Some of our favorite recent tax fraud cases.
Cave Creek, Ariz.: Preparer Linda Mary Anderson, owner and operator of Coyote Accounting, has been charged with 16 counts of false tax-related claims.
Authorities said that from about January 2009 through about November 2010, Anderson prepared and filed federal income tax returns on behalf of more than 100 taxpayers that collectively claimed more than $63 million in false income and withholdings. For the counts in the indictment, she prepared returns seeking some $3,852,947 in false refunds and caused the government to issue some $2,183,633 in false refunds.
Anderson prepared and e-filed more than 2,000 false tax documents with the IRS using 1099-As and 1099-0IDs to falsely report false income and withholdings. She also did not register for or use an e-file account under her own name or her business name, but instead used two accounts registered to others.
Kansas City, Kan.: Preparer Ahferom Goitom, 34, has been indicted after being charged with 14 counts of preparing false returns.
The indictment alleges that Goitom, manager of a franchise tax prep business, prepared at least 34 1040s containing false and fraudulent education credits, charitable deductions, medical and dental expenses, home mortgage interest deductions, gross receipts for a sole proprietorship business, expenses for a sole proprietorship business, and deductions for rental real estate.
For example, according to the indictment, Goitom filed a return for 2009 claiming medical and dental expenses of $5,050, gifts to charity of $8,200 and job expenses and miscellaneous deductions of $5,821 when he knew that the client was entitled to claim medical and dental expenses of only $226, gifts to charity of approximately $2,000 and no job expenses or other miscellaneous deductions.
If convicted, he faces a maximum of three years in federal prison and a fine up to $250,000 on each count.
Oakland Park, Fla.: Preparer Louis A. Francois, 44, pled guilty to one count of wire fraud and one count of aggravated ID theft in connection with filing phony returns to collect and pocket the refunds.
According to court documents, Francois, owner and operator of the tax prep business A&I Multi Services, stole personal identifying information of between 10 and 50 individuals, including names, dates of birth, Social Security numbers and addresses to file fraudulent U.S. income tax returns that claimed refunds in those individuals’ names.
The checks were in the amount of the fraudulent refunds minus Francois’s various fees. The fees were deposited into his bank account while he went to a nearby check-cashing store with the refund checks and fraudulent Florida drivers’ licenses, matching the stolen IDs on the checks, and cashed them. From July 2010 through June 2011, the total amount of U.S. Treasury checks cashed by Francois and the total of fraudulent refunds requested by Francois is some $355,000.
He faces a maximum of 20 years in prison for the wire fraud charge and a mandatory two years in prison, consecutive to any other term, for the ID theft charge.
Newark, N.J.: Preparer Wayne Dunich-Kolb, 49, formerly of Saddle River, N.J., has been charged with aiding and assisting in the filing of false federal income tax returns for tax years 2007 through 2011, and with preparing and signing his own false federal returns.
According to the indictment, Dunich-Kolb owned and operated the tax prep business Dunich-Kolb LLC, which he ran from his residence. He caused many of his clients to form fictitious partnerships or corporations that had no business purpose other than to falsely reduce taxes. He prepared false and fraudulent returns for clients’ fictitious businesses by fabricating and inflating expenses such as advertising, travel and other miscellaneous expenses to generate false business and partnership losses that he then used to substantially reduce taxable income on their individual federal income tax returns. The tax loss totaled more than $1.6 million for 10 clients.
Dunich-Kolb also falsified his own personal federal returns for tax years 2007 through 2010. For these years, Dunich-Kolb’s client invoices reflected that he charged clients an annual total of $600,000 to $860,000 per year. He claimed approximately zero tax due and owing for tax years 2007 and 2008, and tried to obtain refunds for prior-year tax payments that he never made. He also offset his tax liabilities for tax years 2009 and 2010 by claiming false credits for prior-year tax payments that he likewise never made.
Each of the nine tax counts carries a maximum of three years in prison and a $250,000 fine.
Santa Ana, Calif.: Preparer Ronald Vernon Strawn, 69, formerly of Costa Mesa, Calif., has been sentenced to 30 months of imprisonment after pleading guilty to charges that he prepared and filed fraudulent returns on behalf of clients. Strawn was also ordered to pay restitution of $1,992,244 to the IRS and spend a year on supervised release following his prison term.
Last July, Strawn pleaded guilty to three counts of aiding and assisting in the preparation of fraudulent returns, the counts relating to the 2005 and 2006 federal income tax returns filed on behalf of clients that included false business losses, reducing the taxpayers’ taxable income by as much as $201,500 per return.
Pine Mountain, Ga.: Preparers Detrick and Natashia Tucker, a husband and wife who owned and operated T&T Express Tax, have been sentenced for crimes relating to the preparation of false tax returns.
Detrick received a year and a day and Natashia 46 months in prison. Detrick Tucker previously pleaded guilty to aiding and assisting in the preparation of false returns and Natashia to conspiring to defraud the U.S. by filing false returns. Natashia was also ordered to pay $1,483,025 in restitution and Detrick to pay $66,235.
According to court documents, the Tuckers conspired to inflate refunds on clients’ returns to increase the popularity of T&T. Detrick registered T&T with the IRS to e-file false returns and knowingly allowed Natashia to use his IRS registration numbers to file her own false returns. Natashia prepared the majority of the false returns at the business, primarily obtaining artificially high refunds by abusing the EITC and by creating false business information for her clients.
During its three years of operation, T&T filed at least 268 fraudulent federal returns that claimed over $1 million in false refunds.
New York: Preparer Williesteina Jacobs has been indicted and charged with 27 counts of aiding in the preparation of false returns.
According to the indictment, Jacobs owned and operated the tax prep business International Professional Business Services in the New York City borough of Queens and prepared false personal income tax returns for clients for tax years 2007 through 2009. Jacobs allegedly claimed false business losses and inflated or fabricated deductions.
If convicted, Jacobs faces a maximum of three years in prison and a fine of up to $250,000 on each count.
Chicago: Preparer Phillip Smith, 51, has been indicted for submitting false federal individual income tax returns seeking phony refunds. Smith was charged with 11 counts of wire fraud and two counts of making a false claim to the IRS. The indictment also seeks forfeiture of some $840,706 in fraudulent refunds.
According to the indictment, Smith fabricated W-2s knowing that his clients used them to support false tax returns and claims. The W-2s stated false annual withholding amounts to generate significant EITCs and refunds. Smith also fraudulently obtained EINs for the fictitious companies from the IRS, which he included on the bogus W-2s.
Between January 2010 and April 2013, Smith allegedly prepared and caused to be submitted to the IRS more than 150 false tax returns seeking more than $1 million in refunds.
Smith directed clients to provide the bogus W-2s to reputable tax prep businesses, knowing that those preparers would rely on the information to submit false returns, the indictment alleged. In other instances, he prepared and e-filed the false returns, it added. Smith also posed as the employer during calls with the IRS to verify clients’ purported employment and created false employment verification letters and paystubs to submit to the IRS when the agency sought additional records, the charges allege.
The indictment details 11 examples of false returns in which Smith caused taxpayers to seek and obtain fraudulent refunds ranging from $5,292 to $9,864. Each count of wire fraud carries a maximum of 20 years in prison and a $250,000 fine; each count of making a false claim carries a maximum of five years in prison and a $250,000 fine.