A roundup of our favorite recent tax fraud cases.
Rochester, N.Y.: Preparer Frank Wilson, 55, of Tonawanda, N.Y., has been arrested and charged by criminal complaint with preparing fraudulent returns.
Authorities said that according to the complaint, Wilson operated an income tax prep business and prepared at least 18 false returns claiming total refunds of at least $90,508. The complaint further states that Wilson’s conduct appears to be related to a much larger, nationwide fraud scheme involving approximately 3,529 false returns that sought a total of approximately $12,361,498 in fraudulent refunds.
Many of the taxpayers who hired Wilson did not review their returns, did not know that the defendant had included fraudulent information on their returns and received no refund from Wilson as result of the fraudulent returns.
The charge carries a maximum three years in prison and a fine of $100,000.
New York: Former preparer Lester Morrison, who pleaded guilty in 2010 to orchestrating a large-scale tax fraud, has been banned from working as a federal income tax return preparer or engaging in any conduct that interferes with the administration and enforcement of federal tax laws.
Four of Morrison’s associates who also had pled guilty to tax fraud have already been barred from engaging in the prep business.
According to case documents, between 2000 and 2008 Morrison and his associates orchestrated a tax fraud involving preparation of thousands of false and fraudulent returns through a prep business in the New York City borough of the Bronx and in Englewood, N.J. The phony returns sought improper deductions by, among other things, using stolen IDs of deceased children to claim dependent deductions and claiming phony business losses for non-existent businesses.
In 2010, Morrison and his four associates pleaded guilty to tax fraud. As of last April, all been released from prison.
The court’s findings include that Morrison was the organizer and leader of the scheme, caused tax loses to the U.S. of more than $17 million, and lied to the IRS during the course of the investigation.
El Dorado Hills, Calif.: Local resident Sherry Taggart, 56, has pleaded guilty to conspiring to file false claims and filing false claims.
According to court documents, Taggart and her co-conspirator, Barbara Antonucci, an unlicensed preparer, prepared federal returns for clients seeking to maximize refunds.
In 2008, Antonucci began her scheme, and Taggart joined her after May 2010. The two conspired to prepare and file hundreds of false claims with the IRS between June 2012 and March 2014, seeking refunds totaling some $1.4 million.
In total, including the period in which Antonucci operated the scheme by herself, the IRS issued more than $1.8 million in illegitimate refunds from more than $2.5 million illegitimate claims filed during the scheme.
On Aug. 19, Antonucci pleaded guilty to conspiracy to file false claims and filing false claims.
The fraudulent returns that Taggart and Antonucci prepared and caused to be filed reported false wages and dependents for their clients and, in many cases, qualified the clients for the Earned Income Credit when the client’s true wages or family situation would have qualified the client for no credit or a lower credit. Most of the fraudulent returns listed wages associated with self-employment not documented by a W-2, such as “housekeeper.”
The defendants obtained the names, Social Security numbers and other personal identifying information of minors and falsely listed those minors as dependents on returns for clients who were unrelated to those minors. Taggart and Antonucci also filed false claims on their own behalf.
Sentencing for both is in early December. Taggart and Antonucci face a maximum of up to 10 years in prison and a $250,000 fine for conspiracy to file false claims. The maximum penalty for filing false claims is up to five years in prison and a $250,000 fine.
New York: Preparer Eliana Sarmiento, 32, of Passaic, N.J., and formerly with K&S Tax Solution in the Bronx, has been found guilty of multiple charges in connection with her participation in schemes to file fraudulent returns to receive refunds in the form of checks and wire transfers.
Together with her co-workers at K&S, Sarmiento stole more than $19 million in refunds by submitting false returns using stolen IDs, largely stolen from residents of Puerto Rico. To date, 14 employees and associates of K&S, in addition to Sarmiento, have been convicted in connection with this scheme.
According to the allegations in the indictment and trial evidence presented during trial, since January 2010 Sarmiento obtained stolen IDs in part through one co-conspirator, based in Puerto Rico, who stole the IDs of patients of a medical clinic in Ponce. She then obtained EFINs for filing hundreds of returns under the names and Social Security numbers of the victims of the ID theft. Sarmiento and other employees of K&S also used the stolen IDs of children as false dependents on the returns of certain K&S clients.
The IRS has identified $281,348,627 in attempted fraudulent returns and $19,799,175 in Treasury funds stolen by Sarmiento and her criminal associates.
Sarmiento was found guilty of two counts of theft of public funds, each carrying a maximum of 10 years in prison; two counts of conspiring to steal public funds, each carrying a maximum of five years in prison; and two counts of aggravated ID theft, each carrying a mandatory sentence of two years in prison.
St. Louis: Preparer Asmerom Keleta, former owner of U-City Tax Service, and two preparers have been charged with filing false returns on behalf of clients, according to federal prosecutors cited in news reports.
Prosecutors reportedly said that Keleta owned U-City from 2011 to 2013 and employed two preparers, Miyoshi Lewis and Teklom Paulos. The three allegedly conspired to prepare and file false returns using unjustified tax credits and listing false income, then concealed their role by falsifying the name of the preparer.
They inflated and then took a cut of refunds by taking clients to a nearby check-cashing business and demanding a share, prosecutors told news outlets. Keleta, 31, and Lewis, 30, are from St. Louis and Paulos, 36, lives in Florissant, Mo., prosecutors reportedly said. Each faces one count of conspiracy and six counts of filing false income tax returns, according to reports.
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