Tax Fraud Blotter: Got fraud?
Not to worry; oh, brother; Crown and out; and other highlights of recent tax cases.
Inglewood, California: Preparer and ex-state Franchise Tax Board employee Cubby Wayne Williams, 64, of Alhambra, California, has been found guilty of federal criminal charges accusing him of defrauding the IRS out of millions by declaring bogus withholdings used to fraudulently claim substantial refunds.
Williams was found guilty of 22 counts of assisting in the preparation of false returns for his clients and four counts of subscribing to false returns for himself.
Williams, who owns and operates the tax services company Williams Financial Network, fraudulently claimed OID withholdings on 22 returns for clients for tax years 2013 through 2016 and sought hundreds of thousands in bogus refunds. He took a cut of many of these refunds, often by directing the IRS to deposit a portion into a bank account he controlled.
When clients complained that their returns had fallen under IRS scrutiny, had been corrected and that they now owed money to the IRS, Williams told them the IRS had made a mistake and they were still entitled to their refunds. When the same clients informed Williams they were being audited, he assured them he would represent them before the IRS but he ultimately did little other than to submit further fraudulent documentation to the IRS.
Williams’ scheme included many false returns in addition to the returns charged in the indictment, through which Williams attempted to fraudulently obtain more than $5 million in refunds and, in fact, obtained nearly $3 million for himself and his clients.
Sentencing is Dec. 16, when he faces a maximum of 78 years in prison.
Kansas City, Missouri: Eliyas Jiregna, 34, of Kansas City, and Eyob Jiregna, 42, of Memphis, Tennessee, and formerly of Kansas City, brothers who formerly operated a prep business, have pleaded guilty to preparing false returns.
Eliyas Jiregna owned and operated Tax-N-Go Services, with three locations in Kansas City. Eyob Jiregna prepared returns at one of the offices during the 2015 season.
Eliyas and Eyob Jiregna each are subject to up to three years in prison without parole. They must also pay restitution to the IRS.
Fort Smith, Arkansas: Businessman Donald Tankersley, 76, has pleaded guilty to two counts of tax fraud.
Tankersley is the owner of the White Dairy Ice Cream Co., which includes Tankersley Food Service, a food supplier to restaurants, schools and government entities. IRS investigators discovered a scheme in which Tankersley siphoned funds from White Dairy by having checks created from the company’s accounts and made out to non-existent trucking companies. Tankersley collected and deposited the checks into his personal bank accounts or directed others to either deposit the checks into his personal bank accounts or cash the checks for his use.
In 2013, Tankersley falsified the corporate tax returns for White Dairy by causing the checks to non-existent trucking companies to be listed as corporate expenses. Also that year, he did not report checks as personal income.
Tankersley has agreed to pay restitution to the IRS for a total tax loss of $188,198. He faces a maximum of three years in prison for each count.
Waco, Texas: Preparer Stacey Anderson has been sentenced to five years in prison for her role in a scheme to defraud the U.S. and to 27 months (consecutive) for filing a false federal return.
Anderson owned the prep business Anderson Professional Tax Services. With the assistance of co-defendant Janell Lightner, Anderson prepared 2013 and 2014 returns claiming false business items and/or education credits to inflate clients’ federal refunds. These returns were prepared for clients in Texas, Maryland and the District of Columbia. Anderson also filed a 2014 return for herself, falsely claiming an education credit and reporting a fraudulent income amount.
The total tax loss from the scheme exceeded $10 million.
She was also ordered to serve three years of supervised release and pay restitution to the U.S. of $8,100,492.64.
Last summer, Lightner pleaded guilty to conspiring to defraud the U.S. Her sentencing is Dec. 5.
New York: Wellington Feliz, 36, of the Bronx, has been sentenced to 30 months in prison for his role in a scheme to obtain and ultimately cash more than $1 million in fraudulent federal refund checks.
Feliz admitted that he knew that some 180 refund checks that he and others deposited into bank accounts under his direct control did not belong to him or the company named on the account. He admitted to withdrawing funds from these accounts and that he and his conspirators deposited more than $1 million in stolen refund checks into bank accounts controlled by him.
Feliz was initially charged with six co-defendants (Luis Pena, Lourdes Ortiz, Raymundo Hernandez, Isaias Hernandez and Gloria Rivera of the Bronx, and Fausto Bernard of Newark, New Jersey) in a criminal complaint alleging conspiracy to commit theft of government funds, relating to a Stolen Identity Refund Fraud (SIRF) scheme that caused more than $2.6 million in losses to the federal government. After being charged by complaint, Feliz violated the terms of his pretrial release conditions and fled to the Dominican Republic. He was later extradited.
All six co-defendants have also pleaded guilty and have been sentenced for their roles in the scheme. One additional conspirator, Angel Fernandez of Newark, has also pleaded guilty. All have been ordered to pay restitution to victims and forfeiture to the United States.
Feliz was also sentenced to three years of supervised release.
Kenner, Louisiana: Preparers Michegel Butler and Brittany Patterson have pleaded guilty to conspiracy to defraud the U.S. Patterson also pleaded guilty to aiding and assisting in the filing of false returns.
Butler owned Crown Tax Service, where Patterson was a preparer. From about January through April of 2013, Butler, Patterson and others conspired to inflate clients’ refunds by falsely claiming Schedule C businesses, dependents and dependent care expenses. They directed clients to fill out fraudulent receipts and encouraged some clients to buy or sell dependents that could be used on returns.
Butler and Patterson each face a maximum of five years in prison, three years of supervised release, restitution and other monetary penalties. Patterson also faces a maximum of three years for each count of aiding and assisting in the preparation of a false return.
Charlotte, North Carolina: Arthur Joseph Gerard III has been sentenced to 46 months in prison after being convicted of conspiring to defraud the United States.
Between October 2007 and May 2016, Gerard conspired with his client, Reuben DeHaan, to hide more than $2.7 million in gross receipts that DeHaan earned through his holistic medicine business. Gerard helped funnel income through multiple straw companies and accounts held by nominees. Gerard devised the scheme, caused the organization of straw companies in several states, and recruited a friend to serve as a nominee on DeHaan’s accounts and cashed checks for DeHaan. He charged DeHaan $1,000 to $2,500 for each straw company.
Gerard also assisted DeHaan in preparing and filing false documents with the IRS, including 2005 and 2006 returns that fraudulently reported more than $200,000 in withheld federal income taxes. Gerard also assisted DeHaan in creating and filing false liens against DeHaan’s property to give the appearance that there was no equity in DeHaan’s property for IRS debt-collection purposes.
Gerard’s conduct caused a tax loss to the IRS of some $560,000.
Gerard was also ordered to serve three years of supervised release and to pay $567,665 in restitution to the IRS.
Whitesboro, New York: Accountant James Becker, 53, of New Hartford, New York, has been sentenced to a year in prison followed by a year of supervised release for failing to file his personal income tax returns for 2012 to 2015.
Becker, who operated Becker’s Accounting Services, pleaded guilty in June to four counts of failing to file his returns despite having gross income of more than $100,000 in each of the tax years.
He also was ordered to pay $162,049 in restitution to the IRS.