A roundup of our favorite recent tax fraud cases.
Brooklyn Center, Minn.: Preparers Ishmael Kosh, of Philadelphia, and Amadou Sangaray, of New York, have been convicted of conspiracy to defraud the U.S., tax crimes and aggravated ID theft.
Kosh was convicted of one count of conspiracy to defraud the U.S. and eight counts of aiding and assisting in the preparation of false federal income tax returns. Sangaray was convicted of one count of conspiracy to defraud the U.S., four counts of aggravated ID theft and eight counts of aiding and assisting in the preparation of false federal income tax returns.
The defendants were charged in a second superseding indictment with alleged co-conspirators Chatonda Khofi, David Mwangi and Francis Saygbay for their involvement in Primetime Tax Services Inc., a tax prep business with three locations in the Minneapolis area. All five defendants were charged in a conspiracy to defraud the U.S. by preparing fraudulent individual federal returns for clients for tax years 2006, 2007 and 2008.
According to court documents, during these years, the defendants and others filed more than 2,000 federal tax returns through Primetime. Evidence established that in late 2006, Kosh, Sangaray and Khofi set up a Primetime storefront in Brooklyn Center, where they prepared returns that reported false dependents using stolen IDs, fake business income and losses, inflated deductions and inflated credits and false filing status, all to inflate refunds.
The defendants directed the IRS to send clients’ refunds to Primetime and then withdrew the tax prep fees from the refund. When a client came to the office to retrieve their refund check or debit card, the defendants sometimes escorted that client to a check-cashing location or an ATM and demanded an additional cash fee.
After the guilty verdicts, the court determined that Sangaray was a flight risk and he was detained pending sentencing. Sentencings are scheduled for Jan. 5, when the defendants face a maximum of five years in prison for conspiracy, three years for each count of aiding and assisting in the preparation of false returns and a minimum two years for aiding aggravated ID theft. They also face substantial financial penalties and restitution.
In November, Mwangi pleaded guilty to conspiracy to defraud the U.S. and Khofi pleaded guilty to conspiracy and aggravated ID theft. In 2013, Stephanie Robinson, a defendant in a related case who worked at Primetime, pleaded guilty to filing her own false return and aiding and assisting the preparation of a false return. Saygbay is set for trial on Nov. 2.
Atlanta: Preparer Jessica L. Hills, 30, former owner of the Atlanta-area tax prep firm Direct Tax, has pleaded guilty for her role in a fraud using her business to file thousands of fraudulent returns.
According to the charges and other information presented in court, during tax years 2012, 2013 and 2014, Direct Tax filed more than 2,000 federal income tax returns, seeking more than $4 million in refunds. These returns included either fraudulent information to inflate refunds or used stolen IDs.
Hills continued to file fraudulent tax returns even after police in College Park, Ga., executed a search warrant at her business based on complaints from taxpayers and after the IRS cancelled her EFIN.
Sentencing is Nov. 9.
Denver: The federal government has asked a court to permanently bar preparer Gerardo Herrera and his business, El Lobo Multiservicios Professionales Inc., from preparing federal returns for others.
According to the government’s complaint, Herrera and his firm fraudulently reduced clients’ tax liabilities by reporting extra dependents and claiming bogus deductions. The complaint alleges that Herrera and his staff repeatedly and incorrectly claimed clients’ extended family as dependents and have improperly claimed deductions for personal expenses such as cell phones and car insurance. In addition, according to the complaint, audits showed that Herrera and his workers exaggerated deductions, reported fraudulent charitable contribution deductions and claimed improper head of household filing status.
The complaint alleges that the IRS audited more than 200 returns prepared by Herrera’s business and found misrepresentations on almost all of them.
Durant, Miss.: The U.S. has filed seeking to permanently bar preparer Teresa Chism and her business, Lady T. Taxes, from preparing federal returns for others. The complaint alleges that Chism prepares income tax returns that fraudulently overstate clients’ refunds due by falsely claiming refundable credits, including the EITC and credits for education expenses. The complaint further alleges that Chism frequently prepared a fabricated W-2 to submit to maximize the EITC a client claims. According to the complaint, since 2010 Chism prepared more than 2,845 returns, and audits of 220 of them uncovered more than $1 million in tax credits that Chism’s clients did not qualify for.
El Cajon, Calif.: Preparer Marla Lynn Cunningham, owner and operator of Cunningham’s Tax Service, has been arrested after being indicted on 36 counts of aiding and assisting in the preparation of false federal income tax returns.
According to the charges in the indictment, in 2010, 2011 and 2012, Cunningham prepared false individual returns for others that included false Schedules C and Schedules A that reported inflated or fictitious itemized deductions, such as charitable contributions and medical, dental and unreimbursed employee expenses. She also claimed education credits that her clients were not entitled to receive.
If convicted, Cunningham faces a maximum of three years in prison and a fine of up to $250,000 for each count.
Laredo, Texas: Preparer Maria Elena Ramirez, owner of Premier Fastax in Laredo and Rio Bravo, Texas, has been arrested on charges of tax fraud, including a 23-count indictment alleging that she helped prepare and file false returns.
The indictment alleges that Ramirez falsified employment and income on client returns to qualify the taxpayers for credits and refunds they otherwise couldn’t obtain. She also allegedly falsified her own returns by understating her business income and taxable income.
According to the indictment, Ramirez also attempted to obstruct the IRS investigation by filing false supporting documentation and by instructing some of her clients to lie to IRS agents.
She faces up the three years in federal prison if convicted of any of the charges, as well as a possible $100,000 fine.
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