Tax Fraud Blotter: Dirty hat tricks
Uncivil behavior; my client did it; 15 worthless payments; and other highlights of recent tax cases.
New York: Preparer Richard Barker of the borough of Queens has pleaded guilty to conspiracy to defraud the U.S. by filing false returns.
Barker owned and operated a tax prep business under the names Tax Depot and KPS Kampant, Parkinson, Sinclair & Co. Inc. From 2011 through 2017, he conspired with others to file returns for clients that falsely reported withholdings to inflate federal refunds. Barker also admitted that he filed returns for himself and for others claiming more than $530,000 in fraudulent refunds from the IRS.
Barker caused a loss of at least $460,000 to the U.S.
He faces a maximum of five years in prison and a period of supervised release, restitution and monetary penalties.
Bethany, Connecticut: Attorney William S. Palmieri has been sentenced to three years of probation (the first six months in home confinement) for failing to pay federal income taxes he owed over several years.
Palmieri has a practice specializing in civil rights law. Between 2006 and 2014, he reported to the IRS but did not pay income taxes he owed. Investigation also revealed that he used his attorney bank account to pay personal expenses, including his home mortgage and private school tuition payments.
Palmieri, who pleaded guilty in December, must pay $141,474.53 in back taxes and $86,234.47 in interest and penalties. He was also ordered to perform 150 hours of community service.
Honey Grove, Texas: Preparer Kristi Michelle Finney, a.k.a. Kristi Michelle Fry, has been sentenced to 33 months in prison for tax fraud.
Finney offered tax services from her home, where she would complete and file tax returns for others at a fee of around $200. IRS investigation linked 147 suspicious returns to Finney, many of which contained false employment, income and expense information.
Finney would claim large financial losses for businesses that never existed, inflating refunds. She then diverted portions of the refund to herself by placing the refunds on prepaid debit cards, concealing her involvement by falsely claiming that the fraudulent returns were personally prepared by her clients, rather than by her. The IRS was ultimately able to identify Finney as the filer of these returns through Internet Protocol addresses and email addresses associated with the electronic returns, as well as through witness interviews.
She was also ordered to pay $359,733 in restitution to the IRS.
San Diego: Rabbi Yisroel Goldstein and five of his associates have pleaded guilty to fraud charges, admitting that they participated in a complex, years-long, multimillion-dollar tax evasion scheme and other financial deceptions.
While Goldstein was director of the Poway synagogue, he received at least $6.2 million in phony contributions to the Chabad and affiliated charities and secretly refunded up to 90 percent of the donations to the “donors.” After Goldstein provided these donors with fake receipts, they illegally claimed huge deductions for these nonexistent donations and the rabbi kept about 10 percent — more than half a million dollars over the course of the fraud.
Tax losses to the IRS were more than $1.5 million. At least 20 taxpayers were involved in this and related tax-evasion schemes.
Among other admissions, Goldstein admitted that in one instance in late 2017 he attempted to disguise the source of more than $1.1 million in fraudulent donations by purchasing gold coins worth approximately $1 million. He then delivered the gold to the phony donor. There were many schemes within the broader tax-fraud and kickback scheme, dating back to 2010 or earlier and continuing through 2018.
Goldstein has agreed to cooperate with ongoing investigations of uncharged co-conspirators and to forfeit $1 million in proceeds and pay restitution of $2.5 million. Five others who participated in the scheme with Goldstein also entered guilty pleas, admitting that they knowingly participated by concealing their donations through the Chabad and making false deductions on their tax forms or by recruiting new taxpayers to participate in the scheme.
This case was under investigation for more than two years before Goldstein was shot and wounded during the April 27, 2019, attack on worshippers at the Chabad.
Clermont, Florida: Dennis J. Nagle, 67, has been sentenced to three years in prison for corruptly obstructing the due administration of the internal revenue laws.
Since 1999, Nagle, reportedly of Clermont, refused to voluntarily pay federal income taxes. By 2014, he had an outstanding tax balance of more than $400,000. When the IRS attempted to collect the taxes by filing liens and levying his paychecks and pension, Nagle obstructed the collection efforts.
He submitted false forms to his employer claiming he was exempt from federal tax withholding, attempted to pay off his tax debts with checks written on a closed bank account, and threatened to file criminal complaints against IRS collection officers. Nagle sent the IRS at least 15 worthless payments, purportedly totaling more than $1.9 million dollars.
Nagle was also ordered to serve a year of supervised release and to pay some $221,502 in restitution to the U.S.
Rapid City, South Dakota: Former office manager Jennifer Durham has pleaded guilty to one count of tax evasion and two counts of wire fraud.
Between February 2010 and June 2019, Durham, while employed as the office manager for Rapid City Professional Hockey, stole $700,000 from the organization. She used the money for her own expenses and also transferred money to bank accounts she controlled. To cover up her theft, Durham made false entries into the accounting records to give the illusion the money she was stealing was spent on legitimate business expenses for the organization.
During the same time, Durham tried to evade or defeat taxes by underreporting her income from tax years 2010 through 2018 by $688,867.67, resulting in a tax loss of $186,277.
She agreed to pay the IRS $186,277 and to pay $700,000 in restitution to Rapid City Professional Hockey.
The maximum penalty on each tax evasion count is five years in prison or a $250,000 fine or both, three years of supervised release and $100 to the Federal Crime Victims Fund. The maximum penalty on each of the wire fraud counts is 20 years in prison or a $250,000 fine or both, three years of supervised release and $100 to the Federal Crime Victims Fund.
Granite City, Illinois: Douglas J. Kiffmeyer, who held himself out as a retirement planner, financial consultant and tax advisor, has pleaded guilty to a 17-count indictment that charged wire fraud, failure to file individual and corporate income tax returns and money laundering.
Kiffmeyer operated businesses under the names of Modern Retirement Professionals and Kiffmeyer Tax Advisory Group. He solicited funds from clients for personal investments and made personal expenditures with investor funds that totaled some $1.5 million. Very little of the investor funds were ever used for their intended purpose, with most of the funds going to pay for Kiffmeyer's personal expenses. None of the money was reported by Kiffmeyer as income to the corporation or as personal income to the IRS.
Sentencing is Nov. 10.