A roundup of our favorite recent tax fraud cases.
Bismarck, N.D.: Preparer Solomon Lindsay, 39, has been sentenced to time served plus three years of supervised release on three counts of tax fraud and been ordered to pay $300 to the Crime Victims’ Fund as well as restitution to the IRS.
Investigation revealed that for the tax years 2009 through 2012, Lindsay ran a tax service out of his apartment and created a scheme to file returns on behalf of others, mainly family and friends, that included inflated income figures and false credits.
Each return then requested a false refund; Lindsay e-filed the returns and deposited all the refunds in his personal account. Each taxpayer received a smaller refund than requested while Lindsay skimmed a substantial amount of the money.
The scam resulted in the IRS paying out fraudulent refunds totaling $140,741.
San Diego: Tax preparer Melissa Ann Vega, a.k.a. Lisa Vega, has been sentenced to seven years in prison after admitting that she filed more than 3,500 false federal income tax returns and that she committed tax evasion and stole the IDs of minors and others to steal more than $7 million in bogus refunds.
Vega, owner of L&T Works, was sentenced on charges of conspiracy to file false, fictitious and fraudulent claims for federal tax refunds, tax evasion and aggravated ID theft. As detailed in her plea agreement, from at least December 2009 through last April, Vega falsified clients’ returns without their knowledge or consent, claiming thousands of dollars in false education expenses and undeserved tax credits. Vega told her co-conspirators and employees that they should maximize clients’ refunds by filing for a $4,000 education credit even though the clients did not attend school for that tax year. To conceal her role, Vega intentionally omitted her name and PTIN on the false returns.
In total, Vega’s fraud caused the IRS to pay more than $7 million in inflated refunds based solely on the false education credits. Moreover, Vega admitted that she and her co-conspirators stole the IDs of other persons, including minors, and used them on the false returns to further inflate the refunds.
In addition to charging her clients between $150 and $200 per return, Vega also admitted that she stole more than $300,000 in false refunds from her clients by directing the money into bank accounts that she controlled. Vega also admitted that she evaded her own income taxes and filed false personal returns in which she fraudulently claimed withholding credits, education credits and tax credits for minor dependents that she did not support and who were not related to her.
According to court documents, she evaded more than $156,000 in taxes due to the IRS for tax years 2009 through 2013.
Vega was arrested on gun charges on Dec. 16, 2014. On Jan. 28, 2015, she was released on bond and ordered not to commit any federal crimes – specifically filing false returns – while in the community. Nonetheless, Vega once again began filing false returns with the IRS within days of her release. To cover up her activity, Vega agreed with a co-conspirator for the latter to act as owner and preparer for the returns filed in February 2015. Vega actually continued as the owner of her tax prep business and prepared the false returns.
Vega was again arrested on Feb. 25, 2015. Her co-conspirator pled guilty to providing false statements to the grand jury and is set for sentencing on April 1.
The court also ordered the forfeiture of several firearms seized from Vega’s residence during the execution of a search warrant in April 2014, including a sawed-off shotgun, a 9-mm. handgun and ammunition. Vega’s husband was sentenced to 30 months for possessing the unregistered sawed-off shotgun.
The court ordered Vega to pay $7,176,836 restitution to the IRS. Further, as part of her plea agreement, Vega agreed to be permanently enjoined from ever preparing or filing federal income tax returns for anyone other than herself. A permanent injunction will be entered by the IRS to prevent Vega from acting as a tax preparer in the future.
Separately, three more defendants have entered guilty pleas admitting their roles in the conspiracy.
Manchester, N.H.: Preparer Okello Odongo, 36, of Snellville, Ga., pleaded guilty to 19 counts of filing false returns and fraudulently obtaining refunds.
Odongo operated a Manchester tax prep business called Tax Smart Solutions Co., where in 2011 and 2012 he filed false returns on behalf of some clients that overstated the refunds they were entitled to claim. Odongo also filed Allocation of Refund Forms that directed the IRS to e-deposit the fraudulent portions of the refunds to bank accounts he held or had access to. None of Odongo’s clients knew that he used their doctored returns to defraud the IRS.
The maximum for each of the 19 charges Odongo pleaded guilty to is five years in prison. Sentencing is June 22.
Harrisburg, Pa.: Preparer Felix Ramon Diaz, 56, has been indicted on 45 counts of aiding and assisting the preparation of false tax documents. Authorities said he owned Felix Tax Service where from 2010 through 2013 he filed 45 returns with false and fraudulent income, deductions and addresses to inflate refunds. His conduct resulted in approximately $100,000 in taxes due.
Cincinnati: Preparer Walter T. Boyd, 37, has been sentenced to 18 months in prison and three years of supervised release and was ordered to pay $110,467 restitution to the IRS for willfully filing false claims for federal income tax refunds.
According to court documents, between February 2010 and April 2012, Boyd, who pleaded guilty in October, prepared and e-filed income tax returns with the IRS for the 2010 and 2011 income tax years in the names of clients of his employer, ABT Services. These returns claimed false refunds that Boyd knew the clients were not entitled to receive.
Boyd prepared approximately 300 returns for the 2010 and 2011 income tax years that directly contributed to the submission of false claims for refunds of approximately $400,000 to $1 million.