Tax Fraud Blotter: For whom the Pell tolls
Two decades and tens of millions; bank error; dirty deal; and other highlights of recent tax cases.
Kansas City, Mo.: Resident Ashwini Kumar, 54, has pleaded guilty to filing a false return.
Kumar admitted that he filed false returns for 2014, 2015 and 2016; his 2014 return falsely claimed $32,000 in taxable business income when he knew his true taxable business income was $174,996; his 2015 return falsely claimed $19,218 in taxable business income when he knew his true taxable business income was $157,596; and his 2016 return falsely claimed $26,081 in taxable business income when he knew his true taxable business income was $173,421.
The false returns filed by Kumar for those three years resulted in a tax loss to the government of $136,277, not including interest or penalties. After the federal investigation was initiated, Kumar paid $136,277 in restitution to the IRS. Those returns were used in the filing of false Pell Grant applications from 2014 to 2018.
Kumar is subject to a sentence of up to three years in prison without parole.
Long Beach, Calif.: CPA Carol Ann Pedersen, 66, has pleaded guilty to a federal wire fraud charge for running a Ponzi scheme that defrauded her victims, many of whom were clients of her accounting firm, out of tens of millions of dollars over two decades.
According to her plea agreement, between 1996 and September 2017 Pedersen executed her scheme by serving as her victims’ unlicensed investment advisor. Through her firm, Carol A. Pedersen CPA, she solicited her accounting clients’ investments through two types of investment opportunities: “Time Deposit” and “Client Pool.” The victims were told that Time Deposit would invest in low-risk securities providing a fixed return on their money after a period of time while Client Pool would invest their money in the stock market through an investment pool Pedersen had established with other investors’ funds.
Pedersen’s victims invested more than $40 million into these accounts; loss to the victims was at least $27,550,720.40.
Pedersen admitted that after she took her victims’ money, deposited the funds into her personal accounts and then used that money to pay her credit card bills, establish trust accounts for her family and purchase real estate. Pedersen used some of her victims’ money to make distribution payments to her other victims, and she falsely represented the payments as returns on their investments. She also admitted to avoiding detection by creating fraudulent documents, including false account statements and an online “virtual portfolio” that she falsely represented enabled her victims to track their investments’ progress.
Sentencing is July 10, when Pedersen faces a maximum of 20 years in prison.
Green Bay, Wis.: Preparer and former resident Alma Ramirez, 40, has been sentenced to four years in prison to be followed by three years of supervised release and been ordered to pay $301,370 in restitution for filing false returns.
Ramirez, who now lives in Alabama, pleaded guilty to wire fraud, assisting in the filing of false returns and aggravated identity theft.
According to the plea agreement, from March 2013 through May 2016 Ramirez and others working with her and at her direction prepared and filed more than 60 false federal income tax returns in the names of various individuals, seeking more than $300,000 in federal refunds. The returns included false information concerning employment, wages, federal taxes withheld from those wages, dependents and eligibility for various tax credits.
Ramirez also committed ID theft by illegally using the names and Social Security numbers of unwitting individuals.
La Crosse, Wis.: Victor Karpiak, 64, former CEO of First Savings Bank Northwest in Renton, Wash., has pleaded guilty to filing a false return, admitting that between 2010 and 2016 he failed to report more than $2.3 million in income on his taxes.
Karpiak retired in 2013 and moved from the Seattle area. According to the facts admitted as part of his plea, between 2010 and 2016, he served as a trustee and consultant for a woman who was the beneficiary of a family and a marital trust. Over those years Karpiak paid himself fees of $3,265,072 but on his taxes reported less than a third of that income. The tax loss is $867,540.
He agreed to pay $867,540 to the IRS as well as any interest or civil penalties; the interest alone in this case could total more than $143,647. Sentencing is May 17. Filing a false return is punishable by up to three years in prison and a $250,000 fine or twice the gross tax gain or loss.
Plainfield, N.J.: Two preparers have admitted their roles in conspiring to defraud the IRS, filing false personal tax returns and witness tampering.
Samuel Davis Jr., 52, pleaded guilty to one count of conspiring to defraud the IRS by aiding and abetting the filing of false returns, one count of filing false personal returns and one count of witness tampering. Kyna Felder-Ruiz, 35, pleaded guilty to one count of conspiring to defraud the IRS by aiding and abetting the filing of false returns.
According to case documents and statements in court, Davis owned and operated the prep firm Get Organized Tax & Accounting. Davis retired as a detective sergeant from the N.J. State Police in 2016 after 28 years. Felder-Ruiz, who was employed by the N.J. State Police as a public safety dispatcher for approximately two years, was employed as a tax preparer at Get Organized.
For tax years 2011 to 2016, the two prepared false individual income tax returns for various clients. They used a number of fraudulent practices, including falsely claiming deductions and fabricating educational credits to inflate refunds. For tax years 2012 through 2014, Davis filed false personal income tax returns by underreporting business income. He also admitted that in October he became aware that his son had received a subpoena to appear before a grand jury and admitted to attempting to persuade his son to provide false testimony. The tax fraud conspiracy charge carries a maximum of five years in prison and a $250,000 fine, and the witness tampering charge a maximum of 20 years in prison and a $250,000 fine. Sentencing for both defendants is June 11.
Altus, Ark.: Preparer Amber Barbour, 36, has pleaded guilty to charges she inflated federal income tax deductions for clients and took some of the resulting higher refunds for herself, according to published reports.
Barbour has agreed to pay $112,443.47 in restitution, according to her plea agreement with the government, news sources said, adding that the government said the total tax loss was more than $250,000 but less than $550,000.
The plea agreement reportedly said Barbour prepared returns for clients for tax years 2012, 2013 and 2014. IRS investigators reportedly identified at least 23 returns that appeared to contain false information intended to increase the refund. They included such things as deductions for gifts to charity. In one of the two cases for which Barbour pleaded guilty, news outlets said, a return prepared in 2014 for a client identified as R.M.A. listed the client as head of household, for which he did not qualify, reported $54,038 in itemized deductions that contained false information and $29,675 in gifts to charity. R.M.A. reportedly denied that he provided that information to Barbour.
The other charge to which Barbour pleaded guilty was a return for R.A., R.M.A.’s wife, according to the cited plea agreement. In it, Barbour reportedly listed R.A. as the head of household, for which she did not qualify. Barbour also reported R.A. as the sole proprietorship of a business cleaning houses that Barbour named “Rhonda’s Dirt Away,” reports said, listing gross for the business as $15,000.
The cited plea agreement said R.M.A.’s 2014 returns claimed a refund of $11,089 and R.A.’s return a refund of $4,981. The total for the two was $16,070, inflated by $6,957. Barbour directed $7,400 of the refund amounts to her bank accounts, according to cited plea agreements.
Barbour reportedly faces up to three years and a fine of up to $250,000 on each charge.
Kingston, N.Y.: Tax preparer and CPA Boris Sukenik, 67, owner and operator of Sukenik Tax Center, has paid $85,714 in taxes, penalties and interest after pleading guilty to charges related to filing false returns for clients and himself.
Sukenik’s charges related to misreporting income on clients’ returns in a scheme to claim larger earned income tax credits and refunds.
Sentencing is June 3, when he faces three years of probation and an order to pay additional fines totaling $11,000.