The not-so-great outdoors; spear itself; pain and gain; and other highlights of recent tax cases.
Washington City, Utah: Business owner Phyllip Hallman Heaton has been sentenced to five months in prison and 18 months of supervised release (including six months of home detention) after not paying taxes for six years.
From 2017 to 2022, Heaton, who pleaded guilty in February, underreported his income to the IRS. Sole owner of Zion Outfitter, an outdoor retailer in Springdale, Utah, he handled the company finances and provided CPAs with information and records to prepare tax forms to submit to the IRS.
He underreported his taxable personal income, which resulted in his evading at least $1.9 million in income tax.
Heaton was also ordered to pay a $95,000 fine and $1,947,906.79 in restitution, which he paid at sentencing.
West Long Branch, New Jersey: Resident Matthew Tucci has pleaded guilty to tax evasion.
For 2015 and 2016, he filed tax returns that stated he owed more than $2 million in taxes for both years but did not fully pay the taxes. Instead, he purchased real estate and engaged in a series of transactions designed to conceal his interest in those properties.
In 2017, the IRS sent notices to Tucci that he owed taxes, interest and penalties for 2015 and 2016. Tucci transferred multiple properties to an entity owned by another individual but continued to exert control over at least two of them.
Of the two properties Tucci continued to control, he sold one and refinanced the other. He used the money from these transactions to pay personal expenses rather than his tax debts. In 2019, he also submitted documents to the IRS that falsely claimed that he had no connection to the entity that owned the properties.
Sentencing is Oct. 9. He faces up to five years in prison as well as a period of supervised release, restitution and monetary penalties.
New York: Kingsley Uchelue Utulu, 38 of Nigeria, has been sentenced to 63 months in prison for his role in a hacking, fraud and ID-theft scheme targeting U.S.-based tax prep firms, businesses and individuals.
Beginning around 2019, Utulu and other Nigeria-based conspirators schemed to hack into U.S-based tax prep businesses. The conspirators used spear-phishing emails to obtain access to these businesses' electronic systems, then stole the tax and other identifying information of the tax prep companies' clients.
The conspirators hacked into several businesses in New York, Texas and other states, using this information to file fraudulent returns with the IRS and state tax authorities. They sought fraudulent refunds of at least some $8.4 million and obtained at least some $2.5 million.
The conspirators also used the stolen IDs to file fraudulent claims with the SBA's Economic Injury Disaster Loan program and were able to obtain at least some $819,000 in fraudulent payouts.
Utulu, who previously pleaded guilty, was also ordered to pay $3,683,029.39 in restitution and forfeit $290,250.
Upton, Massachusetts: Former attorney Paul Anthony Conte has pleaded guilty to evading taxes.
Until 2020, Conte was an attorney and member of the Massachusetts Bar. From around January 2003 through at least 2020, he earned income by offering services as a taxation, investment and real estate specialist. From at least 2016 through 2020, he filed no returns for himself or for his companies.
He also attempted to conceal his income from the IRS by using his business bank accounts to pay personal expenses, including the purchases of auto parts, guns, jewelry and powersports vehicles. He also transferred funds from his business entities to his wife and then used his wife's bank accounts, in which Conte was not a signatory until 2020, to pay personal expenses.
Sentencing is Oct. 9. He faces up to five years in prison as well as a period of supervised release, restitution and monetary penalties.
Hoover, Alabama: Chiropractor Gary Forrest Edwards has pleaded guilty to tax evasion and to obstructing the IRS.
He owned and operated the chiropractic practice Hoover Health & Wellness Center. After not filing income tax returns for many years, in 2015 Edwards filed returns for 2009 through 2013 and later filed a return for 2017. On these returns, Edwards admitted that he owed more than $2.5 million in taxes. He did not pay the taxes nor the interest and penalties assessed.
He concealed his financial accounts from the IRS, transferring funds from accounts he owned to accounts in only his spouse's name, filing false court documents to terminate federal tax liens against his property and lying to IRS investigators.
Edwards faces up to five years in prison for the evasion charge and up to three years on the obstruction charge. He also faces a period of supervised release, restitution and monetary penalties.
Happy Valley, Oregon: Business owner Joyce Leard has pleaded guilty to not paying over employment taxes to the IRS.
Leard owned and operated Mr. Tree Inc., which provided tree removal and landscaping services to customers and had some 50 to 75 employees each year. From 2017 through 2024, Leard also owned and operated Wall 2 Wall Hardwood Floors Inc., another Happy Valley-based company.
From the fourth quarter of 2018 through the fourth quarter of 2020, she collected and withheld taxes from her employees' wages but did not pay the funds over to the IRS or file quarterly payroll tax returns. Leard used funds in her business bank account to purchase approximately $3.5 million worth of real estate, which was titled in her name.
In total, Leard caused a tax loss to the United States of more than $1.5 million.
Sentencing is Oct. 6. She faces a maximum of five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Bakersfield, California: Tax preparer Victor Cruz, 40, has pleaded guilty to helping Miguel Martinez, a Mexican national who was in the U.S. illegally, submit fraudulent individual federal income tax returns that claimed $25 million in refunds.
From November 2019 through June 2023, Martinez used stolen IDs to create fake businesses and report phony wage and withholding information to the IRS. Martinez then submitted hundreds of individual federal income tax returns in the names of individuals whose identities he had stolen, claiming that those individuals worked for the fake businesses and were owed refunds.
Cruz prepared and filed more than 500 of the fraudulent returns, which claimed more than $3 million in refunds. He received thousands in fees from Martinez in exchange, and the IRS paid out $2.3 million of the $25 million in refunds claimed.
Sentencing is Nov. 17. Cruz faces a maximum of 10 years in prison and $250,000 fine.
Rochester, New York: Business owner Gregory J. Coco, 44, has pleaded guilty to filing a false return.
Coco owns Century Asphalt Maintenance, a driveway sealing company. For 2017 through 2022, Coco received payments from customers for services provided by Century totaling $2,611,685.57. He intentionally failed to advise his tax preparer of all the income he received, underreporting his income by $1,704,556.57.
As a result, Coco failed to pay the IRS $456,683.
The charge carries a maximum of three years in prison and a $250,000 fine.
