Kon man; anti-social behavior; not much of a Solution; and other highlights of recent tax cases.
Valley, Alabama: Tax preparer Christina Prather Williams, 42, has been sentenced to 20 months in prison for preparing false federal returns.
Williams operated Family Tax Service, where she prepared federal income tax returns for clients. Some of her clients complained to local police that they never received their tax refunds; investigation revealed that Williams had forged powers of attorney in her clients' names and cashed their refund checks, keeping the money for herself. Local police reported their findings to the IRS, which during its investigation determined that Williams had prepared and filed returns that included deductions her clients were not entitled to.
Williams specifically admitted to filing two 2018 tax returns containing numerous false claims. On one return, she claimed that a client incurred solar electric and water heating property costs, medical and dental expenses, home mortgage interest and points, and gifts to charity totaling $39,887. Williams also admitted that the other return falsely claimed the same types of expenses, plus child and dependent care costs, in the amount of $42,841.
She will also serve a year of supervised release and must pay the IRS $76,694 in restitution.
Covina, California: Robinson Rin Yang, a.k.a. Robert Mora, a.k.a. David Lee, of Diamond Bar, California, has been sentenced to two years in prison and ordered to pay more than $2.7 million in restitution for failing to pay more than $200,000 in payroll taxes owed by his employment staffing company.
From 2016 to 2020, Yang, who previously pleaded guilty, operated B&S Staffing. From mid-2017 until the end of 2019, B&S accrued large unpaid employment tax liabilities, failed to make timely employment tax deposits and repeatedly failed to timely file federal quarterly employment returns with the IRS. After these returns were filed, B&S again fell into non-compliance with its reporting.
In total, B&S accrued some $2,791,783 in unpaid employment taxes during this year period. Yang has agreed to pay this amount in restitution to the IRS.
Also, from 2017 to 2019, to frustrate IRS collection actions against him regarding his personal income taxes and to conceal the true extent of how much money he made, Yang did not pay himself a salary from B&S. Instead, he caused weekly checks to be issued from the company's corporate bank account to a business named "Advanced Business Konsulting" and deposited these checks into an account that he controlled.
Yang used B&S funds for the down payment and monthly mortgage payments on his home but kept the property in the name of another person to conceal his ownership. Yang also directed payments from the corporate bank accounts of B&S to pay for personal expenses, including a portion of his daughter's college tuition and funding for other business interests, including a failed construction business and a failed restaurant.
Tampa, Florida: Tax preparers Jamica Nelms, Capriesha Cummings, Camille Harper and Ashley Flournoy have pleaded guilty to conspiracy to commit tax fraud and aiding or assisting in the preparation of false income tax return documents.
Each faces a maximum of eight years in prison.
From January 2017 through April 2019, Nelms, Cummings, Flournoy and Harper were tax preparers at a business in St. Petersburg, Florida. They prepared false federal income tax returns for numerous clients of the business to generate false, inflated federal refunds.
The four documented on Schedules C that clients owned fictitious businesses which maximized the Earned Income Tax Credit; they also fraudulently reported that clients were entitled to claim credits for fuel taxes or education expenses.
Westminster, California: Tax preparer Anton Nguyen, 54, of Fountain Valley, California, has pleaded guilty to one count of conspiracy to defraud the U.S. in connection with schemes that caused nearly $3.8 million in losses.
Nguyen operated Century Tax & Travel and from 2012 to June 2019 he and conspirators filed hundreds of returns using others' personal ID information without permission to generate fraudulent refunds.
One of the conspirators was John Tran, believed to be either 57 or 61 years old, also of Fountain Valley and an Orange County Social Services Agency case worker from July 1994 to October 2018. He stole Social Security numbers and other ID information from his clients, many of them recent immigrants, and with his conspirators used this information to fraudulently obtain money from the federal government, the State of California, Orange County and financial institutions. Tran pleaded guilty in 2019.
Nguyen used the stolen information that Tran provided to create 1099-MISCs that falsely showed payments made to the victims by companies, including those controlled by Tran and other accomplices. Nguyen prepared and filed federal income tax returns using the stolen IDs and then used the purported payments on the fraudulent 1099s as income to the victims, making them appear to qualify for tax credits, including the EITC and the Child Tax Credit.
In turn, the reported payments to the ID-theft victims were used by Nguyen's clients to offset business revenues and reduce the taxes they owed by making it appear that the victims worked for them. In exchange for the fabrication of the 1099s, Nguyen's clients paid him a fee.
In total, Nguyen and his co-conspirators defrauded the U.S. out of at least $3,773,282. Prosecutors have secured seven guilty pleas connected to this scheme.
Nguyen's sentencing is July 24, when he will face up to five years in prison.
New York: Swiss exec Daniel Wälchli has pleaded guilty to conspiring to defraud the U.S. in connection with a scheme to help wealthy American clients hide more than $60 million in income and assets and evade U.S. income taxes.
Wälchli was a member of the executive board of a Swiss holding company that owned, among other entities, a Zurich-based private bank called Privatbank IHAG Zurich AG. From around 2009 to around 2014, Wälchli and conspirators defrauded the IRS by concealing income and assets of three wealthy U.S. clients with undeclared bank accounts at IHAG in a scheme dubbed the "Singapore Solution."
Wälchli and his co-conspirators also agreed to transfer more than $60 million from undeclared IHAG bank accounts of the U.S. clients through a series of nominee bank accounts in Hong Kong and other locations before returning the funds to newly opened accounts at IHAG in the name of a Singapore-based asset-management firm that Wälchli helped establish. The U.S. clients paid large fees to IHAG and others in connection with the scheme.
Wälchli faces up to five years in prison.
Detroit: A federal district court has entered a preliminary injunction against tax preparers Herman "Eddie" Simmons, Richmond Simmons and Profile Income Tax Co., d.b.a. Simmons Income Tax Company, enjoining them from preparing federal income tax returns for others through the resolution of their case.
The government supported its motion with 12 sworn declarations in which clients disavowed various aspects of the returns that the defendants had prepared for them, in particular false and inflated deductions for charitable contributions.
The court rejected the defendants' contention that they had made "honest mistakes" in the returns, finding that their claim that they simply reported whatever their customers told them was not credible.
Lexington, South Carolina: Tax preparer Jeffrey Harmon has pleaded guilty to two counts of filing false tax returns.
He owned and operated TFL Worldwide, a tax prep business through which he prepared and filed returns for clients that claimed fraudulent deductions relating to, among other things, rent, utilities, meals, gifts, dues and depreciation.
Harmon admitted to filing a false 2012 return for himself and to aiding and assisting in the preparation of a 2016 return claiming false deductions for rent and depreciation for one of his clients. Harmon agreed that the tax loss totaled some $320,000.
He faces up to three years in prison for each count, as well as a period of supervised release, monetary penalties and restitution.
