Some of our favorite recent tax fraud cases.
Heber City, Utah: CPA Dick Reid Jenkins has been convicted on 18 counts of filing false claims for income tax refunds and one count of presenting a fictitious financial instrument.
According to court documents and trial evidence, Jenkins filed a false 2007 individual income tax return for himself which claimed a refund of $402,920. In October 2008, he filed a false amended 2004 individual income tax return that claimed a refund of $434,261. Both false claims were based on the use of a false 1099-OID.
In addition to his own false returns, Jenkins caused 16 false federal individual income tax returns to be filed on behalf of others from September 2008 through February 2009, authorities said. These returns also used false 1099-OIDs and claimed federal refunds totaling $8,407,623.
Jenkins faces a maximum of 25 years in prison and a fine of up to $250,000 for passing and presenting a fictitious obligation to the U.S. and a maximum of five years in prison and a fine of up to $250,000 or twice the gross gain or loss caused by the defendant for each count of presenting false, fictitious, and fraudulent claims to the U.S.
Jenkins, charged by a superseding indictment on June 26, 2013, will be sentenced on Sept. 9.
Honolulu: Los Angeles-based CPA and preparer Dennis Duban has received 24 months in prison for conspiracy to defraud the IRS and assisting in the filing of a false federal income tax return.
According to case information, Duban ran an accounting firm that provided accounting and tax planning services to Hawaii residents Charles Alan Pflueger and James Pflueger and some of the Hawaii-based entities they controlled, including Pflueger Inc. and Pflueger Properties.
As early as 2003, Duban knew that personal expenses of Pflueger Inc. owner Charles Alan Pflueger were being paid for by Pflueger Inc. and illegally deducted on corporate income tax returns as business expenses. Duban also knew that some personal expenses of another co-defendant were being paid for and illegally deducted by Pflueger Inc. In preparing returns for Charles Alan Pflueger and another co-defendant from at least 2003 to 2006, Duban did not include as additional items of income all personal expenses which he was aware were paid for by Pflueger Inc.
In connection with the 2007 sale of Hacienda, a San Diego investment property owned by Pflueger Properties, Duban agreed with another co-defendant to file a false Pflueger Properties 2007 partnership income tax return and false individual income tax return that falsely reported the gain on the sale of the property, which sold for $27.5 million. Duban reported the basis of Hacienda as approximately $7 million higher than its actual basis.
Prior to the sale of the Hacienda property, Duban and others assisted the same co-defendant in creating a nominee Cook Islands trust and opening a bank account at Wegelin Bank in Switzerland. Proceeds of the Hacienda sale, more than $14 million, were sent to the Wegelin account.
Duban and a New York-based firm served as investment managers for the account. Duban and the co-defendant did not timely report the co-defendant’s beneficial interest in the Swiss account on Schedule B of a 1040 or by filing a FBAR.
Duban also had an interest in other foreign bank accounts that he failed to properly report to the government. For at least 2006 and 2007, he failed to report his interest in at least one New Zealand account on Schedule B of his individual returns or by filing an FBAR.
Three of Duban’s codefendants Alan Pflueger, Randall Kurata and Julie Kam previously pleaded guilty.
Duban, who pleaded guilty in October 2012, was also ordered to pay a fine of $30,000 and perform 600 hours of community service.
Riverside, Calif.: Former accounting firm partner Pablo Javier Moran Jr., has been sentenced to 21 months in federal prison for tax evasion related to an embezzlement scheme.
According to case information Moran, who pleaded guilty to one count of tax evasion for the calendar year 2008 on December 6, from 2008 to about April 15, 2009, tried to evade a substantial part of his income tax. His acts included misusing a client’s credit card and using checks drawn on the same client’s checking account to pay for his personal expenses. He also failed to report the embezzled funds on his personal U.S. individual return.
Moran was also sentenced to two years of supervised release and ordered to pay $194,791 restitution to the IRS.
McAllen, Texas: Preparer Maria I. Cantu has been permanently barred from preparing federal returns for others.
Cantu, who agreed to the civil injunction order, must also turn over to the federal government a list of all persons for whom she prepared federal returns or claims for a refund for tax years 2010 through 2012 and to notify these clients of the permanent injunction.
The complaint alleged that Cantu prepared returns that contained false, improper or inflated deductions or tax credits, such as the EITC. The complaint also alleged that these activities led to her clients filing returns which unlawfully understated tax liabilities and overstated refunds.
Collins, Miss.: Authorities are reportedly investigating several claims against preparer Melissa Diane Thrash of stealing clients’ refunds.
According to published reports, the local sheriff’s office says that Thrash will face charges after investigation revealed that she completed returns for clients and then used a debit card scam to steal the refunds.