Tax Fraud Blotter: Bad Lux
Disunion; 13 grand in cigars; ‘til theft do us part; and other highlights of recent tax cases.
Detroit: Gary Jones, former president of the international United Auto Workers union, has pleaded guilty to conspiring with other UAW officials to embezzle over $1 million of UAW dues money, to further racketeering activity, and to evading taxes.
Jones, of Texas, pled guilty to one count of conspiring to embezzle UAW dues money and conspiring to use a facility of interstate commerce to aid racketeering crimes between 2010 and September 2019. He also pled guilty to a separate count of conspiring to defraud the U.S. by evading the payment of taxes on embezzled funds and causing the UAW to file false returns.
Between June 2018 and November 2019, Jones served as the president of the International Union, United Automobile, Aerospace, and Agricultural Workers of America, which represents almost a million members in more than 600 local unions nationwide. Prior to serving as UAW president, Jones was the director of UAW Region 5 and a member of the union's International Executive Board from October 2012 through June 2018.
He admitted to conspiring with at least six other high-level UAW officials in a multi-year conspiracy to embezzle from the UAW, concealing personal expenditures in the cost of UAW Region 5 conferences in Palm Springs, California, Coronado, California, and Lake of the Ozarks, Missouri. Between 2010 and 2018, Jones and other officials submitted fraudulent expense forms seeking reimbursement from the UAW’s Detroit headquarters for expenditures supposedly incurred in connection with Region 5 leadership and training conferences. The conspirators actually used the conferences to conceal hundreds of thousands of dollars in UAW funds spent on lavish entertainment and personal spending, including golf clubs, private villas, cigars (including $13,000 worth in just one year), golfing apparel, green fees at golf courses, and high-end liquor and meals costing more than $750,000 in UAW funds.
Jones also pleaded guilty to assisting in a conspiracy to embezzle UAW funds from the UAW’s Midwest CAP, one of the union’s community action programs. Jones admitted to accepting more than $60,000 in cash from co-conspirator Edward Robinson, who cashed more than $500,000 in fraudulent UAW Midwest CAP checks and embezzled money from the UAW Labor Employment Training Corporation.
Jones also pleaded guilty to conspiring with UAW officials to impede IRS collection of taxes from Jones and other UAW officials. The conspirators also caused the UAW to file false federal returns.
Jones, the 14th defendant convicted in the ongoing investigation, faces up to10 years in prison and a fine of up to $250,000. (Under the terms of his plea agreement with the government, Jones is facing an advisory sentencing guideline range of 46 to 57 months in prison.)
He has agreed to forfeit his interest in $81,000 in a UAW Region 5 “flower fund” and money from a union political fund. He has also agreed to surrender a set of Titleist golf clubs and $32,377 in cash that was seized from a search of his residence.
Butler, Pennsylvania: A married couple has pleaded guilty to federal fraud and tax charges.
Stephanie J. Roskovski has pleaded guilty to one count of mail fraud and one count of filing a false income tax return. Scott A. Roskovski has pleaded guilty to one count of filing a false income tax return and one count of submitting a false loan application to a bank.
From April 2011 through December 2017, Stephanie Roskovski, while serving as the COO for Butler Health System, embezzled more than $1.3 million from her employer. She used her corporate credit card to make personal purchases that she disguised as business expenses, submitted falsified reimbursement requests claiming purchases she made on a personal credit card were for business, and obtained hundreds of merchant gift cards worth more than $350,000, falsely claiming they were for distribution to “focus groups” or physicians, and which she used for personal spending.
During that time, Scott Roskovski was a detective with the Butler County District Attorney’s Office, investigating financial crimes, including theft and fraud. The defendants spent most of the money on lavish vacations, renovations to their home, and the purchase and operation of a motocross track, Switchback MX.
They failed to report the fraud proceeds as income on their jointly filed annual federal income tax returns. After the couple lost their jobs, they also submitted a materially false loan application to S&T Bank to refinance the Switchback business and to purchase a bulldozer. S&T extended two loans, the first for $1,128,227 and the second for $55,384, based on the information.
Loss from the mail fraud against BHS totals some $1,331,884. Loss to the IRS is some $397,342.
Sentencing for Stephanie Roskovski is Oct. 5; sentencing for Scott Roskovski is Oct. 6.
As to the mail fraud conviction, they face up to 20 years in prison and a fine of $250,000 or twice the gross pecuniary gain. For filing a false statement on a loan application conviction, they face a maximum of 30 years and a fine of $250,000 or twice the gain. For filing a false income tax return, they face up to three years and a fine of $250,000 or twice the gain.
Naples, Florida: Preparer Ancelot Similien has been sentenced to 22 months in prison for preparing and filing false federal income tax returns.
Similien, who pleaded guilty in March, owned and operated the prep service D’Lux Tax, and for tax years 2013 through 2016 prepared and filed false and fraudulent 1040s for clients. The returns contained material falsities, including false Schedule C losses and false Schedule A deductions, to inflate refunds. Similien continued to prepare and file false returns even after suspension of his EFIN by using a number assigned to another.
He prepared a double set of returns, one for the IRS and one for his clients that did not show the false items reported on the returns filed with the IRS. Similien skimmed some of the refunds by retaining portions of the refunds for his personal use in addition to charging prep fees.
He was also ordered to pay $103,393 in restitution to the IRS.