A roundup of some of our favorite recent tax fraud cases.
Nashville, Tenn.: Preparer Nicole Bond Hicks, 45, has been indicted on charges related to preparing and filing false income tax returns.
Hicks was charged with 14 counts of aiding and assisting in the preparation of false tax returns for other individuals and one count of interfering with the administration of the internal revenue laws.
According to the indictment, Hicks owned the tax prep business America’s Tax Table, and from approximately 2007 through 2011 she prepared and caused to be filed some 3,700 returns on behalf of clients. The indictment charges that she aided in the preparation of at least 14 false returns for others from January 2010 through March 2011.
The fraudulent returns inflated or created fictitious medical and dental expenses, cash charitable contributions, and fictitious unreimbursed employee business expenses.
If convicted, Hicks faces up to three years in prison and a $250,000 fine on each count.
Glendale, Calif.: Preparer Michael Joseph Calalang Cabuhat, 40, has been arrested on charges that he defrauded clients of his tax prep business by diverting refunds into his own accounts.
Cabuhat, a resident of the Hollywood Hills West neighborhood of Los Angeles and who refers to himself in online postings as “celebritytaxguy,” was arrested pursuant to a criminal complaint that charges him with wire fraud, aggravated ID theft and structuring financial transactions to evade reporting requirements. Cabuhat is half-owner of VisionQwest Resource Group Inc., which operates VisionQwest Accountancy Group and Icon Tax Group Inc., in Glendale.
According to case documents, Cabuhat defrauded his clients in at least two ways. In some instances, the client was given a copy of a return that showed a much smaller refund than on the return Cabuhat actually filed with the IRS on behalf of the taxpayer. Sometimes, Cabuhat would simply increase the amount of tax owed on the taxpayer’s copy of the return, decreasing the refund; other times he manipulated reported expenses on the filed returns to increase the refund.
Without the taxpayer’s knowledge, Cabuhat directed the IRS to deposit the small amount reflected on the taxpayer’s copy of the return into the taxpayer’s bank account and deposit the remainder into a bank account that Cabuhat controlled.
In other instances, according to the complaint, Cabuhat gave the client a copy of a return that falsely showed a tax due, but Cabuhat would file with the IRS a return that sought a refund. In these instances, Cabuhat would tell the taxpayer to make the “tax payment” directly to him so he could remit the payment to the IRS. In fact, Cabuhat allegedly kept the “tax payment” and directed the IRS to deposit the refund that the client should have received into a bank account that he controlled.
From 2010 through 2015, Cabuhat allegedly used this scheme to steal more than $1.2 million in refunds that should have gone to 144 clients.
In addition, in September of 2014 Cabuhat structured cash deposits to avoid federal bank reporting requirements. Specifically, he structured a $29,700 cash deposit into three separate transactions of $9,900 over seven days, allegedly to evade the reporting requirement triggered by cash transactions of more than $10,000. On the day after these structured transactions were completed, Cabuhat wrote a $24,500 check to purchase a Ferrari.
If convicted, Cabuhat faces a maximum of 27 years in prison.
New York – Preparer Alabi Gbangbala, a.k.a. Babatunde Alabi Babaia, 52, was sentenced to 18 months in prison followed by one year of supervised release and was ordered to pay $178,209 restitution to the IRS for preparing false federal income tax returns.
According to court documents and in-court statements, Gbangbala was the operator of Broadfield, a tax prep business on Staten Island. For tax years 2008 and 2009, he prepared false federal individual income tax returns for clients by, among other things, failing to report accurate exemptions, falsifying business receipts and losses on Schedules C and inflating or fabricating charitable contributions and unreimbursed employee expenses.
He also filed false tax returns for himself by underreporting his income for tax years 2008 through 2010.
Gbangbala pleaded guilty last June to one count of preparing a false return.
Kansas City, Kan.: Preparer Antione Dorsey, 38, has pleaded guilty to one count of preparing false tax returns.
Dorsey, owner of Day-1 Tax Service, admitted including false items on his clients’ income tax returns without their knowledge or authorization. He falsely inflated taxpayers’ incomes by falsifying gross receipts listed on Schedules C, apparently qualifying clients for the EITC. In other instances, Dorsey falsified itemized deductions on Schedules A to fraudulently increase refunds.
Dorsey caused fraudulent refund claims of approximately $74,400 to be made to the IRS and approximately $13,980 in fraudulent claims to be made to the Kansas Department of Revenue. Sentencing is June 27, when he faces a maximum of three years in prison and payment of restitution.
Nashville, Tenn.: Preparer Joshua Gotwe Chinamora, 37, of Plano, Texas, has been sentenced to 18 months in prison followed by three years of supervised release on charges of conspiracy and filing false tax returns. He was also ordered to pay $140,705 restitution to the IRS.
Chinamora pleaded guilty in November to two counts of an 11-count indictment charging him and co-defendant Moven Mpofu with conspiracy and preparing false returns. Chinamora admitted that between January 2007 and April 2010, he and Mpofu operated Acura Tax Service and prepared and e-filed some 58 false returns.
Each of these returns claimed false refunds from $1,400 to $7,600. False entries on the returns included filing status, moving expenses, medical expenses, gifts to charity, child and dependent care credits, education credits and dependent credits. Clients for whom Chinamora and Mpofu prepared and filed returns did not provide the defendants with the false information and did not know that the returns were falsely prepared.
Mpofu is currently a fugitive and his case remains pending.
Annapolis, Md.: State Comptroller Peter Franchot has suspended processing electronic and paper returns from four additional private preparers, bringing the total number of firms to 65 at 68 locations throughout the region and outside of Maryland.
The most recent action was due to a high volume of questionable returns received. Preparers or businesses notified of the action are Taxpoint Solution Accountants in Upper Marlboro, Md., Tax Care in Baltimore, ICS Group in Lanham, Md., and Tax Time (a.k.a. Speedy Tax Service) in Washington.
These suspensions follow four previous announcements in the past two months that the comptroller’s office halted processing returns from various preparers.
Suspicious characteristics detected on the returns included: business income reported when taxpayers did not own a business; refund amounts requested much higher than previous-year returns; inflated or undocumented, or both, business expenses; dependents claimed when taxpayer did not provide required support or care; inflated wages and withholding information; and inflated itemized deductions.
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