An Ohio CPA has pleaded guilty to charges that he helped clients file false tax returns claiming investments in gas wells.
Daniel D. Weddington of Newark, Ohio entered a guilty plea Friday and faces up to nine years in prison and a $205,000 fine, according to the local NBC News station. Weddington was the part owner of Mid-Con Petroleum Co. and was also responsible for doing the accounting. At the same time, he had his own accounting and tax prep firm.
Mid-Con drilled natural gas wells in Ohio and sold interests in the wells to help finance the drilling costs. Investors would receive monthly payments based on a share of the money earned from the wells.
Weddington offered a “note program” to his accounting and tax clients that allowed them to buy investments in the wells, but told clients that their future income would pay for the notes and that they would not be held personally liable. He also reassured them that the investments were 100 percent tax deductible and that the note program was legal and had been audited by the IRS. However, he did not let them know that the IRS had actually challenged the note program in audits of some of his investors and in an investigation of Mid-Con. The IRS said that Weddington had fraudulently deprived it of about $3.23 million in tax revenue over a three-year period.
As part of his plea agreement, he has been permanently enjoined from preparing or filing tax returns for clients.
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