Tax Fraud Blotter: A lot of baloney
Different kind of bracelets; Bentleys and a rinse; ministry of fraud; and other highlights of recent tax cases.
Baton Rouge, Louisiana: A state court has barred former tax preparer Joseph A. Gillies from preparing state income tax returns.
Gillies was arrested in January 2017 on felony charges that he used ghost companies and fabricated business losses to claim $768,740 in refunds for clients. Numerous clients told investigators they had not reported any business losses when they provided Gillies with their tax records; many said they weren’t even business owners. Gillies pleaded guilty in October.
The injunction bars Gillies permanently from preparing any Louisiana returns other than his own.
Hamden, Connecticut: Deli owner Raymond George, 52, has pleaded guilty to one count of tax evasion.
According to court documents and statements in court, George owns and operates a Ray & Mike’s delicatessen and for the 2012 and 2013 tax years evaded his federal income taxes in multiple ways.
He failed to deposit all of the cash receipts of the business into his business bank account. He also used the Ray & Mike's account to pay personal expenses and deposited three large checks totaling nearly $300,000 from the Ray & Mike’s account into his personal investment account without reporting the funds as income in any capacity. He then withdrew funds from the account to purchase personal investment properties. He also deposited a $25,800 check from the Ray & Mike’s lottery account into his personal investment account without reporting the funds as income.
On his federal returns, George underreported his income by some $365,065 for the 2012 tax year and by $273,108 for the 2013 tax year, and failed to pay a total of approximately $220,000 in taxes.
George faces a maximum of five years in prison and a fine of up to some $440,000. He also has agreed to pay back taxes of $220,663, plus interest and penalties.
Albuquerque, New Mexico: Businessman David Castle, 76, has pleaded guilty to tax evasion.
Castle, owner and operator of the Gold and Silver Exchange, a store that focuses on the sale, purchase and repair of jewelry, was indicted in February 2018, and was charged with obstructing the administration of the internal revenue laws and tax evasion. The first count of the indictment charged him with a scheme to evade and defeat the assessment and payment of federal taxes from December 2004 through last January.
According to the indictment, Castle used several nominee businesses to conduct GSE’s financial operations to hide income from the IRS: using bank accounts belonging to the nominee businesses; concealing personal income and expenditures; engaging in cash transactions; employing and paying GSE personnel in cash; and failing to keep accurate GSE business records.
The indictment also alleged that from December 2008 through December 2017 Castle attempted to evade a total of $104,446.81 in federal taxes for a number of years in the 1990s and early 2000s. The indictment alleged that he concealed the nature and location of his business revenue from the IRS.
Castle admitted from 2010 through 2013, while he was the sole owner and operator of GSE, he filed no returns for his business, his business provided no withholdings to the IRS and he paid no taxes either for his business or his household, among other activities. He also agreed that his conduct resulted in a tax loss of $211,829 during tax years 2010 through 2013.
He faces a maximum of five years in prison, supervised release, a maximum fine of $250,000 and restitution.
Wexford, Pennsylvania: Mark Stanford, owner of the cleaning business Y Clean and a resident of Sewickley, Pennsylvania, has pleaded guilty to tax evasion.
According to information presented to the court, Stanford evaded payment of both his personal income taxes and the employer and employee portions of Social Security and Medicare taxes for 2008 through 2012. He made large personal expenditures, such as two Bentley automobiles, rather than pay the taxes.
He also was shown to have filed a false document with the IRS that failed to identify, among other things, the two Bentleys on his list of assets and a bank account that he opened, which identified his son as the principal account holder and which he used to move money that he took from his business and paid to himself in cash.
Sentencing is Sept. 4, when Stanford faces a maximum of five years in prison and a fine of up to $250,000 for each count.
Andover, Massachusetts: Former attorney Daniel P. Gibson, 62, has been convicted of filing false tax returns and for conspiring with his accountant to defraud the IRS.
Gibson conspired with his accountant to prepare and file false returns in tax years 2005, 2006, 2008 and 2009 that intentionally underreported some $3.7 million in income earned by the law firm where Gibson was managing partner. As a result, Gibson avoided more than $875,000 in taxes.
Sentencing is Sept. 5. Filing of the false returns provides for a maximum of three years in prison, a year of supervised release and a fine of $100,000 per count, as well as for restitution. Conspiracy to defraud the IRS provides for a maximum of five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater.
Tampa, Florida: Pastor Luckner Stimphil, 55, of Brandon, Florida, has been sentenced to 57 months in prison for conspiracy to defraud the U.S. Stimphil’s daughter, Elwolfine Dufort, 31, of Riverview, Florida, was also previously sentenced to two years in prison for her role in the conspiracy.
Stimphil and Dufort have agreed to be permanently enjoined from preparing or assisting in the preparation or filing of federal tax returns or other related documents for any other person or entity; from maintaining any association with a tax return preparation business; and from instructing, teaching or otherwise training any person in the preparation of federal tax returns. Stimphil further consented to pay all taxes, interest and penalties he owed to the IRS relating to his personal tax returns for years 2012 and 2013.
According to court documents, Stimphil, the then-pastor at First Calvary Family Life Ministry in Tampa, created and operated Top Popular Tax, a prep business that operated from around 2011 through at least mid-2015. Stimphil, Dufort and others working under Stimphil’s supervision routinely helped prepare fraudulent 1040s that included false information on Schedules C and 8863s. Some of the forms also included a fraudulent claim for a credit for federal tax on fuels.
The court also ordered Stimphil and Dufort to pay $11 million in restitution to the U.S. and imposed a $10,000 fine against Stimphil. Stimphil and Dufort pleaded guilty in February.
New Hartford, New York: Preparer James Becker, 53, has pleaded guilty to four counts of failing to file his personal federal income tax returns for tax years 2012 to 2015.
Becker admitted that he was required to file returns based on his gross income in those years and that he failed to do so despite being a professional preparer.
Sentencing is Sept. 16, when Becker faces up to a year in prison and up to a $100,000 fine on each of the four counts.
Tucson, Arizona: Preparer Joseph Michael Vosberg, 59, has been sentenced to 18 months in prison for assisting in the preparation and filing of false federal income tax returns.
Vosberg admitted that he prepared and filed 33 federal returns that contained $457,187 in false deductions.
He was also ordered to pay $202,243 in restitution to the U.S. Treasury.