Tax Fraud Blotter: A grand per dependant
CPA under-reports income; Miami vice; an open relationship and a hidden scheme; and other highlights of recent tax cases.
Kansas City, Kan.: Former CPA Robert M. Purinton, 69, formerly of Overland Park, Kan., and now of Rancho Mirage, Calif., has pleaded guilty to one count of making a false statement on his 2009 return by under-reporting his income some $202,000.
He agreed to make restitution of $71,543 for the additional taxes due and owing for that year. He also agreed to make restitution of $34,512 for 2010, although he did not plead guilty to any criminal activity for that year.
During those years, he was a CPA with an accounting firm in Overland Park.
Purinton faces a maximum of three years in federal prison, a fine up to $250,000 and total restitution of $106,055.
Texarkana, Texas: News outlets said that Eric G. Hicks, 44, admitted that he conspired with another preparer to defraud the IRS of about a half million dollars from October 2010 through March 2012 by filing returns on behalf of nonexistent employees.
Hicks reportedly pleaded to conspiracy to file false claims against the U.S. and submitting false and fraudulent claims. The trial date remains set for his co-defendant, who faces the same charges, news outlets said.
The two were indicted in September 2016 but the indictment wasn't unsealed until April 13 of this year, reports said, three days after Hicks was arrested in Miami on a warrant issued out of Arkansas.
According to the indictment and a cited court statement, the scheme resulted in the filing of 104 fraudulent claims for refunds that ranged from $2,247 to $10,024.
The indictment said the defendants also prepared and filed fraudulent returns in their own names as though they had been employed by business entities that actually didn’t employ them, with Hicks falsely claiming he was due $3,930.
Investigators reportedly obtained much of their evidence by listening to recorded calls that Hicks placed to his co-defendant between November 2011 and February 2012, while he was in jail. In the calls, Hicks reportedly gave detailed instructions for setting up LLCs, obtaining federal identifiers and establishing business bank accounts. He was recorded telling his co-defendant how to obtain identities to use in the returns and then discussing specific identities, including those that “didn't go through” the previous year, reports said, adding that he also instructed the co-defendant on how to redirect refund money to prepaid cards.
About $555,000 was stolen through the scheme, reports said.
Ames, Iowa: Preparer Lony Tap Gatwas, 48, has been sentenced to 45 months in prison for wire fraud, tax fraud and aggravated ID theft.
Gatwas, found guilty last summer, operated a prep business and defrauded the IRS by preparing and filing personal income tax returns listing false dependents. During his trial, the government presented evidence that Gatwas placed his own children as well as other children on his clients’ personal income tax returns as dependents when these children had no relationship to the taxpayers.
He inflated clients’ refunds by thousands of dollars. Clients’ testimony established that Gatwas charged them $1,000 to $2,000 for each false dependent he put on their return. When his clients were audited, Gatwas instructed some clients to lie to the IRS about their relationship with the false dependents.
Gatwas was also ordered to pay $132,585 restitution to the IRS, serve three years of supervised release following his imprisonment, and pay $1,800 to the Crime Victims’ Fund.