Tax Fraud Blotter: Fraud abloom
A repeat offender gambles, then loses; targeting the homeless; and other highlights of recent tax cases.
Suffolk, Va.: Preparer Stephanie Towns, 43, has pleaded guilty to her role in a fraud that prepared hundreds of false returns that resulted in a loss of some $1.6 million to the United States.
According to documents filed with the plea agreement, Towns, 43, was one of the principal preparers at A Plus Tax Service and NN Financial, which operated as tax prep businesses at different periods between July 2009 and February 2014. Towns, along with co-defendants Brenda Benn and Kevin Towns, conspired to operate a business based on creating false returns that generated inflated refunds for clients to cultivate good will and generate repeat business.
They used methods such as claiming false education-related expenses, stating excessively high amounts of charitable contributions and manipulating the amount of income to take advantage of certain credits. The clients did not persuade or instruct the preparers to generate the false returns.
Towns pleaded guilty to conspiracy to defraud the U.S. and aiding in the preparation of a false return. She faces a maximum of eight years in prison when sentenced on Sept. 27.
Pensacola, Fla.: Preparer Christopher Jacob Rankins, 32, has pleaded guilty to 12 counts of aiding or assisting others in the preparation of false returns.
According to case documents, between Jan. 1, 2011, and May 8, 2012, while working as a preparer at American Tax Service, Rankins helped prepare and present fraudulent and false returns that falsely represented the taxpayers’ business expenses and falsely claimed educational credits that resulted in taxpayers receiving approximately $356,172 in undeserved refunds and credits.
For each of the counts, Rankins faces a maximum of three years in prison. Sentencing is Sept. 19.
Great Neck, N.Y.: Adrian Benitez, 39, and Jose Ramirez, 44, co-owners and operators of Metro Floral Decorators, have pleaded guilty to corruptly endeavoring to obstruct and impede internal revenue laws.
According to documents filed with the court, between 2007 and 2012 the two diverted more than $1 million in sales to their personal bank accounts instead of depositing the funds into the business bank account. They directed customers to pay in cash, checks payable to cash or checks payable to them personally.
Benitez and Ramirez concealed these funds from their return preparer and filed false individual income tax returns with the IRS that did not report the money they diverted. They also did not report the full gross receipts on the firm’s corporate returns.
The two admitted to causing a combined estimated tax loss of more than $463,000. Each faces a maximum of three years in prison, a period of supervised release, restitution and monetary penalties.
Somerville, Tenn.: Tenika Finnie-Smith, owner of Elite Tax Service, has been sentenced to 36 months in prison for theft of government funds.
According to information presented in court, Finnie-Smith was a repeat felony offender who stole the IDs of taxpayers. She used clients’ personal information to file 2011 and 2012 false returns with the IRS and also listed false claims on returns and made deposits.
From 2011 and 2012, Finnie-Smith deposited more than $190,000 in tax refunds into her personal bank account. She would immediately withdraw the funds to use for gambling and other personal benefits. As a result of the theft, some taxpayers never received a refund.
Virginia Beach, Va.: Local businessman Michael Popina, 61, has pleaded guilty to failing to pay nearly $1 million in payroll taxes to the IRS.
According to the plea agreement, Popina was the president and owner of Chesapeake Coatings & Decks, a painting and sandblasting company hired primarily by government contractors and marine businesses. As part of its tax obligations, CCD had a duty to withhold from its employees’ paychecks certain federal taxes and pay the monies over to the IRS.
During tax years 2010-2013, Popina failed to pay to the IRS approximately $130,000 in these withheld payroll taxes.
Investigators learned that Popina utilized an additional scheme to avoid paying payroll taxes: He spread his employees’ regular pay into two separate checks. The first payroll check went to Popina’s payroll company, taxes were withheld and the income reported to the IRS. The second check was not sent to the payroll company, taxes were not withheld and the income was not reported to the IRS.
Court records indicate that Popina utilized this system because his business was poorly managed, and he used the tax savings to continue keeping the business in operation. Investigators concluded that Popina failed to account for some $4 million using this system and that he failed to pay to the IRS some $950,000 in payroll taxes.
He pleaded guilty to failure to pay over payroll tax, and faces a maximum of five years in prison when sentenced on Oct. 2.
Dayton, Ohio: Preparer Tynesha Davis, 32, has pleaded guilty to preparing false returns, according to published reports.
In 2011, Davis filed numerous fraudulent 2010 income tax returns on behalf of and in some cases without the consent of her clients, reports added. She reportedly claimed false wages for her clients from various businesses in Ohio and fabricated the employment and wages of her clients to inflate their refund, often by using the Earned Income Tax Credit.
None of her clients was employed by the employer listed on the return, reports added.
In 2011, reports said, Davis filed at least nine fraudulent returns for the 2010 income tax year in a similar manner, netting $14,070 in bogus refunds.
Davis reportedly agreed to pay $14,070 in restitution to the IRS, which told news outlets that aiding and assisting in the preparation and presentation of fraudulent income tax returns carries a maximum penalty of three years in prison and a fine of up to $250,000.
San Jose, Calif. – Diep Vo, a.k.a. Nancy Vo, 74, has pleaded guilty to conspiring to file false claims for tax refunds, submitting false claims for tax refunds, mail fraud and aggravated ID theft in connection with using IDs of homeless and unemployed individuals to file fraudulent claims for refunds with the IRS.
According to case documents and information provided to the court, Vo, who conspired with co-defendant Trong Nguyen, a.k.a. John Nguyen, went to homeless shelters and halfway houses and falsely represented to individuals that she could get them money from a government program designed to assist people who had not worked in previous years.
Vo convinced people to write down their names and Social Security numbers and to sign blank income tax returns. She and Nguyen then falsified the signed returns, including bogus income and income tax withheld amounts, and sought fraudulent refunds from the IRS. The pair directed the refund checks to private mailboxes they controlled.
Nguyen previously pleaded guilty to submitting and conspiring to submit false claims for refund.
Sentencing is Nov. 14, when Vo faces a maximum of five years in prison on each count of conspiring to file false claims and submitting false claims for refund, 20 years for each count of mail fraud, and a minimum of two years for aggravated ID theft. Vo also faces a period of supervised release, restitution and monetary penalties.