Some of our favorite recent tax fraud cases.
Uvalde, Texas: Preparer John Andrew Cardenas, 34, was sentenced to three years in prison to be followed by a year of supervised release, and was ordered to pay $97,445.95 in restitution to the IRS after pleading guilty to preparing fraudulent returns.
Cardenas is the owner and operator of Cardenas Income Tax Service, with offices in Uvalde and the Texas municipalities of Crystal City, Kingsville and Corpus Christi. Last August 29, he pleaded guilty to one count of aiding and abetting the preparation of a false and fraudulent return and by pleading guilty admitted that he knowingly and intentionally prepared returns for 2007, 2008 and 2009 that inflated refunds by fraudulently claiming that the taxpayers operated businesses.
In addition to the prison term and restitution, Cardenas has expressly consented to a permanent injunction barring him from preparing, filing or assisting in the preparation of income tax returns in the future.
Detroit: The Justice Department has asked a federal court to permanently bar Brandon and Tamika Lee, a husband and wife who do business as Quick Money Tax & Loan Center, from preparing federal returns.
The civil injunction suit alleges that the Lees falsify income on clients’ returns to claim false and inflated EITCs by falsifying returns so clients qualified for the range of earned income generating a maximum EITC, or the credit “sweet spot.”
According to the complaint, the Lees reported fabricated “household help” income and reported fake business income and expenses on returns to report clients’ income in the EITC sweet spot on some returns. The complaint alleges that 99 percent of the returns that the IRS identified as prepared by the Lees and their business in 2010 and 2011 claimed a refund, an extremely high rate.
The complaint also alleges that the Lees prepare returns that claim education credits even though the clients did not attend school or have qualifying education-related expenses.
Fairfax, Va.: PreparerThuy Tien Le, 40, received three years in prison for filing false returns, according to published reports.
Le pleaded guilty earlier this year to aiding in the preparation of false income tax returns and to wire fraud in connection with her operation of the tax prep business T2 Advantage Services. In a statement of facts filed with her plea agreement, Le admitted that from 2005 through 2013, she prepared federal returns for her clients and led those clients to believe she had e-filed legitimate returns. Le admitted, however, that prior to filing she altered the returns by adding false itemized deductions to generate large income tax refunds.
She admitted that she prepared and filed false returns for at least 50 clients without their knowledge or consent and that she caused the fraudulently refunds to be e-deposited into bank accounts she controlled. She further admitted that she caused $454,455 in losses to the IRS.
Le faced a maximum penalty of three years in prison on the tax charge and 20 years in prison on the wire fraud charge.
Buffalo, N.Y.: Preparer Maung No, 25, pleaded guilty preparation of false returns.
No, a preparer for VPS Income Tax in 2011 and for BTC Income Tax in 2012, charged 10 percent of a client’s refund plus bank fees. In 2012, authorities said, No prepared a 2011 return for clients and claimed an education credit of $1,358, an AOC of $2,000 and a federal fuel tax credit of $183 without the clients’ knowledge. No knew that the credits were false and that the clients not entitled to claim such credits nor had the clients provided any such claim for the credits. As a result, the clients received an inflated federal refund and BTC a larger fee. Tax loss totaled $3,543.
Between 2011 and 2012, No filed similar returns for 1,138 clients and cost the IRS a total of $2,332,122.
Published reports said No catered largely to a local community of Burmese refugees.
The charge carries a maximum of six years in prison, a fine of $100,000 or both. Sentencing is November 4.
Benton Harbor, Ind.: Preparer Tammy Carol Watson, 53, pleaded guilty to ID theft, according to published reports.
The incident reportedly occurred March 3 in a local H&R Block office where Watson was the franchise owner. News outlets said that Watson took clients’ personal information to open lines of credit for herself.
Watson reportedly received two years of probation, 30 days in jail and 80 hours of community service and must pay $1,808 in fines and costs. Restitution will be determined at a later date, reports said, adding that she also cannot work as a tax preparer or in any position where she has access to other people’s money or personal information.
Rome, N.Y.: New York state authorities said that John Tebbetts, 34 and owner of several Central New York head shops, has pleaded guilty to swindling the state out of $600,000 in taxes during a five-year scheme.
Tebbetts admitted that he failed to remit sales tax collected between March 2007 and September 2012 on the sale of herbal incense, pipes, hookahs, body jewelry, dart supplies, and other items sold in his stores. Tebbetts also admitted earlier to selling dangerous synthetic drugs, known as bath salts, at his stores. He also agreed that he owes New York State in excess of $616,000 in unpaid sales tax and personal income tax.