Some of our favorite recent tax fraud cases.
Las Vegas: Preparer Rosherral Beverly has been indicted on 66 counts of preparing and causing the filing of false returns. According to the indictment, from approximately 2006 through 2011 Beverly, who was sole owner and preparer for the tax preparation and bookkeeping business RBTB, did fraudulent returns for her clients for the tax years 2008, 2009 and 2010. The tax returns included various false items, including charitable contributions, gambling losses, tuition deductions, education credits and job, travel and vehicle expenses. If convicted, she faces a maximum of three years in prison and a $250,000 fine for each count.
Chino, Calif.: Businessman Daniel William Porter has been sentenced to 55 months in prison and three years of supervised release for his role in a conspiracy to promote and sell fraudulent tax products, including a product called Tax Break 2000. As part of his plea agreement, Porter, who pleaded guilty to one count of conspiracy to defraud the U.S., agreed to cooperate with the government and assist with its ongoing investigation into entities and individuals involved in the sale and promotion of Tax Break 2000.
According to court documents, Porter conceived and designed Tax Break, purportedly an online shopping site. By at least November 2000 and continuing through at least July 2002, he conspired with others to promote and sell Tax Break to customers nationwide. Customers were told that purchasing Tax Break would allow them to claim legitimate income credits and deductions under the Americans with Disabilities Act by modifying the Web site each customer was provided to make it accessible to the disabled. The National Audit Defense Network charged $10,475 for the product to maximize the fraudulent tax credits and deductions that customers would claim on their federal income tax returns. In fact, the customers only paid between $2,000 and $2,695 for the product.
Porter sold Tax Break 2000 directly through Oryan Management and by contracting with other individuals and entities, including Donald Hicks, a preparer in Gladstone, Mo., and NADN in Las Vegas. Through Hicks and NADN, Tax Break was sold to thousands of customers.
Alan Rodrigues, NADN’s former general manager and executive vice president; Weston Coolidge, the former president of NADN; and Joseph Prokop, the national director of marketing for Oryan Management and a former NFL punter, were convicted in the District of Nevada for their roles in the sale and promotion of Tax Break 2000 in a separate criminal case.
On March 10, at the sentencing of Rodrigues, Coolidge and Prokop, the judge found that the intended tax loss to the IRS associated with the sale of Tax Break exceeded $60 million and that the fraud loss to customers who purchased the product topped $36 million. Rodrigues was sentenced to 72 months in prison, Coolidge to 70 months and Prokop to 18 months followed by 30 months of home confinement. All three were ordered to pay restitution of more than $35 million to customers of NADN.
Hicks, who promoted the fraudulent tax products in Missouri, pleaded guilty in a separate criminal case in that state.
Chicago: The federal government has filed to bar a retired firefighter from preparing federal returns for others. The civil complaint alleges that Irving Brown Sr., who operates Irving Brown Sr. Tax Services out of his home, prepares federal income tax returns for firefighters and other Chicago-area taxpayers that understate tax liabilities to inflate refunds.
The government alleges that Brown obtains inflated refunds for clients through the use of fraudulent EITCs, false charitable deductions and fake business expenses on a Schedule C. The suit alleges that the clients own no business or, if they do, the business-related expenses are false.
According to the complaint, Brown also frequently prepares returns claiming head of household filing status for ineligible clients. For other clients, the complaint alleges, Brown created false Schedule E expenses from fictitious rental real estate, and in some instances Brown prepared false invoices and receipts to substantiate false expenses.
The suit states that Brown prepared more than 2,000 returns since 2011 and that IRS examination of 94 of those returns reveals a total tax loss of more than $740,000. Based on the number of returns Brown prepared, the complaint alleges that his actions might end up costing the U.S. Treasury more than $1 million.
Jackson, Tenn.: Preparer Carol Munoz, 42, has been charged with 123 counts of fraud for preparing false and fictitious income tax returns.
Munoz, operator of Carol’s Income Tax Service, was indicted for preparing false and fraudulent tax returns, operating an unlicensed money transmitting business, and money laundering.
According to the indictment, between April 15, 2010, and April 16, 2013, Munoz prepared 123 fraudulent tax returns, nearly all of which claimed false dependents. The returns also claimed credits to inflate the refund, including the Child Tax Credit, Additional Child Tax Credit and Child Care Credit, for which the taxpayers did not qualify.
Charlotte, N.C.: Preparer Fitzroy E. Lawrence has been indicted for filing false returns. According to the indictment, for tax years 2008 through 2011, Lawrence aided and assisted in the preparation of hundreds of returns seeking fraudulent refunds totaling millions of dollars. Many of the fraudulent returns included false wages and false dependent information. Lawrence was charged with 15 counts of making false claims for refund and faces a maximum of five years in prison and a $250,000 fine per count.
Woodstock and Acworth, Ga.: Two local residents have been sentenced for involvement in a stolen-ID refund-fraud scheme.
Obi Emelogu, 51, of Woodstock, was sentenced to 45 months in prison to be followed by three years of supervised release and was ordered to pay $719,872 restitution, and Oloh Samuel, 33, of Acworth, was sentenced to 18 months in prison to be followed by three years of supervised release and was ordered to pay $146,179 restitution.
According to court documents and information, the pair stole identities to file fraudulent federal income tax returns. The scheme involved businesses located in Georgia, including S&O Accounting Services LLC, controlled by Samuel, and Xpress Auto Parts & Towing LLC and O.B. Consulting & Tax Services LLC, controlled by Emelogu.
In 2012, Emelogu filed hundreds of false federal returns that included fraudulent claims for refunds to be paid into his business bank accounts and into a bank account controlled by Samuel. Evidence established that additional false returns were also filed from overseas and the refunds were deposited into Samuel’s bank account.
At sentencing, the court found that the intended loss amount attributable to Emelogu exceeded $400,000 and that attributable to Samuel to more than $1 million.
Last fall, Emelogu pleaded guilty to conspiracy to defraud the U.S. and to aggravated ID theft. In December, Samuel pleaded guilty to conspiracy to defraud the U.S.
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