Tax Fraud Blotter: Checks in the mail
Preparer for illegal aliens pleads; wheat tricks; Ace goes down; and other highlights of recent tax cases.
Shirley, N.Y.: Former county legislator Fred Towle Jr., 52, has pleaded guilty to making and subscribing a false return for 2012 that underreported business income.
Towle was also sole owner of the company East Coast Marketing, which he used to, among other things, consult with political candidates and assist homeowners in expediting approvals for permits from various governmental entities in Suffolk County, N.Y.
According to court documents in the case, in 2012 Towle falsely reported no taxable income from businesses controlled by him, including East Coast Marketing, despite earning approximately $246,000 in taxable corporate income for that year.
Between tax years 2012 and 2014, Towle failed to declare approximately $1.2 million in income, resulting in a tax loss to the U.S. of some $307,427.
Towle faces a maximum of three years in prison and a fine of up to $250,000. As part of his plea, Towle agreed to pay $307,427 in restitution, the full amount of his tax liabilities.
Hamden, Conn.: Salesman Ira Malkin, 49, has been sentenced to six months in prison to be followed by three years of supervised release for tax evasion.
According to court documents and statements in court, Malkin worked as a principal salesman for Good Copy Printing Center Inc., a printing company in New Haven. He earned substantial commissions and GCP paid many of Malkin’s personal expenses.
With Malkin’s consent, GCP reduced his commissions by the amount of personal expenses the company paid, then reported to the IRS that Malkin had earned substantially less income than he truly earned.
Also, GCP handled printing jobs for Comcast, which included GCP mailing flyers and paying the postage with the expectation that the company would be reimbursed for that expense. Malkin had GCP pay the postage for the Comcast mailings, had Comcast reimburse him for the cost of the mailings and then had GCP reduce his earned commissions by the amount of postage paid by GCP. Through this arrangement, between approximately 2009 and 2012 GCP further under-reported Malkin’s income on filed W-2s.
Through this scheme, Malkin underreported more than $1.5 million in income and failed to pay $484,581 in federal income taxes.
Malkin, who pleaded guilty in February, has paid all of his back taxes but still owes the IRS more than $700,000 in interest and penalties.
During his supervised release, he must spend six months in home confinement and perform 200 hours of community service.
Fairfield, Ohio: Preparer Janet Benitez, 44, who prepared returns for illegal aliens and concealed her own income, pleaded guilty to filing a false income tax return, according to published reports.
Between January 2011 and October 2016, Benitez reportedly submitted returns on behalf of 23 illegal aliens seeking fraudulent refunds of at least $123,999. She also reportedly cheated on her own returns.
She not only failed to report her prep fees for tax years 2011 through 2015, reports said, but also filed false income tax returns in her name and her spouse’s name when she should have filed one return that combined their income, which would have resulted in tax due.
She has reportedly agreed to pay $265,839 in restitution to the IRS.
Filing a false income tax return carries a maximum of three years in prison and a fine of up to $250,000.
Peabody, Mass.: William Panousos, 67; his wife, Theodora Panousos, 65; and their son, Konstantinos Panousos, 39, current and former owners of Giovanni’s Roast Beef & Pizza, have been sentenced in connection with skimming cash receipts from Giovanni’s and failing to report the cash on their tax returns, avoiding payment of some $550,000 in taxes.
They each received three years’ probation, with the first 18 months confined to the City of Peabody, and were ordered to pay a fine of $150,000. They were also ordered to pay restitution of $549,883 to the IRS.
In November, all three pleaded guilty to one count of conspiracy to defraud the U.S. William Panousos also pleaded guilty to three counts of aiding and assisting in filing false corporate and individual returns. Theodora pleaded guilty to four counts and Konstantinos to two.
During tax years 2013 through 2015, the Panousoses skimmed some $2.8 million in cash receipts from Giovanni’s and did not deposit them into the business’ bank account or report them to their preparer. They diverted about $1.5 million of those cash receipts to their own personal use. They used the rest of the skimmed cash to pay some of their business expenses, including a portion of payments to suppliers and a portion of employees’ salaries. In addition, the defendants failed to report those cash expenses on their returns.
Whiting, Iowa: Farmer Kurt Neldeberg, 65, who filed false and fraudulent returns, has been sentenced to two years’ probation.
Neldeberg, who pleaded guilty in February, admitted that from at least 2009 through 2012 he failed to report some $315,512 in income from grain sales which resulted in more than $100,000 in unpaid taxes due and owing.
He admitted that he deposited proceeds from farm grain sales into personal bank accounts and failed to inform his bookkeeper and his preparer that he had done so. His farm receipts on Schedule F of his joint federal returns resulted in under-reported income for each of the tax years 2009 through 2012.
Neldeberg was also ordered to complete 120 hours of community service, to pay a $100 special assessment and to make full restitution to the IRS. Neldeberg previously posted a $125,000 cash bond to the IRS for restitution.
St. Louis: Prep-service operator Asmerom “Ace” Keleta, 33, has been sentenced to five years in prison for conspiring to defraud the U.S. through tax fraud and for preparing fraudulent returns.
According to court documents, Keleta operated University City Tax Service starting in 2012. He conspired with employees Miyoshi Lewis and Teklom Paulos to prepare fraudulent returns for clients, directing the employees to inflate refunds by listing false American Opportunity Credits and federal fuel tax credits, as well as by creating false Schedule C income to fraudulently maximize Earned Income Tax Credits.
Keleta also prepared false returns for clients and, as owner of University City Tax, received a percentage of clients’ inflated refunds.
He was also ordered to pay $662,645 in restitution.
Atlanta: A federal court has barred preparer Marjorie St. Jean and MarjorieStjeanLLC from preparing federal returns for others and owning or operating a prep business.
The court also ordered that St. Jean and MarjorieStjeanLLC disgorge $367,346.14, representing the gains for the preparation of returns making false claims.
The court found that St. Jean and MarjorieStjeanLLC, an entity owned by St. Jean through which she operates prep stores, prepared returns that included fraudulent claims for the EITC, often based on bogus dependents, fabricated business income and expenses or false filing statuses. The court also determined that St. Jean and MarjorieStjeanLLC systematically and routinely prepared returns that falsely claimed fuel tax credits, household help income, unreimbursed employee business expenses and self-employment income or expenses.