Tax Fraud Blotter: Bank job
Oh, Momma; investments and deductions; against the wall; and other highlights of recent tax cases.
Dallas: Preparer Shannon Tecoko Mays, 40, has been sentenced to prison for federal tax violations and failure to appear for his trial on that charge in early 2015.
Mays received 180 months in prison, of which 162 months were for the tax scheme and an additional or consecutive 18 months for the failure-to-appear felony.
Mays was indicted in 2014 by a federal grand jury charging him with conspiracy to commit wire fraud. He was released on bond pending trial and failed to appear for trial in January 2015, for which he was then indicted for obstruction of justice.
Mays pleaded guilty to the two felony indictments on October 2.
According to prosecutors, investigation began in 2012 in response to numerous complaints to state and federal authorities from citizens in Port Arthur, Anahuac, Nacogdoches and Lufkin, Texas, regarding income tax returns that were being fraudulently prepared on their behalf. Investigators learned that Mays was operating numerous offices across the U.S. under the name Syam Tax Services and Baby Momma Tax. The main office was in Dallas but Mays operated or sought satellite offices in numerous other locations, including Fort Worth, Texas; Houston; New Orleans; Memphis, Tenn.; Atlanta; Chicago; and Los Angeles.
According to information presented in court, he targeted individuals who were on disability or only received Social Security income, as they are generally exempt from having to file income tax returns and would be less likely to discover a fraudulent return filed on their behalf. Mays employed recruiters, paying them from $50 to $100 for every client they successfully brought into Syam Tax; many of the subsequently complaining taxpayers were told by the recruiters that they were receiving an economic stimulus payment from the government.
To avoid detection, Mays altered the taxpayers’ addresses and phone numbers on the returns so IRS calls or correspondence would not reach the taxpayers. The scheme also used e-deposits to ensure paper checks would not be mailed to the taxpayers.
For tax year 2011, Mays filed 4,226 returns claiming some $6 million in refunds. Of the returns filed, 3,887 of the returns fraudulently claimed an education credit. Some of the returns also claimed false Earned Income Tax Credits.
An injunction by the Texas AG’s office in 2014 recovered some $1,282,000 from Syam Tax Services accounts. One recruiter from the Port Arthur area, Diana Broussard McCoy, pleaded guilty to the conspiracy charge in 2015 and was sentenced to five years of probation. Another recruiter, Myra Jones, pleaded guilty in 2014 to impersonating an IRS employee and was also sentenced to probation.
Mays was also ordered to pay $1,121,202 in restitution to the IRS.
Winnemucca, Nev.: Preparer Thomas Michael Bidegary, 67, has pleaded guilty to conspiracy to commit tax fraud and theft of government money related to two separate criminal indictments. Preparer Ginger Bidegary, 58, who with Thomas Bidegary co-owned Winnemucca Tax and Bookkeeping Service, has also pleaded guilty for her role in the fraud.
According to court documents, beginning in at least 2009 and continuing through 2014 Thomas Bidegary advised clients that by making small “investments” into various businesses he owned, the clients could decrease their annual taxable income and increase refunds. As part of the scheme, after receiving checks from clients, Thomas prepared false tax forms for the corresponding tax year that included large fictitious business losses.
He caused a tax loss of some $259,880.
The maximum sentence is five years in prison for conspiracy to defraud the U.S., a term of supervised release, restitution, and monetary penalties.
In relation to a separate criminal case filed against Thomas Bidegary, he also admitted to preparing and filing an unauthorized return on behalf of an elderly woman in Battle Mountain, Nevada. After receiving the $12,500 tax refund, he deposited the check into a bank account which was then converted for his personal use.
The maximum for this offense is 10 years in prison, as well as a term of supervised release, restitution, and monetary penalties. Sentencing is January 29.
Ginger Bidegary admitted that from at least 2011 through at least 2013 she conspired to prepare and file fraudulent individual income tax returns on behalf of a client using a similar small “investments” scam. Again as part of the scheme, Ginger Bidegary prepared false tax forms for the corresponding tax year that included large fictitious business losses.
She caused a tax loss of some $39,588 for tax years 2011 and 2012. The maximum is five years in prison for conspiracy to defraud the U.S., as well as a term of supervised release, restitution and monetary penalties. Her sentencing is September 17.
Jonesboro, Ark.: A federal court has permanently barred Rachelle Eldridge-Bray from preparing federal income tax returns for others.
The complaint alleged that Eldridge-Bray prepared returns that understate clients’ income tax liabilities and overstate refunds. Eldridge-Bray unlawfully prepared federal returns with fabricated business income and expenses and bogus itemized deductions, according to the complaint.
Marietta, Ga.: Residents Raphael Menard, 33, and Leshanda Hunte, 34, have been sentenced to prison for running a refund scheme using the stolen IDs of disabled and elderly taxpayers and causing more than a $250,000 loss to the government.
According to prosecutors, the charges and other information in court, starting in 2011, Menard and Hunte ran a fraud that involved filing fraudulent federal income tax returns in the names of others. They targeted disabled and elderly victims who did not file income tax returns and would not report the theft of their IDs. Some of the returns were also filed using the IDs of people who had recently died.
Menard and Hunte used the stolen money to finance a lavish lifestyle, including travel and large retail purchases. The scheme unraveled after employees at Chase Bank noticed the suspicious deposits and froze the couple’s joint accounts.
This led Hunte to go to the bank and demand the release of the stolen money, telling bank employees that she was a tax preparer and the refunds belonged to her clients. In reality, none of the victims knew Hunte or Menard, and the defendants were not registered preparers.
In 2012, Hunte brought a relative to the bank who presented fake ID in the name of one of Hunte’s victims, causing the bank to release more than $8,500 in cash. Two days later, Menard attempted to pull off the same scheme but was arrested after bank employees spotted the fake ID. Menard’s arrest led to the seizure of the money that remained in the defendants’ accounts and launched an IRS investigation.
Menard, who pleaded guilty in January, has received 46 months in prison to be followed by three years of supervised release. Hunte has been sentenced to 30 months in prison to be followed by two years of supervised release. Hunte was found guilty in February.
The two were also ordered to pay $206,564.04 restitution to the government.
Cheyenne, Wyo.: Douglas Brendle, creator of Fitwall exercise equipment, has pleaded guilty to two counts of willfully failing to file his income tax returns and one count of making a fraudulent application for health-care benefits.
According to court documents, from 2008 to 2012 Brendle owned and operated Brendle Climbing Systems, which sold Fitwalls. In 2013, Brendle sold the rights to Fitwall to investors in exchange for nearly $1.5 million in payments during 2013 and 2014. Despite receiving this income, he failed to file individual income tax returns or pay income taxes in either year, resulting in a tax loss of $404,501.
Additionally, during 2013 and 2014 he fraudulently received health care benefits for himself and his family from Wyoming Medicaid. In December 2013, Brendle caused a false renewal application to be filed for Wyoming Medicaid, claiming his household had no income. During the two years, Wyoming Medicaid paid Brendle more than $20,000 in benefits to which he and his family were not entitled.
Sentencing is September 24, when Brendle faces a maximum of three years in prison, as well as a period of supervised release, restitution and monetary penalties.