A roundup of our favorite recent tax fraud cases.

Appleton, Wis.: A federal court has permanently barred tax preparer Gerardo Garcia, a.k.a. Gerry Garcia, from preparing federal returns for others.

The civil injunction order prohibits Garcia and his firm, Garcia Enterprises LLC, from acting as a tax preparer and from continuing to operate a prep business. Garcia agreed to the entry of the injunction but did not admit to the allegations in the civil complaint.

According to the complaint, he prepared false and improper returns during the 2015 filing season even though the IRS had previously assessed $26,000 in penalties against him. The complaint alleged that Garcia prepared returns on which he concocted phony businesses to understate clients’ tax liabilities or inflate refunds. He also allegedly fabricated business expenses, understated clients’ business income and claimed other false or improper deductions, credits and filing statuses.

In one case, the complaint alleged that Garcia prepared two returns that reported more than $10,000 in losses over two years from a non-existent aquaculture business. The complaint cited several additional examples, including Garcia improperly claiming child tax credits for children who live outside the U.S.; dependency exemptions without proof the customer supported the children; and such incorrect filing statuses as head-of-household that resulted in more favorable tax rates.

Ft. Lauderdale, Fla.: Preparer Joseph Akins Owanikin, a.k.a. Joe Akins, has pleaded guilty to filing one count of false claim with the IRS. According to court documents, Owanikin operated Akins Financial Inc., a.k.a. Akins Financial Services, and knowingly filed a false and fraudulent 2008 income tax return and supporting documents, including a 5405 for the First-Time Homebuyer Credit, fraudulently claiming a tax refund of $7,500. Sentencing is December 1, when Owanikin faces a maximum of five years in prison.

New York: Tax preparer Awilda Rosario, of Brooklyn, has pleaded guilty to two counts of aiding and assisting in the preparation of false income tax returns.

According to the indictment, Rosario owned and operated Edujas Multiservices Corp., where she prepared false federal individual returns for clients for tax years 2008 through 2013. Rosario attached false schedules to the returns that reported business losses that the clients did not incur and reported inflated or fictitious deductions. She also attached forms claiming fictitious education and fuel tax credits.

The indictment further alleges that after the IRS revoked the EFIN for Edujas Multiservices Corp., Rosario obtained at least two different EFINs and continued to prepare and submit false returns for clients, listing a different paid preparer and prep firm.

Rosario faces a maximum of three years in prison and a fine of $250,000 for each count. Sentencing is January 8.

Houston: Preparer Adriana Lizette Luna has entered a plea of guilty to one count of knowingly preparing a materially false claim against the U.S., admitting that she prepared a materially false 2011 individual income tax return.

According to the written plea agreement, Luna who operated a prep business known at times as Ruby’s Income Tax and Diaz Tax Service, admitted preparing at least 23 false returns for clients, including the 2011 return that was the basis for her plea, which claimed a false refund of approximately $11,724.

Luna admitted that the intended tax loss on the 23 false returns she prepared exceeded $235,000 and that she split roughly half of the false refunds with clients. As part of the plea, she has agreed to pay restitution to the government of $116,000.  

Sentencing is December 10, when Luna faces up to five years in prison and a $250,000 fine.

St. Louis: Preparer Angel Bailey-Dyson, who worked for the local tax prep firm Tax King, has been sentenced to one year and one day in prison and been ordered to pay $28,694 restitution to the IRS after pleading guilty last summer to preparing false returns for clients for tax years 2011 and 2012. The returns minimized the clients’ tax liability and maximized the refunds. She pled guilty in June to four felony counts of filing false returns.

East Brunswick, N.J.: Self-employed preparer Edward Winter, 51, has pleaded guilty to preparing false returns for clients. According to court documents and statements in court, Winter prepared false returns by, among other methods, fabricating unreimbursed business expenses to inflate refunds. Between February 2009 and April 2014, he prepared at least 21 federal individual income tax returns that were fraudulent, creating undeserved refunds totaling $77,022. Sentencing is December 7.

Miami: A federal judge has ordered Ebenezer Tax Services and its owner, Ernice Joseph, to stop assisting in the preparation of federal income tax returns that knowingly understate tax liability.

The injunction also requires the company and Joseph to exercise due diligence in preparing returns that claim the EITC and bars them from preparing any return that claims the Fuel Excise Tax Credit. In addition, for five years Ebenezer and Joseph must gather documentation to substantiate the deductions and credits claimed on the returns they prepare and to retain the documentation, and send a copy of the injunction to customers and others. Finally, the injunction requires that a neutral monitor be engaged at Ebenezer’s and Joseph’s expense to review and monitor their compliance with the injunction and report findings to the federal government.

The court previously barred Primo Tax Services Inc., another company partly owned by Joseph, from preparing returns for others.

According to the complaint, Joseph and Ebenezer Tax Services prepared federal returns that understate income tax liabilities and overstate refunds through a variety of schemes, including unlawfully claiming the EITC by reporting fictitious Schedule C income and allegedly claiming undeserved credits to overstate refunds.

According to the complaint, the IRS estimates that the activities of Ebenezer Tax Services and Joseph may have led to millions of dollars in revenue losses. In consenting to the injunction, Ebenezer and Joseph admitted that they had engaged in conduct subject to penalty under Sec. 6701 of the Internal Revenue Code.

Baton Rouge, La.: Preparers Raquel M. Walker and Tamicka D. Kitts face multiple felony charges for a scheme resulting in more than a quarter-million dollars in fraudulent state income tax refunds. Investigators say that Walker and Kitts, employees of Tax Town, filed state income returns containing fabricated business losses for hundreds of clients who had reported no losses and who in many cases were not business owners. The filings resulted in the state issuing more than $250,000 in fraudulent refunds. Kitts was convicted in federal court in 2004 for similar activities.

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