Tax Fraud Blotter: ‘Just enough’ income
Martial miscreants; Capital crime; what a dump; and other highlights of recent tax cases.
Fresno, Calif.: Longtime IRS employees Della Ornelas, 49, and Randall Ruff, 53, have pleaded guilty to aiding others in the preparation of false returns and making their own fraudulent returns as employees of the U.S. government.
According to court documents, between 2005 and 2012 the married couple filed false returns for family and friends that added dependents, generating large tax refunds that were diverted into bank accounts they controlled, sometimes without the knowledge of the taxpayer. They also filed false returns for themselves by fraudulently adding dependents.
Over the seven years, Ornelas defrauded the U.S. of some $76,897; Ruff defrauded the U.S. of approximately $53,227.
Sentencing is Nov. 13. They each face a maximum of three years in prison for aiding and abetting false returns and five years in prison for making a fraudulent return as an employee of the U.S.
Houston: Preparer Ryan Damont Akers has entered a guilty plea to willfully aiding and assisting in the preparation of a false return for one of his clients.
In the plea agreement filed in the record of the case, Akers admitted that he prepared income tax returns for clients and that he opened his own prep business, Capital Income Tax. Akers willfully placed several false items on the return, including false losses from a sole proprietorship, a false net long-term capital loss and false amounts of gifts to charity and false unreimbursed employee expenses. He further admitted he claimed a false income tax refund on the return that resulted in an intended tax harm to the IRS of approximately $16,695.
According to the plea agreement, Akers prepared a total of 32 false income tax returns for clients, with a total intended tax loss of more than $134,000. Akers also prepared a false 2014 U.S. return for an undercover IRS agent posing as a taxpayer, claiming a false income tax refund of more than $4,000 when the tax return should have reflected an amount due of $530.
Sentencing is Nov. 20, when Akers faces up to three years in federal prison and a possible $250,000 maximum fine.
Hopkinton, Iowa: Businessman Randy Less has been sentenced to 15 months in prison in connection with failing to pay over employment taxes and violating the Clean Water Act by causing ethanol to be discharged into a tributary of the nearby Maquoketa River.
According to documents filed with the court, Less was the majority owner, general partner and general manager of Permeate Refining Inc., an ethanol production business. At the sentencing hearing, the district court found Less was responsible for $654,921 in tax loss to the government because he did not account for and pay over employment taxes for Permeate during 2009 through 2012. Less also knowingly discharged or caused to be discharged ethanol, a pollutant, into a water of the United States without a permit to do so.
In addition to the term of prison imposed, U.S. District Court Judge Leonard T. Strand ordered Less to serve two years of supervised release, fined him $10,000 and ordered him to pay $8,673.30 in costs of prosecution.
Mobile, Ala.: Preparer Destina Yetta Parker (a.k.a. Desinta Yetta Parker) has been sentenced to five years of probation and been ordered to pay $66,928 restitution after pleading guilty to charges stemming from preparation of a false return.
Parker e-filed 17 income tax returns with unverifiable household help income for tax years 2011 and 2012. Most of the returns reported just enough unverifiable household help income to qualify for the maximum amount of EITC, inflating the refund. Investigators learned from the defendant’s clients that many of the clients were unaware of household help income; some of the clients admitted that they never performed the work indicated on their returns.
Parker also failed to file a personal income tax return for the tax year 2013.
Ringgold, La.: A federal district court has permanently barred preparer Angelina Adams (a.k.a. Angelina Morris) and her prep business Angie’s Tax Service from preparing federal returns for others.
The defendants consented to the permanent injunction after the government filed a complaint, which alleged that Adams, of Princeton, La., and Angie’s Tax Service repeatedly and continually prepared returns that understated liabilities and overstated refunds.
Their alleged schemes included fabricating Schedules C to secure bogus earned income tax credits; deducting false employee business expenses and moving expenses on Schedules A; and claiming unsupported education credits.
In one cited example, Angie’s prepared a client’s returns to report more than $25,000 and $20,000 in Schedule C losses for an electrician business in the 2013 and 2014 tax years, respectively. The complaint alleged that the client had no such business. In another example, the complaint alleged that Adams prepared a client’s return to report $24,484 in unreimbursed employee business expenses although the client incurred no out-of-pocket expenses for her job.
As alleged in the complaint, the use of fraudulent unreimbursed business expenses by the defendants may have generated more than $10 million in fraudulent deductions.