Tax Fraud Blotter: Crime ribs
Gone Postal; five down in fraud; “saves me a lot of taxes;” and other highlights of recent tax cases.
Houston: Preparer Yomi Michael John has been sentenced to 12 months and a day in prison for willfully aiding and assisting in the preparation and presentation of a false U.S. individual tax return.
According to court records, John, who pleaded guilty in May, operated the prep business “Postal Tax Services” during calendar years 2010 through 2012. He admitted that he willfully added numerous false deductions, credits and business losses to 61 client returns without their knowledge to inflate refunds some $214,413.
According to the plea agreement, John’s motive was to build and maintain a reputation for getting large refunds to increase his client base.
He was also sentenced to a year of supervised release and ordered to pay $212,853 in restitution to the IRS.
Hendersonville, Tenn.: Preparer Victor Oliva, 40, has received 18 months in prison to be followed by three years of supervised release.
Authorities said Oliva is the final defendant charged in a conspiracy to file fraudulent federal income tax returns, claiming millions in bogus refunds.
In April 2015, 10 federal search warrants were executed at various residences and tax businesses throughout middle Tennessee, including Soto’s Income Tax Service in Madison; Soto’s Services 2 in Hermitage; Soto’s Income Tax in Springfield; Soto Services 1 in Gallatin; and S Income Tax Services in Nashville. Agents subsequently determined that part of the tax fraud dated back to 2011 and 46 persons were ultimately charged and convicted of federal offenses.
During the investigation, agents seized more than $1 million in cash; several luxury automobiles; and 11 Nashville-area residential properties owned by one of the defendants. Many of the individuals charged were in the U.S. illegally and have since been convicted and deported.
Oliva was the sole owner and operator of one of the prep businesses, known as S Income Tax Preparation in Nashville. In December 2016, Oliva pleaded guilty to his role in the scheme and admitted to preparing and filing 166 false federal income tax returns with the IRS claiming fraudulent refunds of $1,308,422.
Oliva was also ordered to pay $1,308,422 in restitution to the IRS.
Other defendants, who pleaded guilty last spring and summer and who played a significant role in the scheme, include:
- Byron Fernandez-Virula Jr., 25, of Madison, Tenn., who admitted that he prepared and filed 236 false federal income tax returns claiming fraudulent refunds of at least $1,444,957. He also admitted to cashing at least $351,000 in fraudulently obtained refund checks. In July 2017, he was sentenced to 24 months in prison to be followed by two years of supervised release, and was ordered to pay $1,444,957 in restitution to the IRS.
- Byron Fernandez-Virula Sr., 45, also of Madison, admitted that he prepared and filed at least 1,064 false federal income tax returns claiming fraudulent refunds of at least $5,894,827. He also admitted to cashing at least $817,000 in fraudulently obtained refund checks. He was sentenced in September to 37 months in prison to be followed by three years of supervised release, and was ordered to pay $1,444,957 in restitution to the IRS.
- Wilmar Soto-Virula, 35, of Madison, admitted that he prepared and filed at least 170 false federal income tax returns claiming fraudulent refunds of at least $730,707. He was sentenced in September to 28 months in prison followed by two years of supervised release, and was ordered to pay $730,707 in restitution to the IRS.
- Julio Soto, 30, of Goodlettsville, Tenn., admitted that he prepared and filed at least 130 false federal income tax returns claiming fraudulent refunds of at least $737,788. He was sentenced in November to 36 months in prison to be followed by three years of supervised release, and was ordered to pay $737,531 in restitution to the IRS.
Edmond, Okla.: Local resident Melissa Day Morton has been sentenced to 57 months in prison for bank fraud and signing a false federal income tax return in connection with a $2.68 million embezzlement from the Oklahoma Beef Council.
From 1995 until July 2016, Morton, who pleaded guilty in May, worked as the accounting and compliance manager at the Oklahoma Beef Council in Oklahoma City. She prepared checks, paid invoices and generated financial statements for audits.
Morton pleaded guilty to preparing an unauthorized company check for $5,652.25, made payable to herself, in February 2016. At the plea hearing, she also admitted that she forged the signature of the council’s executive director on the check and later presented that check for payment against the council’s account at a local bank. She further admitted that she embezzled funds from her former employer from around 2009 through 2016 and stipulated that the total loss to the Beef Council was $2,681,400.73.
In May, Morton also pleaded guilty to signing a false return, admitting that in October 2015 she signed a personal federal return that she knew was false because it reported only $183,545 in total income, omitting more than $388,000 of embezzled income.
Morton was also sentenced to five years of supervised release and was ordered to pay some $2.3 million in restitution to the Beef Council and $110,000 to an insurance company that provided coverage to the council. She must also pay $617,044 restitution to the IRS. Before sentencing, Morton had made restitution payments totaling $253,874.41 to the Beef Council.
Protem, Mo.: Restaurant owner Tony E. Cowden, 63, has been sentenced to 18 months in prison without parole for tax evasion.
Cowden pleaded guilty last summer to five counts of income tax evasion, admitting that he engaged in a scheme to conceal taxable income from the IRS from 2008 to 2015 by skimming from cash sales at the business and not reporting the cash income.
Cowden listed his business and property for sale in 2015. Two IRS undercover agents posed as potential buyers and met with Cowden. Cowden apologized to them for not having provable income to substantiate the $599,000 sales price but stated, “It saves me a lot of taxes.” He admitted to the undercover agents that he “pockets” all the money from the sale of Keno-Lotto tickets and the cash received from the arcade games in his restaurant. Cowden maintained correct financials for the business in a black three-ring binder.
He encouraged his customers to pay in cash by offering discounts for cash payments. By omitting a portion of his gross receipts, Cowden also falsely claimed that he was entitled to the Earned Income Tax Credit.
In addition to $91,037 in federal income taxes for the years 2009 through 2014, Cowden admitted he owes $12,474 in state income tax and $35,016 in state sales tax for the same period. Federal and state tax losses for those five years total $138,527.
Cowden must pay restitution to the IRS and to the State of Missouri, and must pay $29,581 to the Social Security Administration for Social Security disability payments he was not entitled to receive.