Tax Fraud Blotter: Car trouble
Just enough false income; fraud from inside a sex-offender program; payroll perp; and other highlights of recent tax cases.
Charlotte, N.C.: Preparer Shawanda Elmore, who owned and operated C and W Tax Professionals, has pleaded guilty to aiding and assisting in the preparation of a false return.
According to court information, from 2011 through 2017 Elmore inflated clients’ refunds with false education credits, false itemized deductions and phony businesses expenses. She caused a tax loss to the IRS of more than $500,000.
Elmore faces a maximum of three years in prison, as well as supervised release, restitution, and monetary penalties.
Odessa, Texas: Preparer Markinson Auguste has received two years in prison for a scheme to defraud the IRS.
In April Auguste, owner of YeYe Tax and Multi Services, pleaded guilty to one count of aiding or assisting in the preparation of a fraudulent federal income tax return, admitting to preparing hundreds of fraudulent returns from 2012 and 2016.
According to court records, Auguste’s scheme involved adding just enough false income to the lower-income returns so clients would qualify for higher Earned Income Tax Credits. He benefited through both the prep fees and receiving a portion of the fraudulent refunds as a kickback. Auguste also claimed unauthorized dependents on other fraudulent returns to increase refunds and then directed those refunds into bank accounts that he controlled.
Auguste was also ordered to pay a $10,000 fine as well as $251,942 in restitution to the IRS.
Central Islip, N.Y.: Harold and Bruce Bendell, former senior managers of Major Automotive Companies (d.b.a. Major World) have pleaded guilty to filing a false corporate return that underreported income and inflated expenses.
Major World operated automobile dealerships in New York and throughout the metropolitan area. As stated in the charging and plea documents, on or about mid-2010, the Bendells filed a Form 1120 for 2009 that failed to report approximately $1,417,814 in gross receipts, as well as some $2,116,000 in cash payroll expense for which Major Automotive did not pay payroll taxes.
Prior to their guilty pleas, the defendants paid over $3,888,267 in restitution to the IRS and resigned from Major World.
When sentenced, each faces a maximum of three years in prison.
Coral Springs, Fla.: Retailer Nestor Bastidas, 53, of Coral Springs, has been sentenced to a year and a day in prison for conspiring against the IRS with respect to excise taxes on tires.
According to documents and information provided to the court, Bastidas owned and operated The Fat Tires, a tire retailer.
Under federal law, tires marked for highway use are subject to federal excise tax for which a tire importer is liable when the tires are sold. The importer typically passes on the cost of the excise tax to customers and tire retailers; the law does provide for a refund of the excise tax if tires are exported overseas rather than sold domestically.
Bastidas purchased taxable tires from Banlu Inc. and Banlu Tires Inc., tire importers owned by co-conspirator Angel Gomez.
Bastidas then purchased false bills of lading from International Trade-Logistics Services, a logistics company owned by another co-conspirator, Luis Gomez.
The false bills of lading purported to show that the tires were exported offshore to the Dominican Republic and elsewhere.
Both co‑conspirators knew that Bastidas never exported tires. Bastidas gave Angel Gomez the false bills of lading and Gomez did not charge Bastidas the excise taxes due on the tires. Angel Gomez then filed false federal 720s that did not report the sale of the tires to Bastidas.
Bastidas also purchased tires from and submitted false bills of lading to other tire importers from February 2013 through June 2016. His submission of false bills of lading caused a loss to the United States of some $335,000.
Bastidas entered a guilty plea in April and has also been ordered to serve three years of supervised release and to pay $335,174 in restitution to the IRS. Luis and Angel Gomez also previously pleaded guilty and were scheduled to be sentenced in August.
Moose Lake, Minn.: Arthur Dale Senty-Haugen, 51, who since 1994 has been confined to the Minnesota Sex Offender Program, has been sentenced to 10 years in prison for orchestrating a years-long tax fraud.
According to the defendant’s guilty plea and documents filed in court, from early 2012 through late 2017 Senty-Haugen devised and participated in a scheme to file false federal income tax returns claiming fraudulent refunds on behalf of fellow clients of the MSOP. He prepared and filed the returns using the filers’ names and Social Security numbers, as well as false wage and federal income tax withholding information. Senty-Haugen enlisted other individuals not confined at MSOP in filing the fraudulent returns, as well as in collecting and transferring the stolen refunds.
He admitted to filing 92 fraudulent income tax returns for tax years 2011 through 2016, seeking more than $550,000 in undeserved refunds.
In 2000 and 2013, Senty-Haugen was prosecuted in state court on fraud-related offenses, and in 2004, while confined at MSOP, was indicted in federal court for tax fraud and sentenced to 57 months in prison followed by three years of supervised release. Senty-Haugen began his new fraud just two days after his supervised release expired.
Aliquippa, Pa.: Local resident Elaine Trombetta Neill has been sentenced to two years of probation, been ordered to perform 75 hours of community service and ordered to pay $30,223 in restitution on her conviction of filing a false return.
According to information presented to the court, Elaine Trombetta Neill is the sister of Nicholas Trombetta, the former founder and head of PA Cyber, an on-line cyber charter school. Elaine Trombetta Neill filed false personal returns which reported a large portion of the income of her brother on her personal return, thereby concealing it. The returns are also false in that they inflated the business deductions of Neill and a sham business called One2One.
Cotati, Calif.: Stanley Charles, 33, has pleaded guilty to preparing and presenting a false and fraudulent federal income tax return and filing a false amended federal income tax return.
Charles admitted to preparing and filing a fraudulent federal income tax return for two clients, a husband and wife, without their knowledge or permission. This return falsely reported that the couple had $8,000 in higher qualified education expenses. Charles also filed a Form 8888 directing the IRS to split the refund by paying $5,447 to the couple and the remaining $1,235 to his own bank account.
Charles also admitted to preparing and filing with the IRS his own false 2011 amended federal individual return, which falsely reported a $9,873 American Opportunity Credit though he knew the credit was no more than $2,500.
He also admitted that he prepared and filed an additional 428 fraudulent federal income return for 2009 through 2015 that sought tax refunds.
Charles was charged with one count of aiding and assisting in preparation and presentation of false returns and one count of filing a false return. Sentencing is Oct. 24; the maximum for each count is three years in prison and a fine of $250,000 plus restitution.
Atlanta: Accountant Stantisha Kemp, who embezzled more than $1.2 million dollars from her employer, has been sentenced to two years in prison, to be followed by three years of supervised release.
Authorities said that from 2007 to 2013 Kemp was a payroll and accounting manager of a company that developed medical technology. During that time, she embezzled money by falsifying payroll records sent to a third-party payroll processing company and instructing the processor to direct deposit funds into her personal bank accounts. Kemp falsely instructed the payroll processing company that a doctor (identified in case records as “Y.H.J.”) was a company employee and further instructed the payroll processing company to direct-deposit Y.H.J.’s salary payments into her personal bank accounts.
She concealed her scheme by preparing a set of fabricated internal payroll records that made no mention of Y.H.J., who had not been employed by the company since early April 2010. Nonetheless, Y.H.J.’s unauthorized salary payments were deposited into Kemp’s personal bank accounts until February 2013.
Kemp was also ordered to pay $1,253,287 in restitution.