Examples of Non-filer Investigations - Fiscal Year 2016
The following examples of Non-filer Investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
Former Fugitive Sentenced for Failing to Pay Taxes from Illegal Gambling Operation
On Sept. 1, 2016, in Chicago, Ill., Alber Najjar, aka Alber Yakoub, was sentenced to 57 months in prison, fined $5,000 and ordered to pay back taxes to both the U.S. and the State of Illinois. Najjar failed to pay taxes on income he earned from a gambling operation in Illinois and Indiana from 1997 to 2001. Najjar filed an individual federal tax return for each of those years, but he failed to report the income he earned from the gambling business. Shortly before being indicted in April 2004, Najjar fled to Lebanon and was considered a fugitive for more than 11 years. During that time, Najjar used a Syrian passport – issued in the name of Alber Yakoub – to travel to Europe, Asia and other parts of the Middle East. He was arrested in November 2015 on the island of Cyprus and extradited to the United States shortly thereafter. Najjar pleaded guilty earlier this year to two counts of filing a false tax return. Najjar, who resided in Winnetka prior to fleeing the country, generated large sums from his illegal bookmaking business, and utilized the services of offshore accounts to transact business. He concealed from his accountant both the gambling enterprise and the income he earned from it. Najjar’s illegal conduct resulted in a total state and federal tax loss of more than $1.07 million.
New York Man Sentenced to 18 Months for Tax Evasion
On July 27, 2016, in Utica, New York, Edward J. Purcell Sr., of Fayetteville, was sentenced to 18 months in prison, three years of supervised release and ordered to pay $347,128 in restitution to the IRS. In December 2015, Purcell pleaded guilty to tax evasion. During the years 2008 through 2010, Purcell owned and operated American Roofing Company (“ARC”). In this time period, he failed to report any of the income he received from ARC by not filing federal income tax returns, despite receiving taxable income of $655,937. The total tax loss for the years 2008 through 2010 was $231,362. Purcell also agreed to repay the IRS an additional $115,766, representing the tax loss for 2007. Purcell concealed his income by depositing checks payable to ARC into nominee bank accounts, which he controlled through powers of attorney. Purcell set up these bank accounts in the names of his close friends and family members for the purpose of concealing his income from the IRS.
South Carolina Man Sentenced in $45 Million Mortgage Fraud Scheme
On May 10, 2016, in Columbia, South Carolina, Scott M. Wickersham, of Summerville, was sentenced to 36 months in prison, five years of supervised release and ordered to pay restitution of $23,997,151 on the conspiracy count, and pay $256,862 in restitution to Internal Revenue Service. Wickersham participated in a mortgage fraud conspiracy that utilized real estate and mortgage businesses operated in Summerville, South Carolina, under the names North American Mortgage Group, LLC; Realty Executives of Coastal Carolina; and New Freedom Enterprises, LLC. The scheme involved more than 70 properties, approximately $45 million of mortgage loans, and a loss of more than $23 million suffered by financial institutions. Wickersham was a loan officer for North American Mortgage Group, LLC; a real estate agent and part-owner/franchisee of Realty Executives of Coastal Carolina; and a partner in New Freedom Enterprises, LLC. Wickersham and others used straw purchasers and made other false representations on mortgage loan applications to induce financial institutions to provide mortgage loans for the properties in the scheme. The properties later went into foreclosure and sold at a significant loss to the lenders. Wickersham also willfully made and filed false U.S. Individual Income Tax Returns for calendar years 2006 and 2007, as he failed to report income he received from the mortgage fraud scheme. This under reporting resulted in a tax loss of $206,100 for 2006 and $50,762 for 2007, for a total tax loss of $256,862. Two other defendants have been convicted in connection with the mortgage fraud scheme. Steven F. Weiss, of Virginia Beach, Virginia, was sentenced in April to 30 months in prison and ordered to pay restitution of $4,961,732. Kelly Martin, of Moncks Corner, pleaded guilty in 2015 to conspiracy to commit mail fraud, wire fraud, and bank fraud. She is awaiting sentencing.
Illinois Man Sentenced for Defrauding the IRS and Banks
On April 20, 2016, in Chicago, Illinois, Phillip Smith was sentenced to 36 months in prison and three years of supervised release. Smith was also ordered to pay restitution of $840,706 to the IRS and $1,796,460 to victim banks. From January 2010 thru April 2013, Smith created wholly fictitious companies and documents for clients that falsely purported the clients earned income from, and had taxes withheld by, one of these fictitious companies. In some cases, Smith directed his clients to a reputable tax preparation business to have a tax return prepared using the fraudulent information. In other cases, Smith personally prepared and submitted false tax returns for his clients which included the false information. Clients paid Smith a portion of these fraudulent refunds. Smith caused over 150 false tax returns for tax years 2009 through 2012 to be filed with the IRS claiming approximately $1,250,876 in fraudulent refunds and causing an actual loss of approximately $840,706. If a client had subsequent dealings with the IRS, Smith created fictitious verification documents and posed as an employer during phone calls. Furthermore, Smith failed to file any income tax returns for himself for tax years 2009 through 2012. Additionally, Smith created fraudulent employment-related documentation to enable straw buyers to obtain fraudulent and inflated mortgage loans. The straw buyers later defaulted on the loans, causing financial losses to the financial institutions.
Doctor Sentenced for Taking Bribes in Test-Referrals Scheme with New Jersey Clinical Lab
On April 20, 2016, in Newark, New Jersey, Gary Safier, of Randolph, was sentenced to 24 months in prison, two years of supervised release and ordered to forfeit $353,152. From August 2007 through March 2013, Safier accepted bribes in return for referring patient blood specimens to Biodiagnostic Laboratory Services LLC (BLS). Initially, the bribes were paid under the guise of bogus lease and service agreements between BLS and his medical office. Later, BLS paid Safier in monthly cash payments that, at times, exceeded $10,000 per month. The total amount of bribes paid by BLS to Safier from the sham agreements and cash payments exceeded $353,000. Additionally, Safier failed to report $90,000 in bribes he received from BLS on his federal tax returns for 2010 and 2011.
Alaska Attorney Sentenced for Failing to File Tax Returns
On April 15, 2016, in Anchorage, Alaska, Paul D. Stockler, a criminal defense attorney, was sentenced to 14 months in prison, one year of supervised release and ordered to pay $886,058 in restitution to the IRS. Stockler still has not paid the more than $800,000 in income taxes that he owed for the years 2006, 2008 and 2009. At the same time that he failed to file his tax returns and pay the taxes due, Stockler made personal expenditures for gambling, cars, and property. Stockler also failed to file timely income tax returns for the years 2000 through 2004, 2007, 2010 and 2011, failed to file employment tax returns during the years 2004 through 2008 and failed to pay employment taxes to the IRS. Stockler also submitted a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to the IRS in 2009. A Form 433-A is used by the IRS to obtain financial information from a taxpayer to determine his ability to pay an outstanding tax liability. On the Form 433-A, which he signed under the penalties of perjury, Stockler failed to disclose certain retirement assets.
Maryland Business Owner Sentenced for Failing to Pay Over $1.4 Million in Taxes
On April 11, 2016, in Washington, D.C., James T. Redding, of Reistertown, Maryland, was sentenced to 24 months in prison, three years of supervised release and ordered to pay $1,473,054 in restitution to the IRS. Redding was the president, sole shareholder and sole director of James T. Redding, Inc., doing business as JTR Inc., JTR Finishing Contractors, and JTR Construction. Redding filed false and fraudulent tax returns for James T. Redding, Inc., for the 2009 and 2010 calendar years. He did not file returns for the corporation for the 2011, 2012, and 2013 calendar years. In addition, for the tax years of 2009 through 2012, Redding filed false and fraudulent U.S. personal income tax returns on behalf of himself and his spouse. He and his spouse did not file a personal income tax return for the 2013 calendar year. Finally, from the beginning of the fourth quarter of the 2010 calendar year through the fourth quarter of the 2012 calendar year, Redding willfully failed to pay over all of the federal income tax and Federal Insurance Contributions Act (FICA) taxes withheld from JTR employees. Instead of paying over the taxes that he knew were due, he used those funds to pay JTR creditors and for the benefit of himself and his family members. In total, JTR did not pay over $873,054 that was due to the IRS.
Missouri Man Sentenced on Federal Fraud Charges
On April 7, 2016, in St. Louis, Missouri, James Michael Arnold, of Sikeston, was sentenced to 30 months in prison for mail fraud, aggravated identity theft and failure to file tax returns. Arnold graduated from the University of Missouri School of Law in July 1992 but never passed the Missouri Bar Examination and has never been licensed to practice law in Missouri or elsewhere. Between January 2010 and January 2014, Arnold fraudulently represented that he was a licensed attorney in order to gain employment as an attorney. As part of his scheme to defraud, Arnold used the name and Missouri Bar number of a licensed Missouri attorney to apply for jobs as an attorney and to file court documents. Arnold’s unsuspecting victims paid him for his fraudulent representation. Additionally, for tax years 2011, 2012, and 2013, Arnold failed to file tax returns reporting the earnings from the illegal activity described. Arnold’s failure to file the required returns resulted in a tax loss of approximately $74,000.
South Dakota Father and Son Sentenced on Conspiracy and Tax Crimes
On April 4, 2016, in Sioux Falls, South Dakota, Theodore “Ted” J. Nelson, Jr., and his son, Steven A. Nelson, both of Letcher, were sentenced to 70 months in prison and 12 months and one day in prison, respectively. Both were ordered to pay joint restitution of $1,842,102. The Nelsons inherited a family farm and business from Ted Nelson’s parents. The IRS placed a lien against Ted Nelson’s real estate in January 2004. After that time, the Nelsons created over 30 trusts, corporations, LLCs, and other entities, in an effort to hide their ownership of the farm and its income. In 2004 the Nelsons also opened a series of bank accounts with themselves or another person as signors, using false tax identification numbers and social security numbers. Steve Nelson filed income tax returns through 1996 and Ted Nelson filed them through 1998, and then both stopped filing.
Florida Bookkeeper Sentenced for Embezzling Over $1 Million
On March 31, 2016, in Pensacola, Florida, Candace B. McLeod, of Holt, was sentenced to 75 months in prison and was ordered to pay restitution of $1,076,042 to the victim company and $201,838 to the IRS. Between 2009 and 2013, McLeod embezzled over $1 million from her employer, a family-owned business in Destin. McLeod worked as a bookkeeper, and she stole money by making unauthorized online payments to pay her credit cards with employer funds, using corporate credit cards for unauthorized personal purchases, and issuing extra checks to herself from corporate accounts by fraudulently using the signature of the general manager. She used her position to create false documentation and to manipulate accounting records to cover up her scheme. McLeod also failed to report the embezzled money as income on her income tax return.
Georgia Doctor Sentenced for Tax Evasion
On March 23, 2016, in Atlanta, Dr. Debra Johnson-Jordan, of Winder, was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay restitution of $464,432 to the IRS. Johnson-Jordan, who practiced medicine in East Point, failed to file income tax returns and pay federal income taxes from at least 1997 to 2014. Johnson-Jordan claimed she was exempt from paying federal income taxes despite earnings in excess of $1.5 million dollars. She ignored numerous notices from the IRS explaining her tax liability and warning of criminal penalties if she failed to comply with tax laws. Despite these warnings, Johnson-Jordan sent correspondence to her employer, the IRS and the U.S. Attorney’s office raising frivolous arguments and continued to challenge her tax liability until she was indicted in August 2015.
Colorado Liquor Store Owner & Co-Conspirator Sentenced for Concealing Millions in Receipts from the IRS
On March 22, 2016, in Denver, Colorado, Alan Timothy Hershey, of Gilcrest, was sentenced to 71 months in prison and three years of supervised release. Hershey was also ordered to pay $1,777,182 in restitution to the IRS and the Colorado Department of Revenue and ordered to pay a fine of $100,000. On April 6, 2016, Hershey’s co-conspirator, Renee Molinar, of Johnstown, was sentenced to three years of probation and 10 months of home detention. In March of 2001, Hershey caused Johnstown Liquor to be transferred on paper to Molinar and concealed from the IRS that Hershey retained true ownership and control of the store. At Hershey's direction, Molinar would remove a certain amount of the cash receipts before preparing the deposit slips and give that cash to Hershey. Hershey and Molinar used a second set of books and the check-cashing business operated by Johnstown Liquor to conceal the true amount of the business's cash receipts. Hershey willfully filed no federal income tax returns for the entire period of the conspiracy (for tax years 2001 through 2011), and made no payments of income taxes to the IRS. Hershey also used nominees to purchase two other liquor stores and a number of houses. Hershey controlled the operations of the stores, and he and Molinar collected the rents from the houses. Hershey also ran another liquor store and failed to pay federal taxes on any of the four stores’ $3,223,027 taxable income. As part of the fraud, many employees were paid “off the books” in cash wages and were instructed to not to file tax returns.
New Hampshire Woman Sentenced for Mail Fraud and Filing False Tax Returns
On March 14, 2016, in Concord, New Hampshire, Susan Durrance, of Farmington, was sentenced to 30 months in prison and ordered to pay restitution to the victim of her crime. From 2005 to June 2011, Durrance stole $396,212 while employed as a bookkeeper for a privately owned appliance store. Durrance stole the money by issuing checks from the store’s operating account to make payments on her personal credit accounts. Durrance also issued checks from the operating account to “Cash” or to herself in amounts that were inconsistent with her salary. Durrance failed to report the embezzled proceeds on her federal income tax returns for tax years 2005 through 2010. Through this conduct, she evaded paying additional taxes totaling $94,270 to the IRS.
Two Sentenced for Conspiracy to Avoid Paying Federal Taxes
On March 2, 2016, in Springfield, Missouri, Wesley Vernon Delport, of Ozark, was sentenced to 46 months in prison and ordered to pay a $5,000 fine and $585,733 in restitution to the IRS. Co-defendant Alton Louis Vaughn Sr., of Greene County, was sentenced to 42 months in prison and ordered to pay $585,733 in restitution to the IRS and $3,595 in restitution to a victim. Delport was the owner of Abundant Health & Wellness. Between Jan. 1, 2004 and Dec. 31, 2013, Delport received approximately $4.7 million in gross receipts that he did not report to the IRS or pay taxes on. Delport submitted documents to the IRS consisting of frivolous arguments in order to impede and delay an IRS examination. He also attempted to place his funds and assets beyond the reach of IRS collection efforts. Delport and Vaughn also attempted to impede a federal grand jury in its investigation of Delport by refusing to comply with federal grand jury subpoenas for tax and business records, by sending correspondence to the U.S. Attorney’s Office falsely stating that an IRS Revenue Officer had personally seized and collected all of Delport’s original income documents for the years 2003 through 2009 and by Vaughn falsely testifying before the grand jury. Both also attempted to impede a federal grand jury in its investigation by counseling an employee to refuse to testify.
Former Stockbroker Sentenced for Fraud and Tax Evasion
On March 1, 2016, in Boston, Massachusetts, Jeffrey Eldred Gallagher, of Bradenton Beach, Florida, was sentenced to 36 months in prison. In December 2015, Gallagher pleaded guilty to one count of wire fraud, three counts of engaging in a monetary transaction and two counts of tax evasion. In 1989, Gallagher was convicted of one count of mail fraud and three counts of interstate transportation of stolen property in connection with his illegal and unauthorized options trading while he was a stockbroker. According to court documents, from at least 2008 through early 2012, Gallagher persuaded friends and associates to pay him money to invest and made promises that the investments would yield guaranteed returns. Gallagher commingled investor funds with his own personal funds, and paid some investors with monies given to him by other investors. When asked for the return of their investments, Gallagher provided investors numerous false explanations and bad checks totaling $1,783,375. In sum, 23 investors lost a total of approximately $617,475. As part of the scheme, in 2009 and 2010, Gallagher used approximately $249,703 of investor monies for his personal benefit, but did not report any of this income on his federal income tax returns for those years.
Massachusetts Man Sentenced for Tax Evasion and Bankruptcy Fraud
On Feb. 25, 2016, in Boston, Robert P. Bonefant, Jr., of Topsfield, was sentenced to 15 months in prison, one year of supervised release and ordered to cooperate with the IRS to assess and pay his outstanding taxes. In 2008, the IRS assessed Bonefant $194,430 in taxes owed for 2004 and 2005. Bonefant then took steps to prevent the IRS from determining his entire income and actual tax liabilities such as depositing $1 million into his father’s bank accounts, filing false tax returns and failing to file a return for 2010. In total, including the amounts assessed for 2004 and 2005 and the amounts owed for 2009 through 2012, Bonefant failed to pay approximately $389,030 in taxes. In 2012, Bonefant filed for bankruptcy in Massachusetts seeking to discharge various debts, including the outstanding 2004 and 2005 federal tax liability. In documents filed with the Bankruptcy Court, Bonefant made false statements concerning his income and assets, as well as his use of his father’s bank accounts.
Video Poker Business Owner Sentenced
On Feb. 24, 2016, in Columbia, South Carolina, Larry Flynn, aka L.W., of Richland County, was sentenced to 15 months in prison; three years supervised release and ordered to pay $251,000 in restitution. Flynn ran an illegal video poker business called Magic Minutes from 2011 through 2013. Magic Minutes placed video poker machines throughout the state, generally in gas stations, liquor stores and party shops. For a fee, the machines allowed gamblers to play games of chance – with the ability to cash out their winnings with the owners of the stores where the machines were housed. Magic Minutes was a profitable illegal gambling business, in two years making well over a million dollars. However, during this same time, the defendant paid no taxes and had members of his family on Medicaid.
Arkansas Man Sentenced for Federal Tax Crime
On Feb. 24, 2016, in Fayetteville, Randall Acton West was sentenced to 14 months in prison, one year of supervised release and ordered to pay restitution of $95,825 to the IRS. West, a former real estate appraiser, failed to file federal income tax returns with the IRS for the years 2007 through 2010, despite earning gross income in excess of the tax return filing threshold.
Former Accounting Manager Sentenced for Embezzlement, Tax Evasion
On Feb. 23, 2016, in Charlotte, North Carolina, Amy Hilty, of Dayton, Ohio and formerly of Stanley, North Carolina, was sentenced to 18 months in prison, three years of supervised release and ordered to pay restitution to her former employer and the IRS. From 2008 to 2012, Hilty was employed as the accounting manager for a company located in Huntersville. Hilty used her access to the company’s accounting system to divert company funds to bank accounts she controlled. Hilty covered her fraud by falsely recording the stolen funds in the company’s books and records as supplies, owner withdrawals and travel expenses, among others. Through this scheme, Hilty embezzled $390,156 from the company and used the money to purchase a new home and a BMW vehicle. In addition, for tax years 2008 through 2011, Hilty did not file federal income tax returns, and failed to report the diverted income and her salary from the victim company, totaling $520,976.
Former Insurance Agent Sentenced for Investment Fraud Scheme and Tax Fraud
On Feb. 22, 2016, in Columbia, South Carolina, Timothy David Mays, of Walterboro, was sentenced to 42 months in prison, three years of supervised release and ordered to pay restitution of $583,087 to his victims and $127,051 to the IRS. From late 2008 through 2011, Mays was an insurance agent licensed to sell life insurance and accident/health insurance, who also touted himself as a “licensed” investor and CEO of Life Trust Financial, LLC, and Mays Group Financial investment companies. Mays received approximately $1,089,000 from investors under false pretenses. Mays invested only $200,000 of the funds and returned approximately $203,000 to clients who asked for their money back. He spent approximately $583,000 on a variety of personal and business expenditures. Approximately $104,000 of funds he had left in his accounts were turned over to federal authorities during the investigation. In addition, Mays filed a false U.S. Individual Income Tax Return in February 2007 for calendar year 2006 that understated his total income, and he willfully failed to file U.S. Individual Income Tax Returns for calendar years 2007, 2008, and 2009.
Recruiter in Multi-Million Dollar Mortgage Fraud Scheme Sentenced
On Feb. 22, 2016, in Los Angeles, California, Chester Peggese was sentenced to 12 months and one day in prison, five years of supervised release and ordered to pay restitution of $4.2 million to a bank and $38,609 to the IRS. Peggese held himself out to churches in the Los Angeles area as a consultant who could assist the churches in obtaining mortgage loans to purchase property or in obtaining loans to refinance existing mortgages. Between 2007 and 2009, Peggese met with churches and obtained the financial information required as part of the loan application. Unidentified co-schemers would alter the financial information provided to make it appear as if the churches were more financially sound than they were. Peggese caused these false loan applications to be submitted to a bank. An insider at the bank, Paul Ryan, provided a template for presenting financial information for the churches, to ensure that the church loan applications, which contained inflated financial information, would be approved. Peggese received payment out of escrow on the loans and would kickback a portion of the funds to Ryan. As a result of this false information, the bank issued a loan of $1,331,250. The actual loss to the bank on this loan was $403,010. Peggese also had additional gross business receipts for calendar year 2008 of $106,325 that were not reported on his tax return.
Government Contractor Sentenced for Accepting Kickbacks and Tax Evasion
On Feb. 17, 2016, in West Palm Beach, Florida, Victor Villalobos, of Enterprise, Alabama, was sentenced to 48 months in prison, three years of supervised release and ordered to pay $542,562 in restitution to the IRS. In addition, Villalobos is permanently debarred from federal government contracting. Villalobos worked for a federal prime contractor at Fort Rucker, Alabama. In 2009, Villalobos approached Maxim Silinsky, a Florida-based subcontractor for this company, and solicited illegal kickbacks. Between June 2009 and February 2015, Villalobos received more than $1.9 million in kickback payments. Villalobos attempted to conceal his receipt of the kickbacks by forming nominee entities and opening nominee bank accounts. Villalobos also evaded paying income taxes on the kickback payments by causing false federal income tax returns to be filed with the IRS. Co-conspirators Silinsky and Trevor Smith were previously sentenced to 12 months and a day in prison and 18 months in prison respectively for their roles in the scheme.
Louisiana Man Sentenced For Filing a False Tax Return
On Feb. 17, 2016, in Shreveport, Richard Z. Johnson Jr., of Mansfield, was sentenced to 12 months and one day in prison, one year of supervised release and ordered to pay $275,184 in restitution. Johnson reported a total income of $126,197 on his 2011 U.S. individual tax return but willfully failed to report additional income of $78,717.
Former Missouri Man Sentenced for Tax Evasion
On Feb. 16, 2016, in Kansas City, Scott Christopher Lucas, aka Scott C. Bogan, formerly of Springfield, was sentenced to 25 months in prison and ordered to pay restitution of $127,721 to the IRS and $41,368 to the state of Missouri. From 2002 to 2005, Lucas was employed as a time-share salesman. During those four years, Lucas earned a gross income of $811,367 in wages and a total taxable income of $719,505, for a total tax due and owing of $142,418 in federal income tax and $41,368 in state income tax. Lucas failed to file income tax returns from 2002 through 2005. For employment purposes, Lucas used the name Scott Christopher Lucas, when his legal surname, and the surname he used in his dealings with the IRS, was Bogan. To avoid having income taxes withheld from his pay, Lucas filed IRS forms in which he claimed exemption from the withholding of income taxes. Lucas also took steps to hide his property from the IRS by using another person’s name and a false social security number.
Missouri Woman Sentenced for Ponzi Scheme
On Feb. 16, 2016, in Kansas City, Terina K. Carney, aka Terina Humphrey, of Lebanon, was sentenced to 36 months in prison and ordered to pay restitution of $396,246 to victim investors and $118,241 to the IRS. Carney was the owner of Riverside Lease, LLC. She promised investors a high rate of return at little to no risk. Carney actually used the money she received to pay other investors or for personal expenses. Carney defrauded numerous investors, for a total of $697,918. During the course of the Ponzi scheme she repaid initial investors $326,328 from monies obtained from later investors. Thus, the total amount lost was $396,246.
Florida Man Sentenced for Stealing Money from Former NBA Player and Tax Evasion
On Feb. 12, 2016, in Orlando, John A. White, of Windermere, was sentenced to 57 months in prison for wire fraud and filing a false tax-related document. Restitution and forfeiture will be decided at a future date. From 2006 through 2012, White was employed as the personal assistant to an NBA basketball player. During calendar years 2008 through 2011, White stole approximately $2,188,170 from the player by making unauthorized online banking money transfers from a bank account belonging to the player into bank accounts White controlled. White also filed false joint income tax returns with the IRS for each of these years. In these tax returns, he and his wife never reported more than $60,000 in gross income, when in fact their joint income was significantly greater. White’s false tax returns caused a tax loss of approximately $621,144 to the IRS.
Payroll Administrator Sentenced for Tax Evasion
On Feb. 11, 2016, in Miami, Florida, Marilyn McDaniel, of Garner, North Carolina, was sentenced to 42 months in prison and three years of supervised release for her participation in a tax evasion scheme. McDaniel was the payroll administrator for a company and her sole responsibility was to report the employee hours and pay to the company’s payroll service provider. In 2010, a former employee contacted the company’s accountant regarding a letter from the IRS indicating that the individual failed to pay taxes on income earned in 2008. The company’s payroll records revealed that in 2008 there were wage payments made to the employee, but the payments were actually deposited into McDaniel’s personal bank account. The company’s payroll records also showed that McDaniel submitted false wage reports on behalf of 16 other former employees and approximately $1.7 million in wage payments in the names of those former employees were diverted into accounts controlled by McDaniel and her daughter. McDaniel did not report or pay taxes on the stolen money and she failed to file an individual tax return with the IRS for calendar year 2009. In total, McDaniel’s total tax due and owing is $547,792.
Texas Businessman Sentenced for Tax Evasion
On Feb. 11, 2016, in Fort Worth, Avan Nguyen, of Arlington, was sentenced to 36 months in prison and ordered to pay a $250,000 fine. Additionally, Nguyen agreed to forfeit $1.1 million previously seized and he made restitution of approximately $337,864 to the IRS prior to sentencing. Nguyen operates Nava Material Goods, Inc., a wholesale business for beauty and/or nail salon products. In 2012, Nguyen aided and assisted in the preparation and presentation of Nava Material Good Inc.’s U.S. Corporate Income Tax Return (Form 1120) for 2011. When filing that return, Nguyen aided and assisted another by willfully omitting approximately $4,910,697 of income on the return.
Former Plan Trustee Sentenced for Embezzling over $1 Million, Income Tax Evasion
On Feb. 10, 2016, in Dayton, Ohio, Timothy Hock, currently of Chicago, Illinois, was sentenced to 42 months in prison and ordered to pay approximately $1 million in restitution to a victim company and approximately $326,000 in restitution to the IRS. Hock pleaded guilty to embezzlement and tax evasion charges on Aug. 19, 2015. According to court documents, Hock, a Certified Public Accountant, was the controller for a company when it (and five other related entities) filed for Chapter 11 bankruptcy in September 2009. Hock embezzled approximately $1,080,289 which belonged to the bankruptcy estate of the company through a variety of means, including writing checks to himself from the trust’s bank accounts. Hock committed tax evasion on his 2010, 2011 and 2012 tax returns by claiming that his taxable income was much less than it actually was. In total, he attempted to evade paying approximately $326,000 in federal income taxes for those years.
Louisiana Man Sentenced for Tax Evasion
On Feb. 2, 2016, in Shreveport, Joseph Lanza was sentenced to 27 months in prison and three years of supervised release. Lanza evaded paying more than $250,000 in taxes for 1996 through 1999, 2001, 2002 and 2004 through 2007. Lanza did this by placing funds and properties in the names of nominees.
Former Owner of Chiropractic Practice Sentenced for Tax Fraud
On Jan. 29, 2016, in Boston, Massachusetts, Paul E. Jondle, of Salem, New Hampshire, was sentenced to 12 months in prison, two years of supervised release, and ordered to pay $202,270 in restitution. Jondle operated a chiropractic practice in Malden called Future Health. Jondle, who was barred from working as a chiropractor, used the names and tax identification numbers of licensed chiropractors working at Future Health for billing purposes, causing the insurance company payors to report the payments to the IRS as income to Jondle’s subcontractors. In fact, the payments, mailed to Jondle and deposited into bank accounts that he controlled, were income to Jondle. From 2003 through 2007, Jondle deposited approximately $3 million into his bank accounts, yet he reported no taxable income for those years, and paid no federal income taxes. During those years, Jondle spent hundreds of thousands of dollars on personal expenses including mortgage payments on his home, landscaping, tuition payments and pet spas.
Former Kentucky Private Investigator and Legal Consultant Sentenced for Tax Fraud
On Jan. 29, 2016, in Bowling Green, Kentucky, James S. Faller II, formerly of Russell Springs, was sentenced to 36 months in prison and three years of supervised release. Restitution will be determined at a later date. From 2006 through 2009, Faller received annual income of approximately $126,000 to $289,000 per year from his work as a private investigator and legal consultant. However, Faller did not timely file any individual income tax returns for that period. Instead, Faller took steps to conceal his income from the IRS. Faller owes additional federal income taxes of $112,065 for the 2006 through 2009 tax years. In March 2010, Faller signed and submitted a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to an IRS revenue officer. Faller falsely reported that he had no income even though he had earned $23,000 in the preceding month alone.
North Carolina Businessman Sentenced for Tax Evasion
On Jan. 29, 2016, in Greensboro, Douglas Michael Lang was sentenced to 18 months in prison, three years of supervised release and ordered to pay restitution of $607,608 for tax evasion. Lang was the sole owner of numerous businesses that sold and serviced vending machines and coin-operated air compressors. Among those businesses were Protocol LLC and R&J Vending LLC. Protocol was a national vending machine company that sold and serviced vending machines to franchisees, sold the goods to be stocked in the vending machines, received commission payments, and charged and received management fees from franchisees. As the sole owner of Protocol LLC, Lang was required to report Protocol’s income and other tax items on his personal tax returns. In order to evade assessment of taxes, Lang retitled his interest in Protocol LLC, in the name of House of Psalms, ostensibly a religious non-profit entity he controlled. Lang also opened a bank account in the name Spirit of Angels, another ostensibly religious non-profit entity he controlled. Lang used these entities to deposit funds derived from his vending machine business. He then used the bank account to pay for his personal and business purposes, not for any charitable or religious purposes. Lang’s companies Protocol and R & J Vending made gross sales of over $11 million between 2005 and 2010.
Former Government Contracting Official Sentenced for Bribery
On Jan. 8, 2016, in Alexandria, Virginia, James Edward Addas, of Stafford, was sentenced to 30 months in prison for his role in a bribery scheme involving U.S government contracts in Iraq. Addas previously pleaded guilty to bribery and tax evasion. According to the plea agreement, in August 2004, Addas was a contracting official at the Iraq/Afghanistan Joint Contracting Command in the U.S. Embassy in Baghdad when the owner and CEO of a contracting company based in Jordan offered to pay him a total of $1 million in return for assistance in obtaining U.S. government contracts for major electrical construction projects and related services in Iraq. With Addas’ assistance, the contractor’s companies subsequently received at least 15 contracts, with a total value of more than $28 million. The contractor paid Addas via cash and wire transfers that totaled more than $505,000 and paid for other items valued at more than $70,000. Addas did not declare any of this income on his filed federal tax returns.
Former Administrator at Los Angeles Law Firm Sentenced for Embezzlement
On Dec. 21, 2015, in Los Angeles, California, Esterlina Santos was sentenced to 60 months in prison and ordered to pay $3,322,161 in restitution to her former employer and $781,109 to the Internal Revenue Service. Santos pleaded guilty in June to mail fraud and subscribing to a false tax return. From 2004 to August 2010, Santos fraudulently obtained approximately $3,322,161 from the Law Offices of Robert Smylie and Associates (RSA). While serving as the firm administrator for RSA, Santos used QuickBooks software to generate checks from RSA’s operating account to pay for expenses for her personal credit accounts. After Santos generated checks from RSA’s operating account and mailed them to pay her personal credit accounts, she used QuickBooks to alter the checks to falsely reflect that they were paid to RSA’s vendors for services purportedly provided. Santos admitted that she received $2,448,794 of income she failed to report to the IRS during the 2007 through 2010 tax years.
Former Property Manager Sentenced for Stealing from Employer and Clients
On Dec. 11, 2015, in Washington, D.C., Lorraine Cyr, of Palm Bay, Florida, was sentenced to 41 months in prison, three years of supervised release and ordered to pay $380,537 in restitution to a property management company and other victims of her scheme, as well as $96,112 to the IRS. She will also pay a forfeiture money judgment of $342,917. Cyr pleaded guilty in July to wire fraud and income tax evasion. From 2001 until 2009, Cyr worked for a property management company in Washington, D.C. She was vice president of operations during her last four years of employment. Between July and November of 2009, Cyr embezzled $37,620. In 2009, Cyr started her own property management company, also in Washington, D.C., in which she performed similar duties for various clients. Between March 2010 and April 2011, she stole $342,917 in funds from eight clients. In addition, Cyr evaded paying income taxes on the money that she was stealing, as well as the legitimate income that she was earning, during the course of her scheme.
Massachusetts Man Sentenced for Evading Tax
On Dec. 11, 2015, in Boston, Massachusetts, John W. Lippolis, of Blackstone, was sentenced to 12 months and a day in prison, one year of supervised release and ordered to pay restitution of $172,759 to the IRS. In June 2015, Lippolis pleaded guilty to corruptly endeavoring to impede the IRS. From 2005 to 2011, Lippolis was the sole proprietor of JW Masonry and, at times, he also worked for his son’s business, JM Masonry Inc. When Lippolis was paid by check for work performed, he used check cashing services instead of depositing the funds into a bank account to avoid IRS scrutiny. Lippolis cashed nearly $3 million in checks in this manner. Lippolis operated his business in cash, paid workers in cash and requested that customers not write checks to him for amounts exceeding $10,000. Lippolis also failed to file tax returns for many years.
Michigan Business Owners Sentenced for Conspiracy to Defraud United States, Mail Fraud and Wire Fraud
On Dec. 10, 2015, in Detroit, Michigan, Toranio Ingram was sentenced to 66 months in prison, three years of supervised release and ordered to pay restitution of $871,781 to the IRS. Ingram pleaded guilty in June 2015 to conspiracy to defraud the United States, mail and wire fraud. Ingram was the owner Special T Tax, a tax preparation business. Ingram and his partner, Ingrid Thompson, took several steps to conceal income from the IRS such as failing to file Form 1065, U. S. Return of Partnership Income which understated their personal income tax liability by $420,703. In addition, Ingram was also involved in multiple identify theft schemes including filing false claims for the First Time Homebuyer Credit (FTHBC), Upfront Mortgage Insurance Premiums (UFMIP) refunds and unclaimed corporate stock dividends. Co-defendants Eddie Maurice-Matthew Jones and Ingrid Thompson were sentenced to 30 months in prison and 15 months in prison, respectively. Jones was ordered to pay $562,602 in restitution. Thompson was ordered to pay $489,290 in restitution to the IRS.
Oregon Couple Sentenced for Tax Crimes
On Dec. 10, 2015, in Eugene, Oregon, Ronald Joling and his wife, Dorothea Joling, both of Coquille, were sentenced to 97 months in prison and 48 months in prison, respectively. Each must also pay more than $1.2 million to the IRS in outstanding federal taxes. Over a span of nearly 20 years, the Jolings’ attempted to prevent the IRS and the Oregon Department of Revenue from collecting almost $2 million they owed in back taxes, penalties and interest. The Jolings used sham trusts, bank accounts in the names of nominees, a warehouse bank, bogus money orders, bills of exchange, bonds, and filing false tax returns with the IRS. When those efforts failed, the Jolings resorted to intimidation tactics and threats. Rather than pay their taxes, the Jolings spent about $750,000 on a motel and restaurant and tracts of land. They attempted to conceal their interest in these properties from the IRS by placing them in sham trusts.
North Carolina Businessman Sentenced for Tax Evasion
On Nov. 30, 2015, in Charlotte, North Carolina, Sammie Marks, of Matthews, was sentenced to 12 months and one day in prison, one year of supervised release and ordered to pay $158,614 in restitution to IRS. Marks was the owner of “Marks Metal and Salvage.” Between tax years 2009 and 2013, Marks deposited checks and cash receipts from his businesses and its customers totaling over $1.1 million into his personal bank account, which he did not include in his personal or business tax returns filed with IRS. As a result of the unreported gross receipts, Marks had additional tax liability of $158,614.
Carpet Cleaner Sentenced for Tax Evasion
On Oct. 23, 2015, in Minneapolis, Minnesota, James Siganos was sentenced to 21 months in prison and ordered to pay $300,619 in restitution. Signos pleaded guilty on June 11, 2015, to evading corporate income taxes. Siganos was the owner of a carpet-cleaning business and was responsible for filing federal corporate tax returns on behalf of the company. Siganos filed a Form 1120S, U.S. Income Tax Return for the calendar year 2009, in which he underreported his company’s gross receipts or sales. To avoid paying taxes on the full amount of his company’s revenue, Siganos cashed more than 1,400 checks totaling approximately $410,905 at a check cashing facility in Minneapolis. Additionally, Siganos filed no corporate income tax returns for the tax years 2010, 2011, and 2012, resulting in an underreporting of approximately $438,991.
New Hampshire Man Sentenced for Tax Evasion
On Oct. 1, 2015, in Concord, New Hampshire, Ronald Martin, of Hill, was sentenced to 12 months in prison and three years of supervised release. In June, Martin pleaded guilty to three counts of tax evasion. According to court documents, Martin formerly owned and operated Martin Construction, in Northfield, and employed three to eight employees at various times. In 2008, 2009 and 2010, Martin’s business earned about $1.2 million in gross receipts, but Martin did not file any federal income tax returns for Martin Construction or for himself during those years and did not pay any federal income tax for either. Martin took steps to conceal the business revenue by directing payments and invoices for selling scrap metal to be made in the name of a third party. He also only deposited a small fraction of the income earned from Martin Construction into the business’ bank account. Instead, Martin diverted a significant portion of the business income for personal expenditures. He also did not file any federal employment tax returns or pay over to the Internal Revenue Service (IRS) any federal employment taxes for any of his employees.
Fiscal Year 2017 - Non-filer Investigations
Fiscal Year 2015 - Non-filer Investigations