Tax Fraud Blotter: Fun in the sun
Fast, Quick and jailed; Complete fraud; eight figures off the books; and other highlights of recent tax cases.
Honolulu: Businessman Wagdy A. Guirguis has been sentenced to five years in prison for conspiracy to defraud the U.S.
On November 20, Guirguis and co-conspirator Michael Higa, a CPA, were convicted of conspiracy, while Guirguis was also convicted of three counts of filing false corporate income tax returns, one count of failure to file a corporate income tax return, three counts of tax evasion, one count of corruptly endeavoring to obstruct and impede the IRS and one count of witness tampering.
The convictions arose from a scheme to divert funds from Guirguis’ business entities for his own benefit and to avoid the payment of federal employment taxes, corporate and individual income taxes and IRS penalties.
Guirguis and Higa used nominee entities to divert more than $1 million from Guirguis’ businesses. Guirguis made numerous false statements to IRS employees over the years during their attempts to collect taxes. In addition, to impede the criminal investigation into his tax violations, Guirguis falsely told an employee, who had testified before the grand jury, that he did not know about the false backdating in the books of the nominee entity and asked the employee to sign a false statement to that effect.
Guirguis must serve three years of supervised release and pay $3,308,868 in restitution to the IRS and $6,730.24 in prosecution costs.
Winston-Salem, North Carolina: Preparer Claudia Lynette Shivers has been sentenced to 21 months in prison for conspiring to defraud the U.S. by filing false returns.
Shivers co-owned and operated two prep businesses: Fast Tax of Winston-Salem and Quick Taxes in Greensboro, North Carolina. Shivers and her co-conspirators falsified items on clients’ returns, such as dependents and Schedule A deductions, to inflate refunds. Shivers also directed clients to handwrite false information on tax forms and other documents used in the preparation of their returns. She further admitted that she held training sessions for her employees during which she would instruct them on how to manipulate information on returns to obtain undeserved refunds.
Between January 2014 and April 2017, Shivers and her co-conspirators prepared approximately 519 false returns that claimed some $1.3 million in false federal refunds.
Shivers was also ordered to serve three years of supervised release and to pay $38,266 in restitution to the IRS.
St. Louis: Preparer Renell Mace, 36, of Atlanta, has been sentenced to 21 months in prison for his role in preparing fraudulent returns.
Between Jan. 1, 2010, and Feb. 1, 2015, Mace worked as a preparer for Mace Property Group and Simplee Amazing Catering. Mace filed nearly 100 false returns, stating false wages to increase taxpayers’ Earned Income Tax Credit or stating false educational expenses to claim various refundable educational credits.
The actual amount paid to Mace and others through this scheme was $342,741.
Fayetteville, North Carolina: Businesswoman Shuvon Rena Mitchell, 40, has been sentenced to two consecutive prison terms of 19 months minimum, 32 months maximum, on felony tax charges.
Mitchell, a corporate officer of S&K Home Care, aided and abetted the corporation in embezzling $102,675 in North Carolina withholding tax from Jan. 1, 2012, through Dec. 31, 2017. Business records showed that personal expenses, including vacations to Myrtle Beach, Las Vegas, Puerto Rico and Disney World, along with entertainment costs for concerts, comedy shows and races, were paid by the corporation.
At sentencing, Mitchell paid $10,000 toward the total restitution of $102,675.
Kansas City, Missouri: Preparer Monique Hernandez, 52, of Killeen, Texas, has been sentenced to 54 months in prison.
Hernandez owned Complete Tax Service in Independence, Missouri, from 2013 to 2016. She and her daughter, co-defendant Robyne Warburton, 33, of Los Angeles, operated the business. Hernandez continued to prepare returns for the business when she moved to Texas in 2015.
On Feb. 21, Hernandez and Warburton each pleaded guilty to participating in a conspiracy to aid and assist in the filing of false returns. They combined to cause a financial loss to the government of $692,000 from 1,014 false returns associated with Complete. Interviews with tax clients specific to Hernandez confirmed a $129,748 loss.
Hernandez and Warburton filed false claims for inflated or false deductions or employee business expenses for their clients such as commuter mileage, personal vehicle expenses, meals eaten during work and charitable deductions. Hernandez and Warburton also encouraged clients to claim false “gross receipts or sales” on “Profit or Loss from Business” forms to maximize the EITC. They also encouraged clients to claim non-eligible children as dependents.
After an undercover IRS agent confirmed the fraud, federal agents executed a search warrant at the office of Complete in 2014. Hernandez and Warburton kept committing tax crimes for almost two more years until the IRS revoked their PTIN.
The court also ordered Hernandez to pay $129,748 restitution.
Tucson, Arizona: Preparer Mayra Betty Peñuñuri Cordova has been sentenced to four months in prison and a year of probation after pleading guilty to one count of filing a false return and two counts of assisting in the preparation of false returns, news outlets said.
Cordova was reportedly accused of cheating the government out of $85,842 by filing false 1040s for tax years 2010, 2011 and 2012. She also reportedly falsely claimed two dependents, which gave her head-of-household filing status, and she also helped two taxpayers qualify for deductions, exemptions and other credits by falsely claiming dependents between 2011 and 2015, resulting in $40,019 in unpaid taxes.
Cordova was also ordered to pay $125,860 in restitution to the IRS, news reports added.
Lancaster, Kentucky: Businessman Warren Griffin II, 50, has pleaded guilty to joining with Clarence Michel Jr. in a $15 million tax fraud.
Griffin recruited and paid associates to open staffing companies and bank accounts, the primary purpose of which was to hide from the IRS that Griffin and Michel’s businesses failed to pay $14,671,184 in federal payroll taxes. Griffin obtained $2,118,584 of that money and during this time also underpaid his personal federal income taxes by $700,428.
Michel previously pleaded guilty and has been sentenced to 71 months in prison and ordered to pay more than $19 million in restitution. Griffin is scheduled to be sentenced on Sept. 11, when he faces up to five years in prison and a maximum fine of $250,000 or twice the amount of the loss. Griffin has agreed to pay $2.8 million in restitution to the IRS.
Miami: A federal court has permanently barred Georgina Gonzalez and Georginagonzalez LLC, Ideal Tax Pros and Trinity Tax Service from preparing federal returns for others and owning or operating a prep business.
The court also ordered that Gonzalez and Trinity Tax Service LLC disgorge $48,214.30, representing what they received for the preparation of returns making false claims.
The government’s complaint alleged that the defendants prepared returns that included fraudulent claims for the EITC based on fabricated income or business expenses. The complaint further alleged that the defendants prepared returns for some customers that reported bogus “Household Help” work income and returns claiming phony business loss deductions to maximize their claim to the EITC. The complaint also alleged that defendants falsely claimed education credits on the returns of customers who did not attend college and had no qualifying education expenses.