Some of our favorite recent tax fraud cases.
Kahuku, Hawaii: Preparer Melanau Fohe Haiola, 52, has been indicted for preparing false returns for her clients and for failing to report income she earned.
The indictment charges that Haiola prepared 17 federal income tax returns that fraudulently claimed the American Opportunity Credit, personal property rental expense deductions, or medical, dental or employee expenses. In addition, the indictment charges that she filed false returns for herself for the 2009 and 2010 tax years, underreporting her income by $114,315.
According to the indictment, Haiola, owner and operator of Nau’s Tax Preparation, personally prepared and supervised others in the preparation of hundreds of federal returns, many of which claimed the AOC and the personal property rental expense deduction when neither was legally applicable.
If convicted, Haiola faces up to three years in prison and a fine of up to $250,000 for each of the 19 charges.
Chicago: A federal court has permanently barred Barbara L. Garrett from preparing returns for others or working for any business that prepares such returns.
The complaint alleged that Garrett, while working at area tax prep businesses, including Instant Tax Service, Preferred Financial and Income Tax Solutions, claimed fraudulent deductions and credits on clients’ federal returns. Examples cited include returns prepared by Garrett that falsely claimed thousands of dollars in bogus deductions from entirely fake businesses.
The injunction also requires her to contact and provide a copy of the injunction order to every client for whom she prepared a return since 2011. Garrett agreed to the injunction, which was entered on April 30.
San Diego: Preparer Michael I. Turner has been permanently barred from preparing federal returns for others.
In the complaint filed last August, the government alleged that Turner has prepared returns since at least 2004 but failed to sign or affix a PTIN to many of the returns. The complaint also alleged that he entered bogus deductions on clients’ returns, primarily on the Schedule A, to claim larger refunds. The government also alleged that when the IRS audited Turner’s clients, he provided the clients with false documents to help them falsely substantiate charitable contributions and employee expenses that they did not incur.
In addition to barring Turner from preparing returns, the injunction order bars him from representing any person or entity before the IRS, and from owning, managing, controlling, working for or volunteering for a tax prep business.
In consenting to the injunction, Turner did not admit to the government’s allegations.
Miami: The U.S. has asked a federal court to stop preparers Lazaro Jesus Toyos, Shirley Ester Almazan, Dilma Toyos Garcia and Daniel Almazan and their companies L. Toyos Tax Service Inc., Toyos Garcia Tax Service Inc., Toyos Tax Service Inc. and Total Income Tax Services from preparing federal income tax returns for others.
Lazaro Toyos became a paid preparer in 1979 as an adjunct to his insurance business. Later he was joined in the business by his daughters, Dilma Garcia and Shirley Almazan, and Almazan’s husband Daniel. Since 2008, these defendants prepared more than 17,000 returns for clients.
The complaint alleges that the defendants prepare returns that unlawfully understate tax liabilities and overstate refunds by fabricating or exaggerating deductions and credits. These alleged practices include fabricating losses for non-existent businesses, falsely claiming the First Time Homebuyer Credit for taxpayers who did not actually purchase a home and falsely claiming American Opportunity Credits for taxpayers who did not incur education expenses or go to college.
The complaint alleges that the defendants’ activities may have cost the federal government millions.
Avondale, Ariz.: Preparer Latoya Nivea Morehead has been found guilty of wire fraud, false statements, aid or assistance in a false statement, and aggravated ID theft.
On Sept. 5, 2012, a federal grand jury returned a 43-count indictment charging Morehead. The indictment alleged that she committed the crimes while working as a preparer at various companies. According to the indictment, Morehead failed to report income on her own returns and used personal and financial information of former clients to prepare returns that resulted in refunds that these former clients never received. The indictment also alleged she fraudulently used the identities of unknown individuals to prepare returns that resulted in refunds those persons also never received.
Sentencing is July 30.
McDonough, Ga.: Preparer Ramona Conley has been arrested and accused of ID theft and of filing fraudulent returns, according to published reports.
Georgia Department of Revenue investigators told news outlets that Conley and her business partner Deatra Lightfoot have for years filed bogus returns for clients of their prep firm, MFR Taxes in Conyers, Ga.
Authorities reportedly said Conley added phony W-2s to clients’ returns to inflate refunds, and that Lightfoot then pocketed the money and also stole inmates’ identities to file false returns.
Investigators reportedly seized several luxury cars as evidence. Executing a search warrant on Conley’s home, they also reportedly found cocaine, meth and marijuana, along with several illegal guns.
Investigators reportedly said Conley likely got money back from the IRS, but that Georgia blocked the refunds.