Some of our favorite recent tax fraud cases.
Fredericksburg, Va.: Preparer Daniel L. Jones, 56, has been sentenced to 37 months in prison for aiding in the preparation of fraudulent returns for his clients and making a false statement to the IRS.
According to court documents, for many years Jones ran the tax prep service Tax Doctor Plus where, to increase refunds for clients, he regularly prepared and e-filed returns that contained false entries and items.
These included improperly splitting married couples into incorrect filings statuses to place both taxpayers into lower tax brackets and create EITC opportunities, filing false Schedule Cs with enough false deductions to qualify the client for the EITC, submitting false Schedule A expenses and education credits and falsifying income with false W-2s to qualify clients for the maximum amount of government credits, such as the EITC, various education credits and the Making Work Pay Credit. In addition, to represent clients before the IRS, Jones submitted Forms 2848 on which he falsely claimed he was a CPA.
Jones agreed that the total tax loss from 2009 to 2012 was some $598,000, based on approximately 630 returns containing false education credits.
Little Rock, Ark.: Preparer Christopher T. Craig, 47, formerly of Little Rock and now of Atlanta, has waived indictment and pled guilty to an indictment charging him with two counts of aiding and assisting in the preparation of fraudulent income tax returns.
Craig admitted that on April 30, 2010, and March 1, 2012, he prepared false employment returns (Form 941) on behalf of other taxpayers. Unknown to the taxpayers, Craig filed the returns in a way that reduced the amount of federal withholdings. He then collected payments from the taxpayers for the correct amount of employment taxes but diverted to himself the difference between the correct amount owed and the amount paid to the IRS.
For these two returns, Craig diverted $43,280.50. He admitted that the total loss to the government was $1,092,177.79.
Craig faces a maximum penalty of not more than three years in prison on each of the two counts or a fine of up to $500,000 or both. Sentencing has not been set.
St. Charles, Mo.: A federal court has permanently barred William Naes from preparing federal returns for others.
The government alleged that Naes prepared returns that fraudulently claimed deductions for clients, including bogus charitable contributions and unreimbursed employee business expenses. According to the complaint, he also fabricated business expenses on Schedule Cs, concocted a fake business for at least one client, and failed to properly identify himself as the paid preparer on many of the returns he prepared.
Claymont, Del.: Preparer Dawn Chamberlain, 36, has been sentenced to 51 months in prison and ordered to pay full restitution after pleading guilty late last year (Accounting Today) to false claims conspiracy and mail fraud.
From 2009 through 2012, Chamberlain prepared nearly 450 fraudulent federal income tax returns for clients she solicited in Delaware and elsewhere. In the returns, she claimed an average of some $3,500 in fake credits, often the American Opportunity Tax Credit and the EITC for ineligible clients.
Her actions are estimated to have caused at least $1.5 million in losses to the U.S. Treasury.
Chamberlain also stole from clients, keeping a portion of their refunds without their consent, and used clients’ names, dates of birth and Social Security numbers to file more than $210,000 in false and fraudulent New York State income tax returns. (Her clients did not live or work in New York nor did she share any of the New York refunds with her clients.)
Chicago: The U.S. has filed to bar preparer Laurie G. Helfer, a.k.a. Laurie G. Powell, individually and through her businesses Laurie’s Freelance & Tax Preparation Services and Tax Lady Laurie Inc., from preparing federal returns for others.
The complaint alleges that Helfer prepares and files amended returns for individuals claiming refunds to which they are not entitled. According to the complaint, she prepared hundreds of amended returns for clients, and the tax loss could exceed $3 million.
According to the civil injunction complaint, Helfer promises clients that she can obtain refunds by amending their returns from prior years. To do this, she allegedly fabricates expenses from businesses that do not exist, the expenses offsetting clients’ income from prior years and illegally generating a refund.
To dodge the IRS, Helfer stopped signing the returns she prepares and also frequently changes locations in which she prepares returns, including various Chicago-area hotel rooms, the complaint alleges.
Jackson, Mo.: Preparer Cynthia Raymond, who pleaded guilty last year to filing false income tax returns and aggravated ID theft, now reportedly faces allegations that she falsified documents to obtain a lighter sentence.
According to published reports, Raymond filed about 98 false returns under 36 clients’ names without their knowledge, claiming excessive refunds and diverting some of the money into her personal bank account. Sentencing in the case has reportedly been delayed several times.
In March, Raymond’s then-attorney asked that the case be continued to this month so Raymond could undergo treatment for medical issues, according to reports that added that federal prosecutors have filed a motion to potentially stiffen Raymond’s sentence after she allegedly filed false documents seeking probation, restitution and community service instead of prison time.
Raymond reportedly had her attorney submit correspondence purported to be from two doctors, one treating her for a back problem and the other for ovarian cancer. The federal motion lists 11 instances in which Raymond claimed to have varied health problems, including eight types of cancer, a kidney transplant and a miscarriage, according to news outlets.
Federal prosecutors reportedly claim that one doctor denied writing such correspondence and a nurse for the other doctor did not recognize Raymond’s name and found no record of Raymond in the hospital’s computer system.
Sentencing had been set for earlier this month, but prosecutors reportedly requested a continuance to allow time to investigate Raymond's claims concerning her medical history. The sentencing memorandum states that Raymond’s behavior stemmed in part from circumstances surrounding her marriage to a man who physically and emotionally abused her, reports said, adding that according to the memorandum, Raymond needs to be free to care for her daughter and young grandson and to undergo medical treatment.