A California tax preparer who falsely claimed to be a CPA and former IRS employee could receive up to six years in prison after he pleaded guilty this week to aiding and assisting others in preparing false tax returns.

James Otis Swift appeared before U.S. District Judge S. James Otero late Monday afternoon to enter his guilty plea to charges contained in a two-count criminal information filed by prosecutors in July.

According to his plea agreement, from 2003 through 2008, Swift willfully prepared hundreds of false income tax returns for clients for tax years 2002- 2007. Swift claimed inflated deductions for charitable contributions, unreimbursed employee and business expenses, personal property taxes and home mortgage interest payments. The inflated deductions for home mortgage interest claimed by his clients amounted to more than $12.5 million, according to prosecutors, resulting in a tax loss to the government of more than $2.6 million.  

In order to make it appear as if he was operating a legitimate tax preparation business, Swift misrepresented to clients that he had previously worked for the IRS, was a CPA, had attended IRS-sponsored seminars, and had offices in the Arco Building in downtown Los Angeles. When some of Swift’s clients received audit notices from the IRS, Swift assisted his clients in evading the payment of their tax liability and in obstructing the audits by fabricating false charitable contribution letters and Forms 1098, detailing mortgage interest paid, to substantiate the false deductions.

Swift faces up to six years in prison and fines totaling $500,000 or more when he is sentenced on Jan. 19, 2010.

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