Some of our favorite recent tax fraud cases:
Evansville, Ind.: Preparer Steve W. Pirnat, 61, has been convicted and sentenced to 37 months in federal prison after admitting that he conspired for three years to submit false claims to the IRS in a scheme that cost taxpayers almost a quarter of a million dollars in fraudulent refunds.
From 2009 until 2011, Pirnat provided tax prep services though he was not a registered tax preparer with the IRS but instead filed returns he prepared and classified them as self-prepared.
On July 26, 2011, the IRS received a complaint from a taxpayer who had Pirnat prepare her returns for 2009 and 2010. The taxpayer had received an audit notice from the IRS notifying her that she needed to provide information to support her claim that she had a dependent as listed on her 2010 return. The taxpayer had no dependents and was unaware that any were listed on her return; the return copy Pirnat provided to her did not list a dependent.
The taxpayer contacted Pirnat who offered to deal with the IRS on her behalf. The taxpayer met with Pirnat and recorded her conversation with him due to her concerns about the situation. At the meeting, Pirnat gave the taxpayer an amended 2010 return without a dependent on it for the victim to file and explained that he had falsified her tax return to “help out a lady he knew.”
IRS records show that the taxpayer was issued a total refund related to her 2010 return of $5,633 and that the refund was split and deposited into more than one account, with only $1,815 deposited into the taxpayer’s bank account. The $1,815 refund was the amount listed on the copy of the return Pirnat gave to the victim and the remaining $3,818 was e-deposited into a bank account controlled by Pirnat.
An IRS investigation revealed a pattern of filings from Pirnat’s computer that contained fraudulent dependent information. Auditors calculate that Pirnat’s scheme generated $222,740 in fraudulent refunds.
Pirnat was ordered to fully repay the loss and to serve three years of supervised release at the end of his prison term.
Memphis, Tenn.: The Department of Justice has filed to stop Grady Smith, who does business as One Price Refunds, from preparing federal tax returns.
According to the complaint, Smith and One Price Refunds have prepared over 2,000 tax returns since 2009 and allegedly understated clients’ tax liabilities by reporting false or inflated business and educational expenses and improperly claiming the EITC.
In addition, the complaint alleges that Smith has prepared tax returns using fictitious TINs, obscuring his identity as the tax return preparer.
According to the complaint, Smith’s activities may have cost the government more than $800,000.
Summerville, S.C.: Preparer Jessica Geddis has been permanently barred from preparing federal income tax returns for others. According to the government’s complaint, Geddis, who consented to entry of the injunction, prepared federal returns from her home and as a preparer at Smith’s Tax Service and later at MBM Tax and Accounting Services LLC.
As alleged in the complaint, Geddis prepared returns that unlawfully overstated refunds through a scheme that reported fictitious household help income to increase the amount of her clients’ refundable credits, including the EITC, the Child Tax Credit and the Making Work Pay Credit.
The complaint further alleged that she directed the IRS to deposit all or a portion of her clients’ overstated refunds into bank accounts that she controlled. The IRS reportedly reviewed Geddis’s bank records and determined that she received at least 148 refunds, totaling $281,678, between January 2008 and May 2012.
Spanish Fork, Utah: Stanley J. Wardle, 65, has pleaded guilty to nine counts of filing false claims for income tax refunds. According to the indictment, on or about Jan. 22, 2009, Wardle prepared and filed a false individual return for the year 2008 on which he claimed a refund of $32,115. In addition, between Dec. 8, 2008, and May 13, 2009, he caused additional false claims for tax refunds to be made on behalf of others.
Wardle was involved in false claims for refunds totaling $653,884. He faces a maximum five years in prison and a fine of up to $250,000 or twice the gross gain or loss caused by the defendant for each false claim charge. He was indicted on Feb. 15, 2012, and is scheduled to be sentenced on Feb. 27, 2014.