Some of our favorite recent tax fraud cases, including one preparer who is alleged to have sent in a false return for her dead mother.
Miami: Three preparers were among 25 defendants charged in schemes that resulted in thousands of identities stolen and millions of dollars in ID theft tax filings. The charges stemmed from a massive ID theft sweep in the Miami area, where authorities say the crime reaches “epidemic” proportions.
Preparer Freddie Howard, 56, of Davie, Fla., was charged with access device fraud and identity theft in connection with a scheme that involved the submission of approximately $22 million in fraudulent refund claims. According to authorities, Howard, who operated Quality Tax Service in Broward County, prepared fraudulent returns using the identity information of willing participants and stolen IDs. He used false and fictitious income and withholding information on federal returns to justify fraudulent refunds generally ranging from $60,000 to $1,400,000.
Howard typically requested these refunds via Treasury check and, to conceal his identity, submitted the returns by mail, including no preparer information. Howard also blocked out the preparer software information and used other people to contact the IRS to inquire about the status of the fraudulent returns.
Authorities said Howard submitted over $22 million in false and fraudulent tax refund claims and the IRS paid some $4.5 million of them.
Preparer Stevens Nore, 35, of Port St. Lucie, Fla., was charged in a 28-count indictment for his participation in tax fraud and ID theft schemes. According to the indictment, from June 11, 2009, through April 2012, Nore owned and operated Fraternity Tax and Services in Fort Pierce, Fla., which prepared and submitted 1040s claiming false deductions and credits for tax years 2009 to 2011. Nore also filed false returns for 2010 and 2011 by falsely stating gross receipts and sales on Schedule Cs.
He stole three refunds totaling $26,349.30, authorities said, and used the identity of two individuals without their permission.
Nore was charged with 21 counts of preparing false returns, two counts of filing false returns, three counts of theft of public money and two counts of aggravated ID theft.
Preparer Rony Maurical, 38, also of Port St. Lucie, was charged in a 52-count indictment for his participation in tax fraud and ID theft schemes. According to the indictment, from July 3, 2008, through March 23, 2012, Maurival owned and operated RJ’s Tax & Services in Fort Pierce where he prepared and submitted 1040s claiming false deductions and credits for tax years 2008 to 2011.
Maurival also filed false returns for 2009 and 2010 by falsely claiming head of household status and falsely stating Schedule C income, gross receipts and sales. Authorities said he stole three refunds totaling $3,292 and used the ID of three individuals without their permission.
Maurival was charged with 44 counts of preparing false returns, two counts of filing false returns, three counts of theft of public money and three counts of aggravated ID theft.
If convicted, the defendants face maximum prison sentences of 20 years for each count of wire fraud, 10 years for conspiracy to make false claims against the U.S., five to 15 years for access device fraud, 10 years for stealing government funds, and two years consecutive to any other term for aggravated ID theft.
Phoenix: Preparer Kimberly Stewart has been indicted on federal fraud and ID theft charges for allegedly filing false returns and pocketing more than $95,000 in refunds - including for her dead mother.
Stewart, who operated tax prep businesses between 2003 and 2010, is accused of filing 23 false claims with fabricated W-2s and false education credits and with e-filing false returns to the IRS. Authorities said she directed 10 refunds into bank accounts she controlled.
In the spring of 2011, authorities said, Stewart also filed for a $6,468 refund in the name of her deceased mother. Stewart claimed her mother received $19,496 in wages and had $2,652 in federal withholding while working for Stewart that tax year.
Los Angeles: Preparer Gabriela Sandra Ramirez, 38, former operator of Gaviota Consulting Services and La Gabiota Income Tax has been sentenced to 15 months in prison for conspiring to file fraudulent returns. Ramirez was also ordered to pay restitution of $62,008 and spend three years on supervised release following her prison term.
In February, Ramirez pleaded guilty to conspiracy to defraud the U.S. For over two years, Ramirez conspired with her now-deceased husband to file returns containing false claims for refunds. According to court documents, from about 2008 until November 2010, Ramirez and her husband created and filed false 4852s and altered legitimate W-2s claiming their taxpayer clients had more federal income taxes withheld from wages than were actually withheld. In some cases, including on their personal returns, Ramirez and her husband falsely listed dependents.
The IRS issued larger refunds than were due and Ramirez admitted to submitting approximately $110,064 in false claims to the IRS.
Ramirez remains in federal custody since her arrest in August.
Little Falls, N.Y.: Preparer James Butcher, 58, pleaded guilty to aiding and assisting in preparation of false returns.
Butcher, owner and operator of Jim’s Income Tax Service, admitted that from 2007 through 2010 he prepared false 1040s for 14 clients. All 40 of the 1040s contained false or inflated Schedule A deductions, specifically false or inflated charitable deductions and unreimbursed employee expenses. He admitted that he inflated deductions without being directed to do so by clients.
The tax loss totaled $140,446.00. Butcher faces a maximum of three years in prison, a maximum fine of $250,000 and restitution to the IRS for tax years 2007 through 2010. Sentencing is August 1.
Benton, La.: PreparerMarie Kemp, a.k.a. Marie Devers, faces 21 counts of ID theft, computer fraud and filing or maintaining false public records related to tax fraud. State authorities said Kemp is accused of falsifying returns filed through Marie’s Tax Service, where she allegedly inflated clients’ refunds by improperly claiming the Louisiana’s Child Care Expense Tax Credit.
Seward, Pa.: Thefederal government has filed to permanently bar preparer Larry E. Snow from preparing federal returns for others.
In February 2012, Snow pleaded guilty to one count of aiding and assisting in the preparation of false and fraudulent individual income tax returns and was later sentenced to six months of home detention and three years of probation. The new civil complaint alleges that Snow repeatedly prepared returns with false deductions for medical expenses, personal property taxes, charitable contributions and unreimbursed employee expenses. He also allegedly maintained a list he referred to as “IRS Gimmes,” items he instructed his employees to report on each return prepared in his accounting practice regardless of whether the client was entitled to them.
The IRS estimates that Snow’s activities for one year alone cost more than $1.3 million in lost tax revenue.
New Iberia, La.: The United States has filed seeking to bar preparer Joyce Bougere-Keyes and her business, Joyce Tax & Financial Service LLC, from preparing federal returns for others.
According to the injunction, Bougere-Keyes prepares clients’ federal returns that report fabricated or inflated business income and expenses to maximize the EITC. Bougere-Keyes also improperly claimed education credits for ineligible taxpayers.
Since 2009, she prepared more than 7,500 individual income tax returns; her conduct allegedly cost the U.S. Treasury more than $1 million.
San Antonio: Preparer Eddie Alberto Madrigal has been ordered to pay a $50,000 fine and $11,225 in restitution for filing returns that generated fraudulent refunds, according to published reports.
Madrigal reportedly pleaded guilty to one count of aiding and abetting the preparation and presentation of a fraudulent return and was also ordered to serve five years of probation.
The IRS reportedly claims that Madrigal’s scheme cost the government at least $75,000 in false refunds.
Roswell, Ga.: The Georgia Department of Revenue’s Special Investigations Division has taken arrest warrants out on preparer Todd Kelly, president of Tax Traxx LLC, on theft by conversion charges for allegedly pocketing over $20,000 in client sales tax payments, according to published reports.
A local restaurant owner told news outlets that she hired Kelly to file her monthly sales tax returns with the state for over a year but recently received a call from the state informing her that she owed back taxes.
A spokesperson with the state agency reportedly said Kelly kept the money instead of turning it over to the department.