Some of our favorite recent tax fraud cases.
Oakland, Calif.: Former CPA and preparer Jeffrey Deshon Applewhite, a.k.a. Jeffrey Donald Mason, has been sentenced to three years in prison and been ordered to pay $9,249 restitution for helping prepare false federal income tax returns.
According to court documents, Applewhite owned and operated Applewhite and Co. CPA, along with Mason Financial Services, in Inglewood, Calif. Applewhite also owned and operated an Oakland H&R Block franchise (though Applewhite mainly prepared returns from his Inglewood office, he did come to the Block location each year to meet with clients).
Applewhite, of Los Angeles, was convicted on April 28 on 20 counts of aiding and assisting in the preparation and presentation of false and fraudulent returns. The returns reported false deductions and credits or false Schedule A expenses, such as inflated charitable contributions.
Heber-Overgaard, Ariz.: Preparer Kennith Lee Defoor, 73, has been sentenced to 18 months in prison and been ordered to pay nearly $897,394 in restitution and a $1,200 assessment for claiming millions in fraudulent federal refunds.
Defoor was indicted along with two co-defendants with submitting false claims for more than $9.5 million in fraudulent refunds. Authorities said the three prepared at least 337 fraudulent federal returns for clients at two tax prep businesses since 2001.
Defoor, along with the married couple Deane and Shelia Young, both 50, were arrested in December 2010 and subsequently sentenced to five years in prison.
Philadelphia: Preparer Edward J. Rorie, 50, has pleaded guilty to multiple counts of criminal tax fraud.
Authorities said that for tax years 2009 through 2011, he prepared 968 federal income tax returns that sought refunds totaling $3.85 million. The bogus refund claims were based on various tax credits in addition to inflated and fictitious medical, dental and miscellaneous expenses.
The faked credits included the First-Time Home Buyer Tax Credit, the Hope Tax Credit, the EITC, education and child-care credits and the Recovery Act’s Additional Child Care Credit. The fraud cost the IRS at least $100,000.
Rorie faces a maximum of 75 years in prison, a $2,500 special assessment and a fine of up to $6.25 million. Sentencing is February 11.
Charlotte, N.C.: Preparer Nkhenge Shropshire, a.k.a. Konjay Shropshire, 41, has received 33 months in prison for filing false returns and lying on a loan application. She was also ordered to serve five years under court supervision following her term and to pay $582,933 in restitution to the IRS and separate amounts of $14,309.17 and $25,000 to two credit unions she defrauded.
According to filed court documents, from 2009 to 2011, Shropshire, owner of Tax Connections, helped prepare more than 600 e-filed federal returns for clients. Many of the returns included false Schedule C losses and refundable education credits and false EITCs. Tax loss associated with the false education credits exceeds $580,000.
Court records also show that Shropshire directed many of the fraudulent refunds into a bank account she controlled and kept a portion of the refund. Sometimes, according to court records, she didn’t provide clients with copies of their completed returns, or gave them incomplete copies to hide the fraud.
In October 2011, Shropshire applied for membership with a federal credit union using a different Social Security number and home address. On the same day, court records show, she applied for a loan with the same credit union to buy a Mercedes, listing a false employer, false annual salary and false job title. Records also show that Shropshire was approved for a $40,075 car loan but only made two payments, totaling $2,508.50.
Shropshire pleaded guilty to conspiracy to defraud the IRS and to making false statements on a loan application in October 2013.
Jacksonville, Fla.: Preparer Raymond Jones Jr. has received 18 months in prison and been ordered to pay more than $400,000 in restitution to the IRS after pleading guilty to filing fraudulent federal returns, according to published reports.
Jones reportedly pleaded guilty to filing fraudulent federal returns in one of 73 cases that investigators said cost the government $400,542. Returns in 2010 and 2011 that he filed on behalf of clients included statements of deductions to SE retirement plans, education and expenses, according to federal prosecutors cited in reports.
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