prison on charges of conspiracy to prepare and electronically file (“e-file”) hundreds of false tax returns with the Internal Revenue Service. Roberts was sentenced to 78 months in prison, to be followed by three years of supervised release, and ordered to pay $443,864 in restitution.  On September 24, 2010, Roberts was convicted on one count of Conspiracy and eight counts of Aiding or Assisting the Preparation of False Tax Returns. Shepherd was sentenced to nine months in prison, to be followed by three years of supervised release, and ordered to pay $163,161 in restitution. Shepherd pleaded guilty to one count of Conspiracy on September 13, 2010, and testified at Roberts’ trial. Carmona was sentenced to 18 months in prison, to be followed by three years of supervised release, and ordered to pay $512,070 in restitution. Carmona pleaded guilty to one count of Conspiracy on May 26, 2010, and also testified at Roberts’ trial. According  information presented at trial, between 2003 and 2007, Roberts was the Chief Executive Officer of “PC Tax Service” (also known as Liberty Tax Service), a tax return preparation business headquartered at 6844 Main Street, Lithonia. In late 2003, Roberts hired Carmona to recruit clients for PC Tax Service in Saint Croix, U.S. Virgin Islands, where Carmona lived. In early 2004, Roberts hired Shepherd to be the Office Manager of PC Tax Service. Beginning with the 2004 tax season, Carmona provided U.S. Virgin Islands client information to Roberts and Shepherd to prepare Form 1040 U.S. income tax returns. Roberts and Carmona made up false Georgia addresses, false income amounts, and other false information for the returns. Then, with Shepherd’s assistance, Roberts electronically prepared the false returns and Roberts e-filed them with the IRS. The fraudulent information was designed, in part, to make it appear that the clients were eligible for the Earned Income Tax Credit. After Roberts e-filed the fraudulent returns, the co-conspirators used a bank refund anticipation loan process to expedite the payment of the refunds to the clients within two weeks after filing the returns. This process also permitted Roberts to control the printing and distribution of refund checks, which were as much as $6,000 per return, and to deduct preparer fees from the refunds up front. Roberts deducted preparation fees for PC Tax Service of as much as $950 per return, part of which he shared with Carmona, Shepherd, and others in the form of commissions and salaries. Roberts and others, acting at his direction, then mailed the refund checks to Carmona in Saint Croix, where she distributed them to the clients. At some point during the 2007 tax season, Roberts stopped preparing the fraudulent U.S. Virgin Islands returns, but Shepherd and Carmona continued the scheme that season using a company that Shepherd established named GLM Tax service, also based in Lithonia, Georgia. During 2007, Shepherd e-filed dozens of additional false returns seeking nearly $100,000 in fraudulent refunds. In total, the conspiracy involved more than 200 tax returns claiming $586,689 in fraudulent refunds from the United States Treasury between 2004 and 2007. U.S. Virgin Islands taxpayers are not eligible for the Earned Income Tax Credit in returns filed with the IRS in the U.S. unless they lived in the 50 states or the District of Columbia for more than six months of the tax year. 

Arizona Man Sentenced for Role in Million Dollar Tax Refund Conspiracy

On February 8, 2011, in Phoenix, Ariz., Russell Shawn Robinson was sentenced to 37 months in prison, followed by three years supervised release and ordered to pay $806,186 in restitution as a result of pleading guilty to Conspiracy to Defraud the Government.   According to court documents, from January 2006 until February 2009, Robinson, along with three other defendants, participated in a scheme to obtain and to aid others to obtain false refund payments from the Internal Revenue Service. Robinson provided names and social security numbers to another defendant knowing that the information would be used to fabricate a false income tax return.  As part of the conspiracy, Robinson and others controlled banks accounts into which the tax refunds were deposited and directed how the money would be distributed.  Over 100 false income tax returns were filed claiming approximately $1.6 million.     

Two Sentenced for Using Stolen Identities to Seek Almost $500,000 in Fraudulent Income Tax Refund Anticipation Loans

On January 27, 2011, in Columbus, Ohio, Kenyetta Williams, and her husband, Delmar Williams, were sentenced for their role in an identity theft scheme using information they obtained through the Securities and Exchange Commission website.  The scheme used fraudulent income tax returns to apply for almost $500,000 in refund anticipation loans from banks.   Kenyetta Williams was sentenced to 87 months in prison and ordered to pay restitution of $196,322.  Delmar Williams was sentenced to 36 months in prison and ordered to pay restitution of $10,394.  The couple each pleaded guilty on September 1, 2010, to one count each of aggravated identity theft, bank fraud, and making false claims against the United States. According to testimony in the plea hearings, the two used stolen personal identifying information, such as names, addresses and social security numbers and dates of birth in the identity theft scheme.  They obtained much of this personal identifying information from the EDGAR archives, which are maintained by the Securities and Exchange Commission.  At the time this scheme took place, in 2006 and 2007, the EDGAR archives were available for online viewing by the public. Between December 2006 and March 1, 2007, the couple used the information they obtained from the website to file more than 100 false tax returns in attempts to obtain almost $500,000 in refund anticipation loans from banks.

Prison Inmate and Family Members Sentenced for Tax Fraud Scheme

On January 14, 2011, in Miami, Fla., Danilo Suarez, a prison inmate, was sentenced to 60 months in prison, followed by three years of supervised release, and ordered to pay $58,022 in restitution. Suarez participated in a scheme to file fraudulent tax returns on behalf of inmates in the Monroe County Jail, in Key West, Florida, and others.  In November 2010, Danilo's daughter, Sandra Suarez, and his sister, Belkis Mendez, were each sentenced to 6 months in prison, followed by three years supervised release, and ordered to pay restitution in a combined amount of $76,969.  According to court documents, while incarcerated in the Monroe County Jail, Danilo Suarez began a scheme to defraud the IRS by recruiting and submitting false tax return forms in the name of fellow inmates, former inmates and relatives for tax years 2004 through 2006. These returns falsely claimed that the purported taxpayers had been employed and paid withholding taxes during the years in question.  To execute the scheme, Danilo Suarez recruited family members to receive the resulting IRS refund checks.  Danilo Suarez also instructed the co-defendants to cash the checks, sometimes using fraudulent powers of attorneys.  Once the checks were cashed, the co-defendants gave the cash to Danilo Suarez, who divided the proceeds between himself, the co-defendants, and the complicit inmates.

California Woman Sentenced to 30 Months for Identity Theft and Filing False Claims for Refunds

On January 13, 2011, in Los Angeles, Calif., Dora Argote, of Riverside, was sentenced to 30 months in prison, three years of supervised release, and was ordered to pay $839,866 in restitution for participating in a scheme to defraud the IRS.  On July 28, 2010, Argote pleaded guilty to two counts of Mail Fraud and one count of Aggravated Identity Theft.   According to the indictment, beginning in early 2002 and continuing through June 2007, Dora Argote and others filed returns with the IRS that falsely claimed that they, and the individuals whose personal identifying information they had obtained, were entitled to tax refunds based upon falsified income and withholding amounts.  Argote and others falsified IRS Forms W-2 and W-2G detailing fictitious income and withholdings in their own names and the names of those whose personal identifying information they had obtained to substantiate the refunds claimed.  Typically, the falsified Forms W-2 and W-2G’s were submitted to return preparers who prepared the returns and filed them with the IRS.  In total, the scheme in which Dora Argote participated caused a tax loss to the government of $839,866.  On October 4, 2010, Dora Argote’s husband, Abelardo Argote, who was also charged in the indictment, was sentenced to 70 months in prison, three years of supervised release, and ordered to pay restitution of $839,866 for his involvement in the scheme. 

California Woman Sentenced to 15 Months for Conspiracy to Commit Tax Fraud

On January 6, 2011, in Sacramento, Calif., Theresa Gallindo Constancio, of Stockton, California, was sentenced to 15 months in prison, to be followed by three years of supervised release, for her role in a conspiracy to defraud the government by filing false tax returns.  She was also ordered to pay $8,874 in restitution to the Internal Revenue Service (IRS).  According to court documents, from January through March 2007, Constancio was part of a conspiracy to file fraudulent tax returns with the IRS seeking refunds.  Constancio filed a false return in her own name and recruited two other people to do the same.

Two Missouri Men Sentenced in False Tax Claim Conspiracy

On December 21, 2010, in Springfield, Mo., Jason Andrew Powell, of Nixa, was sentenced to 17 months in prison, followed by three years of supervised release, and ordered to pay $71,622 in restitution to the Internal Revenue Service (IRS).  Powell pleaded guilty on September 14, 2010, to conspiring to file false and fraudulent claims with the federal government.  According to court documents, Powell admitted that he created false forms W-2 for himself and others using employer names of two non-existent companies, listing wages that were never actually earned, and listing federal income tax amounts that were never actually withheld or paid.  Powell and his co-conspirators used these false forms W-2 to have fraudulent federal income tax returns prepared and filed, in order to receive large refunds to which they were not entitled to receive.  On June 1, 2010, Max R. Snodgrass, of Springfield, was sentenced to 55 months in prison for his role as a co-conspirator with Powell and for his role in a bank fraud conspiracy case.  In the tax scheme, Snodgrass admitted that he attempted to obtain, and assisted others in obtaining, fraudulent tax refunds from the IRS by filing false 2007 federal income tax returns.  Like Powell, Snodgrass used his computer to create false forms W-2 for a sham business, which he and co-conspirators took to tax preparers and caused fraudulent federal returns to be filed electronically.  In addition to Powell and Snodgrass, several other co-conspirators have entered guilty pleas in federal court to filing false claims for federal income tax refunds and are awaiting sentencing.

Washington Man Sentenced for Filing False Claims for Tax Refunds

On December 16, 2010, in Spokane, Wash., Earnest Jay Allen was sentenced to 30 months in prison, followed by three years of supervised release, and ordered to pay $50,121 in restitution.  In addition, Allen was ordered to cooperate with the Internal Revenue Service (IRS) in the correct filing of all delinquent and current tax returns and pay any outstanding tax liability, including interest and penalties.  Allen was charged in July 2010 with conspiracy to defraud the United States by making false claims for income tax refunds.  According to court documents, Allen and others used the names and social security numbers of other individuals to prepare and submit fraudulent tax returns.  Fraudulent Forms W-2 were prepared showing overpayment of taxes. The W-2’s were submitted with fictitious and fraudulent income tax returns resulting in tax refunds that Allen and others were not entitled to receive.  

Georgia Woman Sentenced To More than 12 Years for Tax Fraud

On December 6, 2010, in San Jose, Calif., Nicole Bermudez, of Buford, Georgia, was sentenced to 151 months in prison and ordered to pay $2,488,613 in restitution for her role in promoting a tax fraud scheme.  Bermudez was convicted on September 2, 2010, of conspiracy to commit mail and wire fraud, wire fraud, and engaging in monetary transactions derived from specified unlawful activity.  During the trial, evidence showed that Bermudez promoted a tax fraud scheme known as the “Original Issue Discount” or “OID” scheme.  Bermudez helped approximately 40 individuals, including co-conspirator Seth Sundberg, file for $20 million in illegal and undeserved tax refunds from the Internal Revenue Service (IRS).  The evidence at trial showed that Bermudez made fraudulent claims to the IRS; specifically, she invented previously-withheld tax prepayments for taxpayers.  Bermudez then filed this fraudulent information electronically with the IRS on behalf of taxpayers.  Sundberg was sentenced to 71 months in prison on July 22, 2010.

 

New Jersey Man Sentenced in Conspiracy to Obtain Over $2 Million in Fraudulent Refund Checks

On November 18, 2010, in Trenton, N.J., Felipo Edmundo Vidal Geraldino, of Newark, was sentenced to 30 months in prison, to be followed by three years of supervised release, and ordered to pay $220,000 in restitution.  Geraldino is a citizen of the Dominican Republic and must cooperate with immigration.  Geraldino pleaded guilty to an Information charging him with conspiracy to defraud the United States by obtaining the payment of over $2 million in fraudulent income tax refund checks.  According to court documents and statements made in court, from January to July 2009, Geraldino and his co-conspirators filed several hundred false and fraudulent tax returns with the IRS in the names of more than 300 different individuals across eleven states, including New Jersey, New York, Florida, and Alaska.  Geraldino operated La Bella Campesina, a small grocery store in Newark, and deposited the fraudulently-obtained refund checks into his business checking account.  From there, he wrote checks to dozens of co-conspirators who cashed the checks for him, took their respective cuts, and provided Geraldino and the conspiracy’s organizers with the majority of the illicit proceeds.

 

Third Conspirator Sentenced in Refund Fraud Scheme

On November 30, 2010, in Greenbelt, Md., Al David Toler, of Silver Spring, was sentenced to 15 months in prison followed by three years of supervised release for conspiring to defraud the United States and making false claims for tax refunds.  Toler was also ordered to pay $48,840 in restitution to the Internal Revenue Service (IRS) and $7,400 to individual victims.  According to his plea agreement, throughout 2008 and 2009, Toler conspired with Thomas Johnson and Harry Williams to file false individual and trust tax returns with the IRS that claimed refunds to which the taxpayers were not entitled to receive. The returns falsely reported that certain federal taxes had been withheld, which increased the amount of taxes purportedly paid to the IRS and the size of the refund.  Toler, Johnson and Williams also claimed to clients that they could reduce or eliminate their debt, including mortgage, credit card and other debt. Williams and Johnson would prepare amended individual income tax returns that falsely reported that income tax had been withheld in amounts that substantially exceeded the amount of tax paid. On that basis, the returns claimed tax refunds, the amount of which approximated the debt to be eliminated.  The defendants charged fees of between $10,000 and $69,000 to prepare the false forms.  On November 15, 2010, Johnson, of Burtonsville, Maryland, and Williams, of Clarksburg, Maryland, were sentenced to 60 months and 72 months in prison, respectively.

Defendant Sentenced to Over 9 Years in Prison for Filing False Claims for Refunds

On November 15, 2010, in Augusta, Ga., Anthony Davila, of Tampa, Florida, was sentenced to 115 months in prison, followed by three years of supervised release, and ordered to pay $423,530 in restitution to the Internal Revenue Service (IRS).  As a condition of his supervised release, Davila will cooperate with the IRS in the payment of all outstanding taxes, interest, and penalties.  In May 2009, Davila was indicted on charges of conspiracy, false claims against the United States, mail fraud, and aggravated identity theft.  According to the indictment, Davila caused to be filed with the IRS more than 120 false income tax returns in other individuals’ names that together claimed over $630,000 in false, fictitious, or fraudulent refunds. The indictment describes a scheme where Davila searched the website of the Florida Department of Corrections and the websites of other state prisons to identify inmates who were serving sentences which generally exceeded 15 years. Using the data on the inmates he created fictitious 1040EZ tax forms, forged the signatures of the inmates, and mailed said forms to the IRS.

Two Individuals Sentenced for Claiming Over $5.5 Million in False Tax Refunds

On November 15, 2010, in Greenbelt, Md., Thomas Arrona Johnson, of Burtonsville, and Harry James Williams, of Clarksburg, were sentenced 60 months and 72 months in prison, respectively.  They were also sentenced to serve three years of supervised release following their prison terms and ordered to pay $992,835 in restitution to the Internal Revenue Service (IRS) and $139,234 to individual victims.  Williams was sentenced in absentia after he failed to appear in court.  According to testimony at their trial, throughout 2008 and 2009, Johnson and Williams filed and caused others to file more than a dozen tax returns that reported $7 million in phony withholding taxes and claimed $5.5 million in fraudulent tax refunds.  The evidence showed that the returns falsely reported certain federal taxes had been withheld, which increased the amount of taxes purportedly paid to the IRS and the size of the refund that could be sought.  Witnesses at trial further testified that Johnson and Williams also claimed to clients that they could reduce or eliminate their debt, including mortgage, credit card and other debt.  Williams and Johnson would prepare amended individual income tax returns that falsely reported that income tax had been withheld in amounts that substantially exceeded the amount of tax paid. On that basis, the returns claimed tax refunds, the amount of which approximated the debt to be eliminated. The defendants charged fees which ranged up to tens of thousands of dollars per claim, to prepare the false forms.

Illinois Man Sentenced in First Time Home Buyers Credit Fraud

On November 1, 2010, in Peoria, Ill., Roderick Smith was sentenced to 24 months in prison, three years of supervised release and ordered to pay nearly $74,000 in restitution for wire fraud and tax fraud.  According to court documents, Smith falsely represented himself as a lawyer.  He provided business cards identifying himself as an attorney, President and CEO of Roderick E. Smith & Associates, Inc., Tax and Legal Consultant.  Smith prepared and filed electronic income tax returns for clients and claimed the First Time Home Buyer credit (FTHBC) and other deductions and credits that were not legitimate.  The refunds were deposited electronically into an account controlled by Smith but held in another individual’s name.  When the inflated refunds arrived, Smith would provide a check of a lesser amount to the client, keeping the excess for himself.  As a result of this scheme, Smith falsely claimed over $100,000 in tax refunds.

Two Portland Men Sentenced in $1.5 Million Tax Refund Scheme

On October 28, 2010, in Portland, Ore., Lee Vinton Howlett was sentenced to 60 months in prison and Todd Martin Howlett to five years of probation for their roles in a fraudulent tax refund scheme. Lee Howlett, who pleaded guilty to filing false claims on June 30, 2010, was also sentenced to three years of supervised release and was ordered to pay $754,214 in restitution to the Internal Revenue Service (IRS). He had previously returned $341,275 to the IRS, in addition to $285,026 being seized from his bank accounts. In July 2009, while under federal court supervision for his previous conviction for conspiring to make false statements to financial institutions relating to mortgage fraud, Lee Howlett began filing phony corporate income tax returns with the IRS and depositing the resulting refund checks. This continued up to the time of his arrest in February 2010 by IRS agents.  Lee Howlett filed corporate tax returns for shell companies he had previously established in Oregon. After being confronted with the phony refunds in October 2009, Lee Howlett repaid more than $340,000 to the IRS. Once the repayments were made, Lee Howlett continued receiving and processing fraudulent refunds. In all, Lee Howlett attempted to defraud the government of over $1.5 million through the filing of two dozen phony corporate tax returns, and did in fact receive over $1.3 million in fraudulent refunds. He used hundreds of thousands of dollars of this stolen money for gambling. Lee Howlett enlisted the assistance of his brother, Todd Howlett, also of Portland, to help carry out his scheme. Todd Howlett pleaded guilty to structuring, which involved him making four $5,000 currency withdrawals from a bank over two days to evade the bank's requirement to report the transactions to the IRS on a Currency Transaction Report. The account from which Todd Howlett withdrew the funds contained the proceeds of one of Lee Howlett’s fraudulent tax refund checks.

Detroit Man Receives Jail Time on Tax Charge

On October 13, 2010, in Detroit, Mich., Ronald Williams was sentenced to 24 months in prison and ordered to pay more than $6,100 in restitution for filing false tax returns and was also ordered not to assist any individual in the preparation of their tax returns..  According to court documents, during 2007 through February of 2008, Williams recruited individuals to file false tax returns. As part of the scheme, Williams would recruit participants to use false and fictitious W-2 forms, Wage and Tax Statements, and instructed the individuals to bring those forms to a local tax service in the Detroit, Michigan area. The tax service unknowingly prepared the tax returns based on the information provided by those individuals and submitted the false returns to the IRS. Williams would accompany some of the individuals to file their tax returns and on occasion would receive a $500 fee. The scheme generated an intended loss to the IRS of over $79,000. This investigation was started when the IRS' Andover Fraud Detection Center identified many of the returns claiming the false wages from the fraudulent W-2 forms.

Dallas Brothers Sentenced in Return Preparer Fraud Case

On October 5, 2010, in Dallas, Texas, brothers Kennedy and Cloud Mhondiwa were sentenced for conspiracy to commit bank fraud.  Kennedy received 21 months in prison, followed by two years of supervised release and was ordered to pay nearly $21,000 in restitution.  Cloud received 15 months in prison and two years of supervised release.  According to court documents, the brothers owned and operated Kingdom Tax Services, also known as K&M Financial Company, LLC.  Kennedy and Cloud Mhondiwa obtained a total of 42 refund anticipation loan checks by filing false individual income tax returns using the identities of unknown victims .  Both Kennedy and Cloud pleaded guilty to conspiracy to commit bank fraud.

 

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