Tax Fraud Blotter: House of straw
Mr. Unfreeze; Discount miscount; pity me, pity me; and other highlights of recent tax cases.
Glendale, California: Former Wells Fargo branch manager Hakop Zakaryan, 34, has pleaded guilty to one felony count of bank fraud for using his position to help launder proceeds of a tax fraud and identity theft scheme.
The scheme involved using false IDs and bogus Republic of Armenia passports to fraudulently obtain $14 million in federal refunds.
Zakaryan admitted that he used his position to “unfreeze” bank accounts that Wells Fargo had frozen because of suspected fraud. Zakaryan called the bank’s loss-prevention department and provided false information to unfreeze the accounts even though he knew that the schemers were using fraudulent identities. Zakaryan also admitted that he assisted the schemers because they paid him thousands of dollars in cash.
Eighteen defendants have been charged in the scheme, which involved some 7,000 fraudulent returns that sought about $38 million in refunds. The IRS issued about $14 million in refunds.
Zakaryan will be sentenced Nov. 18, when he faces up to 30 years in prison.
West Palm Beach, Florida: Tamara Jeune, a.k.a. Tamara Voltaire, 46, owner and operator of at least two prep businesses, has been sentenced to 15 years in prison to be followed by three years of supervised release for her role in a scheme to defraud the IRS over five years.
Jeune, who was previously convicted of tax preparation fraud, fraudulently obtained EFINs and PTINs in the names of other individuals who acted as straw EFIN and PTIN holders. Jeune used the numbers to file fraudulent federal income tax returns using stolen ID information of her clients and other individuals without their authorization and knowledge. These returns contained false wages, employment information, expenses and deductions. She also stole information of minors who were at times dependents of her clients and submitted false returns in the minors’ names. Jeune directed the IRS to send the refunds to bank accounts she controlled and spent the money on personal expenses.
The IRS lost more than $700,000.
Bridgeport, Connecticut: Preparer Rolando Russell, 62, has been sentenced to 50 months in prison, to be followed by a year of supervised release, for preparing false returns for clients.
Russell prepared approximately 1,820 federal returns for the 2013 through 2016 tax years through a tax prep practice he operated. The returns claimed some $11.26 million in refunds, of which the IRS issued approximately $10 million. Investigation revealed that many of the returns he prepared included false Schedules C, false unreimbursed employee expenses and false charitable contributions.
Russell’s false filings resulted in at least $1.5 million in losses to the IRS; he was ordered to pay $1,501,000 in restitution.
St. Louis: Preparer Aaron Mitchell, 30, has pleaded guilty to one count of preparing false returns and one count of filing false claims for refunds.
Mitchell admitted that from 2013 through 2015 he prepared some 160 federal income tax returns for individuals and e-filed the returns even though he was not registered with the IRS as a preparer and submitted the returns only in the names of the individuals. Most of the returns he prepared and filed were false and constituted fraudulent claims for refund.
Mitchell submitted false W-2 information that reflected false employer names as well as false wage and income tax withholding. He often added in bogus claims for education credits by falsely claiming that individuals had upwards of $4,000 in expenses. The false returns prepared caused a tax loss of $99,576, the amount of refunds the IRS paid out.
Sentencing is Oct. 29. Mitchell faces up to three years in prison and a fine of $250,000 for preparation of false tax returns, and up to five years in prison and a fine of $250,000 for filing false claims for refunds.
New Orleans: Preparer Quincy Irvin, 41, has pleaded guilty to making false statements on an income tax return.
Irvin admitted to owning two tax prep companies, Discount Tax Services and Quincy Irvin Tax Services, and to failing to declare $696,060 in income for tax years 2012, 2013 and 2014. The total tax loss to the government was $249,074.
He faces three years’ incarceration, a $250,000 fine, the cost of the investigation and restitution to the IRS. Sentencing is Nov. 13.
Kalispell, Montana: Judy Lynn Carroll, 60, previously convicted of tax evasion and four counts of wire fraud, has been sentenced to seven years in prison, to be followed by three years of supervised release on the wire fraud charges.
Carroll was also ordered to pay $1,240,236.01 in restitution to several victims and a $400 special assessment to the Federal Crime Victims Fund. She was also sentenced to seven years in prison, to be followed by three years of supervised release, and ordered to pay $310,078 in restitution to the IRS and a $100 special assessment to the Federal Crime Victims Fund on the tax evasion charge, with the prison time to run concurrently with the wire fraud convictions.
The wire fraud charges relate to a scheme devised by Carroll in which she told others that the IRS had seized an account of hers that contained several million dollars. Carroll knew the IRS had not seized her financial account and that she did not have any account that had millions of dollars. She then convinced several individuals to send her hundreds of thousands of dollars between 2000 and 2016.
Trenton, New Jersey: Joseph Kenny Batts, 50, of Elkridge, Maryland, who was working as a tax preparer in New Jersey, has been convicted on charges of conspiracy to defraud the IRS by preparing false income tax returns for clients to boost business at tax prep companies he and others ran.
Since at least 2009 to April 2015, Batts was co-owner, along with conspirator Damien Askew, of Tax Pro’s, a prep and payroll business in Essex County, New Jersey, where Batts and others prepared returns. To boost business, Batts, Askew and co-defendants Tony Russell, Angelo K. Thompson and Rudolph Sanders conspired to falsify clients’ returns to generate undeserved refunds. The fraudulent practices included fabricating and inflating credits for education and child care; fabricating deductions such as charitable contributions and unreimbursed employee expenses; and Schedule C losses. Batts, Thompson, Askew, Russell and Sanders also used fraudulent 1098-Ts.
Batts also used the PTIN of his conspirator preparers when preparing returns to conceal his identity as the actual preparer, due to, among other things, his prior tax fraud conviction.
Batts and his conspirators caused a total tax loss to the U.S. exceeding $900,000.
Thompson, Askew, Sanders and Russell have previously pleaded guilty and await sentencing. The conspiracy charge carries a maximum of five years in prison. The maximum sentence for aiding or assisting in the filing of false returns is three years in prison. Both are also punishable by hefty fines. Sentencing for Batts is Jan. 16.
Houston: Attorney Jack Stephen Pursley, a.k.a. Steve Pursley, has been convicted of one count of conspiracy to defraud the U.S. and three counts of tax evasion.
Pursley conspired with a former client to repatriate more than $18 million in untaxed income that the client had earned through his company, Southeastern Shipping. Knowing that his client had never paid taxes on these funds, Pursley designed and implemented a scheme whereby the untaxed funds were transferred from Southeastern’s business account in the Isle of Man to the U.S. Pursley helped to conceal the movement of funds from the IRS by disguising the transfers as stock purchases in U.S. corporations controlled by Pursley and his client.
Pursley received more than $4.8 million and a 25-percent ownership interest in the co-conspirator’s ongoing business for his role in the scheme. For tax years 2009 and 2010, he evaded the assessment of and failed to pay the income taxes he owed on these payments by, among other means, withdrawing the funds as purported non-taxable loans and returns of capital. Pursley used the money for personal investments, including a vacation home in Vail, Colorado.
Sentencing is Dec. 9. Pursley faces a maximum of five years in prison for the conspiracy count and five years in prison for each count of tax evasion. He also faces supervised release, monetary penalties and restitution.