Tax Fraud Blotter: Just reward
Smoke screen; low miles but big sentence; undivine Providence; and other highlights of recent tax cases.
Durham, N.C.: Businessman Preston Ray Swift, 55, was sentenced to a 28-month minimum, 52-month maximum prison term on felony tax charges filed by the North Carolina Department of Revenue.
Durham pled guilty to eight counts of embezzlement of state property, eight counts of embezzlement of Durham County property, two counts of attempt to evade or defeat tax and five counts of willful failure to file North Carolina individual income tax returns.
Swift, the owner of Swift Auto and Truck Repair, aided and abetted the corporation to embezzle, misapply and convert to its own use $66,021.32 in North Carolina and Durham County sales tax from 2011 through January 2018. He also attempted to evade or defeat North Carolina sales tax by instructing an employee to create a second set of books for the company and then later destroy the records.
In addition, Swift failed to file North Carolina income tax returns for the tax years 2012 through 2016.
St. Louis: Preparer Eddie Buren has been sentenced to a year and a day in prison after pleading to a conspiracy charge and two counts of aiding and abetting the filing of false returns, according to published reports.
Buren was reportedly an employee of Filmon Tekle, who ran tax prep businesses under a variety of names from 2013 to 2015, including First Class Tax, Reward Tax and First Class Tax Group. Prosecutors reportedly said Tekle charged “significant” fees for filing the returns and paid preparers a kickback. They say his false tax returns cost the government at least $167,469, according to news outlets.
Buren was also reportedly ordered to repay $23,508.
Tekle reportedly pleaded guilty in March to one felony count of conspiracy to defraud the U.S. and four counts of falsifying returns, and was sentenced in July to 21 months in prison.
Another employee, LaJohnda Dunger, pleaded guilty in May to a conspiracy charge and a false return charge and was sentenced in August to five years of probation, reports added.
Nashua, N.H.: Aldean Khater has paid $400,000 to the New Hampshire Department of Revenue Administration as part of his agreement for pleading guilty to one count of mail fraud related to a scheme to evade state tobacco excise taxes.
Khater, who pleaded guilty in January, was formally licensed as a wholesaler in New Hampshire and Massachusetts and operated Khaternet and True Tobacco in Nashua and managed Mass Cash and Carry in Woburn and North Billerica, Mass.
Authorities said that between 2012 and 2017, Khater took actions to evade payment of excise tax revenue specific to products that fall under the “Other Tobacco Products” category by purchasing and shipping OTP from distributors in other states to sell wholesale in New Hampshire and Massachusetts without paying all of the applicable excise taxes owed to the states from which the OTP was purchased. These orders repeatedly included tens of thousands of dollars’ worth of OTP at one time.
Khater vastly underreported his wholesale sales of OTP to New Hampshire and Massachusetts and paid less than $130,000 in tobacco taxes over about five years, a fraction of the amount owed. By 2017, Khater described Khaternet on its website as the “leading wholesale tobacco company in the USA,” and Khater was depositing large sums of cash into multiple bank accounts throughout New Hampshire and Massachusetts, including more than $4 million in just one account during a 15-month period.
Sentencing is April 18.
Freehold, N.J.: Used car dealer James Colapinto, 54, has been sentenced to three years in prison for stealing $185,000 by collecting state sales tax from customers that he failed to turn over to the State of New Jersey.
Colapinto was president of Dancola, which formerly operated two used car dealerships in Toms River, N.J. He pleaded guilty in August to an accusation charging him with second-degree counts of theft by failure to make required disposition of property received and failure to turn over collected tax.
He admitted that he failed to remit some $185,000 in sales tax that he collected at his two dealerships from 2012 through 2015, deliberately underreporting the sales tax he collected during those years.
The investigation began when the Division of Taxation conducted an audit of Dancola that revealed discrepancies in the company’s sales tax reporting and payments.
Under the plea agreement, he must pay the Division of Taxation $200,000, representing restitution of $185,000 for the sales tax he failed to remit, plus $15,000 in interest and penalties. Colapinto paid $49,000 of the total at sentencing.
Colapinto was also sentenced in connection with a separate criminal case in which he pleaded guilty to defrauding a commercial lender that lent him money for his dealerships.
New London, Conn.: Tax preparer Yves Aubourg, 50, operator of Providence Tax Services, was sentenced to a year in prison and ordered to pay $219,180 in restitution to the IRS for falsifying thousands of returns from 2011 to 2015, news outlets said.
Aubourg, who pleaded guilty in October to aiding and assisting in the filing of a false return, was also ordered to complete a year of supervised release and pay $219,180 in restitution to the IRS, reports said.
The government reportedly lost $264,870 as Aubourg falsified information on returns including the fabrication of education and business expenses, dependents and charitable contributions.
The government told news outlets it would be recovering unpaid taxes from Aubourg’s clients and that his restitution amount would be reduced as money is recovered.
High Point, N.C.: Businessman Paul Robert Riggan, 48, has pleaded guilty to felony tax charges filed by the North Carolina Department of Revenue.
He pleaded guilty to three counts of embezzlement of state property and three counts of embezzlement of Guilford County property.
Riggan, owner of Gate City Catering, d.b.a. Blue Water Grille, and Blue Bourbon Jack’s, Soho Food Group, d.b.a. Lulu and Blu, and Blue Rock Pizza and Tap, aided and abetted the business entities to embezzle, misapply and convert to their own use $194,239.84 in North Carolina and Guilford County sales tax from 2012 through January 2016.
He received a 16-month minimum, 29-month maximum prison term, suspended. As a condition of probation, Riggan was ordered to serve 90 days in the custody of the Guilford County Detention Center and was placed on supervised probation for 36 months. He was also ordered to pay a $20,000 fine and complete 100 hours of community service. Riggan paid $194,239.84 in restitution prior to court.