A roundup of our favorite recent tax fraud cases.
Birmingham, Ala.: Preparer Donald E. Steele, 41, has been indicted for preparing false income tax returns and for intimidating witnesses contacted by the IRS to question about returns he had prepared.
He is charged with seven counts of aiding in the preparation of a false federal return in 2010 or 2011 and with four counts of witness tampering in 2011. At the time, Steele operated Max Tax, a tax prep business owned by his wife.
Steele is charged with making false claims and fabricating deductions on federal returns for five taxpayers. Among the charges is that in 2011 Steele prepared a 2010 tax return for “H.N.D,” fraudulently claiming an exemption for her disabled dependent brother, identified as “K.L.,” when Steele knew that K.L. was H.N.D.’s boyfriend and not disabled. Steele also claimed a $1,000 American Opportunity Tax Credit based on a false claim that K.L. was a student and had incurred $4,000 in education expenses during the 2010 tax year.
Regarding the witness-tampering counts, Steele is charged with calling K.L. some seven or eight times after learning IRS agents were inquiring about the preparation of H.N.D.’s 2010 return and telling K.L. to lie to the agents and tell them that Steele’s wife had prepared H.N.D.’s return. Two other counts of the indictment charge Steele with preparing returns for “A.E.T.” for the calendar years 2009 and 2010, falsely claiming business losses for the taxpayer when she was not self-employed in either year and did not provide Steele any information pertaining to self-employment. Steele claimed a net business loss of $12,049 for A.E.T. in 2009 and a net loss of $11,938 in 2010, according to the indictment.
In another witness-tampering count, Steele is charged with contacting a former preparer at Max Tax and telling her that if IRS agents contacted her, she should withhold information and tell them that he did not prepare any returns and that his wife prepared and transmitted the returns.
The maximum for aiding in the preparation of a false federal income tax return is three years in prison and a $250,000 fine. The maximum for witness tampering is 20 years in prison and a $250,000 fine.
Los Angeles: Tax preparer Oscar G. Barabino, 56, has pleaded guilty to failing to report income totaling more than $421,000 on his 2008 and 2009 federal income tax returns, costing the government more than $140,000.
According to the plea agreement, for the 2008 tax year Barabino omitted some $296,987 from his total income, resulting in a tax loss to the government of approximately $102,932. For his 2009 return, Barabino omitted approximately $124,283 from his total income, resulting in a tax loss to the government of approximately $37,800.
As part of the plea agreement, Barabino has agreed to not prepare or assist anyone other than himself or his spouse in the preparation of any federal or California income tax returns during his period of supervised release. He further agreed to make full restitution to the U.S. for the tax losses.
Barabino faces a maximum of six years in federal prison and a fine of $500,000 when sentenced on July 25.
Providence, R.I.: A federal grand jury has returned a 70-count indictment alleging that tax preparer Belkis M. Guzman, 47, of Cranston, R.I., participated in schemes to prepare false returns claiming deductions that taxpayers were not entitled to and to file fraudulent returns using personal ID information of others without authorization.
The fraudulent returns allegedly resulted in refunds totaling more than $685,000, which were deposited into a bank account controlled by Guzman.
The indictment charges Guzman with 33 counts of preparing false income tax returns, eight counts of wire fraud, four counts of aggravated ID theft, 23 counts of forgery and one count of theft of government funds.
In one alleged scheme, for tax years 2009, 2010, and 2011 Guzman, then employed at El Centro Multiservices in Providence, filed at least 33 fraudulent returns by creating, inflating or falsifying clients’ dependents, exemptions, credits, deductions and expenses, with and without her client’s knowledge.
The indictment alleges that Guzman also schemed to use others’ personal ID without their authorization to file fraudulent returns during tax years 2009, 2010 and 2011. It is alleged that refunds totaling $686,823.65 obtained through the filing of fraudulent returns were deposited into a personal checking account belonging to Guzman.
Birmingham, Ala.: Preparer Eunice F. Plummer, 36, of Demopolis, Ala., has been sentenced to 46 months in prison for filing more than $250,000 in false returns.
Plummer pleaded guilty in October to three counts of attempting to evade or defeat a large portion of the income tax she owed for 2011, 2012 and 2013. She also pleaded guilty to eight counts of filing false returns for others between 2011 and 2013.
According to the indictment and her plea agreement, Plummer operated Plummer Tax Services from 2010 to 2014, where she routinely inflated customers’ refunds by using such fraudulent information as wage amounts, child and dependent care expenses, education credits, and business losses.
Plummer also substantially underreported her income from operating Plummer Tax Services. Between the taxes she failed to pay on her own behalf and the boosted refund amounts from the fraudulent tax returns she filed for clients, Plummer cheated the IRS out of more than $250,000.
In January and February, while on bond awaiting sentencing following her guilty plea, Plummer re-activated her tax business under the new name Unique Tax Services, at the same location where she had operated Plummer Tax Services, and filed more returns that were fraudulent.
A judge told Plummer at sentencing that by continuing to file fraudulent returns after pleading guilty to that conduct, she showed “disdain and disrespect” to the court and acted like “a thief” and “a con artist.”
Tucson, Ariz.: Preparer Jose Jesus Gonzalez, 48, has received 21 months of imprisonment after pleading guilty to willfully filing a false individual income tax return. He was also ordered to pay more than $255,000 restitution and, separately, a $17,488 fine.
Gonzalez, doing business as Gonzalez Insurance and Tax Services, operated offices in Tucson from 2004 through 2009 and in Phoenix from 2009 through 2010. During the 2008 tax year, Gonzalez e-filed 90 income tax returns seeking a total of $651,500 in false claims for the First-Time Home Buyer Credit. The IRS disallowed a portion of the claims but paid $620,000 in false claims to taxpayers.
Little Rock, Ark.: A jury has convicted traveling minister Allen D. Miles, 58, on 14 counts for his role in a $4.8 million tax refund scam, specifically one count of conspiracy to commit wire fraud, 10 counts of wire fraud and three counts of aggravated ID theft.
Miles, acting with Zinara Highsmith, engaged in a false tax refund scheme in which approximately 2,750 false returns were filed, claiming refunds of approximately $4.8 million. Miles obtained personal ID information from congregants and others by telling them that he could help them obtain money from an alleged government stimulus fund program. Miles did not tell congregants that income tax returns were going to be filed on their behalf.
After he obtained the information, Miles forwarded it to Highsmith, who with others then created the false returns that generated refunds based on certain credits for which the taxpayers did not qualify, such as the American Opportunity Credit, Making Work Pay Credit and the EITC.
For each refund, Miles collected a $125 commission and Highsmith, $275; the taxpayers received the balance. Miles received approximately $300,000 for his efforts in the refund scam, which operated between March and July 2011.
Sentencing is June 13.
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