A roundup of our favorite recent tax fraud cases.
Glen Mills, Pa.: CPA Barry Horrow, 68, has been charged with four counts of bank fraud.
Horrow, owner of Horrow and Associates, allegedly helped one of his clients, George Barnard of Capital Financial Mortgage Corporation, to defraud lenders into issuing mortgages for three multi-million-dollar New Jersey Shore beach mansions and a yacht based on false information.
Barnard was charged previously in an indictment with various offenses stemming from a $13 million fraud.
Horrow allegedly provided false tax returns for Barnard to submit to lenders on which Horrow inflated Barnard’s income by hundreds of thousands of dollars. Horrow also allegedly purported to conduct audits of CFMC, when in reality he did not conduct any audits, and allegedly issued false audit reports that he knew were being submitted to lenders to help secure loans for both CFMC and Barnard.
Horrow faces a maximum of 120 years in prison, five years of supervised release and a $4 million fine, among other penalties.
Cranston, R.I.: Preparer Belkis M. Guzman, 48, has pleaded guilty to aiding and assisting in the preparation of false returns, wire fraud, theft of government funds and aggravated ID theft.
According to court documents, Guzman, who worked at El Centro Multiservicios LLC in Providence, R.I., admitted to preparing false individual income tax returns for clients for tax years 2009 through 2011, which included false dependents, exemptions, tax credits, deductions or expenses. She also admitted to depositing more than 100 fraudulently obtained U.S. Treasury checks, totaling more than $800,700, into her personal bank account. Guzman distributed a portion of the money to others and received a percentage of the negotiated checks as payment for depositing the checks into her account.
Sentencing is Dec. 2, when Guzman faces a maximum of 20 years in prison for the wire fraud count, 10 years for each count of theft of government funds, three years in prison for each count of assisting in the preparation of false returns for clients and two years in prison for each count of aggravated ID theft; she also faces a period of supervised release and monetary penalties.
Pittsburgh: Tax attorney Steven Lynch has been convicted of 16 counts of failing to collect, account for and pay employment taxes.
According to case evidence, between 2004 and 2015 Lynch co-owned and operated the Iceoplex at Southpointe, a recreational sports facility in Washington County, Pa. The Iceoplex included a fitness center, ice rink, soccer court, restaurant and bar. Lynch controlled the finances for these businesses and was responsible for collecting income and employment taxes withheld from employee wages, accounting for these taxes and filing the 941 forms and paying these taxes to the IRS.
Between 2012 through 2015, Lynch failed to timely pay over more than $790,000 in taxes withheld from wages.
Sentencing is Jan. 11. Lynch faces a maximum of up to five years in prison for each count of willfully failing to collect, account for and pay over employment tax, as well as a period of supervised release and monetary penalties.
St. Louis: Eyob Tilahun, 30, owner and operator of several local Tax King locations, has been sentenced to 38 months in federal prison for defrauding the U.S. Treasury.
Tilahun pled guilty to a charge of conspiring to submit false claims for tax refunds, admitting that Tax King’s preparers were trained and instructed to increase clients’ refunds by falsifying certain information on returns. The information included false wages and Schedule Cs that caused the clients to qualify for larger EICs; false education expenses; and phony information regarding fuel taxes.
Tilahun admitted that he profited from the scheme by charging Tax King’s clients fees from approximately $400 to $650. The indictment in the case also alleges that the preparers profited by requesting cash "tips" from the clients of approximately $100 to $1,000.
In addition to the 38-month prison sentence, Tilahun will be ordered to pay restitution expected to exceed $2 million.
Two employees of Tax King have also been sentenced: Tanesa Beverly, 32, of East St. Louis, Illinois, and Melissa Wiley, 35, of Granite City, Illinois, were sentenced to two years’ probation. Beverly and Wiley both worked as preparers at the East St. Louis Tax King in 2013, and both have pled guilty to participating in the conspiracy and filing false returns. In addition to their probation sentences, Beverly was ordered to pay $8,245 restitution and Wiley to pay $13,401.
Four other defendants in the case previously pleaded guilty.
Tallulah, La.: Preparer Frankie Cammack, 48, has received two years in prison for aiding and assisting in the preparation and filing of a tax return containing false information.
Cammack, sentenced on one count of aiding and assisting in making and subscribing a fraudulent and false return, was also ordered to pay $92,339 restitution to the U.S. Treasury.
According to testimony, Cammack prepared 26 returns for eight different taxpayers for tax years 2009 through 2012, all of which contained false information regarding either business expenses or education credits. The false information was used to generate excessive refunds totaling $114,791.
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