Tax Fraud Blotter: Cleaning up
Two firms barred; very differently abled; pain in the neck; and other highlights of recent tax cases.
New Orleans: A federal court has entered a permanent injunction against Adrienne Robinson Thomas, d.b.a. AT Tax Services, barring her from preparing federal returns for others.
The government’s complaint alleged that Thomas prepared fraudulent returns for clients and filed false returns using taxpayers’ identifying information without their knowledge or authorization. As stated in the court’s order, the government’s complaint also alleged that Thomas unlawfully prepared federal returns that lowered clients’ federal taxes by claiming bogus Earned Income Tax Credits, bogus Child Tax Credits, false education credits and fabricated household employee income and withholdings. The order recites the government’s allegations that Thomas prepared fraudulent returns for taxpayers without the knowledge of those taxpayers, via identity theft.
Arvada, Colo.: Businesswoman Marlene Seo has been sentenced to a year and a day in prison for making and subscribing a false corporate income tax return.
According to court documents, Seo owned and operated the National Martial Arts Academy and, from 2011 through 2013 directed that income from the academy be deposited into bank accounts, which she did not disclose to her bookkeeper and accountants. Seo caused the 2011, 2012 and 2013 federal corporate returns for the academy to underreport gross receipts by some $650,000. She pleaded guilty in October to filing the academy’s false 2012 income tax return.
She was also ordered to serve a year of supervised release and to pay $238,350.70 in restitution to the IRS, as well as a special assessment of $100.
Berlin, N.J.: Mitchell Bleicher, 52, owner of a janitorial supply company, has admitted to submitting fraudulent bills to a customer and failing to pay taxes on the proceeds of his scheme.
He pleaded guilty to an information charging him with one count each of wire fraud, money laundering and income tax evasion.
According to case documents and statements in court, Bleicher was the owner and operator of Allied Materials, which sold janitorial and cleaning supplies, office and breakroom supplies, food service items, safety equipment and business printing and imprinted items. He admitted that between 2009 and April 2018 he submitted invoices to a company in Cherry Hill, N.J., that falsely listed products that Allied purportedly delivered to the company when, in fact, it hadn’t delivered them. Allied’s fraudulent invoices also inflated the number of products that were actually delivered.
Bleicher admitted that he paid a contractor working in the facilities department of the company who was responsible for the janitorial supplies. Once that contractor left, Bleicher continued his fraud with the contractor’s replacement and rewarded him with expensive dinners, taking him to professional sports games and providing him with expensive wines. Later, Bleicher recruited an employee of the company and gave her the fraudulent invoices to submit for payment.
Bleicher admitted that he used the money he got from the scheme — $1,917,381 — on such personal expenditures as Rolex watches, two Rolls Royce automobiles, two Subaru automobiles, motorcycles, home renovations and college tuition for his children.
Bleicher acknowledged that he failed to pay taxes on the money he received through the fraud. Although he filed federal income tax returns for 2011 through 2017, he did not report the money that he fraudulently obtained from the defrauded company, defrauding the IRS of $578,902 in tax revenue.
Sentencing is May 17. The count of wire fraud carries a maximum of 20 years in prison, the count of money laundering a maximum of 10 years in prison, and the count of income tax evasion a maximum of five years in prison. All the charges also carry a potential fine of $250,000.
Pittsburgh: Contractor Robert Alan Seth Sr., 58, has been sentenced to nine months in prison, to be followed by two years of supervised release, on his conviction for violating federal tax and Social Security fraud laws.
According to information presented to the court, Seth filed a false federal individual income tax return for the 2013 tax year by failing to report income from his general contracting business, RAS & Sons. As part of his guilty plea, he accepted responsibility for filing a false individual tax return for the 2012 tax year. He also accepted responsibility for failing to file personal income tax returns for 2008 through 2011 and 2013, as well as corporate income tax returns for 2008 through 2014 for RAS & Sons.
Seth was also ordered to pay restitution for back taxes of $173,390, plus interest, to the IRS.
Additionally, between January 2009 and July 2017 Seth fraudulently collected Social Security disability insurance benefits for himself and his minor child totaling $248,145.90, failing to report his employment activity as the owner and operator of RAS & Sons. Seth was ordered to pay $248,145.90 in restitution to the Social Security Administration.
Indianapolis: A federal judge has barred preparer Antonio Chappell and his company, G&A Tax Service, from filing or preparing federal returns for others or from owning, managing or doing paid or unpaid work for any other preparer, news outlets said.
Authorities said that the firm and its owner filed hundreds of fraudulent returns that cheated the government out of more than $1 million in tax revenue.
The injunction, reportedly issued earlier this year, follows a Justice Department complaint a year ago that sought to shut down G&A, but the defendants never responded to this action, according to court documents cited in reports.
Charlotte, N.C.: Preparer Shawanda Elmore has been sentenced to two years in prison for assisting in the filing of false returns.
According to documents and information provided to the court, from 2011 through 2017 Elmore owned and operated the tax prep business C and W Tax Professionals, where she fraudulently increased her clients’ refunds by preparing returns that claimed false deductions and reported income and expenses for fictitious businesses in order to claim the EITC.
Elmore prepared some 500 fraudulent federal returns that claimed more than $500,000 in false refunds.
Elmore was also ordered to serve a year of supervised release and to pay $517,738 in restitution to the IRS.
Bradley, Ill.: Chiropractor Joseph Mayotte, 72, of Kankakee, Ill., has pleaded guilty to wire fraud and failure to file returns.
Mayotte’s sentencing is June 7. The clinic’s former office manager, Constance Leadingham, had previously pleaded guilty to bank fraud and filing false income tax returns and was scheduled to be sentenced on March 1.
Mayotte admitted that from January 2007 to October 2015 he schemed to defraud Blue Cross/Blue Shield by submitting false billing claims. The claims were typically made on behalf of patients for whom his clinic had not provided any services or were made in excess of the actual services provided. Blue Cross/Blue Shield paid the clinic more than $250,000.
Mayotte used the money for his own benefit, further admitting that he failed to file federal income tax returns for tax years 2011 through 2014.
Leadingham, of Watseka, Ill., entered guilty pleas in 2017 to bank fraud and filing false income tax returns for tax years 2011, 2012 and 2013. She admitted that she participated in the scheme by submitting fraudulent billing claims to the company. Leadingham then wrote checks payable to herself from the clinic’s checking account in addition to her salary.
She stole more than $380,000, and admitted that she did not disclose the additional income for her tax filings in 2011, 2012 and 2013. The maximum for wire fraud is 20 years in prison; for bank fraud the penalty is up to 30 years in prison.