Tax Fraud Blotter: Bait and Swiss

Broker busted; bad habits; home of the braid; and other highlights of recent tax cases.

Salinas, Calif.: Resident Jacqueline Ramos, a.k.a. Jackie Acosta, 49, has been sentenced to 60 months in prison on conspiracy and bank fraud charges.

According to court filings, Ramos conspired with her co-defendants to file false federal income tax returns seeking refunds. These returns reported fake wages and fraudulently claimed dependents, education expenses and tax credits. Ramos and her co-conspirators directed the fraudulently obtained refunds into bank accounts they controlled; the returns sought more than $1.6 million in federal refunds.

On July 13, 2017, a federal grand jury indicted Ramos and four of her co-conspirators, charging them with conspiring to submit false claims against the U.S. Ramos and her husband, Antonio Ahumada Rivas, were also each charged with two counts of bank fraud.

On Oct. 17, Ramos entered a guilty plea to the conspiracy count and two counts of bank fraud. On Nov. 14, co-defendant Norma Morfin Mandujano was sentenced to 30 months in prison for conspiracy. Rivas was slated to be sentenced in late March and co-conspirator Ana Bajo in early April.

Ramos was also ordered to pay $1,641,610 in restitution and was ordered to serve three years of supervised release.

Yeadon, Pa.: Preparer Deron Joe has been sentenced to a year and a day in prison and three years of supervised release for filing false returns and conspiring to defraud the United States.

On Oct. 12, Joe was found guilty of one count of conspiring to defraud the United States by preparing and filing false returns and 11 counts of aiding and assisting in the filing of false returns for the 2007, 2008 and 2009 tax years.

Court documents and evidence showed that Joe co-owned and operated Edron Tax Professionals with a co-conspirator. From 2007 through 2010, Joe and his co-conspirator prepared returns for clients that falsely claimed employee business expenses and other unwarranted deductions, inflating clients’ refunds by thousands of dollars. Joe prepared the false returns with inflated refunds to grow his clientele.

Las Vegas: Real estate broker William Waller Jr., who failed to file federal income tax returns for nearly 20 years and attempted to evade more than half a million dollars in income taxes, has been convicted of one count of attempting to evade the payment of federal income taxes of more than $500,000 for the years 2004 to 2009 and two counts of failing to file his 2011 and 2012 income tax returns.

According to the evidence, Waller, after filing his return for 1998 reporting zero income, failed to file federal individual income tax returns for almost two decades. He concealed his real estate income from the IRS with various methods, including using bank accounts in the name of a business to receive his commissions and pay his personal expenses, drawing substantial amounts of cash from those accounts and borrowing against a piece of real property he owned to eliminate his equity in the property. For example, despite earning income of more than $400,000 in 2011 and $170,000 in 2012, Waller filed no returns in those years.

He faces a maximum of five years in prison for the tax evasion count and one year in prison on each failure to file a return count, as well as a period of supervised release, monetary penalties and restitution. Sentencing is June 21.

Hands-in-jail-Blotter
hand in jail

West Haven, Conn.: Pavan Vaswani, 40, a citizen of India, has been sentenced to 18 months in prison, followed by two years of supervised release, for his role in a scheme to defraud Connecticut of more than $5.8 million in taxes due on tobacco products imported into the state.

According to court documents and statements in court, Connecticut imposes tax on tobacco products imported into the state for distribution within the state. Tobacco amounts purchased and taxes due are reported on Form OP-300, which must be filed with the Connecticut Department of Revenue Services.

For several years until 2012, Rishi Malik and a partner operated Connecticut Discounts LLC, a tobacco wholesale business in Bridgeport. Through that company, Malik obtained tobacco products from out-of-state suppliers and distributed the products to a network of clients who offered tobacco products for retail sale. While operating Connecticut Discounts, Malik caused OP-300s to be filed with the Department of Revenue Services that underreported the amount of tobacco he imported into the state.

In June 2012, Malik sold Connecticut Discounts to Vaswani. Vaswani, with Malik’s assistance, continued the tobacco wholesale business under the name KDV Discounts LLC. Between January 2013 and April 2017, KDV acquired almost $12 million in tobacco products, primarily cigars and other products, from suppliers in Pennsylvania, and distributed these products to hundreds of customers in Connecticut that stocked tobacco products for retail sale. On the OP-300s that Vaswani filed on behalf of KDV, the amounts reported were a fraction of what KDV actually acquired. Through this scheme, Vaswani failed to report approximately $5,821,057 in tax to the State of Connecticut.

In 2014, Malik registered Discount Deals, LLC, with an address in Sciota, Pa. Malik held out Discount Deals to be a tobacco distribution business. The unit he rented was not a space for a legitimate tobacco business, however, and was maintained to create the appearance that Discount Deals was a legitimate Pennsylvania-based tobacco wholesaler. Between 2014 and at least April 2017, to subvert other federal regulations regarding interstate transport of smokeless tobacco, Malik used Discount Deals to purchase more than $1.1 million in smokeless tobacco products from Pennsylvania suppliers. A substantial amount of these products were provided to KDV for distribution in Connecticut. Discount Deals made no tax payments to Connecticut between 2014 and 2017, and some $400,000 in smokeless tobacco tax was unreported to Connecticut or other states.

Vaswani and Malik were ordered to pay $5,821,057 in restitution.

On Aug. 21, Vaswani pleaded guilty to one count of conspiracy to commit wire fraud and to violate the Contraband Cigarette Trafficking Act and one count of wire fraud.

Malik, 46, a citizen of India residing in Fairfield, pleaded guilty to the same offenses on Oct. 30. On Feb. 13, he was sentenced to 36 months in prison. Malik faces immigration proceedings when he completes his prison term.

Milwaukee: Preparer Karen Tompkins has been sentenced to a year and a day in prison and ordered to pay $384,528 in restitution for defrauding and conspiring to defraud the United States by preparing and filing false returns.

According to the plea agreement, Tompkins and her co-conspirators were employed as preparers at a branch of Liberty Tax Services. Tompkins was the office manager of that branch, and she and her co-conspirators artificially inflated claimed income, typically by inventing Schedule C business income for non-existent business such as hair-braiding or dancing businesses. They also claimed false W-2 income and Additional Child Tax Credits. In return for these inflated tax refunds, Tompkins and her co-conspirators received kickbacks.

Mount Pleasant, Mich.: Former resident James D. Pieron Jr. has been found guilty of one count of evasion of payment of his federal income taxes for 2008 and 2009.

Pieron, a U.S. citizen, operated a foreign currency exchange business in Zurich before he moved back to Mount Pleasant in 2009. He earned capital gains on a stock sale while living in Switzerland and wired millions of dollars from Swiss bank accounts to business accounts of his corporate interests in Mount Pleasant.

Pieron filed his 2008 and 2009 personal income tax returns in 2011, reporting capital gains from his sale of stock but without paying the taxes he owed on those gains. Instead, Pieron kept his personal money in his business accountants and purchased luxury items such as an $18,900 custom motorcycle, a $38,000 Steinway piano and a $139,500 Mercedes SUV.

In 2012, Pieron submitted an installment agreement request to the IRS, acknowledging that he owed $444,880 in taxes for 2007, 2008 and 2009 and claiming that he could only afford to pay $1,500 per month to get current on his taxes.

The maximum penalty for tax evasion is five years of imprisonment and a fine of twice the gain or loss. Sentencing is June 20.

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