Some of our favorite recent tax fraud cases:
Cincinnati: Preparer Mark Dicks, 48, has been sentenced to 15 months in prison and three years of supervised release and ordered to pay $350,478 in restitution to the IRS for filing false claims for federal income refunds.
According to court documents, between January 2009 and January 2010 Dicks, who pleaded guilty on February 25, operated Brown and Garcia Tax Service and EZ Tax Service, and for the 2008 and 2009 tax years filed false claims for refunds with the IRS.
Most returns prepared and e-filed by Dicks for his clients contained false Schedule Cs, with self-employment income claimed from occupations such as child care, hair care, cleaning and janitorial, and clerical work. In fact, most of his clients had little or no legitimate income and used the falsehoods to qualify for the EITC and inflate refunds.
Dicks prepared the returns with the intention of receiving part of the phony refunds, most of which were deposited onto prepaid debit cards that Dicks activated to withdraw his funds before providing his clients with the remaining balance. He caused at least 92 false claims for refunds to be filed with the IRS, costing the government $350,478.
Detroit: Preparer Tiffiny Coleman, 35, has pleaded guilty to her involvement in a conspiracy to file fraudulent returns with the IRS.
According to court records, in 2010 Coleman conspired with others to prepare and e-file federal income tax returns for the 2009 tax year that were false and fraudulent. The conspiracy involved approximately 100 returns that stated that the taxpayers were employed by various businesses and had part of their wages withheld for federal income taxes when, in fact, Coleman and the others knew that the taxpayers were not employed and that the W-2s were false. In total, the returns caused some $482,977 in refunds to be paid out.
Sentencing is October 7, when Coleman faces a maximum of 10 years and a fine of $250,000. In addition, she will be required to pay full restitution to the IRS.
Margate, Fla.: Preparer Louis A. Francois, 44, has been sentenced to five years in prison to be followed by two years of supervised release, and ordered to pay $355,000 restitution after pleading guilty to one count of wire fraud and one count of aggravated ID theft.
According to court documents, Francois owned and operated the tax prep business A&I Multi Services in Oakland Park, Fla., where he stole personal ID information of various individuals including names, dates of birth, Social Security numbers and addresses to file fraudulent U.S. income tax returns that claimed refunds in those individuals’ names. Subsequently, Francois printed out the refund checks payable to the persons whose ID information was used at A&I.
The checks were in the amount of the fraudulently obtained refunds minus his “tax preparation” fees and other fees. The fees were deposited into Francois’ bank account; he then went to a check-cashing store next door to A&I with the refund checks and fraudulent Florida drivers’ licenses matching the stolen IDs on the checks.
From July 2010 through June 2011, the total amount of U.S. Treasury checks cashed by Francois and the total amount of fraudulent refunds he requested was approximately $355,000.
Laredo, Texas: Preparer Michelle A. Morin pleaded guilty to aiding and assisting in the preparation of false and fraudulent returns.
Morin, who owned and operated Discount Tax Service, has admitted to costing the federal government more than $228,000 in lost taxes. Between tax years 2007 and 2010, Morin willfully placed false items on returns she prepared for clients. She also directed portions of some taxpayer refunds into her personal bank account.
As part of her plea, Morin admitted fraudulently claiming a false Schedule C loss in the amount of $83,184 for a non-existent online business on one taxpayer’s 2009 return. She also fraudulently reported $2,000 in residential energy credits that she knew the taxpayer was not entitled to claim and subsequently directed $2,000 of the false refund to her personal account.
At sentencing, Morin faces up to three years in federal prison and a possible $250,000 fine.
Detroit: Preparer Matthew Bender has been convicted of failing to appear at a bond hearing last July, which was to adjudicate Bender’s noncompliance with the conditions of his pretrial release on federal tax charges. Trial evidence showed that Bender attended a family reunion in Ohio and flew to Texas in the summer of 2013 after a warrant was issued for his arrest.
He was convicted in March of obstructing the IRS and on nine counts of aiding and assisting in the preparation of false federal income tax returns. According to court documents and evidence, Bender prepared more than 3,000 returns between 2006 and 2011 and earned over $500,000 in fees. He failed to report his own income to the IRS and inflated clients’ refunds with false deductions.
Dayton, Ohio: CPA Larry Couchot, 59, president and part owner of an accounting firm in Centerville, Ohio, and who prepared the returns of businessmen associated with Cadillac Ranch restaurants, has pleaded guilty to tax charges.
According to court documents, Couchot admitted that for tax years 2006 through 2010 he assisted in preparing false income tax returns for individuals associated with the Cadillac Ranch restaurants, which caused a tax loss of over $191,000 to the IRS. Three individuals have since pleaded guilty to tax changes related to Cadillac Ranch.
Authorities said that from 2006 through 2010, Couchot was aware that these individuals used substantial company funds for personal expenses, including payments for their cars, car insurance, country club dues, personal credit card charges and individual income taxes. Couchot also admitted that he was aware that one individual used company funds to pay for other personal expenses, including lawn services, repairs and maintenance to personal residences, granite countertops and TV and audio systems. Couchot admitted that he prepared false federal income tax returns that failed to report these items as income on two individuals’ income tax returns.
At sentencing, Couchot faces a maximum of three years in prison, a $250,000 fine and a year of supervised release for each of the two charges.
Wethersfield, Conn.: Preparer Kenneth Zito, 51, has received three years of probation (the first 10 months of which will be in home confinement) for evading taxes on more than $200,000 in income.
According to court documents and statements in court, Zito worked at Daniel Zito Financial Services, a South Windsor, Conn., financial services firm owned by his father where he prepared returns for individuals and businesses. Between 2007 and 2009, Zito cashed checks he received from clients as payment for his services but did not deposit the checks or declare them on his federal return. As a result, ZITO did not report $219,759.32 in income during the three years and failed to pay $59,621 in federal income tax.
On March 18, Zito pleaded guilty to one count of tax evasion, and prior to his sentencing paid $124,241 in back taxes, interest and penalties. He was also ordered to pay a fine of $6,350 and to perform 300 hours of community service.
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