One slick customer; give her credit; unhappy camper; and other highlights of recent tax cases.
New York: Todd Kozel, former CEO of a multinational foreign oil company, has been sentenced to five years in prison following his guilty plea to five counts of willful failure to file individual income tax returns.
From at least about 2004 through at least about 2014, Kozel was the co-founder and CEO of a London-based petroleum company with operations in Iraq. During 2011 through 2015, Kozel, a U.S. citizen, earned compensation totaling more than $66 million.
Kozel failed timely to file any personal federal income tax returns for calendar 2011 through 2015, resulting in well over $20 million in unpaid federal taxes. He used sophisticated offshore structures, trusts and bank accounts to conceal a portion of his undeclared income.
He was also sentenced to two years of supervised release and ordered to pay $29,462,965.23 in restitution to the IRS.
Memphis, Tennessee: Tax preparer Pia Sims has pleaded guilty to charges of access device fraud, possession of access-device-making equipment, aggravated identity theft and conspiracy to defraud the U.S., according to news outlets. Two other counts were reportedly dismissed.
Sims reportedly conspired with accomplices to get stolen names and Social Security numbers. Investigators said one accomplice, an Illinois Department of Human Services employee, sold her almost 500 names, according to court paperwork cited.
Reports added that she possessed more than 4,100 Social Security numbers on her computer and she filed almost 80 fraudulent returns totaling almost $500,000. Authorities told news outlets she also had 15 stolen credit cards.
Sims will pay restitution to victims and faces a maximum of 42 years in prison and $750,400 in fines, reports said, adding that sentencing is May 10.
Hattiesburg, Mississippi: A federal court has permanently barred tax preparer Terance Price from owning or operating a tax prep business and preparing returns for others.
The permanent injunction is against Price, both individually and doing business as Superior Taxes. The court entered the injunction after Price failed to respond to the complaint the government served on him.
The complaint alleged that Price, who began operating his tax prep business in 2015, knowingly took unreasonable positions on returns he prepared that understated the tax his customers owed, overstated the refunds owed to his clients, or both. The complaint alleged that Price prepared returns that falsely claimed residential energy credits, fuel tax credits and unreimbursed employee business expenses.
The government further alleged that Price has filed hundreds of returns since 2015 and that he has filed returns using other preparers’ personal ID information. According to the complaint, the IRS assessed penalties against Price for failing to make reasonable inquiries to ensure that his clients were legitimately entitled to various tax credits and Price has not paid those penalties.
Durham, North Carolina: Attorney Tiffany Dawn Russell has pleaded guilty to conspiracy to commit multiple fraud schemes and filing a false federal income tax return.
Russell and her co-conspirators applied for loans and credit cards with Social Security numbers that were not issued to them by the Social Security Administration. They created new credit profiles or synthetic IDs for themselves to open financial accounts and make purchases from retailers without any intention of paying for the items and services. For example, she was charged with using such a phony ID to purchase a BMW and to obtain a credit card that she used to pay for her 2016 butt augmentation surgery.
Her conspirators previously pleaded guilty to committing bank fraud for their illegal use of synthetic IDs.
Russell agreed to plead guilty to participating in an extensive, multiyear conspiracy to obtain more than $2.5 million from at least 12 financial institutions and the Small Business Administration. According to the government, she used a synthetic identity because she had poor credit. Beginning in August 2017, Russell embarked on a new scheme, known as credit washing, to remove legitimate debt accounts from her credit history by falsely claiming she was the victim of ID theft and had not opened those accounts. Once the credit reporting agencies removed those accounts, her credit score improved, enabling her to obtain credit. She and her conspirators continued to make these false claims of ID theft, demanding the credit reporting agencies remove newly opened accounts. As a result, financial institutions relied on these washed credit reports in deciding whether to extend her credit.
In 2020, Russell and others also fraudulently obtained more than $1 million in loans under the CARES Act. The 10 loan applications, including two for her law firm, contained false representations relating to the number of employees, monthly payroll, revenue and expenses. Russell used the money to buy property in three states and to pay personal debt.
Russell pleaded guilty to conspiracy to commit mail, wire and financial institution fraud, for which she faces a maximum of 30 years in prison and a $1 million fine; she faces an additional three years and $250,000 fine for filing a false return. She also faces a mandatory restitution order of $2,041,605 to the victim financial institutions, the SBA and the IRS. She will also forfeit an additional $2,019,571 to the United States.
Hampton, Virginia: Resident Clarence M. Rice Jr. has pleaded guilty to defrauding area victims out of more than $630,000 and evading more than $50,000 in income taxes.
Between 2013 and 2019, Rice told victims that he was going to receive a sizable inheritance from his father’s death under the condition that Rice paid off all his existing debts. He tricked victims into giving him money claiming that he needed the funds to obtain his inheritance. He stole more than $350,000 from a 75-year-old retired bricklayer and more than $140,000 from an elderly blind man.
In total, Rice stole at least $632,017.44 in the scheme. As part of the plea, Rice agreed that all his victims were of limited financial means and suffered substantial hardship from his fraud.
Rice has also not filed taxes since 2011. Between 2015 and 2019, he defrauded the IRS by living a cash lifestyle, negotiating checks from victims for currency, hiding assets on prepaid cards and lying to law enforcement about his income and assets. The approximate tax due from Rice’s failure to pay is $52,064.18.
He pleaded guilty to wire fraud and evasion of income tax assessment and is scheduled to be sentenced on May 25. He faces a maximum of 20 years in prison for the fraud offense and a maximum of five years for the tax evasion.
Alma, Arkansas: RV salesman Joshua Wood, previously of Alma, has pleaded guilty to tax evasion and admitted that he lied to IRS agents.
Wood told his employer not to withhold income taxes from his paycheck and then did not file returns from 2014 through 2016. During those years, Wood earned more than $378,000 selling recreational vehicles and automobiles.
When questioned by IRS agents, Wood falsely claimed to have been shot down and wounded on a Navy mission, causing him to suffer from post-traumatic stress disorder. He also lied that a CPA had prepared returns on his behalf.
He faces a maximum of five years in prison.
San Antonio: Resident Robert Steven Powell has been sentenced to 51 months in prison and ordered to pay $345,136.68 in federal restitution for tax evasion.
Powell, found guilty in 2018, was a member of a tax scheme organization that promoted tax evasion. Although he earned wages as high as $236,098 per year, he failed to pay income taxes from 2000 to 2013.
Powell evaded his federal taxes by submitting false W-4s to his employer and claiming he was exempt from federal withholding. Powell also placed a house and recreational vehicle in other names and attempted to conceal his physical address from the IRS by obtaining ID documents from multiple states using false personal residence addresses.
