A roundup of our favorite recent tax fraud cases.
Stillwell, Kan.: Preparer Richard Drake has been sentenced to 48 months in prison for stealing clients’ identities and federal income tax refunds falsely claimed in their names.
According to court documents, Drake used three of his clients’ personal IDs to file false federal income tax returns that claimed inflated refunds. As part of his scheme, Drake prepared accurate federal returns for these clients, which he provided to them but did not file with the IRS. He then had these clients make estimated tax payments to the IRS during the year.
Once it was time to file on behalf of his clients, Drake filed false returns with the IRS that underreported his clients’ income and claimed false expenses to generate large refunds, which he directed to accounts under his control.
Drake pleaded guilty in June to one count of aggravated ID theft and one count of theft of government funds. As part of his plea agreement, Drake agreed to serve 48 months in prison, followed by three years of supervised release, and to pay restitution of $2,432,147 to the IRS and $98,087 to the Kansas Department of Revenue.
Worcester, Mass.: Preparer Lydia Torres, 45, has been accused of stealing roughly $400,000 after filing phony returns by using stolen IDs from people in Puerto Rico, according to court records cited in news reports.
Torres owned and operated Divonne Multi Service and prepared returns for clients, reports said, adding that she pleaded guilty last year to one count each of ID theft and conspiracy to file false claims.
Torres received checks from the IRS and she gave them to one of her co-conspirators who either cashed or deposited the checks, according to reports that added that Torres received $300 to $500 for each phony return.
Authorities reportedly said that Torres filed at least $400,000 in false claims and used the names of at least 50 people.
Elizabeth City, N.C.: Preparer Geri Zaler has been cleared of a 12-year-old charge of embezzling from a former employer, according to published reports.
The case gainst Zaler, who operates under the name The Tax Lady, was reportedly dismissed by the local district attorney’s office last fall due to a lack of evidence.
According to reports, Zaler was charged with embezzlement after being pulled over by a police officer for speeding; a records check uncovered an arrest warrant for embezzlement against her that had never been served. The warrant reportedly alleged that she had stolen more than $13,000 from a local Jackson Hewitt office in 2004.