Tax Fraud Blotter: Bad conduct
Fire away; from the Big Island to the big house; getting the lead out; and other highlights of recent tax cases.
Winter Park, Florida: Tax preparer Leslie Muniz has been sentenced to three years in prison for aiding and abetting the filing of false federal income tax returns.
Between 2012 and 2016, Muniz owned and operated Royalty Tax Services. To inflate clients’ refunds, she prepared or caused her employees to prepare hundreds of fraudulent returns claiming false itemized deductions and fake Schedule C businesses and losses. Muniz then used prep numbers assigned to her employees to file the fraudulent federal returns. When employees questioned Muniz about her practices or her use of their numbers, she fired them.
The total loss to the U.S. exceeded $1.6 million.
Muniz, who pleaded guilty in August, was also ordered to pay $1,615,143 in restitution to the United States.
Kansas City, Missouri: Kathleen Frederico, 52, has been sentenced to two years and three months in prison, and been ordered to pay $546,603 in restitution for embezzling from a health care foundation.
Frederico was the accounting and special projects manager at Saint Luke’s Foundation, a nonprofit supporting Saint Luke’s Hospitals and Health Systems from May 1999 until she was fired in February 2018.
Frederico, who pleaded guilty to wire fraud in June, admitted that she conducted two related schemes over 14 years. An auditor found that Frederico had embezzled nearly $1.2 million. Because bank records were unavailable for the earliest years, the government’s evidence is that Frederico stole at least $546,603.
She began embezzling in 2003 and continued until March 2017. Investigation revealed that Frederico’s spending of the embezzled money included more than $150,000 on shopping and retail; more than $67,000 in cash; more than $30,000 in travel; more than $21,000 in Internet purchases to support her illegal drug habit; and mortgage payments, utility bills and other living expenses.
Frederico created unauthorized checks made payable to herself. To conceal the embezzlement, she entered a different payee into the GL and created or falsified invoices. She also created unauthorized checks in which the foundation paid her personal credit card bill, and, on two occasions, a relative.
Trenton, New Jersey: A preparer, her husband and a co-conspirator have been sentenced to prison or face prison after pleading guilty for their roles in a scheme in which they stole hundreds of thousands of dollars by filing false returns with Hawaii state tax authorities.
They tried to steal more than $400,000; the actual loss was $246,667. Twelve other defendants face probation and prison in a related investigation involving tax fraud against New Jersey.
The defendants are preparer Mylove D. Tetterton, 45, of East Orange, New Jersey, who led the scheme and who faces 12 years in prison. Her husband, Anthony Hodges, 44, was sentenced to five years in prison.
Tetterton pleaded guilty in April to money laundering and trafficking in personal ID information in the Hawaii case. She also pleaded guilty to a separate accusation charging her with theft by deception and misconduct by a corporate official in connection with tax fraud against New Jersey and the U.S. from 2012 to 2015.
Tetterton filed fraudulent returns on behalf of her clients to obtain New Jersey refunds. She is responsible for restitution to New Jersey of $56,592 and restitution to the IRS of $22,542. She faces five years in prison on those charges, concurrent to the longer sentence for the Hawaii scheme.
Tetterton owned and operated Mylove’s Tax Service. She filed 65 fraudulent Hawaii returns for tax year 2013 for individuals who never resided in or earned wages in Hawaii. She used personal ID information that was obtained from co-conspirators or stolen, including personal information of people who were deceased. Tetterton used much of the stolen money to gamble in Atlantic City.
She had the refund checks sent to addresses associated with her or her co-conspirators. She cashed only a few checks herself but directed her co-conspirators to cash or deposit the checks and turn over a large share of the money to her. Hodges collected the proceeds of the refund checks from the other co-conspirators, who included relatives and friends of the couple.
In addition to other defendants in the case, Constantine Kunaka, 27, of Jersey City, New Jersey, faces three years in prison. He pleaded guilty in February in a related investigation charging him with receiving stolen property and filing fraudulent returns with New Jersey. He must pay $238,693 in restitution.
Upper Marlboro, Maryland: DiAnte Eugene Yawn, 41, has pleaded guilty to one count of theft greater than $100,000.
Yawn has been sentenced to five years in prison (all but six months suspended) and three years of supervised probation and is prohibited from acting as a preparer while on probation.
From 2014 to 2016, Yawn, who was not a registered preparer in Maryland, prepared and filed state income tax returns, for a fee, on behalf of numerous Maryland residents. Many of the returns included false information that reduced clients’ state tax liabilities and inflated refunds. The returns contained false entries concerning business income and loss, dental and medical expenses, unreimbursed medical expenses, educational expenses, false reported prep fees and a false W-2.
Tucson, Arizona: Former resident Van Raymond Brollini, 70, has been found guilty of tax evasion, corrupt interference with tax administration and four counts of failure to file a return.
Brollini, a former engineer at National Semiconductor Corp., evaded payment of taxes from 2002 through 2004 and failed to file a return for four consecutive years.
Sentencing is Jan. 29. Tax evasion carries a maximum of five years in prison, a $250,000 fine or both. Corrupt interference with tax administration carries a maximum of three years in prison, a $250,000 fine or both. Failure to file carries a maximum of a year in prison, a $100,000 fine or both.
Jacksonville, Florida: Preparer Nicole Johnson has been sentenced to two years in prison for aiding and assisting in the filing of a false return.
Johnson, who pleaded guilty last year, owned and operated Financial Asset Tax Service, and during tax years 2014 through 2017 prepared more than 1,900 returns for individuals in which she falsified deductions and credits. As a result, the IRS issued more than $1.3 million in undeserved refunds. Johnson was ordered to repay that amount to the IRS in restitution.
Minneapolis: Preparer Lessie Beatrice Lindsey, 37, has been sentenced to a year and a day in prison for falsely claiming $1,151,585 in refunds.
Between January 2013 and March 2016, Lindsey, who pleaded guilty last June, operated in Minneapolis and Chicago and charged individual taxpayers a fee to prepare and file federal income tax returns.
Lindsey prepared some 192 fraudulent returns that claimed approximately $1,151,585 in refunds. She caused the U.S. Treasury to pay $995,966 to her clients.
Orlando, Florida: Business exec David Martin Golloher has been sentenced to three years in prison for wire fraud, tax fraud and bankruptcy fraud.
Golloher, who pleaded guilty in August, was president and CEO of OATH Corp., a bullet manufacturer. Golloher recruited investors in OATH and defrauded one of nearly $70,000 by embezzling funds intended for corporate use. Golloher defrauded another of more than $40,000 by convincing him to purchase the rights to an “exclusive distributorship” that did not actually exist.
For six quarters in 2015 and 2016, he collected federal payroll taxes on behalf of OATH employees but failed to pay over that tax. Golloher also failed to pay over OATH’s payroll tax obligations, resulting in a tax loss of more than $458,000.