Some of our favorite recent tax fraud cases.
East Point, Ga.: Preparer Amberula Levitt, 45, who owned Tax Time Tax Service, has been sentenced to 21 months in prison for fraud on her own returns.
According to case records and authorities, from 2004 through 2010 Levitt under-reported earnings from Tax Time on her personal federal returns and owes some $620,000 in back taxes. Levitt was convicted on two counts of filing false returns for the 2004 and 2005 tax years, after she pleaded guilty on October 29. She will also serve a year of supervised release, pay $620,004 in restitution to the IRS and complete 100 hours of community service.
Dallas: Preparer Ousmane Sow, indicted in 2007 on federal felony charges and a fugitive until last November, has pleaded guilty to one count of aiding and assisting in the preparation of a fraudulent return.
According to case documents, from 2003 to 2005, Sow and co-defendant Tichafara Mpariwa provided tax prep services through a business they jointly owned and operated named DSL Tax Services. From 2003 to 2005, Sow prepared and filed federal individual returns along with supporting schedules and forms that contained materially false credits and deductions, including false business expenses and false education expenses to create a bonus education credit, to inflate clients’ refunds.
He faces maximum of three years in prison, a $250,000 fine and payment of restitution. Sentencing is not yet set.
Mpariwa remains a fugitive.
Los Angeles: CPA Jeffery Deshon Applewhite, a.k.a. Jeffrey Donald Mason, has been convicted on 20 counts of aiding and assisting in the preparation of false returns. Evidence showed that Applewhite, owner and operator of tax prep businesses in Los Angeles and Oakland, Calif., prepared false and fraudulent income tax returns for clients from 2006 through 2011. On these returns he fabricated deductible expenses and fraudulently included residential energy credits and education credits. He prepared and filed the false returns using the names Jeffery Deshon Applewhite and Jeffrey Donald Mason and used the name and PTIN of another preparer.
Applewhite’s sentencing hearing is August 5, when he faces a maximum for each count of three years in prison and a fine of $250,000. He was not convicted on five charges of ID fraud.
Stafford, Va.: Preparer Daniel L. Jones, 56, pled guilty to two counts of aiding in the preparation of fraudulent returns for clients and one count of making a false statement to the IRS.
According to the court documents, Jones ran a tax prep service in the Fredericksburg, Va., area, The Tax Doctor Plus. To increase clients’ refunds, he regularly prepared and e-filed returns that contained false entries and items, including: improper filings statuses for married couples to place both taxpayers into lower tax brackets and create EITC opportunities; false Schedule Cs with enough false deductions to qualify clients for the EITC; false Schedule A expenses and education credits; and false income with false W-2s to qualify taxpayers for such credits as the EITC, various education credits and the Making Work Pay credit. To represent clients before the IRS, Jones also submitted 2848s on which he falsely claimed he was a CPA.
Jones agreed that the total tax loss for the various false returns from 2009 to 2012 is approximately $600,000. He faces a maximum of 11 years in prison, three years of supervised release, $750,000 in fines and payment of full restitution when he is sentenced on August 21.
Teaneck, N.J.: Preparer Sixto Rodriguez, owner of 123 Taxes, has been indicted on 21 counts of preparing fraudulent returns for clients and three counts of filing false returns for himself.
According to the indictment, Rodriguez, arrested in Kissimmee, Fla., operated 123 Taxes out of his Teaneck home, and for tax years 2008 through 2011 met there with clients to prepare individual returns. Allegedly Rodriguez prepared at least 80 fraudulent returns for clients by fabricating and inflating Schedule A deductions such as unreimbursed employee business expenses and charitable contributions and fabricated expenses to obtain educational credits. In other instances, he allegedly fabricated and inflated Schedule C expenses and losses and Schedule E expenses relating to rental real estate losses. The indictment alleges that Rodriguez obtained falsely inflated refunds for clients, costing the government some $234,768.
Rodriguez also allegedly failed to report all his tax prep income from 2007 through 2009. For the tax years 2007 and 2008, Rodriguez reported $0 taxable income and for 2009 reported approximately $4,558. As alleged in the indictment, his corrected taxable income for those years totaled some $291,441.
If convicted, he faces a maximum on each count of three years in prison and a maximum fine of at least $250,000.
Minneapolis: Five preparers have been named in a 70-count superseding indictment charging them with attempts to defraud the U.S.
Chatonda Khofi, Ishmael Kosh, Amadou Sangaray, Francis Saygbay and David Mwangi of Primetime Tax Services, Inc. were named in the superseding indictment stating that in 2007, 2008 and 2009 they allegedly conspired to prepare and file false individual income tax returns for clients.
These returns claimed false dependents and reported false Schedule A deductions, Schedule C businesses and W-2 wages, qualifying clients for inflated refunds. Also, they prepared and filed false Minnesota income tax returns for clients that contained the same or similar false information.
The indictment further charges each defendant with multiple counts of aggravated ID theft and aiding and assisting in the preparation of false individual income tax returns. The ID theft charges stem from the defendants’ alleged use of the names and Social Security numbers of actual persons to claim as false dependents on clients’ returns. An aggravated ID theft conviction carries a minimum sentence of two years.
According to the indictment, the defendants also accompanied some clients to check-cashing businesses to cash the false refund checks and demanded from the clients a portion of the cashed check in addition to tax prep fees already collected. The five are also alleged, in some instances, to have withdrawn cash from debit cards containing their clients’ refunds without permission and again in addition to prep fees already collected.
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