A married pair of New Jersey tax preparers have been charged with tax fraud, with the wife arrested at her home, while the husband remains at large.
Special agents of IRS-Criminal Investigation arrested Carol Johnson, 42, at her home in Union, N.J., on Thursday morning on an indictment charging her and her husband, Courtney Johnson, 43, each with one count of conspiracy to defraud the United States and six counts of assisting in the preparation of fraudulent tax returns. Courtney Johnson remains at large.
The pair operated tax preparation businesses in South Orange and Jersey City, N.J., through which they allegedly committed crimes resulting in tax losses of nearly $400,000.
Carol Johnson was expected to appear Thursday afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.
According to the indictment unsealed Thursday, from tax years 2005 to 2007, the Johnsons sought to increase the number of referrals they received from clients, and thereby expand their business and enrich themselves, by preparing and filing income tax returns based on false information to generate large tax refunds for clients. To do this, the Johnsons routinely used a number of fraudulent practices, including falsely claiming a filer was a “head of household”; inventing and inflating deductions; creating fictitious businesses with bogus incomes and losses; and creating false credits for education, child care and moving expenses.
Taxpayers generally met with one of the defendants to provide the information needed for their tax returns, but the other defendant’s name routinely appeared as preparer on the return.
On several occasions, the defendants stole part of the refunds by issuing Santa Barbara Bank cashier’s checks payable to their clients, forging the clients’ signatures and depositing the checks into a bank account they controlled.
On at least one occasion, the Johnsons filed two federal income tax returns for the same year for the same client, providing a copy of the return with a several-hundred-dollar refund to the taxpayer and a copy with a several-thousand-dollar refund to the IRS.
The bogus returns resulted in a tax loss of nearly $400,000.
The conspiracy charge against the preparers carries up to five years in prison. Each false tax return count carries a maximum potential penalty of three years in prison and a $250,000 fine.
“I look forward to defending my client and the case in court,” said attorney Leslie Sinemus, who is representing Carol Johnson. Asked about the whereabouts of Courtney Johnson, she replied, “My understanding is that her husband was at a funeral in Jamaica and is on his way back to the States.”
U.S. Attorney Paul Fishman credited special agents of IRS-CI, under the direction of Special Agent in Charge Shantelle P. Kitchen, with the investigation. The government was represented by Assistant U.S. Attorney Lorraine Gerson of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
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