Tax Fraud Blotter: Defrauded, disgorged and deceased
Using your late mother’s Social Security number for fraud, and other highlights of our favorite recent tax fraud cases.
Port Murray, N.J.: Preparer Brian Allen Day, 54, has been charged with filing false individual income tax returns for clients and defrauding banks by misappropriating clients’ funds.
According to the indictment, Day is a self-employed preparer with various prep businesses in New Jersey, such as PTS, Tax Consultants and Tax Consultants LLC. For the tax years 2013 to 2015, he allegedly prepared false individual income tax returns for clients by fabricating and inflating expenses and deductions on Schedules A or supplemental loss deductions on Schedules E.
The false deductions and expenses charged in the indictment total $383,773.
Also according to the indictment, from December 2011 through April 2015, Day falsely advised clients that they owed certain tax payments to the IRS, directed clients to give him checks made payable to the IRS to resolve these purported liabilities, altered the checks to make them appear to be payable to his prep businesses, and deposited the checks into his business bank accounts without making any payment to the IRS on behalf of the clients.
Day then presented his clients with documents purportedly issued by the IRS falsely stating that the agency received payments for the taxes owed, according to the indictment, which added that he stole $61,000 from his clients.
Each count of aiding and assisting in the filing of false tax returns carries a maximum sentence of three years in prison and a fine of $250,000 or twice the gross pecuniary gain or loss from the fraud. The bank fraud charges each carry a maximum of 30 years in prison and a fine of $1 million.
Phoenix: Preparer Kimberly Stewart, 53, has been sentenced to two years in prison for ID theft and been ordered to pay more than $101,000 restitution to the federal government, according to published reports.
According to IRS investigators cited, Stewart, who pleaded guilty to aggravated ID theft last October, owned and operated a prep business from 2003 to 2010. Prosecutors told news outlets that she admitted in her plea agreement that in early 2011 she filed a false return for the 2010 tax year using the name and Social Security number of her deceased mother. Stewart then got a refund of more than $6,400, according to published reports.
Investigators also told news outlets that the IRS had previously contacted Stewart about false returns she prepared and filed on behalf of others.
Baldwin, La.: Preparer Lakesha Navy faces multiple felony charges in connection with a tax fraud scheme that cost Louisiana an estimated $55,000.
Navy allegedly filed hundreds of state income tax returns containing fabricated business losses that improperly reduced clients’ taxable income and, in many cases, inflated refunds.
Louisiana auditors noticed a suspicious pattern with returns that Navy filed in 2014 and 2015; investigators who interviewed her clients determined that many of them did not claim any business losses when they provided Navy with their tax records and that some did not own businesses at all. The clients interviewed claimed no knowledge of the suspected illegal activity.
Sheboygan, Wis.: Preparer Lesley E. Anzures, 35, has pleaded guilty in connection with defrauding the IRS of nearly $500,000 by helping undocumented immigrants claim refunds based on claims of dependents still in Mexico, according to published reports.
The charge against Anzures, operator of Lesley’s Tax Service, reportedly involves one client’s 2010 return that netted a refund of $3,772 when he actually owed $1,156. The return listed six dependents for the taxpayer but five of them lived in Mexico and could not be legally claimed on the man's tax return; Anzures knew the return was improper, according to cited records.
Investigators reportedly reviewed 40 returns that Anzures filed for a dozen clients over four years and found more false statements that cost the IRS about $225,000. An audit also reportedly turned up another $274,000 in fraud among the returns of 22 more clients.
For 2010, 2011, 2012 and 2013, Anzures filed almost 9,500 tax returns for a total of more than $34 million in refunds, according to reports that added that the average refund was $3,609 on returns listing an average of three dependents, 70 percent of whom had ITINs, provided through a program meant to encourage those without a Social Security number to file tax returns.
Lauderhill, Fla.: The federal government has filed to bar Aleluya Universal Accounting Services Inc. and its officers Frantz Petit-Dos, Luczor Fertilien and David Joseph from preparing federal income tax returns for others.
The government also requests a court order requiring the business and these officers to disgorge the gross receipts they obtained from preparing federal tax returns that make false claims.
The complaint alleges that the defendants prepare returns that unlawfully understate income tax liabilities and overstate refunds by fabricating or exaggerating deductions and tax credits. For example, the defendants claimed fuel tax credits for customers who did not qualify for this credit, according to the complaint.
In particular, Joseph falsely advised one client that she was eligible for the fuel credit because she was self-employed and drove herself to work, according to the complaint. Fertilien also told the IRS that he advised that anyone with receipts for gas used in their vehicles could claim the fuel credit, according to the complaint.
The government further alleges that Petit-Dos’, Fertilien’s, and Joseph’s misconduct predates the creation of Aleluya. Prior to Joseph forming Aleluya in June 2013, Petit-Dos and Fertilien owned the prep business Imperial Taxation; the complaint alleges that Petit-Dos, Fertilien, and Joseph (a preparer at Imperial) prepared false returns and committed other violations while there.
Altogether, the complaint alleges that the loss to the U. S. Treasury from the defendants’ activities may be millions of dollars.
Lutcher, La.: Preparer Warren Lavern Bryant is accused of submitting state income tax returns that included phony business losses that improperly reduced his clients’ taxable income and illegally inflated refunds. State auditors grew suspicious of returns that Bryant submitted in 2015; investigators later determined that none of the clients whose returns they examined had claimed any business losses when they provided Bryant with their tax records. Bryant’s alleged fraud cost Louisiana some $116,325.00.
Gulfport, Miss.: Preparer Allen Brice, 35, has been convicted on seven counts of fraud involving false returns he prepared for his clients, according to published reports.
Brice was found guilty of reporting false information on four clients’ self-employment retirement plans, according to news outlets, which added that Brice had been charged along with his employer, Jeremi Washington, in a 16-count indictment on Jan. 20. Washington, also of Gulfport, owned and operated Flash Financial and pleaded guilty to a conspiracy charge last December, according to published reports.
Sentencing is March 22, reports said, adding that Brice faces a maximum of 21 years in prison, $700,000 in fines and the court costs.