Tax Fraud Blotter: International flavor
Mobile no more; Nigerian citizen pleads guilty in $12-million fraud; Ontario man pleads in phony-refund scam; and other highlights of recent tax cases.
Houston: Preparer Chester Swanson has pleaded guilty to preparing an individual income tax return for a client.
Swanson admitted in the plea agreement filed in the record of the case that he prepared at least 37 false income tax returns for clients with a resulting intended tax loss to the U.S. of more than $244,000.
He further admitted that he used false amounts of unreimbursed medical and dental expenses, false amounts of gifts to charity, false amounts of unreimbursed employee expenses and false amounts of alleged losses from a sole proprietorship.
Swanson operated his prep business under the name Chester’s Mobile Tax Service and met clients at various locations to prepare their returns. Swanson also admitted that he also used the name Hollywood Business SVC Investments in his prep business.
Swanson has agreed to pay more than $244,000 in restitution to the IRS and to never again prepare income tax returns for others.
Sentencing is Oct. 3, when Swanson faces up to three years in federal prison and a possible $250,000 fine.
Loveland, Colo.: Businessman Daryl Brent Giesking, who owned a delicatessen franchise in Fort Collins, Colo., has been sentenced to two years in prison for conspiring to file fraudulent claims for tax refunds.
According to documents filed with the court, Giesking conspired with his return preparer, Teresa Marty (https://www.taxprotoday.com/news/tax-fraud-blotter-cover-their-assets), owner of Advanced Financial Services in Placerville, Calif., to file three individual returns claiming more than $1 million in refunds based on falsely reported income tax withholdings.
The IRS paid out a $350,765 fraudulent refund to Giesking, which he spent on precious metals and coins, a truck, jewelry, luxury travel and sporting equipment.
Soon after, the IRS levied Giesking’s bank accounts and recovered some $40,503. Following the levies, Giesking took steps to liquidate a number of his assets and then relocated to Ecuador. He was arrested there in June 2016, on a warrant issued in this case.
Giesking was also ordered to serve three years of supervised release and to pay $310,261.58 restitution to the IRS.
Lauderhill, Fla.: Preparers Luczor Fertilien, 39, and David Joseph, 37, have pleaded guilty to conspiring to file and filing fraudulent returns with the IRS.
According to court documents, Fertilien and Joseph owned two prep businesses: Imperial Taxation and Multi-Services Corp. and Aleluya Universal Accounting Services Inc. From approximately 2010 through 2016, the two preparers filed fraudulent returns for clients seeking undeserved refunds by reporting fictitious business income, fraudulent education and fuel tax credits, and claiming deceased individuals, whose identities were stolen, as dependents. The two also filed returns in the names of individuals whose identities had been stolen.
Fertilien and Joseph did not report the illegal proceeds they received from this scheme on their personal tax returns and each admitted to causing a tax loss of more than $550,000.
Sentencing is Sept. 22. Fertilien and Joseph face a maximum of five years in prison on the conspiracy count and a maximum of three years in prison on the false return count. The defendants also face a period of supervised release, restitution and monetary penalties.
St. Louis: Nigerian citizen Kevin Kunlay Williams, a.k.a. Kunlay Sodipo, 56, who resided in Missouri, has pleaded guilty to mail fraud, aggravated ID theft, voter fraud and illegally re-entering the U.S. after having been removed.
According to court documents, Williams and others stole public school employees’ IDs from a payroll company and used them to e-file more than 2,000 fraudulent federal returns seeking more than $12 million in refunds.
He also stole several return preparers’ EFINs and used them to secure tax-related bank products and services that facilitated the issuance of refunds, including blank check stock and debit cards. Williams used the blank stock to print checks funded by the fraudulent refunds and directed some of the refunds onto debit cards.
Williams previously entered the country from Nigeria under the name Kunlay Sodipo but was deported in 1995. Four years later, he illegally returned to the U.S. from Nigeria using the last name Williams. In 2012, Williams registered to vote in federal, state and local elections by falsely claiming that he was a U.S. citizen.
Sentencing is Oct. 13. Williams faces a maximum of 20 years in prison for mail fraud, 10 years for illegal re-entry, five years in prison for each voter fraud count and a minimum of two years in prison for aggravated ID theft. He also faces a period of supervised release, restitution, forfeiture and deportation.
Alice, Texas: Preparer Cristina Gonzalez has pleaded guilty regarding helping in the preparation of false U.S. income tax returns for others and filing a false income tax return for herself.
During tax years 2011 through 2014, Gonzalez operated a prep business that prepared and filed more than 1,200 federal returns for clients. More than 99 percent of returns Gonzalez prepared claimed a refund and nearly 60 percent of the returns claimed the maximum EITC. An IRS review of returns Gonzalez filed showed many of the returns included suspicious “household help” income in specific amounts that maximized Earned Income Credits and significantly inflated refunds.
IRS agents interviewed the taxpayers associated with 47 of these returns and found that the income each of these taxpayers reported was significantly less than the amount of income reported in the returns Gonzalez filed; most of the taxpayers denied earning any significant household help income or reporting any such income to Gonzalez.
The false representations in the returns Gonzalez prepared caused a tax loss to the U.S. of $223,305 in these 47 returns alone.
Gonzalez also prepared and filed her own personal federal income tax returns for 2011, 2012, 2013 and 2014. In each of these returns, she failed to report any income generated through her prep business. She collected fees from clients ranging from $350 up to $2,280 per return. Gonzalez received many of these fees by instructing the IRS to “split” the client’s refund and send a portion of the refund to bank accounts Gonzalez owned or controlled.
Between 2011 and 2014, she failed to report $276,842.71 in split fees as income on her personal returns.
Rochester, N.Y.: Jose Compuesto, 52, of Mississauga, Ont., has pleaded guilty to conspiring to defraud the U.S. and stealing government funds.
According to documents filed with the court, Compuesto and other Canadian citizens participated in a scheme to file fraudulent refund claims with the IRS. In January 2010, Compuesto filed a fraudulent non-resident alien income tax return seeking a refund of $383,155.46. On this return, he falsely claimed that the requested refund represented the amount of income taxes that had been withheld and paid to the IRS on his behalf.
After the IRS issued the refund to Compuesto, he entered the U.S. and opened a bank account in Kenmore, N.Y., to deposit the check. In April 2010, Compuesto transferred the funds from this account to bank accounts in the U.S. and Canada in the name of one of his co-conspirators.
Sentencing is Oct. 17. Compuesto faces a maximum of five years in prison, a period of supervised release and monetary penalties. As part of his plea agreement, Compuesto agreed to pay $383,155.46 restitution to the IRS, plus interest.
Compuesto is the fourth Canadian convicted for a role in this scheme.