A roundup of our favorite recent tax fraud cases.
Spokane, Wash.: CPA Roger Stadtmueller, 53, has pleaded guilty to three counts of making and subscribing false corporate income tax returns.
Stadtmueller admitted owning Zazz Inc., a corporation under which he provided accounting and consulting services, including income tax prep, bookkeeping and financial auditing for clients. He also admitted that he made and subscribed false and fraudulent corporate returns for Zazz for calendar years 2006, 2007 and 2008, understating the corporation’s gross receipts some $1.8 million.
Sentencing is October 11. Stadtmueller faces a maximum sentence of three years in prison and financial penalties for each of the three counts of filing false corporate returns. He also agreed to pay $400,000 in restitution to the IRS.
Greenville, Texas: Local resident Lourdes Ramirez has been indicted on 21 counts of aiding and assisting in the preparation of false tax returns, one count of mail fraud and one count of aggravated ID theft.
According to the indictment, Ramirez helped prepare fraudulent federal returns for years 2011 through 2013 that contained, among other falsehoods, phony education credits and Schedule C expenses. Ramirez is also charged with using the U.S. Postal Service to submit her own fraudulent 2011 federal income tax return that falsely claimed an individual as Ramirez’s dependent without that individual’s knowledge.
If convicted, she faces a maximum of three years in prison for each count of aiding and assisting in the preparation of a false return, a maximum of 20 years in prison for the mail fraud charge and a mandatory two years in prison for the aggravated ID theft charge. She also faces monetary penalties, supervised release and restitution.
Mount Vernon, N.Y.: Preparer Samuel Gentle, 59, owner of the prep business GenGen Inc., has been found guilty on charges of obstructing the IRS and aiding and assisting the preparation of false and fraudulent individual income tax returns for clients.
Evidence at trial showed that from 2010 through 2014, Gentle’s business prepared and submitted to the IRS, on average, 3,200 returns each year. Some of these returns were fraudulent in that they contained various inflated deductions for unreimbursed employee business expenses, gifts to charity and Schedule C expenses.
As part of the investigation, an undercover IRS agent posed as a client and provided Gentle with a W-2. Despite being provided no records to support any other deductions, Gentle included false and fraudulent deductions for unreimbursed employee business expenses and gifts to charity on the return he prepared for the undercover agent.
Gentle also failed to report on his own returns nearly half of the $1 million he received for tax prep services from 2010 through 2014; he spread the receipts across eight accounts at five banks. In addition, he failed to issue W-2s or 1099s to himself or his employees.
He was found guilty on all 39 counts, including one count of interfering with the administration of the internal revenue laws and 38 counts of aiding and assisting in the preparation of false and fraudulent U.S. returns, each of which carries a maximum sentence of three years in prison. Sentencing is October 25.
Dallas: Preparer Allan Ukiru Kadagi and four associated tax prep companies have been permanently barred from preparing federal returns for others.
According to the complaint, Kadagi and Akay Tax Services, Akay Express Tax Services, Akay Express Tax Services and Cleanshine Tax Services prepared returns for clients that claimed false, improper or inflated business expense deductions and education expenses and credits. The returns also claimed unjustified EITCs, the complaint alleges.
The complaint further alleges that Kadagi and the companies misused PTINs and that Kadagi did not provide true copies of returns filed with the IRS to his clients.
The court order requires the defendants to turn over to the federal government a list of all persons for whom they prepared federal returns since Jan. 1, 2014, and authorizes the U.S. to monitor the defendants’ compliance.
