This week’s edition of the Blotter includes not just our usual collection of preparer-related fraud, but also a chilling story about a preparer whose clients turned violent.
Boca Raton, Fla.: A preparer was attacked by his clients as they met at an LA Fitness outlet to discuss the progress of their tax return, according to published reports. The preparer, whose name was not given, was assaulted by a business client and the client’s brother, who then burglarized the preparer’s vehicle of $700 cash, according to police reports cited by news outlets. No arrests have been made.
Los Angeles: Preparer Nancy L. Hilton, 69, has pleaded guilty to a massive filing of bogus returns claiming refunds.
Hilton admitted to conspiring to defraud the U.S. with respect to claims, submitting a false claim and possession or use of ID to commit unlawful activity.
According to the plea agreement, in approximately January 2008 Hilton schemed with at least five other individuals to file fraudulent returns and collect refunds resulting from those returns. Hilton’s role included preparing fraudulent returns as well as supervising preparation of fraudulent returns through her preparation business in Moreno Valley.
Hilton met with co-conspirators who gave her names, dates of birth and Social Security numbers of numerous people, which she used to file fraudulent returns. Hilton kept a portion of the resulting phony refunds, typically half. Some of the returns contained false wage and withholding information, others false business losses on Schedule Cs.
When Hilton learned of the government’s investigation of her prep business, she deleted data from the firm’s computers to try to obstruct the investigation.
The total amount of refunds claimed by members of the conspiracy for tax years 2008 and 2009 was at least $5,841,584. IRS refunds based on those returns totaled approximately $4,408,950.
Hilton faces a maximum sentence of 30 years in prison when sentenced on July 6. She further agreed to pay $4,408,950 restitution to the IRS.
Providence, R.I.: Preparer Evelyn Nunez, 40, has been sentenced to 30 months in prison and two years of supervised release and been ordered to pay more than $1.4 million restitution to the IRS and the State of Rhode Island for her role in a scheme to steal personal ID information of minors.
Authorities said the minors’ information was used to name dependents on legitimate returns prepared by Nunez’s company, NBP Multiservices in Cranston, R.I., and then sold to other filers for use on returns to inflate refunds.
According to court documents, the IRS analyzed returns prepared by NBP and identified questionable use of children being claimed as dependents. Use of the dependents led to the refunding of hundreds of thousands of dollars under the EITC.
According to court records and information presented to the court, between January 2008 and February 2012 taxpayers purchased false dependents for approximately $600 to $700 per dependent. Investigation revealed that on numerous returns the defendants falsely claimed dozens of children to be foster children, nieces and nephews of some of their clients.
Investigation also revealed that the scheme defrauded the IRS of more than $1.34 million dollars and defrauded the State of Rhode Island of more than $65,500.
Nunez pleaded guilty on Dec. 12 to one count each of conspiracy to defraud the government and aggravated ID theft. Two co-defendants, both from Cranston, have also pleaded guilty to federal charges and are awaiting sentencing. Tashia Bodden, 37, pleaded guilty to one count of conspiracy to defraud the government and one count of aggravated ID theft. Wendy Molina, 40, pleaded guilty to one count of conspiracy to defraud the government.
Bristol, Ind.: Preparer Marie Henderson, 36, has received 24 months in prison and a year’s supervised release and been ordered to pay restitution of $99,786.64 after pleading guilty to preparing and filing phony returns.
According to case documents, from 2009 through 2012, Henderson ran the sole proprietorship Four Seasons Finance out of her home after learning how to prepare returns while previously working at H&R Block. The 1040s she prepared for many of her clients inflated refunds with materially false Schedule C deductions for business income and mileage and car and truck expenses.
In 2009, 2010 and 2011, for example, she prepared returns for a couple whose sources of income consisted of pension retirement benefits, military disability payments, Social Security disability payments and investment interest. For tax year 2010, Henderson prepared a 1040 for these clients listing a false mileage claim of 100,000 miles and car and truck expenses of $50,000. The retired couple in fact owned no business for legitimately claiming expenses; their bogus refund totaled $4,955.
Crestline, Calif.: Preparer Tammy J. Ahumada, 48, has been sentenced to 41 months in prison for her role in defrauding the U.S. government of more than $1.4 million by creating 200-plus false returns that claimed bogus refunds. She was also ordered to pay $1,414,167 restitution to the IRS. Ahumada pleaded guilty in August to count 12 of a 44-count indictment charging her with making false claims against the federal government.
Indianapolis: The federal government has filed to permanently bar Jennifer Carolina Gonzalez, d/b/a Jenny’s Tax Services, from preparing federal returns for others.
The civil injunction complaint alleges that Gonzalez fraudulently adjusted clients’ income on Schedule C to either increase an undeserved EITC or to reduce the client’s tax liability. She also, according to the suit, frequently prepared returns claiming head of household status for ineligible clients. Gonzalez allegedly frequently prepared returns claiming child tax credits for clients’ relatives living in Mexico who had never lived in the U.S. and failed to provide her PTIN on returns she prepared until January 2013. Instead, the complaint alleges, Gonzalez used a PTIN assigned to a person living in New Jersey who has no connection to Gonzalez and has never authorized Gonzalez or anyone else to use the PTIN.
The complaint further alleges that, in 2012, Gonzalez sold the use of the third-party PTIN she had appropriated, her own EFIN and her firm’s EIN to another preparation business for $20 per return filed containing Gonzalez’s ID numbers. Despite selling use of the numbers, she continued to use the ID numbers when preparing returns for the 2011 tax year, as did the purchaser.
According to the complaint, the IRS estimates that Gonzalez prepared more than 2,000 tax returns since 2011, that the bogus information on her clients’ returns generated larger refunds or reduced tax liabilities, and that the losses to the U.S. Treasury could exceed $3.9 million.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access