Some of our favorite recent tax fraud cases.
Lynn, Mass.: Preparer Arismendy Ramos, a.k.a. Arismendi Ramos and Aris Almonte, has been arrested on four counts of filing false tax returns and two counts of obstructing the IRS.
According to the complaint, Ramos owned and operated Almonte Tax and allegedly filed false forms with the IRS claiming that he paid the clients to work for him when, in fact, he had never employed them. He then allegedly claimed the bogus wages as business expenses on his own personal returns, illegally reducing his own taxes. He also allegedly told two clients to lie if they were asked about the false wages.
Ramos faces a maximum of three years in prison, one year of supervised release and a fine of $250,000 for each count.
W. Hartford, Conn.: Preparer Hai T. Le, 44, has pleaded guilty to three counts of filing a false claim with the IRS in connection with false returns.
According to court documents and statements made in court, Le prepared federal returns for individuals in his community, many of whom were family or friends. Le typically asked clients to provide prior returns and, in addition to preparing the client’s current-year return, made and kept copies of the prior returns.
Le admitted that after certain clients received a current-year refund, he used the prior returns to prepare false amended returns, purportedly on behalf of his clients. The amended returns included such false information as unwarranted residential energy credits, education credits, and tuition and fees deductions, and incorrectly reflected that the taxpayer was entitled to an additional refund. Unknown to his clients, Le filed the amended returns with his own residence as the return address.
In most cases, the IRS sent a refund check to the listed address. Le then endorsed his client’s name and his own on the reverse of the check to make it appear that the check had been signed over to him, and deposited the check into one of his bank accounts. He used the money for living expenses and to buy a $50,000 certificate of deposit.
Between March and August 2010, Le prepared and filed 28 fraudulent amended federal returns to obtain $138,826 in refunds. Six refunds, totaling $32,752, were stopped prior to a check being issued, resulting in an actual loss to the IRS of $106,074.
Sentencing is Sept. 1, when Le faces a maximum 15 years in prison, a fine of up to $250,000 and an order to make full restitution.
New Iberia, La.: A federal court has barred preparer Joyce Bougere-Keyes and her business from preparing federal returns for others.
The government’s complaint alleged that Bougere-Keyes and Joyce Tax & Financial Service LLC prepared federal income tax returns for clients that reported phony business income and expenses to fraudulently inflate the EITC for clients.
According to the complaint, many of her clients reported that they were unaware that their returns contained business income or expenses, or confirmed that the returns otherwise misrepresented these items.
The IRS audited 71 federal income tax returns filed by her clients for tax year 2010, which resulted in the disallowance of $210,571 in improper EITCs on those returns alone, according to the suit. The complaint further alleged that Bougere-Keyes improperly claimed education credits for taxpayers.
Bougere-Keyes has prepared more than 7,500 individual returns since 2009, according to the suit. Loss to the U.S. Treasury likely exceeds $1 million, according to the complaint.
San Francisco: The U.S. has reportedly filed to bar Enrolled Agent Timothy Conn Vu from implementing, facilitating and promoting allegedly abusive tax shelters and tax avoidance schemes.
According to the complaint cited in news reports, one tax avoidance scheme that Vu promoted illegally avoided corporate income taxes on gains received from the sale of corporate assets. Additionally, Vu reportedly promoted a scheme that illegally avoided taxes on the gains from selling transferrable state tax credits.
According to the complaint, in many instances Vu served as the sole officer, director and/or manager of the five companies that were used to carry out these schemes, and he signed many of the documents on behalf of those companies, reports added.
In one transaction reportedly described in the complaint, a company that Vu managed allegedly bought all of the stock of a closely held corporation shortly after that corporation sold its assets to a third party; the asset sale generated capital gains. The complaint alleges that, once it owned the stock, the company that Vu managed offset the tax liability from the asset sale using a purported bad-debt deduction based on bogus losses from a distressed asset debt and/or distressed asset trust shelter, according to published reports.
Vu, as an officer of the companies perpetrating these schemes, also signed and then filed with the IRS many of the corporate returns that claimed bogus losses to offset the income on which the corporations should have paid substantial federal taxes, according to the cited complaint.
The complaint alleges that Vu’s participation in these abusive tax schemes has generated more than $515 million in bogus deductions that have led to federal income tax deficiencies of at least $129 million, reports added. He allegedly earned $3 million in compensation, according to the cited complaint.
Columbus, Ga.: Preparer Danielle Wallace, 36, has entered a plea of guilty to charges of wire fraud, aggravated ID theft and filing false income tax returns.
As a part of her plea agreement, Wallace admitted to filing more than 180 fraudulent returns between Jan. 1 and March 24, 2014, when she worked for Blue Cross/Blue Shield, fielding customers’ calls. She obtained personal information from the customers during the calls and then filed phony income tax returns through “Simple Cash 1,” a tax prep business she owned and operated.
The attempted and actual loss, the amount of funds that was obtained by fraud, is approximately $494,000.
For the wire fraud charge, Wallace faces a maximum of 30 years in prison, a maximum fine of $1 million or both. For aggravated ID theft, she faces a mandatory two years in prison, consecutive to any other sentence. Filing false income tax returns carries a maximum of five years’ imprisonment and a $250,000 fine.
Vineyard Haven, Mass.: CPA Roger A. Armstrong, 61, has been sentenced to three years of probation, the first nine months of which are to be served in home confinement, and been ordered to pay a $3,000 fine for filing returns in which he underreported more than $800,000 in income for three years.
Armstrong owned rental property in Massachusetts and Florida and was required to report gross receipts and his business profit or loss on his individual income tax returns and also was to report any rental income he received. For tax years 2009 through 2011, he filed returns in which he significantly underreported both his business gross receipts and his rental income, specifically $790,000 in gross receipts and $47,000 in rental income.
As a result of the underreporting, he did not pay $200,000 in taxes.
In January, Armstrong pleaded guilty to three counts of filing returns, and at the sentencing hearing paid $389,365 restitution, which included his taxes owed, as well as interest and penalties.
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