Flat-out invented; 500 months; diverted income; and other highlights of recent tax cases.
Aurora, Colorado: A Colorado business owner pleaded guilty to filing a false personal tax return with the IRS.
Manuel Rocha, of Aurora, owned and operated Rocha's Drain, a drain installation business, and Rocha's Liquor, a liquor store, both located in Denver. While operating these businesses, Rocha diverted income to additional bank accounts to conceal the true amount of money he earned.
Each year from 2015 through 2022, Rocha provided records and information to his tax preparers that omitted his diverted income. As a result, he underreported the income he and his businesses earned during each of these years. In 2021 Rocha reported that his two businesses earned $57,907 in gross receipts. In reality, the businesses earned approximately $691,650.
In total, Rocha caused a tax loss to the U.S. of approximately $2.2 million.
Rocha is scheduled to be sentenced on August 25 and faces a maximum of three years in prison for filing a false tax return.
Jacksonville, Florida: A sales representative will spend nearly two years in federal prison after dodging more than $3.7 million in federal income taxes over a 13-year period.
Phillip Mak of Jacksonville was sentenced to 22 months in prison following a guilty plea to one count of tax evasion. Mak raked in over $10 million between 2008 and 2020. Despite receiving multiple reminders from the IRS and facing a notice of federal tax lien on his property, Mak had paid zero federal income taxes by the end of 2021. Instead of settling his debt, Mak actively shielded his money from federal authorities. Between 2019 and 2021, he routed $1 million to his domestic partner and signed over his house to a trust his partner controlled. He also set up a corporate entity to hide his personal earnings in a business bank account.
On top of his 22-month prison term, Mak must serve three years of supervised release and pay $3,751,485 in restitution to the U.S. government.
Sacramento, California: A Sacramento man was sentenced to 12 months and one day in prison for falsifying tax returns for more than 20 clients, resulting in the IRS losing $270,592.
Toyed Xiong, 40, was convicted of one count of aiding or assisting in the preparation or presentation of a false or fraudulent tax return.
From 2018 through 2021, Xiong falsified records to increase his clients' tax refunds and reduce their tax liabilities. He reported false businesses, false income, false expenses and false deductions for his clients.
Xiong falsely reported that one client incurred $10,017 in business losses when the client did not operate any business.
Along with the prison sentence, Xiong was also ordered to pay restitution to the IRS.
Minneapolis: Aimee Bock, 45, the former head of Minnesota nonprofit Feeding Our Future, was convicted of fraudulently receiving $250 million in federal funds meant to feed underprivileged children, and was sentenced to 500 months — or 41-and-a-half-years — in prison.
The nonprofit sat atop a fraud network involving partner organizations, phony distribution sites, kickbacks and fake lists of children supposedly being fed. Dozens of people have been convicted for their roles in a series of overlapping food fraud cases that have spent years winding through the courts.
Prosecutors have charged 78 defendants, and more than 60 have either been convicted or pleaded guilty in connection with the scandal.
Brooklyn, New York: A Brooklyn tax preparer who helped steer what prosecutors call one of the largest COVID-era tax credit scams in the country is headed to federal prison after a judge handed down a three-year sentence.
Tiffany Williams, 43, pleaded guilty to a single count of wire fraud tied to a sprawling plot that tried to squeeze more than $600 million out of pandemic-era tax credits. The group inflated or flat-out invented claims for the Employee Retention Credit and the paid sick and family leave credit, filing thousands of bogus quarterly payroll returns that ultimately brought in roughly $45 million before investigators shut the operation down.
Williams and her co-conspirators submitted the fraudulent filings between November 2021 and June 2023, sending in more than 8,000 returns in that period.
The crew leaned on shell companies and fake payroll records, then quietly filed returns that left off paid-preparer information in an apparent effort to hide who was really behind the paperwork.
The group also relied on virtual private networks to help obscure their activity and pushed more than 8,000 returns that collectively sought over $600 million in credits. All told, the scheme generated more than $44 million in payouts.
Kansas City, Missouri: A Kansas City woman was sentenced for filing false tax returns for others.
Tanisha Spencer, 35, was sentenced to 18 months in federal prison without parole. The court also ordered Spencer to pay restitution of $730,709.00 to the IRS. Spencer pleaded guilty to one count of aiding and abetting the preparation and filing of false tax returns.
Spencer prepared income tax returns for pay for persons who contacted her via Facebook. She prepared the income tax returns in Kansas City, Missouri, and the returns were electronically filed with the IRS in Kansas City. The federal income tax returns prepared by Spencer included fraudulent sick leave and family leave credits, illegitimate fuel tax credits and fraudulently inflated federal tax withholdings. By including these and other fraudulent items on the client's tax returns, Spencer was able to manufacture substantial refunds to her clients that they would not have been entitled to if the returns had been accurately prepared.
Spencer charged her clients a return preparation fee of between $500 and $14,840 per return. The 156 returns that Spencer prepared claimed $4,047,531 in refunds, of which the IRS paid $689,872.
