A tax preparer who led a tax fraud scheme that resulted in more than $28 million in fraudulent refunds was sentenced in Manhattan federal court to 72 months in prison for his role.
The tax preparer, Lester Morrison, was also ordered to pay restitution of $17.3 million to the IRS. The sentence was imposed by U.S. District Judge Sidney H. Stein.
Since at least 2000, according to prosecutors, Morrison and his co-defendants, Paulette Bullock, Kevin Vaden, Gary Hanna, and Joy David, filed more than 7,500 returns—most of them fraudulent—through a tax preparation business with locations in the Bronx and New Jersey.
“Rooting out dishonest tax preparers remains a top priority in our agency,” said Joseph Foy, a spokesperson for IRS Criminal Investigation in the New York Field Office. “We will investigate and recommend prosecution on any dishonest tax preparer who attempts to gain a fraudulent and unfair competitive advantage at the expense of the honest, hardworking, compliant and professional tax preparer community.”
They allegedly employed a variety of deceptive practices to carry out tax fraud , and claim more than $28 million in refunds, including the use of stolen identities of deceased children to falsely claim them as dependents on clients' returns. They also claimed "business losses" from fictitious businesses, and claimed thousands of dollars in deductions for non-existent charitable contributions and miscellaneous job expenses, along with false claims for education and childcare expenses, according to prosecutors. Each of the defendants earned inflated commissions and fees related to the fraudulent refunds they generated.
Morrison was the leader, opening the tax preparation business in the Bronx, and later assisting in preparing tax returns at the New Jersey locations. Morrison also conducted a class for his co-defendants during which he explainedhow to prepare fraudulent returns.
This case was part of "Operation Brass Tax," a joint investigation conducted by the U.S. Attorney's Office for the Southern District of New York and the IRS. Operation Brass Tax was the largest coordinated takedown of corrupt tax preparers in history.
Morrison pled guilty in August to one count of conspiracy to defraud the IRS and one count of obstructing theadministration of internal revenue law.
His co-defendants, Paulette Bullock, Joy David, Kevin W. Vaden, and Gary Hanna pled guilty.
Bullock was sentenced Thursday by Judge Stein. She received 60 months in prison, two years of supervised release, and was ordered to pay back $6,951,970 to the IRS. David, who is Bullock's daughter, was sentenced last month to time already served of one day, plus three years of supervised release, and $831,321 in restitution. Vaden and Hanna have yet to be sentenced.
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