Tax Fraud Blotter: Brazen attempts
Lost Horizon; crimes of Misdemeanor; Strachans plea; and other highlights of recent tax cases.
Shoreview, Minnesota: Preparer Olufemi Augustine Badejo has been found guilty of four felony counts of filing a false income tax return, four felony counts of knowingly preparing returns that were fraudulent or false, and one felony count of filing a false property refund claim.
Badejo operated the tax prep business New Horizon Investments, where he placed such false information as fraudulent business expenses and fake charitable contributions on clients’ returns to reduce their taxable income and increase refunds. Badejo also filed false income tax returns from 2014 through 2017 that failed to accurately state his taxable income, and filed a false property tax refund claim in 2016.
Badejo allegedly defrauded the state of more than $214,000 and allegedly owes more than $18,000 in tax, penalties and interest.
Each tax-related felony charge carries a maximum of five years in prison, a $10,000 fine or both. Sentencing is in November.
Dickson, Tennessee: Shannon C. Monzon, owner of a probation service, has pleaded guilty to three counts of failing to file a federal return.
Monzon owns and operates Misdemeanor Offenders Program, a private probation service that supervised probationers out of local courts. The service charged probationers a fee paid by cash, money order or checks. Misdemeanor also received payments from the contracting municipalities and counties. Between 2013 and 2018, the company received more than $708,000 in deposits into the business account. During that time, Monzon and her husband also received more than $617,000 in cash deposits into their joint personal bank account.
Monzon admitted that she did not file returns for 2008 through 2018 and caused a tax loss to the IRS of $396,002. She agreed to pay restitution in that amount. She faces up to a year in prison and a fine of up to $100,000 on each count when sentenced on Jan. 6.
Columbus, Ohio: Theresa R. Gregory of Mount Vernon, Ohio, and her daughter Tera L. Gore of Croton, Ohio, have each pleaded guilty to five counts of federal income tax evasion.
Between 2008 and 2017, Gregory and Gore evaded income taxes owed by Gregory. They also falsified documents to help Gregory purchase a second home in Florida, including a bank statement that claimed a bank account held nearly $2 million more than it did.
Since the 1990s, Gregory has earned income from multi-level marketing companies: She earned commissions and bonuses based on the volume of products she sold, as well as the volume of products sold by other individuals she recruited to be part of her distributor network. By 2012, her annual income exceeded $900,000. Between January 2009 through December 2017, Gregory earned some $17,498,680.55.
Gregory failed to voluntarily file personal returns and has paid no personal income taxes other than W-2 withholdings for more than 20 years. Since at least 1993 she has been the subject of several IRS civil examination and collection proceedings, during which the IRS conducted audits and filed substitutes for return and tax liens.
Gore knew that Gregory owed a substantial amount for personal taxes. The two worked together to conceal Gregory’s income and assets from the IRS, systematically moving assets, including businesses and bank accounts, out of Gregory’s name and into Gore’s. Between 2009 and 2017, they also used multiple accountants, moving on from individual preparers when deficiencies with recordkeeping and unwillingness to comply with requests were spotted.
Gregory spent her income on lavish personal expenses, including home furnishings and improvements, at high-end retailers, on cruises, on horses and horse shows, gifts for family members, a home in Florida and cars. Gore had bank cards for the bank accounts in her name and used them for a substantial amount of personal expenses for herself and her family.
The two also worked to alter, falsify and fabricate financial and other business documents for Gregory’s $1,115,000 second home in Florida; Gregory financed a portion of the purchase with a seller-backed mortgage to avoid any requirement to disclose returns. In one instance, Gregory gave the real estate agent documents that included a business bank account statement representing that the account contained more than $1.9 million; the account actually contained $3.21.
The combined total tax loss for the 1998 through 2006, 2008 and 2014 through 2017 income tax years was $3,759,889.11. Income tax evasion carries a maximum of five years in prison and a $250,000 fine.
La Grande, Oregon: Anndrea D. Jacobs, former office manager and bookkeeper for a medical practice, has pleaded guilty for devising a scheme to defraud her employer. She also pleaded guilty to filing a false personal income tax return, falsely impersonating an IRS employee, aggravated ID theft and bank fraud as a joint resolution for two criminal cases.
From 2011 until her termination in 2015, Jacobs used her position and access to the practice’s finances to steal money by, among other means, writing business checks to make payments on personal credit cards and to pay personal expenses. She prepared and maintained false records, overstating expenses and estimated tax payments. She also opened a business bank account in the name of the practice owner without his knowledge, deposited a business check payable to the Oregon Department of Revenue into her personal account and gave the practice owner falsified property tax statements.
She also convinced the owner to grant her limited power of attorney to handle the practice’s pending IRS collection action. In what authorities called “perhaps her most brazen attempt to conceal her embezzlement,” Jacobs created a fictitious identity as an IRS taxpayer advocate, a.k.a. Linda Gibson; established a phone number and voicemail account for the fictitious identity; and purported to assist the medical practice owner with his IRS collection issues while impersonating “Linda Gibson.”
Sentencing is Dec. 7. Jacobs has agreed to pay full restitution.
Los Angeles: Strachans SA in liquidation has pleaded guilty to conspiring with U.S. taxpayers and others to hide income and assets in offshore entities and bank accounts from the IRS.
The defunct financial services firm pleaded guilty to one count of conspiracy to defraud the U.S. and was sentenced to pay a $500,000 fine.
Strachans was an independent firm providing administration to offshore structures for clients residing in a range of countries, including citizens and residents of the U.S. The services provided included the formation of trusts and offshore companies, administration, bookkeeping and accounting.
Strachans also helped U.S.-based clients hide assets from the IRS and evade taxes by managing undeclared assets held by nominee sham entities belonging to the U.S.-based clients; facilitating frequent cash collections, knowing the clients had no intention of declaring the funds to the IRS; providing mechanisms for U.S.-based clients to access their undeclared offshore funds in a secret manner, including fake loans, fake consultancy agreements and dummy invoicing; and for some clients, held funds in the personal accounts of the firm’s shareholders to conceal the true beneficial ownership.
The firm cooperated with the investigation and the guilty plea is the result of the firm’s voluntary disclosure of its criminal conduct.
Chicago: Jeffrey R. Tobolski, the former mayor of the suburban village of McCook who also served as a Cook County Commissioner, has pleaded guilty to tax charges and to extortion conspiracy.
Tobolski admitted that during his tenures as mayor and county commissioner he agreed to accept multiple extortion and bribe payments totaling more than $250,000. One arrangement involved Tobolski scheming with a McCook police officer to accept cash payments from the owner of a McCook restaurant in exchange for Tobolski’s and the police officer’s permission to host events that involved the sale of alcohol. Conspiracy to commit extortion is punishable by a maximum of 20 years in prison.
Tobolski also admitted that he underreported his income on his tax returns for 2012 through 2018, costing the IRS at least $56,268 and the Illinois Department of Revenue at least $9,338. Filing a false return is punishable by up to three years.