Some of our favorite recent tax fraud cases.
Cranston, R.I.: Preparers Evelyn Nunez, 40, of Providence, R.I., and Tashia Bodden, 37, of Warwick, R.I., have been arrested in connection with an alleged scheme by tax prep firm NBP Multiservices to steal the personal ID information of minors named as dependents on returns NBP prepared.
Authorities said the pair sold the information to other filers for use on their returns to inflate refunds. Nunez and Bodden were charged with conspiracy to defraud the U.S., false claims to the U.S. and aggravated ID theft.
According to court records and case documents, between January 2008 and February 2012, taxpayers allegedly purchased false dependents for approximately $600 to $700 per dependent. Research allegedly showed that the defendants falsely claimed dozens of children to be foster children, nieces and nephews of the taxpayers when, in reality, they had no relation to the taxpayer.
The scheme allegedly defrauded the IRS of more than $1.34 million and the State of Rhode Island of more than $65,500 dollars.
A third defendant, Wendy Molina, 39, of Cranston, has been charged with one count of conspiracy to defraud the government.
Memphis, Tenn.: The U.S. has filed to bar three individuals from owning or operating a tax return preparation business or preparing tax returns for others.
Shandon Allen, Tabitha Tunstall and Shewanda Hamilton previously managed Mo’ Money Taxes stores, but more recently prepared returns under the names Southern King Taxes, Tabitha’s Taxes, LaQuita’s Professional Tax Service and Cash King Tax Service, according to the complaint. The federal government previously obtained an injunction barring owners of Mo’ Money Taxes, Markey Granberry and Derrick Robinson, as well as a former Mo’ Money manager, Eumora Reese, from preparing returns for others and owning or operating a tax-prep business.
The complaint alleges that the defendants and their employees prepare fraudulent returns that cause clients to incorrectly report their federal tax liabilities and underpay taxes. According to the complaint, the defendants and their employees prepare federal returns on which they falsely claim the EITC, improper filing status and bogus education credits.
Additionally, the defendants and their employees allegedly improperly prepare returns using paystubs rather than W-2s, fabricate bogus W-2 s, and file returns without clients’ consent while charging “deceptive and unconscionable” fees, according to the suit.
Montgomery, Ala.: Preparer Russell Burroughs was sentenced to 36 months in prison and ordered to pay $211,960 restitution for aiding in the preparation of false returns.
According to court documents, during the 2008 through 2010 tax seasons Burroughs owned and operated Computer Services, a tax prep business where, he admitted, he falsified information on client returns to illegally inflate refunds. He intentionally included false items such as phony business income and losses, false Schedule A deductions, false real estate rental losses and education credits, and bogus energy credits.
The court found that the tax loss associated with the false returns exceeded $2.9 million.
Miami: Preparers Michael Virgile, 28, and Shana Sainvil, 26, have each pled guilty to one count of wire fraud.
According to court documents, in 2009 Virgile set up Tax Masters & Multi-Services LLC, listing himself as managing member with Sainvil, who applied for two EFINs. From early 2010 to late 2011, Virgile caused fake returns in other people’s names to be filed with the IRS, primarily using Sainvil’s EFINs.
Virgile included fraudulent income amounts and inapplicable credits to inflate refunds. Many of the returns were prepared in the names of high school or college students not entitled to refunds.
Court documents also state that approximately $1.2 million in fraudulent refunds were deposited into bank accounts controlled by Virgile and that $200,000 to $400,000 in fraudulent refunds were paid into Sainvil’s accounts.
Sentencing is December 11, when the two each face up to 20 years in prison.
Cincinnati: Preparer Ruth Benton, 37, has been sentenced to 27 months in prison and three years of supervised release and been ordered to pay $748,843.80 in restitution to the IRS for conspiring to submit false claims for federal income tax refunds.
According to court documents, between January and March 2011 Benton, who pleaded guilty on November 5, conspired with Shacretta Williams and others to prepare and file false claims for refunds for the 2010 tax year. Benton and Williams worked together at several tax prep businesses, including Jackson Hewitt, Ohio Instant Tax and Your Tax Service. (Benton owned Your Tax Service, which she opened in January 2011.) Although the conspiracy is limited to the 2010 tax year, Benton also prepared false returns during the 2005 through 2009 tax years. Authorities said she “expected” and often received a part of her clients’ refund.
Benton and Williams began preparing and filing false claims for refunds as employees at Jackson Hewitt. They created fictitious W-2s and included non-qualifying children as dependents to maximize the EITC and the Additional Child Tax Credit. The pair then worked as employees for Ohio Instant Tax, where they modified the scheme by also claiming false SE income on Schedule Cs.
At Your Tax Service, Benton and Williams prepared and filed false claims for refunds by not only including false dependents and SE income but by also claiming qualifying education expenses to secure the refundable education credit.
Benton applied for an EFIN for Your Tax Service; the IRS denied her application. She then located a company online called EVital that was willing to illegally lease an EFIN for Your Tax Service. This EFIN was subsequently used by Benton, Williams and others to file false claims.
After a return was accepted by the IRS and the refund issued, Benton called clients to come into the office to pick up their checks. Benton or another employee at Your Tax Service then escorted the clients to a local check-cashing business and took a portion of the refund in cash, even though the $310 prep fee had already been deducted from the refund check.
During the 2010 income tax year, Benton, Williams and others prepared and filed at least 260 false claims for refunds with the IRS. Tax loss for the 2009 and 2010 years totaled $1,106,415.
On September 30, Williams, 38, pleaded guilty to conspiring to file false claims for refunds and sentencing is set for December 3.
Rock Hill, S.C.: Preparer Michael Christopher Rockholt, 40, has reportedly been arrested on fraud charges just days after being accused of driving under the influence.
Police recently arrested Rockholt on his third DUI charge, according to published reports citing booking information from the local county jail. Then warrants were reportedly served in connection with a September report that Rockholt failed to properly file taxes for one of his clients.
In early September, according to reports, a Rock Hill man told police he hired Rockholt to file his taxes in 2012. The victim reportedly stated that he gave Rockholt checks totaling $3,000 but that his taxes were not filed and that the IRS then told the victim that he owed more than $14,000.
Rockholt was charged with two counts of breach of trust with fraudulent intent and one count of fraudulent check of more than $1,000, according to reports.
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