Tax Fraud Blotter: Boosted and busted
No Silver Lining; $7 million in bogus credits; deducting bribes; and other highlights of recent tax cases.
Jacksonville, Fla.: Preparer Adrian George has been found guilty of conspiring to commit wire fraud and aiding in the preparation and presentation of fraudulent federal returns, as well as multiple counts of aiding in the preparation and presentation of fraudulent returns.
According to testimony and evidence, George owned and operated Professional Tax Service South, a prep firm where he taught employees various ways to include false information in returns to ensure that his clients received large refunds.
At his direction, George’s employees offered to prepare fraudulent or “boosted” returns for clients in exchange for cash payments from the proceeds of the illegitimate refunds. After being in business for less than two years, George and his employees had prepared and filed 748 tax returns for clients — all of which requested a total of some $3.2 million in refunds.
George faces a maximum of 15 years in prison.
Dayton, Ohio: Preparer David Hill, 34, has pleaded guilty to two counts of filing false federal returns, according to publishing reports.
According to cited court documents, Hill claimed false education credits, status information, business income and dependents information for clients; he also prepared and submitted false returns that inflated refunds.
Part of the investigation reportedly showed that Hill did not list himself as a paid preparer and wrote personal checks or used cashier’s checks to his clients for their refund and removed his fee. Hill didn’t claim the fees, news outlets said, and submitted false returns in 2011 and 2012, which investigators said resulted in another tax loss of more than $10,360.
Hill agreed to pay more than $120,000 back to the IRS, reports said, adding that he could face three years in prison and up to a $250,000 fine.
St. Joseph, Mo.: Dinorah Lynn Stoll-Weaver, 50, owner and operator of Homeward Bound Health Services, a home health provider, has been sentenced to two years in prison without parole for leading a $1.5 million tax fraud scheme.
She was also ordered to pay $1,493,991 in restitution to the government.
Beginning in 2001, Stoll-Weaver and her sister and co-defendant Dawn Langlais (formerly Ankrom-Brown), 60, helped operate the business. Between 2001 and 2010, Homeward Bound collected employment taxes from employees but did not pay them over to the IRS.
The IRS notified Homeward Bound as early as 2004 that employment taxes were not paid. Investigators had regular contact with Stoll-Weaver, yet from 2004 to 2009 Homeward Bound failed to pay $326,209 in employment taxes it had withheld from employees.
Stoll-Weaver and Langlais converted Homeward Bound into Silver Linings in 2010, using their parents as straw owners and operators. From 2002 to 2012, Homeward Bound/Silver Linings withheld and failed to pay a total of $1,459,727 in Social Security, Medicare and federal income tax. Stoll-Weaver also withheld employees’ IRA contributions, medical and dental insurance payments and child support, and kept those withholdings as income for herself and other relatives.
Two employees filed lawsuits against Homeward Bound for money that the company withheld from their paychecks, such as for child support, but did not pay as obligated. Stoll-Weaver retaliated against one of the employees by firing her; when the employee filed for unemployment benefits, her request was denied because Homeward Bound had not paid unemployment taxes.
Over the years, Stoll-Weaver represented to the IRS that the business was losing money. Each of the principal employees, including Stoll-Weaver and her husband and co-defendant, Thad Weaver, 46, paid themselves well in both reported and unreported income, however. From 2007 to 2012, Stoll-Weaver earned a total of $579,674 in unreported income and during the course of the conspiracy filed false income and expense reports with IRS Collections regarding her outstanding tax debts.
Langlais also pleaded guilty to failing to pay over employee payroll taxes to the IRS and was sentenced on Jan. 30 to 18 months in federal prison without parole.
Langlais and Stoll-Weaver admitted they received income from Homeward Bound and Silver Linings, which they failed to report on their individual federal income tax forms and as a result underpaid their federal income taxes. Langlais willfully failed to make an income tax return or pay personal income taxes from 2010 to 2012, for a total personal tax loss of $56,860.
Weaver and Stoll-Weaver were married and filed individual income tax returns for 2010 through 2012; Stoll-Weaver filed a separate return in 2009. Their combined unreported income was at least $257,827. Weaver’s total personal tax loss was at least $27,488. Stoll-Weaver’s personal tax loss was $34,264.
Langlais employed her daughter, co-defendant Jennifer Sturgis, 39, at Homeward Bound and Silver Linings. Weaver and Sturgis each pleaded guilty to making false statements on a return and were sentenced to five years of probation.
Weaver and Sturgis admitted they received income from Homeward Bound and Silver Linings, which they failed to report on their individual federal income tax forms, and as a result, underpaid their federal income taxes. Sturgis willfully failed to make an income tax return or pay personal income taxes from 2007 to 2012, for a total personal tax loss of $148,347. Additionally, from 2009 to 2012, Stoll-Weaver, Weaver and Sturgis each claimed personal federal refunds while knowing that Homeward Bound and Silver Linings had not paid any federal income taxes.
Union, S.C.: Preparer Ashley Browning, 31, has pleaded guilty to preparing and presenting false returns.
Evidence established that Browning prepared and filed, and assisted in the preparation and filing of, multiple returns for paying clients from her home and from the homes of her clients. Browning repeatedly falsified information in returns she prepared to generate refunds.
For example, she repeatedly submitted false information about clients’ income, federal withholding and educational expenses. The government issued approximately $200,000 more in refunds than it would have if Browning had submitted accurate and honest information.
She faces a maximum fine of $100,000 and/or imprisonment for three years, supervised release of one year and a special assessment of $100.
San Diego: A federal court has permanently barred Melissa Lang (formerly known as Melissa Ann Vega) from preparing federal returns for others.
In its complaint, the government alleged that Lang operated a tax prep businesses called “L&T Works” and fraudulently reduced clients’ tax liabilities by improperly claiming a variety of deductions and education tax credits. Specifically, the government’s complaint alleged that Lang caused to be filed returns that claimed fraudulent refunds of more than $9 million, which included approximately $7,020,020 in false education credits.
The complaint alleges that Lang filed, or caused to be filed though her associates and employees, approximately 4,194 false returns.
She agreed to the injunction order, which requires her to turn over to the U.S. a list of principals, managers, employees and independent contractors for her prep businesses. Lang has already pleaded guilty to conspiracy to file false, fictitious and fraudulent claims, tax evasion and aggravated ID theft.
New York: Rodolfo Quiambao, former president and CEO of the engineering and electrical design firm Rudell & Associates, was sentenced to 48 months in prison for federal programs bribery and tax evasion in connection with his scheme to pay bribes and kickbacks to supervisors at Consolidated Edison of New York in exchange for lucrative contracts and other benefits from the utility.
According to court filings and facts presented in court, starting in approximately 2000 Quiambao surreptitiously and regularly gave Con Ed supervisors hundreds of thousands of dollars in cash and checks in exchange for securing work, including lucrative “sole source” contracts, for his company. He also engaged in tax evasion by first concealing and then deducting the bribe payments he paid to the Con Ed supervisors as business deductions on his companies’ returns.
Quiambao was also sentenced to pay a $125,000 fine and more than $4.5 million in restitution to the IRS. At the time of his guilty plea in March 2016, Quiambao agreed to forfeit $1 million in criminal proceeds.