Some of our favorite recent tax fraud cases.
Chicago: Preparer Jacqueline Kennedy, 41, has been sentenced to six years in prison for operating a federal income tax fraud scheme, as well as one of the largest fictitious employer unemployment fraud schemes ever prosecuted nationwide.
Kennedy engaged in one scheme to falsely claim federal refunds and, together with 15 co-defendants, engaged in a related scheme using the IDs of others, including some of her tax service clients, to fraudulently obtain millions of dollars from state unemployment insurance agencies in Illinois, Indiana and four other states.
Kennedy owned and managed ATAP Financial Enterprises, ATAP Tax & Business Solutions and ATAP Tax Services. Between January 2008 and April 2010 she prepared more than 200 false income tax returns by attaching false W-2s from fictitious entities to clients’ returns to inflate their EITC.
Between February 2009 and December 2012, Kennedy and her co-defendants registered 97 fictitious companies they created with state unemployment agencies and then filed more than 900 false unemployment insurance claims for fictional employees who were purportedly terminated from the companies without fault. Proceeds from the claims were deposited on debit cards Kennedy and her co-defendants used to withdraw the proceeds.
She and her co-defendants were indicted in April 2012 and, after being released on bond, Kennedy became a fugitive that September while she continued to commit unemployment insurance fraud. She was arrested in December 2012 and has remained in federal custody.
She pleaded guilty in December to one count of making false claims for tax refunds, one count of wire fraud and three counts of mail fraud.
A judge ruled that Kennedy alone is responsible for restitution totaling $4,815,740, including $546,619 lost through the tax fraud scheme and an actual loss of $4,269,121 from the unemployment insurance benefits fraud scheme.
In total, Kennedy and co-defendants bilked state unemployment insurance agencies in Illinois, Indiana, Kansas, Minnesota, Mississippi and Oklahoma out of approximately $9.1 million, including nearly $6 million from the Illinois Department of Employment Security.
In addition to Kennedy, a leader and organizer of the schemes, all 15 co-defendants have been convicted and 11 of them sentenced to terms ranging from probation to three years in prison; the others await sentencing.
Baton Rouge, La.: Two preparers face felony charges in separate cases for filing returns that investigators say improperly claimed state tax credits for childcare expenses. Gwana White, of LaPlace, La., and Ericka Lewis, of Metairie, La., have been arrested and charged with computer fraud and filing or maintaining false public records. White worked as a preparer for Quick, Fast and EZ Tax Service, and Lewis for Quick EZ Taxes of Kenner.
Each is accused of preparing returns for clients containing false information on wages earned and false claims for tax credits for childcare expenses, resulting in fraudulent Louisiana state individual income tax refunds. White’s alleged fraud cost the state $13,647; the alleged fraud in the Lewis case amounted to $12,643.
Newark, N.J.: Halina Okla, 62, pleaded guilty in federal court to a one-count indictment charging her with filing a false 2007 federal return and claiming a refund of more than $350,000.
According to court documents, in 2006 Okla was introduced to individuals who were associated with a business called Mid-Atlantic Trustees that developed and sold products designed to hide income and assets from the IRS and fraudulently attempt to discharge debt, including mortgage and credit card debt and tax obligations.
One of the products offered by Mid-Atlantic was Beneficiary in Common (BIC), which involved fake bonds and fraudulent promissory notes that supposedly discharged debts. Okla purchased a BIC from Mid-Atlantic and used it to fraudulently claim a refund of some $356,574 on her 2007 federal return.
Her charge carries a maximum of five years in prison and a statutory maximum fine of at least $250,000. Sentencing is September 30.
Philadelphia: Preparer Momolu Sirleaf is charged with stealing the ID information of foster children to falsely use as dependents on returns he prepared for clients.
Sirleaf, reportedly of Darby, Pa., owned and operated I.E.S. Tax Services and, according to the indictment cited by news outlets obtained the names and Social Security numbers of foster children. He then reportedly used their information to falsely add them as dependents on some of clients’ returns to generate fraudulent refunds, some in excess of $8,000. He charged clients an extra fee of up to about $800 to falsely include these dependents on the tax returns, according to published reports. He allegedly did this on returns filed from 2010 to 2012 for the previous tax years, reports added.
Casa Grande, Ariz.: Preparer Haydee Guerra Neff, 36, pleaded guilty to two counts of filing false claims with the IRS, according to published reports, which added that in exchange for her guilty pleas, the U.S. Attorney’s Office intends to dismiss another 24 counts against her of filing false returns.
She reportedly faces a maximum of $500,000 restitution and 10 years in prison at her August 18 sentencing; she agreed to pay no more than $435,280 in restitution to the U.S. Treasury, said reports that added that the U.S. Attorney’s Office in Arizona has agreed not to prosecute Neff for any offenses stemming from 90 other fraudulent returns she filed, though U.S. attorneys in other states are free to take action.
The two counts Neff admits to stem from actions she took on Jan. 25, 2011, according to reports, filing one return seeking a $6,543 refund and another refund claim for another client totaling $10,652. She reportedly filed phony returns without clients’ knowledge and admits to filing at least 26 false returns with the IRS in 2011 and 2012, which resulted in about $137,000 in undeserved refunds. She reportedly admitted altering returns by adding college expenses, mortgage interest and residential energy credits.
Neff’s clients received the portion of the refund that matched the amount on the copies she gave them, reports cited court documents as stating, with the remainder funneled to accounts Neff or her associates controlled.