The following examples of Abusive Tax Schemes are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
California Man Sentenced For Tax Fraud Scheme
On April 4, 2017, in Tampa, Florida, Walter Drakeford, of Santa Monica, California, was sentenced to 24 months in prison for attempting to interfere with the administration of internal revenue laws. Between September 2006 and March 2009, Drakeford and another individual falsely purported to own the rights to landfill methane credits. They marketed the purported credits to a network of tax return preparers for use on individual taxpayers' tax returns, despite knowing that the credits were non-existent and/or not able to be claimed by the individual taxpayers. The tax return preparers advised their individual taxpayer-clients to claim the credits on their tax returns. If an individual taxpayer received the tax refund as a result of the landfill methane credit claimed, they were obligated to remit a substantial portion of that refund, frequently as much as 80%, to Drakeford and others. Drakeford presented false and fraudulent documentation to the IRS and presented fraudulent and false amended tax returns that claimed purported dry hole expenses. Drakeford and others provided the tax return preparers a formula by which to calculate the amounts of the dry hole expenses to be claimed by the individual taxpayers. The formula was designed to fraudulently eliminate the individual taxpayers' debts to the IRS based on the disallowance of the false and fraudulent landfill methane credits. The total amount of false and fraudulent credits claimed in this case is estimated to be $4,211,757, a substantial amount of which has been recovered from the individual taxpayers.
Ohio Man Sentenced for Tax Fraud
On March 14, 2017, in Cleveland, Ohio, Dennis Dean Miller, of Millersburg, was sentenced to 26 months in prison and ordered to pay $132,147 in restitution. Miller falsely reported that financial institutions had withheld large amounts of federal income tax on income that did not exist in reality. He falsely filed for tax refunds of $1,121,420 for tax years 2006 through 2011.
Former Business Professor Sentenced for Hiding over $220 Million in Offshore Banks
On February 10, 2017 in Alexandria, Virginia, Dan Horsky, formerly of Rochester, New York was sentenced to seven months in prison, one year of supervised release and ordered to pay restitution in the amount of $250,000 for conspiring to defraud the United States and to submit a false expatriation statement to the Internal Revenue Service (IRS). Horsky paid a civil penalty of $100 million to the U.S. Treasury for failing to file and filing false Foreign Bank and Financial Accounts. Beginning in approximately 1995, Horsky invested in numerous start-up companies, virtually all of which failed. One investment in a business referred to as Company A, however, succeeded spectacularly. In 2000, Horsky transferred his investments into a nominee account in the name of "Horsky Holdings" at an offshore bank in Zurich, Switzerland (the "Swiss Bank") to conceal his financial transactions and accounts from the IRS and the U.S. Treasury Department. Horsky filed a fraudulent 2008 tax return that underreported his income by more than $40 million and disclosed only approximately $7 million of his gain from the sale. By 2015, Horsky's offshore holdings hidden from the IRS exceeded $220 million. Horsky's tax evasion scheme ended in 2015 when IRS special agents confronted him regarding his concealment of his foreign financial accounts. Horsky willfully filed fraudulent federal income tax returns that failed to report his income from, and beneficial interest in and control over, his foreign financial accounts. In addition, Horsky failed to file Reports of Foreign Bank and Financial Accounts (FBARs) up and through 2011, and also filed fraudulent 2012 and 2013 FBARs. In total, in a 15-year tax evasion scheme, Horsky evaded more than $18 million in income and gift tax liabilities.