Tax Fraud Blotter: An education in incarceration
Five Stars and three defendants; a fraud goes ka-boom; and other highlights of recent tax cases.
West Palm Beach, Fla.: A federal court has permanently barred defendants Fred Pickett Jr., Jalisa Steele and Fred Pickett III, as well as three associated prep businesses, from owning, operating, or franchising a prep business and preparing returns for others.
The defendants consented to the order, which also requires them to provide the government with a list identifying their prep clients.
According to the complaint, Pickett Jr., with the assistance of Steele and Pickett III, created and maintained a tax return preparation business operating as Five Star Tax Agency, Five Star Financial Services or Millenium Tax Professionals that prepared returns for customers that understated tax liabilities and claimed bogus refunds.
Their alleged scheme involved fabricating businesses and business-related profits or losses, falsely claiming the Earned Income Tax Credit, claiming false education credits and spurious fuel tax credits, fabricating retirement account contributions and deductions, and failing to provide clients with complete copies of their returns.
In August, the court denied a motion to dismiss filed by the defendants.
Danville, Va.: Preparer Timothy Harris, 49, has been sentenced to 30 months in prison for aiding and assisting in the preparation of fraudulent returns.
According to documents filed with the court, Harris owned and operated TNA Tax Services and TNT Tax Services in Danville and Rocky Mount, Va. Harris used these businesses to prepare false returns for clients that claimed bogus business losses to garner inflated and undeserved refunds.
After the IRS revoked his EFIN in December 2012, Harris used another person’s EFIN to continue filing returns.
Harris, who pleaded guilty in July to aiding and assisting in the preparation of a false return, admitted that his fraudulent conduct caused a tax loss of more than $250,000.
Harris was also ordered to serve a year of supervised release and to pay $335,389 in restitution to the IRS.
St. Louis: Nigerian citizen Kevin Kunlay Williams, a.k.a. Kunlay Sodipo, 56, has been sentenced to 78 months in prison for mail fraud, aggravated ID theft, voter fraud and re-entering the U.S. after having been removed.
According to documents filed with the court, Williams and others stole public school employees’ IDs from a payroll company and used them to e-file more than 2,000 fraudulent federal income tax returns seeking more than $12 million in refunds.
He also stole several preparers’ EFINs and used them to secure tax-related bank products and services that facilitated the issuance of tax refunds, including blank check stock and debit cards. Williams used the blank stock to print checks funded by the fraudulent refunds and directed some of the refunds onto debit cards.
Williams previously entered the U.S. from Nigeria under the name Kunlay Sodipo, but was deported in 1995. In 1999, he illegally returned to the U.S. from Nigeria using the last name Williams. In 2012, Williams registered to vote in federal, state and local elections by falsely claiming that he was a U.S. citizen and voted in the 2012 and 2016 presidential elections.
Williams was also ordered to pay $889,712 restitution to the IRS, in addition to forfeiture of money orders totaling $10,810 seized during the investigation. He is in custody and also faces deportation.
New York: Two residents of the Borough of Queens have pleaded guilty for their roles in separate stolen-ID refund frauds.
Kishore Jattan, 44, pleaded guilty to ID theft. According to the plea agreement and documents filed with the court, from April through June 2012, Jattan stole student IDs from packages he delivered for a university in New York and sold the IDs to other individuals who used them to file fraudulent federal returns. Jattan admitted that he caused a tax loss of $250,000 to $550,000.
Sentencing is for March 21, when Jattan faces a maximum of 15 years in prison, as well as a period of supervised release, restitution and monetary penalties.
In a separate scheme, Michael Bratton, 51, pleaded guilty to conspiring to defraud the U.S. According to the plea agreement and documents filed with the court, from January 2011 through June 2012, Bratton purchased stolen IDs that he provided to a co-conspirator to file fraudulent federal returns.
Bratton admitted to causing a tax loss of more than $40,000 and will also be sentenced on March 21, when he faces a maximum of five years. He also faces a period of supervised release, restitution and monetary penalties.