Get down with PPP; go Huskies; and other highlights of recent tax cases.
York, Pennsylvania: Tax preparer Dommonick T. Chatman, 50, has reportedly admitted that he helped push through bogus Paycheck Protection Program applications during the pandemic, retaining part of the money.
Chatman, who pleaded guilty to one count of bank fraud, oversaw The Chatman Group, where he either prepared or approved nearly 20 fraudulent PPP loan applications in 2021, news reports said, adding that in total applicants sought more than $400,000 and banks ultimately paid out some $341,438.
Chatman reportedly admitted he knew many of the applications were bogus because he had already prepared returns for several of the clients involved. Investigators told news outlets that some applicants didn't have legitimate businesses operating before the program's Feb. 15, 2020, cutoff, and others simply didn't earn enough to qualify for the amounts requested.
News reports said Chatman received roughly 5% of each approved loan (about $1,000 each) and shared some of that money with an employee who helped process applications. Prosecutors also reportedly said he tried to obstruct the investigation by getting rid of a handwritten list of clients tied to the scheme.
Chatman has agreed to pay back the full $341,438.82, news outlets said, and he faces up to 30 years in prison.
Kansas City, Missouri: Tax preparer Tanisha Spencer, 35, has admitted preparing and submitting fraudulent income tax returns on behalf of others and has pleaded guilty to aiding in the preparation of a false return, news reports said.
Spencer reportedly operated her tax scheme by preparing returns for individuals who contacted her through Facebook. Investigators determined that the returns contained fabricated Sick Leave and Family Leave Credits, improper Fuel Tax Credits and significantly inflated federal withholdings, news outlets said. These falsified entries allowed Spencer to generate large undeserved refunds.
Spencer reportedly charged $500 to $14,840 for each return she prepared, in total filing 156 fraudulent returns that sought $4,047,531 in refunds. The IRS ultimately paid out $689,872 before detecting the scheme, news outlets said.
She reportedly faces up to three years in prison without parole.
Old Saybrook, Connecticut: Convicted tax preparer David Adams, 65, has been sentenced to nine months in prison for violating the conditions of his supervised release.
In November 2018, Adams was sentenced to 90 months of imprisonment and three years of supervised release for failing to pay more than $4.8 million in federal income taxes over more than 20 years. He was released from prison in April 2024.
While on supervised release, Adams failed to pay restitution as ordered and failed to disclose to the U.S. Probation Office his access to a bank account that he used to spend more than $100,000 attending UConn basketball games and other live sporting events, eating at expensive restaurants, going on shopping sprees and providing money to a friend. After Adams admitted to the violations, his supervised release was revoked and he was sentenced to nine months in prison with no supervised release.
Adams' criminal history includes two additional federal convictions. In 1986, he was convicted of credit card fraud for submitting more than $588,000 in fraudulent credit card sales drafts through his floral business. In 1992, he was convicted of failing to file tax returns for the 1984 through 1986 tax years.
Washington Township, New Jersey: James J. Mastrogiovanni, 45, has been sentenced to 49 months in prison for fraudulently seeking more than $1.4 million from the IRS by filing false returns claiming pandemic employment tax credits, for laundering the proceeds from that scheme and for stealing from an elderly customer at the car dealership where he worked.
During the pandemic, Mastrogiovanni engaged in a scheme with Leon Haynes, a tax preparer, to exploit pandemic-relief programs. From around March 2021 through December 2022, Mastrogiovanni and Haynes prepared and filed with the IRS false and fraudulent 941s on behalf of Mastrogiovanni, his family members and others, claiming refunds.
All the 941s prepared were false and fraudulent because they listed employees and wages that did not actually exist. Neither Mastrogiovanni nor any of his family owned or operated a business or paid employees.
He claimed at least $1,443,409 in tax credits, and the U.S. Treasury disbursed at least $545,692 to Mastrogiovanni and his family.
Haynes was found guilty on Nov. 10 of 15 counts of aiding and assisting in the preparation and presentation of false returns, one count of mail fraud and two counts of tax evasion for his scheme seeking more than $170 million in fraudulent federal refunds. He caused more than 1,900 false returns to be filed on behalf of himself and his clients. His sentencing is March 12.
From about June through December 2023, Mastrogiovanni also schemed to steal more than $180,000 from an 85-year-old victim who looked to buy a vehicle at the car dealership where Mastrogiovanni worked. Mastrogiovanni later used the routing and checking account numbers on the check to make unauthorized personal transactions from the account until the account was empty.
In addition to the prison term, Mastrogiovanni was sentenced to three years of supervised release and ordered to pay $726,862 in restitution.