Sally Louise Crystal, the owner of a Costa Mesa, Calif., business called Sal the 1040 Gal, was arrested Tuesday on charges of preparing false tax returns.
Crystal, also known as Sally Hernandez, was indicted May 12 by a federal grand jury on five counts of preparing false tax returns and four counts of theft of government money. She allegedly included fictitious expenses and deductions on her clients tax returns to decrease their tax liability and increase their refund amounts.
According to prosecutors, she sometimes provided her clients with tax returns that showed a higher refund amount than the ones she submitted to the IRS. She would then charge a flat fee or a percentage of the tax refund amount provided to her client, using services provided by Santa Barbara Bank & Trust, which exited the refund anticipation loan business last tax season under orders from banking regulators. The indictment alleges that Crystal stole a total of $10,400 in refunds from her clients that she received via a bank account at SBBT.
According to the indictment, for tax years 2005, 2006 and 2007, Crystal prepared returns that falsely claimed $111,873 in expenses that included excess car mileage, business travel, business expenses, investment advisor services, and business losses. The falsely claimed expenses generated the tax refunds that were deposited into the SBBT account that she controlled.
Crystal faces up to three years in prison and a $100,000 fine for each count of preparing false income tax returns, and 10 years in prison and a $250,000 fine for each theft of government property charge. Her next court appearance is scheduled for June 1.
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