A roundup of some of our favorite recent tax fraud cases.
Richmond, Va.: Preparers Jeremy Blanchard, 35, and Erik Pittman, 35, both of Memphis, Tenn., have pleaded guilty to one count of conspiracy to defraud the U.S. and one count of aiding and assisting in the preparation of a false tax return.
According to court documents, Blanchard, Pittman and others prepared numerous false returns for the 2011 tax year for clients of their tax prep business, Mo Money Taxes, which operated three locations in the Richmond area.
Blanchard and Pittman admitted that they created and inflated fictitious and fraudulent tax credits, including the EITC and the American Opportunity Credit, to inflate refunds.
As part of their guilty pleas, Blanchard and Pittman admitted that their conduct caused a tax loss of $250,000 to $550,000.
Each faces a maximum of five years in prison and a $250,000 fine on the conspiracy charge and three years in prison and a $250,000 fine on the charge of aiding and assisting in the preparation of false returns. Sentencing is June 8.
Yorktown Heights, N.Y.: Preparer Steve Sabba, 58, has been charged with two felony counts of criminal tax fraud and with offering a false instrument for filing, also a felony.
Sabba, who pleaded not guilty, is the owner of TaxPro Financial Network Inc. and is also accused of failing to file his own personal income tax return for 2014 and misrepresenting his income in 2012.
He was previously convicted of tax fraud and in 2009 pleaded guilty to filing a false state personal income tax return and failure to file corporation franchise returns. As part of his 2009 plea, Sabba was ordered to make a total restitution to New York State of more than $400,000 in combined back taxes, interest and penalties.
A new investigation by the New York State Tax Department led to the second arrest when investigators discovered that Sabba sold a previous tax prep business for $3.2 million. He is accused of failing to report that income or file any income tax return for himself in 2014, cheating New York State out of more than $90,000.
If convicted, he faces a maximum of four years in prison.
Garland, Texas: Preparer Rudy Contreras received 30 months in prison and was ordered to pay $75,221 in restitution to the IRS following his guilty plea last November to one count of aiding and assisting in the preparation or presentation of a false or fraudulent tax return.
According to case documents, Contreras did business as Amigo’s Taxes and later as Priority One Taxes. Ineligible to obtain an EFIN, Contreras obtained an EFIN and a PTIN in his wife’s name even though she did not work at Amigo’s Taxes and didn’t prepare returns.
When IRS agents searched Amigo’s Taxes in April 2012, Contreras admitted that he was the only preparer at the business. Later, however, Contreras closed Amigo's Taxes and opened Priority One, obtaining an EFIN and PTIN in his brother’s name, even though, again, the latter didn’t work at Priority One and didn’t prepare returns.
IRS investigators identified 24 fraudulent returns, involving 17 clients, prepared by Contreras for the years 2010, 2011 and 2012, which resulted in a tax loss to the government of $75,221. The 17 clients all claimed that Contreras portrayed himself as a knowledgeable and experienced preparer and that they didn’t know he falsified their returns with false forms and expenses.
Cicero, N.Y.: Preparer Joseph Moro, 58, has been arrested and charged with two counts of criminal tax fraud and three felony counts of offering a false instrument for filing.
Moro operates under First Choice Accounting, which he owned with his wife Patricia. Investigation showed that Joseph Moro knowingly filed false New York State tax returns, preparing and filing several fraudulent personal income tax returns that claimed false refunds for his wife. In addition, he failed to file his own returns and report his income.
Moro, who pleaded not guilty, was released on his own recognizance and is scheduled to return to court on April 7. If convicted, he faces up to 12 years in prison.
Lawrence, Mass.: Preparer Leonidas Nunez, 60, pleaded guilty to one count of conspiracy to defraud the U.S. with respect to claims and six counts of filing false, fictitious or fraudulent claims with the IRS.
From October 2010 to April 2011, Nunez conspired with others to defraud the IRS with fraudulent returns that falsely alleged income earned by Puerto Rican residents who had not had federal income tax withheld and who were not required to file income tax returns in the U.S. Nunez and his co-conspirators caused the IRS to deposit the resulting fraudulent refunds into bank accounts controlled by Nunez and his co-conspirators.
Together, they filed more than 100 fraudulent returns with the IRS for tax year 2010, resulting in more than $550,000 in fraudulent claims and more than $220,000 in refunds.
The charge of conspiracy to defraud the U.S. carries a maximum of 10 years in prison, three years of supervised release and a fine of $250,000. The charge of filing false claims carries a maximum of five years in prison, three years of supervised release and a fine of $250,000.
Bay Shore, N.Y.: Preparer Thelma Rodriguez-Garden, 54, pleaded guilty to one count of aiding and assisting in the preparation of a false tax return.
According to court documents, Rodriguez-Garden owned and operated the tax prep business Garden Insurance Agency Corporation and prepared false individual income tax returns for clients for tax years 2008 through 2011. She included grossly inflated or wholly fictitious itemized deductions for unreimbursed employee expenses.
Rodriguez-Garden pleaded guilty to charges alleging that she filed 47 false returns that cost the government more than $100,000. She faces a maximum of three years in prison and a $250,000 fine when she is sentenced on July 11; she has agreed to pay $107,459 in restitution to the IRS.