Some of our favorite recent tax fraud cases
Destrehan, La.: Preparers Cathy Ross Vinnett, 46, and her daughter Lashanda Ruth Vinnett, 29, have pleaded guilty to conspiracy to defraud the IRS.
According to court documents, Cathy Vinnett opened D&C Tax Service in 2006 and two years later with her daughter created River Parish Tax Professionals. The Vinnetts, through River Parish, filed approximately 310 returns that falsely claimed the First-Time Homebuyer Credit and the EITC, as well as listing false dependents resulting in approximately $1.845 million in fraudulent refunds.
The pair used recruiters to locate potential clients, advising potential clients that the federal government was giving out stimulus money and instructing the individuals to visit River Parish to get their money. The Vinnetts interviewed clients at their office in LaPlace, La., to obtain personal information including names, addresses and Social Security numbers, then used the information to file false returns without clients’ knowledge.
The Vinnetts also tried to hide Cathy’s identity from the IRS, knowing that the agency previously suspended her EFIN as a result of another fraudulent tax scheme involving D&C. Additionally, in May 2009 Cathy claimed to IRS agents that she knew nothing about false returns prepared at River Parish, that she didn’t own a tax business and that her brother owned River Parish.
Cathy Vinnett will be sentenced on October 1 and Lashanda Vinnett on September 17. They face a maximum of 10 years of imprisonment followed by up to three years of supervised release, as well as restitution and a $250,000 fine.
Atlanta: Preparers Frederick and Willie Jenkins have been arraigned on federal charges that they conspired to prepare and file false federal returns claiming more than $1 million in refunds. According to case documents and authorities, since 2006 the brothers owned and operated Global Tax Service LLC, with multiple locations in the Atlanta area and in other states, including Alabama. During the tax years under investigation (2008 through 2011), the Jenkins brothers allegedly prepared and filed false income tax returns for clients, claiming primarily fraudulent and fictitious business income and losses to inflate refunds.
Frederick, 42, and Willie, 44 and of Fairburn, Ga., were indicted by federal grand jury on May 20.
Fresno, Calif.: A federal court has permanently barred preparers Ken and Alice Mendoza from preparing federal tax returns for others. The Mendozas, who operated under the business name Mendoza Business Services, consented to the civil injunction order.
According to the complaint, the couple understated clients’ federal taxes by fabricating expenses, claiming false or inflated credits (particularly educational credits) and deducting personal expenses of their clients. The complaint alleges that loss from the Mendozas’ activities might total $2.8 million for tax years 2010 through 2011.
The complaint also alleges that many of the pair’s clients may owe additional tax, interest and penalties because of the improperly prepared returns. The court also enjoined anyone acting in concert with the Mendozas from preparing or filing federal returns and prohibited the two from requesting or directing the preparation of federal returns for others.
The court requires the Mendozas to contact all persons for whom they prepared a federal return since Jan. 1, 2008, to inform them of the injunction.
Miami: A federal district judge permanently barred Lazaro Jesus Toyos and his daughter Dilma Carida Garcia, a.k.a. Dilma Toyos Garcia, and their companies L. Toyos Tax Service Inc. and Toyos Garcia Tax Service Inc. from preparing federal returns for others.
The suit alleges that the defendants prepared thousands of returns and unlawfully understated income tax liabilities and overstated refunds by fabricating or exaggerating deductions and credits. Their practices allegedly included fabricating Schedule C losses for non-existent businesses, falsely claiming the First-Time Homebuyer Credit and falsely claiming American Opportunity Credits for taxpayers who did not acquire education expenses or attend college.
The government alleged that loss from the defendants’ activities may reach millions of dollars.
Huntsville, Texas: Preparer Cedric Keith Oliphant has been sentenced to 33 months in prison following his conviction related to the preparation of false returns.
Oliphant owned and operated Oliphant Tax Service where, according to court documents, he included false deductions on at least 69 returns without clients’ knowledge and fraudulently increased their refunds by some $325,000 for tax years 2006 through 2008.
The most egregious refund was on a 2007 return that claimed false deductions for medical, charitable and unreimbursed business expenses totaling almost $65,000. This return alone caused an estimated tax loss of $11,261. Total losses from his scheme could reach $1 million.
Oliphant, who pleaded guilty last August, was previously released on bond that was revoked when it was determined that he violated the conditions of his release by continuing to prepare returns after conviction. Evidence at his bond hearing in April demonstrated that Oliphant prepared and e-filed at least 463 client returns during the 2014 filing season.
He remains in custody and was further ordered to pay a restitution of $325,852 and serve a year of supervised release following completion of the prison term.
Youngsville, La.: Preparer Lutricia S. Feast, 52, has received 24 months in prison and one year of supervised release for preparing false returns for herself and for clients.
According to evidence at the guilty plea last November, Feast, a preparer beginning in 2001, admitted that from 2006 to 2009 she reported only a fraction of her income to the IRS. On her 2008 return, for example, she reported her income as $14,400, when she actually earned $280,170. Feast also admitted that between 2006 and 2009 her actual income was $830,986 and that she owes $287,860 in unpaid taxes.
Feast also filed false information on 22 returns in 2009 to provide clients with undeserved refunds, listing losses on Schedule Cs, for instance, when clients had no businesses. These returns caused the IRS to issue $96,915 in phony refunds.
Feast was also ordered to pay $382,582 restitution.
Houston: Preparer Charles Lee Harrison pleaded guilty to aiding and assisting in the preparation and presentation of a false return. Authorities said that Harrison, owner of the Harrison and Harrison tax prep business in Houston and Navasota, Texas, placed false items on a client’s return that caused a tax loss exceeding $9,000. As part of his plea, Harrison stipulated that some $396,057 actually includes tax losses from returns he prepared for others, as well as his own.
Sentencing is September 15, when he faces up to three years of imprisonment and a possible $250,000 fine.