Tax Fraud Blotter: An ID is a terrible thing to waste

Flag on the play; range of misdeeds; economic development; and other highlights of recent tax cases.

Fair Oaks, Calif.: Tax lawyer Hiram M. Martin, 71, who represented retired professional football player Antrel Rolle, has been sentenced to three years in prison today for fraudulently obtaining refunds for Rolle, stealing the refunds and then covering up his scheme by filing false documents with the Internal Revenue Service.

Martin, who pleaded guilty on Jan. 7 to one felony count of attempting to obstruct or impede the administration of internal revenue laws, was also ordered to pay $1,223,480 in restitution.

Martin admitted that he submitted false tax returns for Rolle, who hired Martin when he was a 23-year-old rookie in the National Football League. The returns claimed millions in bogus charitable donations and business expenses; Martin never informed Rolle about the phony deductions. The IRS issued refunds of $322,008 for the 2005 tax year and $901,472 for the 2006 year as a result of Martin’s deductions.

Martin directed the IRS to deposit the refunds into Martin’s bank account or to mail the refunds to his mailing address. Martin then used the money for his personal benefit, including an investment account under his control.

When the IRS began auditing Rolle’s returns for these years, Martin faxed two letters in 2009 to the agency that attempted to support the fraudulent donations. Then, without Rolle’s authorization, Martin filed petitions in Tax Court challenging the IRS after it rejected the deductions. Martin has admitted that he forged Rolle’s signature on the Tax Court petitions.

In May 2011, again without Rolle’s knowledge or authorization, Martin agreed to a judgment that imposed a tax liability of nearly $2 million on Rolle. Martin also admitted that he provided Rolle with a fabricated set of returns for 2005 and 2006 that did not claim any refunds. Martin also took steps to prevent the IRS from directly contacting Rolle by providing the IRS with his own personal and business addresses and claiming they were Rolle’s addresses.

Huntingdon, Tenn.: Appliance store owner Joshua Lynn Hicks, 32, has entered a guilty plea to filing false returns.

According to the indictment, in 2015 Hicks owned J. Hicks Appliances in Huntingdon, and Appliances and More in Lexington, Tenn. Responsible for the business recordkeeping, he underreported the gross receipts by $98,031 for the taxable year of 2015.

Hicks also filed false U.S. individual income tax returns by underreporting gross receipts on his Schedule C in 2012, 2013 and 2014, resulting in an underreporting of income of $335,000.

On Nov. 13, a federal grand jury returned a four-count indictment against Hicks for filing false and fraudulent statements on income tax returns for 2012 to 2015. On March 27, Hicks pleaded guilty to one count of the indictment for calendar year 2015.

Hicks faces a maximum of three years in federal prison, a period of supervised release and monetary penalties. As part of the plea agreement, Hicks will pay restitution of $95,210 to the U.S. Sentencing is June 27.

New York: CPA Christopher Miu, 58, has been sentenced to 14 months in prison for filing a return in his own name that contained materially false information.

According to case documents and statements in court, between 2008 and 2014 Miu failed to file income tax returns on his own behalf. When he ultimately filed returns for those years, he substantially under-reported his gross income, leading to a tax loss to the U.S. of more than $550,000.

Miu was also sentenced to a year of supervised release and ordered to pay $670,000 in restitution.

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hand in jail

Hempstead, N.Y.: Town councilman Edward Ambrosino, 54, of North Valley Stream, N.Y., has pleaded guilty to tax evasion.

Ambrosino was an attorney licensed to practice in New York and specializing in economic and industrial development and financing, and was formerly of counsel at a law firm in Uniondale, N.Y. Since March 2003 Ambrosino has served as a councilman for Hempstead.

In 2011, he incorporated Vanderbilt Consulting Group Inc. and was the company’s sole shareholder. Ambrosino subsequently opened and controlled a bank account in the name of Vanderbilt and was the sole authorized signer on that account. From 2013 through 2015, he diverted more than $800,000 in legal fees from clients that he was required to provide to his law firm, and deposited them into the Vanderbilt bank.

Ambrosino neither admitted nor denied wrongdoing regarding this conduct, but as part of his guilty plea agreed to pay $700,000 in restitution to the law firm.

Ambrosino also evaded substantial income tax and filed false and fraudulent corporate tax returns on behalf of Vanderbilt for the 2011, 2012 and 2013 tax years. He evaded the assessment of income tax by claiming false and fraudulent business expense deductions and failed to report funds he diverted from his former law firm. The IRS suffered a tax loss of some $254,628, which will be recouped via restitution.

Ambrosino faces up to five years in prison, as well as restitution to the IRS and the New York State Department of Taxation and Finance for taxes owed for the tax years 2011 through 2014. He also agreed to pay restitution of $700,000.

Asheville, N.C.: Businessman Byron Hale Delavan, 63, has been convicted in a Virginia federal court on 35 charges of conspiracy, tax fraud related to a fraudulent tax shelter, mail and wire fraud and money laundering.

According to court records and evidence, Delavan engaged in a fraudulent tax and investment fraud scheme from approximately 2011 to 2016 that resulted in losses to victims of more than $800,000 and a separate tax loss to the U.S. of more than $400,000.

Delavan offered a fraudulent tax program to individuals in the Tidewater area and elsewhere where they paid Delavan $10,000 to $12,500 to obtain fraudulent losses to offset income on their returns. Delavan purported to deduct bad business debts from non-operational entities he controlled, passing through these losses to client returns as if the clients were actually involved in these entities. He also solicited business loans and investments from some of the same and additional clients that he falsely represented would be used for business purposes.

Delavan used such funds for personal use, including the repayment of prior clients and such personal expenses as private school tuition. Delavan also purported to sell gold to certain clients but made false representations related to the value or existence of the gold or the purpose of the funds obtained.

Sentencing is July 9.

New York: Tax preparer Rebecca Bayuo of the Bronx has been sentenced to three years in prison for committing three different tax frauds that involved using stolen IDs to obtain fraudulent refunds.

She was convicted of 12 counts of preparation of false returns, one count of theft of government funds, one count of aggravated ID theft and two counts of subscribing to false returns. The charges arose from Bayuo’s preparation of false returns on behalf of clients, filing of false returns in the names of victims whose IDs she had stolen, and her filing of false returns on her own behalf.

Bayuo owned and operated Breakthrough Insurance Brokerage, a prep business. From about 2010 through about 2014, she used the stolen IDs of victims to file fraudulent federal returns that generated undeserved refunds; many of the victims were then unable to file returns and were deprived of refunds. Bayuo charged her clients an additional fee for providing them with the stolen IDs of children as false dependents; she recycled the same IDs as false dependents for numerous returns over at least four years. From about 2014 to about 2015, she also filed false personal income tax returns in her own name and included personal ID information she had stolen from others.

She was also ordered to forfeit $76,985 and pay restitution of $127,356.

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