Some of our favorite recent tax fraud cases.
St. Louis: Preparer Joey D. Wood has received 18 months in prison for filing four false returns for himself and two others and claiming false refunds for tax years 2011 and 2012. He was also ordered to pay $185,162 restitution.
According to court documents, Wood filed false tax returns for himself claiming refunds for 2011 and 2012. He also filed false returns claiming refunds for two other people for 2011. Additionally, on May 17, 2013, Wood was in possession of a firearm, which he is prohibited from owning due to a previous felony conviction.
Wood pled guilty last November to four felony counts of making false statements to the government and one felony count of being a previously convicted felon in possession of a firearm.
Brick, N.J.: Preparer Sharif Mahfouz, 50, owner of Expat Focus Consulting, has been sentenced to two years in prison and a year of supervised release and been ordered to pay $1,152,253 restitution to the IRS for preparing false returns for clients.
According to court documents and case statements, Mahfouz owned and operated Expat, a tax prep business, out of his home, with a clientele primarily consisting of expatriates. Mahfouz admitted that he prepared false returns for the tax years 2007 through 2012 for certain clients, using either fabricated or inflated foreign earned income exclusions and foreign tax credits to secure inflated refunds.
Mahfouz did not tell clients about these refunds and kept the money.
When Mahfouz prepared and submitted false returns, he provided a company Bank of America account and a mailing address in Nanuet, N.Y. When the IRS issued refunds based on these false returns, the refunds were either directly deposited into the EFC account or a refund check was mailed directly to the Nanuet address, the latter then forwarded to Mahfouz’s home.
For the refunds issued by check, Mahfouz forged clients’ signatures and deposited the checks into the EFC bank account. Mahfouz then transferred the money from that account to his personal bank account.
In some instances, Mahfouz also prepared accurate versions of returns to show his clients, who then reviewed and approved them. If the return showed a refund due, Mahfouz advised the client to apply the refund as a credit to the following year’s income taxes. If the return showed a tax due, Mahfouz instructed the client to write a check payable to EFC, which he was supposed to use to pay the IRS on behalf of the client. Instead, Mahfouz kept the money.
In total, Mahfouz prepared and submitted to the IRS approximately 26 fraudulent returns for a tax loss of some $1.15 million.
Mahfouz pleaded guilty in September to one count of aiding and assisting in the preparation of false returns.
Philadelphia: A federal court has permanently barred preparer Denise Almanza and her business, Denise’s Centro De Servicios, from preparing returns for others and from operating a prep business.
The government brought the suit in September, alleging that Almanza inappropriately reduced her clients’ income or wrongfully claimed credits on returns, falsifying or inflating refunds. The suit also alleged that she improperly claimed the additional child tax credit on returns, triggering, on average, more than $2,900 in improper benefits per return.
Almanza and her business prepared more than 14,000 federal tax returns since 2010, according to the complaint, adding that allegedly her activities over the last four years potentially cost the U.S. Treasury millions in lost tax revenue.
Bloomfield, N.J.: Preparer Daidry Montanez, 41, has been sentenced to a year of home confinement and two years of supervised release after pleading guilty regarding 37 fraudulent income tax returns, according to published reports.
News outsets said she filed on behalf of clients from her Newark, N.J., storefront DM Multiservices and that her scheme cost the federal government $99,864 in tax losses.
Montanez reportedly pleaded guilty to four counts of aiding and assisting in the filing of false federal returns for tax years 2009, 2010, 2011 and 2012. Montanez prepared false returns that contained either falsely claimed or fabricated deductions, including fictional business expenses such as rent or lease of other business property, supplies and travel, reports said.
Also reportedly included within the returns were purported deductions for home mortgage interest and points, state or local income tax and unreimbursed employee expenses.
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