Tax Fraud Blotter: Father crime
Salon scam; Mr. Guilty; secret identity; and other highlights of recent tax cases.
Brentwood, New York: Business owner Jose Cerritos has pleaded guilty to corruptly endeavoring to obstruct and impede internal revenue laws.
Cerritos owned and operated La Centro Americana Corp., a wholesale food distribution business that sold imported food products for resale in the New York metro area. Cerritos diverted cash receipts from the business bank accounts, which caused La Centro’s returns for 2011 and 2012 to underreport the size of the business and its profits. He also filed individual income tax returns, falsely understating the income he received from La Centro.
Sentencing is March 6, when Cerritos faces a maximum of three years in prison. He also faces a period of supervised release, restitution and monetary penalties.
Kingston, Pennsylvania: Judith Cefaly, 54, of Mountain Top, Pennsylvania, has been sentenced to two years in prison and two years of supervised release for failing to remit federal payroll taxes.
Cefaly was the former general manager and part owner of Shakti Inc., a beauty salon and spa, from 1997 through 2017. Cefaly previously pleaded guilty that she withheld payroll taxes from employees’ paychecks, but failed to remit those taxes to the IRS. Over tax years 2011 through 2016, she failed to remit more than $646,000 of those federal taxes, instead using the funds for her personal benefit.
Cefaly was also ordered to pay $646,620.26 in restitution.
Milwaukee: Business owner Tedmund Blankschein, 51, has pleaded guilty to one count of conspiracy to defraud the U.S. by impeding the IRS in connection with his and Albert Golant’s luxury vehicle brokerage businesses from at least May 2013 to May 2017.
Blankschein and Golant were in the business of purchasing luxury vehicles in the U.S. and selling them at a substantial profit to buyers overseas, typically in China. Blankschein and Golant had control over multiple business and personal bank accounts that they used to divert corporate receipts of WI Automotive T.R.U.S.T., Lease, Registration, and Consulting LLC, and DOT Automotive of WI LLC, which were supposed to be used to purchase specific luxury vehicles. Golant also told their accountant that these funds were used to purchase luxury vehicles and should be deducted as expenses. Their returns substantially overstated business expenses. Blankschein and Golant underreported their income by more than $12 million, generating a federal tax loss of more than $5.4 million.
This offense carries a maximum of five years in prison and a fine of up to $250,000, or both.
Brooklyn Park, Minnesota: Preparer Eric “Papa Eric” Willor, 70, has been sentenced to two years in prison after pleading guilty to one count of aiding and assisting in the preparation of a false return.
Willor ran Willor’s Tax Preparation and Planning out of his home, where he prepared and filed returns using false charitable contributions, medical expenses and educational expenses to inflate undeserved refunds for clients. Between 2012 and 2017, he prepared and filed some 100 fraudulent returns that claimed some $316,000 in refunds.
He was also sentenced to three years of supervised release and ordered to pay $316,979 in restitution.
Phoenix: Kevin Jeffory Rocheteau has pleaded guilty to filing false claims with the IRS.
On Feb. 26, Kathie Jane Bonenberger also pleaded guilty to filing false claims with the IRS.
Beginning in 2016, Rocheteau, through video calls from a county jail, recruited Bonenberger to file false claims with the IRS. On the two occasions when the scheme succeeded, Bonenberger received refund checks and deposited them in bank accounts she controlled.
During the course of the false tax filings in the name of third parties, Bonenberger, at Rochetau’s direction, filed 35 false returns and claimed $165,000 in refunds. The IRS ultimately paid out on two refunds for a total of $11,255.
Rocheteau’s sentencing is Jan. 27. Bonenberger’s sentencing is Dec. 17.
Norfolk, Virginia: Two former managers of a Virginia Beach tax service have been sentenced to prison for their roles in preparing false returns for clients.
Markita D. Simon, 32, of Rocky Mount, North Carolina, and manager of the now-closed Express Tax Preparation Services, was sentenced to nearly five years. Express assistant manager Tinesha L. Bert, 33, of Norfolk, was sentenced to more than four years.
From December 2014 to February 2016 the two were responsible for using false information in clients’ returns to generate a higher refund. In some cases, they falsely stated that a client had dependent children; they also filed returns using the names and Social Security numbers of real persons without their knowledge.
The court found that the two were responsible for tax losses of some $377,000.
Milledgeville, Georgia: Preparer Willie Moore Jr., 48, of Braselton, Georgia, has pleaded guilty to one count of conspiracy to defraud the U.S. in connection with manipulating and falsifying client information on returns.
Co-defendant James Prather, 47, of Douglasville, Georgia, pleaded guilty in May to causing a $1 million loss to the federal government.
Moore and Prather orchestrated a tax fraud through Moore’s tax prep business, AMAB Enterprises, d.b.a. Mr. Tax Etc. Investigators identified 5,529 suspicious federal income tax returns for the 2011 through 2014 tax years, with 97 percent of the returns receiving a refund. Moore admitted that he listed fraudulent businesses, profits, educational expenses and household income. Most of the clients interviewed stated that their income tax returns were not explained to them nor were they reviewed with them. Some clients never even received a copy of their returns or were given partial copies missing pages or schedules.
The conspiracy charge carries a maximum of five years, a maximum fine of $250,000 and up to three years of supervised release. Both defendants agreed to be permanently enjoined from preparing or filing federal returns for others.
Phoenix: Preparer Erik Allen Ketelaar, 35, has been sentenced to three years in prison and three years of supervised release, and been ordered to pay $573,000 in restitution to the IRS, third-party processors and individual taxpayers after pleading guilty to wire fraud.
In 2013 and 2014, Ketelaar owned and operated Tio Sams Taxes. He hired and trained Spanish-speaking staff and marketed tax services to nonresident and resident aliens living in Hispanic communities in the Phoenix area. Ketelaar controlled how all returns were completed and had most of the client refunds directed to bank accounts or addresses he owned and managed. He stole more than a half million dollars in refunds.
Hildale, Utah: Alma Barlow and Denver Barlow have each been sentenced to two years in prison for conspiracy to file false claims.
From 2009 to 2014, the defendants held themselves out as legitimate tax preparers, though they filed more than 700 false returns for themselves and hundreds of unknowing clients, claiming more than $9.7 million in false federal refunds. They also added false entries to returns to trigger the Earned Income Tax Credit or added false figures for federal income tax withholdings or Schedule C expenses to inflate refunds.
The Barlows were also each ordered to three years of supervised release and to pay more than $5.3 million in restitution to the U.S.
Tucson, Arizona: Preparer Adan Ramirez, 36, has pleaded guilty to two counts of aiding and assisting in the preparation and presentation of a false return.
From April 2012 through March 2015, Ramirez prepared and filed 44 false federal income tax returns for clients. He used false and fraudulent claims for false wages, withholdings, dependents, EITCs and Additional Child Tax Credits to inflate refunds and his fees, resulting in a tax loss of $183,803. Ramirez also intentionally omitted his name, signature and PTIN on the returns to conceal his identity as the preparer.
Sentencing is Jan. 17. He agreed to pay $100,479 in restitution to the U.S. Treasury.