Some of our favorite recent tax fraud cases.
Bridgeton, N.J.: Preparer William Jones, 67, pleaded guilty to one count of income tax evasion in connection to charges that he failed to report more than $300,000 diverted from his tax prep service for his personal use.
According to case documents and testimony, Jones operated Your Financial Services and PLM Tax Services, which both provided preparation and payroll services. YFS also provided RALs backed by Refund Advantage, a company that processed returns and provided such loans for smaller tax offices. From 2007 through 2010, Jones offered YFS clients these loans, for which Jones received fees and additional yearly incentives.
Since YFS was a Schedule C business, Jones was required to report the income generated on his individual return. For 2007, 2008, 2009 and 2010, however, he only reported to the IRS W-2 wages, property tax information, and interest and dividend income, omitting all of the diverted payments from Refund Advantage made to YFS.
From 2007 through 2010, Jones admitted, he diverted $310,248 in YFS receipts into his personal bank account, dodging $90,266 in taxes.
The charge against Jones carries a maximum of five years in prison and a $250,000 fine. Sentencing is July 1.
Lakewood, Ohio: Preparer Godrich Machuta, 34, has been charged in a 39-count indictment with conspiracy to defraud the U.S., making false claims, wire fraud and other charges.
He is accused of preparing or assisting in the preparation of false tax returns in which false claims of more than $158,000 were made, according to the indictment.
Machuta worked for Cleveland-based Paglory Tax Services in 2010 and 2011. During that time, according to the indictment, he and co-conspirator Mwale Kakusa fraudulently obtained federal refunds by filing returns with false, fictitious or fraudulent claims. Kakusa pleaded guilty to preparing more than a dozen returns that made false refund claims of approximately $52,468. He awaits sentencing.
Las Vegas: The U.S. Department of Justice has filed to stop preparer Bill Sunga Modina, who allegedly does business as 5M Financial and 6M Financial, from preparing federal returns.
According to the complaint, Modina, who has prepared more than 2,200 returns since 1992, understates clients’ federal tax liabilities by reporting false or inflated employee business expenses and inflated or fabricated charitable contributions. In addition, the complaint alleges, Modina failed to provide his PTIN on returns.
According to the complaint, Modina’s activities cost the federal government an estimated average of more than $4,400 per return with a total possible loss of $9.68 million.