A roundup of our favorite recent tax fraud cases.
West Palm Beach, Fla.: A federal court has ordered preparer Paul Jean not to prepare federal returns for anyone except himself.
The order was entered after Jean failed to respond to a civil complaint, which stated that Jean has operated under the business names Whiz Tax and Rejoice Tax Services and alleged that he prepared returns that claimed fabricated or inflated Earned Income Tax Credits, education credits or fuel credits.
Jean also allegedly prepared returns that report false or inflated deductions on Schedule A, such as deductions for mortgage interest paid or charitable contributions, or on Schedule C, such as expenditures for supplies or office expenses.
The IRS estimates that Jean, directly or indirectly, has prepared and filed more than 3,000 returns since 2012, according to the complaint, and that his conduct may have cost the U.S. Treasury millions of dollars.
LaVergne, Tenn.: A federal court has barred tax preparer Michelle Cole Theus, a.k.a. Michelle Cole, and Cole Tax Services from preparing federal tax returns or operating a return-preparation business. Theus, who agreed to entry of the injunction without admitting or denying the allegations, must also turn over a complete list of her customers to the government.
According to the complaint, Theus initially prepared accurate returns for her clients then fraudulently increased the returns’ claimed refund by, for example, adding fictitious dependents or false education credits. She then diverted the inflated portion of the refund, or sometimes the entire refund, to her own bank account, the complaint alleges.
The IRS estimates that Theus has claimed at least $788,220 in fraudulent refunds, according to the complaint.
Barbourville, Ky.: Preparer Brian Hamilton has pleaded guilty to one count of conspiracy to defraud the U.S. with respect to claims, one count of wire fraud and one count of aggravated ID theft.
Hamilton admitted that during 2011 and 2012 he conspired with others, including his brother, Billy Ray Hamilton, Patsy Carnes and Diana Hill to file false returns from the Bailey Switch Pawn Shop in Knox County, Kentucky. According to the plea agreement, the Hamiltons prepared and e-filed with the IRS at least 31 returns that contained false and fraudulent information regarding wages, self-employment income, expenses, filing statuses and dependents.
The Hamiltons did not list their names as preparers on these returns; in some cases, they filed false returns without the knowledge or permission of the taxpayers named on the returns. Hill obtained personal identifying information and Carnes kept files of that information and provided it to the Hamiltons.
In January, Carnes and Hill each pleaded guilty to one count of conspiracy to defraud the U.S. In April, Billy Ray Hamilton pleaded guilty to conspiracy to defraud the U.S., wire fraud and aggravated ID theft.
Brian Hamilton faces a maximum of 10 years in prison for the conspiracy charge and 20 years for the wire fraud charge, as well as a two-year term for the aggravated ID theft charge. He also faces financial penalties, supervised release and restitution.
Swanton, Vt.: Preparer Lisa Ryder, 48, has been arrested for two counts of grand larceny and one of petty larceny following a complaint that she stole approximately $2,900 from at least one client over the last four years. Investigators said there may be more victims. Ryder is due in court on May 16.
Cleveland: Monique Kirk, 39, has been charged with filing false returns of friends and relatives, fraudulently claiming some $131,000.
The indictment claims that Kirk held herself out as a preparer and offered to prepare returns and used the personal information friends and relatives provided to file false returns, including false wage income and tax credit information, often for claimants who earned little or no money.
Kirk requested that some of the refunds be paid by direct deposit into bank accounts in the name of third parties that she in fact controlled.
She filed 21 false returns between 2012 and 2014 in which she claimed approximately $131,871 in refunds to which neither she nor the claimants were entitled, according to the indictment.
