Some of our favorite recent tax fraud cases.
Pittsgrove, N.J.: Preparer Grace Garrett, 63, has pleaded guilty to charges of conspiring to aid and assist others in the preparation of false and fraudulent returns.
According to authorities and testimony, for the tax years 2007 through 2011, Garrett, a preparer at Pender Tax Services in Rosenhayn, N.J., and a conspirator sought to generate increased referrals, enhance their business and enrich themselves by preparing and filing income tax returns based on false information. They used a number of fraudulent practices, including falsely claiming head of household filing status, inventing and inflating deductions, creating fictitious dependents, and creating false credits for education and childcare.
Although taxpayers generally met with Garrett or the conspirator to provide information to prepare their tax returns, it was routinely the conspirator whose name appeared as the preparer of the return.
The bogus returns resulted in a tax loss to the government of more than $340,000.
The conspiracy charge to which Garrett pleaded guilty carries a maximum of five years in prison and a $250,000 fine. Sentencing is Sept. 11.
Louisville, Ky.: The U.S. has filed to permanently bar a preparer Napoleon L. Jackson and his business, NJ Mobile Tax Service LLC, from preparing federal income tax returns for others.
According to the complaint, Jackson has prepared federal returns that improperly understated clients’ income tax liabilities. According to the suit, in a flyer for NJ Mobile Jackson offers to travel to clients’ homes and prepare their returns. The flyer invites potential clients to “Let me do the numbers & I’ll even come to you,” and boasts that “[Jackson] can increase your chances for a higher return.”
The complaint alleges that Jackson understated clients’ federal tax liabilities by, among other things, falsely claiming deductions related to home ownership for taxpayers who did not own homes, including cases where Jackson prepared and filed returns from clients’ rental homes; falsely claiming dependents, including listing Jackson’s relatives, on a client’s return; fabricating charitable contributions and offering to falsify letters from a church that indicated the clients contributed $5,500 in cash to the church that the clients had not in fact donated; and falsely claiming education credits for taxpayers who were not entitled to them.
The IRS audited 31 tax returns that Jackson prepared for 20 clients for tax years 2010 and 2011 and found an increase in taxes owed for every return, according to the suit. The complaint further alleges that Jackson prepared at least 162 returns from 2010 to 2011, and continues to prepare returns today.
The suit alleges that Jackson’s conduct may have cost the U.S. Treasury more than $800,000.
Porterville, Calif.: Preparer Marie E. Sherrill, 54, has been arrested on charges of wire fraud, money laundering, aiding the preparation of false tax returns, and corruptly interfering with the administration of the internal revenue laws.
According to court documents, Sherrill operated the bookkeeping and tax prep business Sherrill Financial Services and between January 2011 and December 2014 allegedly prepared returns for clients that contained false deductions to inflate refunds, causing an alleged loss to the IRS of $255,901.
She allegedly attempted to obstruct IRS audits of her clients and prepared and filed returns using someone else’s EFIN.
The indictment also alleges that Sherrill used the intimate financial knowledge she gained about her various clients to identify potential victims she could lure into an investment fraud scheme. She allegedly told victims of this scheme that their money would be put into “pooled investments” with the money of other investors, to earn a high rate of return.
The money was, in fact, never put into any investment, but was used instead to pay Sherrill’s personal expenses or to make lulling payments to earlier investors, to make them believe their money was earning a profit.
The indictment alleges that this scheme defrauded at least 17 victims of at least $1.3 million in total.
If convicted, Sherrill faces a maximum of 20 years in prison on each count of wire fraud, 10 years on each count of money laundering and three years on each tax charge. She also faces a $250,000 fine on each count.
Omaha, Neb.: Preparer Adam Mwanza, 43, of Miami, has been convicted on 13 counts of tax fraud for his involvement in assisting in the preparation of false returns.
Authorities said that in tax years 2007 and 2008 Mwanza provided tax prep services to a primarily immigrant clients. He e-filed returns that falsely claimed rental deductions for what people were paying for their monthly rent expense and he fabricated adjusted gross incomes, inflating refunds.
Sentencing is Aug. 7, when Mwanza faces three years in prison and a $250,000 fine on each count.
Oakland, Calif.: Preparer and former IRS employee Valorie Shaw, 38, has received two years in prison and been ordered to pay $309,834 restitution for conspiring to file false claims.
Shaw, who pleaded guilty on Jan. 23 to conspiracy to file false claims, was a preparer at the tax prep firm Kwiktax for three years. Prior to working at Kwiktax, she held a variety of jobs, including as a document transporter for the IRS.
During 2011 and 2012, Shaw prepared and filed false returns on which the purported filers were not entitled to refunds because the wage and tax withholding information on the returns were fictitious. She also filed false W-2 information that stated the purported filers worked for the employers listed on the W-2s, even though she knew the information was false.
Shaw filed the false returns using personal information she obtained illegally, specifically personal ID information of unwitting Kwiktax clients, including names, dates of birth and Social Security numbers.
During 2011, she assisted in filing false returns requesting refunds in an amount no less than $487,248, for the 2010 tax year. During 2012, she helped file false returns requesting refunds totaling $495,789 for the 2011 tax year.
Shaw was indicted on Aug. 14, 2014, charged with conspiracy to file false claims. She pleaded guilty.
