Uniform code of justice; in the rough; color them busted; and other highlights of recent tax cases.
Alexandria, Virginia: CPA Endalkachew Asfaw has pleaded guilty to aiding and assisting in the filing of a false return and causing at least a $250,000 loss to the Internal Revenue Service.
Asfaw has operated Endalk and Yohannes Associated LP with a business partner in the District of Columbia since 2011. From 2016 through 2019, Asfaw and the business partner prepared approximately 10,000 returns.
Asfaw prepared false income tax returns for years 2015 through 2017 for clients by overstating unreimbursed employee business expenses, including for uniforms and unreimbursed mileage expenses. He also admitted to creating fraudulent Schedule C expenses and deducting undeserved exemptions.
Sentencing is Nov. 17. The charge carries a maximum of three years in prison and potential financial penalties. Asfaw has agreed to pay restitution to the U.S.
St. Louis: Attorney Nicholas Franke has been sentenced to two years in prison to be followed by two years of supervised release after pleading guilty to one count of tax evasion.
Franke operated a solo law practice that generated business revenue. He paid himself from those proceeds and filed extension requests for 2013 to 2015, stating zero taxes were due or owed. Franke knew that those statements were false and then failed to file returns for those years. He failed to pay more than $300,000 in taxes.
Meridian, Idaho: Resident Scott Koritansky has been sentenced to 18 months in prison for income tax evasion.
From 2004 through 2010, Koritansky, who previously pleaded guilty, earned combined income exceeding $500,000 but did not pay taxes in those years. After IRS investigators notified Koritansky that he owed tax for those years, he took numerous steps to conceal his income and evade his tax obligations.
Koritansky never maintained his own bank account but deposited his business income into the accounts of others and directed them to make purchases on his behalf and to pay his own personal expenses using funds in the bank accounts of these third parties.
He was also ordered to serve three years of supervised release after his incarceration and to pay $356,676 in restitution to the IRS.
Fairport, New York: Resident Michael Bartusek has been sentenced to two years in prison for wire fraud, money laundering and filing a false return.
He admitted that from the summer of 2015 through the end of 2016, he defrauded his employer of some $776,000 that he then invested in a high-risk scheme to purchase and sell diamonds from overseas, hoping to profit personally from their sale and return the money he stole from his employer before his fraud was discovered. The diamond investment failed and the money was lost.
Bartusek also admitted that, as part of his diamond scheme, he and two others solicited investments for a company called Integra Diamonds by making phony representations to recover investment funds that had been lost, including the money Bartusek stole from his employer.
Bartusek also filed false returns for tax year 2015 and underreported his total income that tax year by some $123,000; he also underreported his total income for the 2016 tax year by some $46,000.
He was also sentenced to a three-year term of supervised release to begin following his term of imprisonment and to pay $973,922 in restitution to his victims.
Miami: Area tax preparer Milagros Espinal has been held in contempt for violating a permanent injunction that barred her from preparing, filing or assisting in the preparation or filing of federal returns for others.
The U.S. filed a complaint against Espinal in 2011 that alleged that she had prepared returns for customers that claimed deductions for fraudulent medical expenses, charitable contributions and unreimbursed employee business expenses. IRS review of returns she prepared uncovered errors in 97% of the returns examined. The parties contemporaneously filed a consent order, in which Espinal agreed to a full bar on tax return prep. On Feb. 16, 2011, the court issued a permanent injunction.
On Dec. 29, the United States filed a motion for an order to show cause, requesting an evidentiary hearing and alleging that Espinal was in contempt. According to the motion, during a deposition in an unrelated civil case, Espinal testified that her profession was “income tax, taxes.” The motion alleged that a subsequent Department of Justice investigation revealed that Espinal had continued to prepare fraudulent returns, that she had never stopped doing so and that she continued to act as a “ghost” preparer. The court granted that motion.
The court found that Espinal had continued to prepare returns notwithstanding the injunction and that returns Espinal filed in violation of the injunction contained numerous fraudulent claims. In particular, the order concludes that Espinal frequently fabricated fuel tax credits and that she included more than $269,095 in fabricated or overstated deductions on the returns.
The court will sanction Espinal on a later date.
Garden Grove, California: Business owner Young Hoon Om, 63, of Seal Beach, California, has pleaded guilty to filing false returns, resulting in a loss of nearly $400,000 to the U.S. Treasury.
From at least 2016 to 2019, Om, the owner of Major Painting Co., a painting-service company, used a nearby check-cashing facility to cash more than $1.6 million in checks he received from his clients.
Over the same period, Om failed to disclose on his individual income tax returns all the income he earned, reporting only $972,150 in gross receipts earned through his business. For example, in 2020, Om reported a total income of $281,135 on his individual federal income tax return for 2019 when he knew he had earned approximately $617,540 in additional income.
He admitted to underreporting his income by tens of thousands of dollars for each of the tax years 2016 to 2019.
Chicago: A federal court has permanently enjoined tax preparer Lennette Roberts and her company, Real Counseling Solution Inc., which did business under the name RR Tax and Accounting, from preparing returns for others and from owning or operating a tax prep business in the future.
The civil complaint in the case alleged that Roberts prepared fraudulent federal income tax returns. According to the complaint, the defendants prepared returns that made false and fraudulent claims including false itemized deductions; fabricated losses for non-existent businesses; false or inflated Earned Income Tax Credits; and false head-of-household filing statuses.
Roberts and her company consented to entry of the injunction, which permits the U.S. to conduct full post-judgment discovery to monitor compliance. The order requires that Roberts send notice of the injunction to each person for whom she and her company prepared federal returns, other tax forms or claims for refund after Jan. 1, 2018. Roberts must also post an electronic copy of the injunction on any business social media profile currently maintained or created over the next five years.
Lilburn, Georgia: A federal jury has convicted Marquet Antwain Burgess Mattox of filing fraudulent returns amounting to nearly $165 million in the name of several fake trusts.
Between 2016 and 2018, Mattox filed at least 30 fraudulent federal income tax returns in the name of at least 11 different trusts. Those returns falsely represented that the trusts had earned interest income and that federal income taxes had been withheld and paid to the IRS. He then fraudulently requested refunds on behalf of the purported trusts totaling nearly $165 million.
The IRS paid approximately $5 million of the refunds, which Mattox used to purchase a house, expensive furniture and a luxury automobile.
Mattox (a.k.a. Marquet Antwain Burgess Mattox El, Marquet Burgess Mattox, Asim Ashunta El and Asim El Bey) was found guilty of nine counts of wire fraud, 10 counts of false claims against the U.S. government and one count of theft of government funds. He faces a maximum of 20 years in prison on the wire fraud counts, five years on the false claims counts and 10 years on the theft of government funds count. He also faces a period of supervised release, restitution, monetary penalties and forfeiture.
