Some of our favorite recent tax fraud cases.
Chicago: Preparers Dyone Dorsey, 39, and Janet Dorsey, 42, have been charged in a 35-count indictment with preparing and assisting in the preparation of false income tax returns.
According to the indictment, between 2009 and 2011 the Dorseys, owners and operators of Dorsey’s Tax Service, allegedly assisted in the preparation of clients’ returns that falsely claimed business losses as well as other deductions and credits to which the clients were not entitled.
The indictment also charged the Dorseys with filing a false joint income tax return on their own behalf for tax year 2010, and with individually for filing false income tax returns on their own behalf for tax years 2008 and 2009.
Each charge carries a sentence of three years in prison and a maximum fine of $250,000 or twice the gross gain to the defendant or loss to the government.
Kansas City, Kan.: Preparer Lamar D. Lynch, 42, has been sentenced to 32 months in prison and three years of supervised release and been ordered to pay $84,630 restitution after preparing and filing fraudulent income tax returns.
According to the plea agreement, a taxpayer identified Lynch as the preparer of her 2009, 2010 and 2011 returns. The taxpayer was a W-2 wage earner and did not have Schedule C self-employment income from a janitorial service as was reported on her returns.
The returns reflected Schedule C losses of $10,312 in 2009, $5,087 in 2010, and $6,719 in 2011, which caused the taxpayer to receive approximately $15,000 in refunds over the three year period. The taxpayer contacted the IRS in 2013 and learned that a portion of her tax refunds went into Lynch's bank accounts. Lynch was never authorized to direct a portion of the refunds to his accounts. The same IP address used to file these returns was used to file numerous other tax returns by Lynch. In addition, court documents state that on or about January 28, 2011, Lynch fraudulently used without authority a Social Security number belonging to another individual as part of the theft of government violations. Lynch used this social security number to file a fraudulent tax return for the 2010 tax year and as a result unlawfully obtained $1,458 in government funds.
Lynch was indicted on March 19, 2014, and pled guilty in November to one count of theft of government funds and one count of aggravated ID theft.
Tampa, Fla.: The U.S. has filed to bar tax preparer Milot Odne from owning, operating or franchising a tax prep business and from preparing returns for others. The complaint also requests that the court order Odne to hand over fees that he obtained through alleged fraudulent return preparation.
The suit alleges that Odne, who owns and operates Rapid Tax 1 and was once a franchisee of LBS Tax Services, targets primarily low-income customers with deceptive and misleading advertisements, prepares and files returns to fraudulently increase clients’ refunds and profits through “unconscionable and exorbitant fees.”
The suit alleges a “culture of greed” at Odne’s prep stores “that expressly promotes and encourages the preparation of false and fraudulent federal tax returns in order to maximize corporate and individual profits.”
Among the alleged activity: falsely claiming the EITC; claiming improper filing status; fabricating businesses and related business income and expenses, as well as itemized deductions, including for unreimbursed employee business expenses, automobile expenses and charitable contributions; falsely claiming education credits; improperly preparing returns based on paystubs rather than W-2s; and failing to provide clients with a copy of a competed return.
The IRS estimates that the tax loss resulting from these activities for the 2012, 2013 and 2014 tax years could reach $35.5 million or more.
This lawsuit is one of several filed against former LBS Tax Services-related individuals.
Miami: Preparers Noe Mompoint, of Southwest Ranches, Fla., and Lucvens Francois, of Aventura, Fla., have been charged with aiding and assisting in the preparation of false federal income tax returns.
Mompoint was charged with 14 counts and Francois (in a separate indictment) with 19 counts of aiding and assisting in the preparation of false returns.
According to allegations, Mompoint owned and operated the Tax Resource Center and filed returns for clients that reported fraudulent First-Time Homebuyer Credits. Francois owned and operated a branch office of the Tax Resource Center and filed returns that also reported fraudulent homebuyer credits, as well as returns that claimed a variety of other false items, including education credits, business losses and itemized deductions.
If convicted, each faces a maximum of three years in prison and a fine of $250,000 on each count.
Latham, N.Y.: Preparer Gnoan Pierre Kablan, 52, has been indicted on 16 felony counts of aiding and assisting in the preparation and presentation of false and fraudulent tax returns.
According to the indictment, Kablan prepared for clients at least 16 returns for 2008 through 2011 containing false deductions for charitable gifts, false deductions for unreimbursed employee expenses and false solar property or energy efficiency credits.
On each count, Kablan faces a maximum of three years of imprisonment, a maximum fine of $100,000, a special assessment of $100 and a maximum term of supervised release of one year, as well as possible restitution to the Treasury Department.
Columbus, Ga.: Preparers Ken Wilford Degourville Jr. and his wife Lakeisha Nichole Degourville have been indicted on 58 counts of tax fraud.
Authorities said the couple ran Macon Road Tax Time, where they falsified clients’ returns. Ken Degourville faces one count of tax evasion and theft, two counts of ID fraud and 17 counts of filing false documents and computer forgery. Lakeisha Degourville faces one count of theft and evading state income taxes, and nine counts of filing false documents and computer forgery.
Washington, D.C.: The U.S. Consumer Financial Protection Bureau and the Navajo Nation are taking action against companies and individuals who operated an illegal tax-refund scheme.
The complaint names Jeffrey Scott Thomas, who through his company J Thomas Development of NM Inc., owned four H&R Block franchises in New Mexico. The FBI and the Navajo Nation did not find that H&R Block participated in any scheme, and Block terminated its relationship with those franchises, which closed in September.
Before they closed, the tax franchises catered largely to low-income citizens of the Navajo Nation who qualified for and relied upon the EITC; the scheme steered such clients toward high-cost refund anticipation loans, according to the CFPB.
A proposed order, if approved by the court, would result in roughly $438,000 in total consumer redress and require the defendants to pay $438,000 in civil penalties for their unfair, deceptive and abusive practices, the CFPB said.
According to the CFPB, Thomas set up S/W (Southwest) Tax Loans, Inc. to offer his clients RALs, which typically carried triple-digit APRs. Thomas decided that his franchises would not offer a line of credit to clients, instead establishing Southwest to sell clients RALs with APRs above 240%. Thomas installed his friend Dennis Gonzales as the owner and president of Southwest, according to the CFPB.
Southwest has already refunded roughly $184,000 to the almost 10,000 consumers impacted, the Bureau added.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access