A roundup of our favorite recent tax fraud cases.
Chicago: A federal court has ordered the tax prep firm Servicios Latinos Inc. to close its nationwide business.
The order comes after the Justice Department filed a civil lawsuit against the business and its owners, Georgina Lopez, Pamela Miranda and Jorge A. Miranda, alleging that the defendants falsely understated their clients’ tax liabilities or overstated clients’ entitlement to a refund. The injunction also prohibits Lopez, Pamela Miranda and Jorge Miranda from acting as federal tax preparers, owning or operating tax-preparation businesses and employing tax preparers.
The defendants agreed to entry of the injunction, but did not admit the allegations in the complaint.
According to the complaint, Servicios Latinos operated out of approximately 84 stores in as many as 30 states. The complaint alleged that the defendants’ employees prepared income tax returns that falsely claimed child tax credits and the EITC, claim incorrect filing statuses, and report incorrect income and expense figures.
The complaint alleges that Servicios Latinos has prepared more than 42,000 federal income tax returns since 2012. The IRS estimates that the loss to the U.S. Treasury from the defendants’ conduct exceeds $4.7 million for 2014 alone, according to the complaint.
Scottsdale, Ariz.: Preparer Demetrio Gregory has pleaded guilty to preparing and filing false and fraudulent returns.
Gregory, who did business as Fulcrum Tax Group, admitted that between December 2011 and April 2014 he would, for example, create one or more fake entities, businesses and partnerships for a client and fabricate the expenses, deductions, and losses to understate or eliminate a client’s taxable income and tax liability. A fake entity was generally merely a hobby or interest of a client, according to case documents, and the entity never actually existed or incurred real expenses in the past. Instead, Gregory admitted, the entity was deceptively made to look like it was created several years prior to his association with the client and that current and prior returns needed to be amended or adjusted to claim these tax “losses.”
Gregory admitted that he fabricated these expenses either using a general resource manual such as the Farmer's Almanac, “or by just making up whatever numbers fit the false scenario created,” according to case documents. Gregory’s fees depended on how much a client’s taxes were fraudulently reduced. Many clients also got large, fraudulent refunds.
Sentencing is May 9.
Baltimore: Preparer Charles Imariagbe has been convicted of 15 counts of aiding and assisting in the preparation of false income tax returns.
According to court documents and testimony at trial, between 2008 and 2012 Imariagbe operated the tax prep business JC Tax Service and during that time prepared false individual income tax returns for at least seven clients for submission to the IRS. The returns claimed false and fraudulent income and expenses from Schedule C businesses and grossly inflated or wholly fictitious mileage expenses, inflating refunds.
Sentencing is May 12. Imariagbe faces a maximum of three years in prison and a maximum fine of $250,000 on each count of conviction.
St, Petersburg, Fla.: Preparer Henry Swinton, a.k.a. Anthony Henry, 45, faces charges related to identity theft after he allegedly forged a refund then filed for a refund anticipation loan, according to published reports.
News outlets said Swinton worked for Liberty Tax, and had done so for six years with no problems. According to the police, Swinton forged a tax refund then filed for a tax refund loan to be placed on a debit card.
The total amount was slightly more than $500. In this case, the customer wanted his refund sent to him as a check and quickly realized that a withdrawal was taking place in “a manner he did not authorize,” police told news outlets, adding that the victim immediately notified Liberty Tax and police.
Liberty has reportedly issued a full refund and filed with the IRS to make sure Swinton isn't allowed to work in the tax field again.