A Southern California tax preparer has been sentenced to five years in prison for preparing and filing false tax returns.
Ernesto Jesus Suarez, 61, of Orange, Calif., was also sentenced to three years’ probation by Judge Stephen V. Wilson in a Los Angeles federal court and ordered to pay total restitution of $753,477.
Suarez pleaded guilty in June to preparing and filing hundreds of tax returns, including his own, that claimed inaccurate and false items on his taxpayer-clients’ returns. Suarez allegedly collected over $672,478 in stolen tax refunds from the IRS and $80,729 from the Franchise Tax Board (see IRS Stops Tax Preparers Accused of Stealing Client Refunds).
According to the plea agreement, Suarez would meet clients at their homes and prepare a largely accurate income tax return on his laptop. If the client was due a refund, Suarez would give the client a check from his personal checking account in the amount stated on the accurate return and misrepresent to the client that he would file the accurate return with the IRS.
Later, Suarez would prepare a false tax return, including fictitious items such as false spouses, dependents, child or dependent care, and education expenses, in order to increase the refund amount. Suarez would forge the signature of the taxpayer and then mail the false tax return to the IRS. He would then direct the inflated refunds to be deposited into 29 different bank accounts that he controlled.
Also according to the plea agreement, Suarez admitted that he used a similar scheme for himself on his 2008 federal income tax return, claiming a fictitious spouse and dependent. Suarez also admitted that he failed to report his true income from his tax return business and the illegal refunds he received.
A civil injunction order permanently barring Suarez from preparing tax returns for others was signed in June by Judge Cormac J. Carney of the U.S. District Court for the Central District of California. The order also prohibits Suarez from representing clients before the IRS and from aiding, advising, or assisting in the preparation of federal tax returns for life.
As part of his plea agreement, Suarez agreed to publish the civil injunction to all of his current clients. The investigation was conducted by the U.S. Attorney’s Office in Los Angeles and the Internal Revenue Service’s Criminal Investigation division.
6 Comments
878K received and NO JAIL time? This is what is wrong with the system. He should be in JAIL for a least 3 years. Maybe probation for 2 years. With no active punishment; other around him can see that they possibly can get off the hook by doing a 'plea down' deal. Have known shoplifters in Virginia that get three years Jail Time. What is wrong with the Judicial system in California?
Posted by: DDTS | October 19, 2012 4:49 PM
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Probably also was the infamous "low cost provider", licensed or unlicensed. I would have done the returns for free if I knew I could steal thousands of dollars per return.
I'm waiting for the shoe to drop on some of the licensed return preparers that I strongly suspect are presently operating under the watchful eye of the IRS.
Want to know how to spot one? Here's an easy test that might provide some insight. Can the return preparer e-file your return? If not, pretty good likelihood that the ability to e-file has been taken away by the IRS. I actually heard one of these folks state it was much safer to paper-file the return than e-file. Wow, there's creative thinking.
Posted by: topbeancounter | October 18, 2012 6:30 PM
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I believe the comment that only probation was received is incorrect. The first of the article states the federal judge gave the crimminal 5 years in prison plus an additional 3 years probation plus the restitution cause. Since there was no mention of the crimminal having his license revoked I assume this crook was unlicensed. It will be interesting to see how much of the funds this guy actually pays back to the IRS. My guess is pennies on the dollar. The IRS needs to do a better job of monitoring / reviewing tax returns than what they have in the past. How this guy was able to use phony names and SSNs to file so many phony tax returns is amazing.
Posted by: FAApilotCPA | October 18, 2012 4:17 PM
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And he only gets probation? No jail time? No wonder there is so much fraud out there!
Posted by: cherylrein | October 18, 2012 11:00 AM
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It boggles my mind how tax preparers think they can get away with this kind of thing! 29 different accounts??? What..is..it....that he thinks the IRS...WOULDN'T have found out about???
Posted by: andystaxes | October 18, 2012 10:29 AM
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I am sorry to hear of this incident. People trust their tax preparer and depend on there knowledge of the tax laws. Cleary this tax preparer took advantage of that trust. It is tax preparers like this gentleman that makes it hard for other honest preparers. Although, this case is disturbing, unfortunately more cases are sure to follow.
Posted by: edna.washington | October 18, 2012 9:55 AM
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