Tax Fraud Blotter: Know when to hold 'em
Workin’ on the highway; school’s out; paycheck re-route; and other highlights of recent tax cases.
Frenchville, Pennsylvania: Preparer Kathy Billotte has pleaded guilty to aiding and assisting in the preparation or filing of a false income tax return.
Billotte operated the tax prep business K B Tax Services and falsified annual returns for at least 15 individuals from 2013 through 2017, ensuring undeserved refunds. The federal tax loss totaled $196,105.
Sentencing is Nov. 18, when she faces not more than three years in prison, a fine of up to $250,000, or both.
Rocky Mount, North Carolina: Preparer Priscilla Evans has pleaded guilty to conspiracy to prepare and file false returns.
Evans conspired to file false returns for the 2013 through 2016 tax years for clients of Community Tax Services. She and conspirators filed returns that claimed false education credits, among other illegitimate items, fraudulently generating clients’ refunds.
The tax loss was more than $2 million.
Evans faces up to five years in prison when she is sentenced in December.
Chelmsford, Massachusetts: Paving company owner Robert W. Joyce of Carlisle, Massachusetts, has pleaded guilty to a payroll tax scheme.
For tax years 2012 through at least 2014, Joyce paid a portion of the wages to employees of his two companies, Allied Paving and Allied Equipment, from his own personal account rather than through the business accounts. Joyce did not collect, account for or pay the IRS the income withholding and FICA taxes.
He also caused Allied Paving and Allied Equipment to file false returns with the IRS which underreported actual wages he paid his employees, as well as the employment taxes due the IRS.
Joyce caused a federal tax loss of at least $331,060.
Sentencing is Oct. 20, when he faces up to five years in prison, three years of supervised release and a fine of $250,000, or twice the gross gain or loss, whichever is greater.
Old Saybrook, Connecticut: Business owner Kevin Braza of Westbrook, Connecticut, has pleaded guilty to one count of tax evasion.
Braza operates K.E. Braza Construction, and for the 2013 through 2017 tax years failed to report to the IRS approximately $565,161 in income earned through his business and through gambling winnings. He failed to pay a total of $184,579 in federal income taxes.
Sentencing is Sept. 16, when Braza faces a maximum of five years in prison. He has paid restitution, including penalties and interest, of $394,474.
Tinton Falls, New Jersey: John Storz, owner and operator of a commercial office-cleaning business, has pleaded guilty to employment tax charges and tax evasion.
Storz, of Eatontown, New Jersey, owned and operated John Storz Enterprises Inc., d.b.a Class A Cleaners. Storz was responsible for collecting, accounting for and paying over payroll taxes for his employees and for filing a Form 941. From 2013 through 2015, Storz cashed over $1.2 million dollars of client checks at a check casher, using most of the cash to pay his employees off the books.
He admitted that for the third quarter of 2015, he failed to report any of the cash wages paid to his employees, failing to pay over $6,471.29 in payroll taxes. In total, for tax years 2011 through 2015, Storz failed to pay over some $213,513.46 in employment taxes.
During 2013 through 2015, JSEI was considered a Sub-Chapter S corporation and the ordinary business income was reported on the personal returns of Storz. He failed to report as income any of the checks that he cashed at the check casher on the corporate returns of JSEI and used the business bank account to pay for personal expenses such as his home mortgage, life insurance, car lease payments, personal credit card purchases and home utilities. Storz also deducted these personal expenses as business expenses on the corporate returns of JSEI.
He admitted that for the 2015 calendar year, he failed to include some $179,500 of additional taxable income on his personal return, which resulted in an additional tax due and owing of some $49,499. In total, for the tax years 2011 through 2015, Storz failed to report some $717,628 of additional income, which resulted in a total tax loss of some $182,210.
Sentencing is Dec. 7. The count of failing to account for, file and pay over payroll taxes and the count of tax evasion each carry a maximum of five years and a fine.
Pataskala, Ohio: A couple has been sentenced for conspiring to defraud federal programs by committing return fraud, student-aid fraud and Medicaid and SNAP fraud causing a total loss of more than half a million dollars.
Damien M. Johnson was sentenced to 51 months in prison and ordered to pay $149,824 in restitution to the IRS as well as $219,976 to the U.S. Department of Education, $87,404 to the Fairfield County Department of Job and Family Services and $73,120 to an individual victim. Kisha C. Hollins-Johnson was previously sentenced to 28 months in prison and three years of supervised release and ordered to pay restitution of $219,976 to the U.S. Department of Education, $149,824 to the IRS and $87,404 to the Fairfield County Department of Job and Family Services.
From at least 2011 through 2017, the defendants recruited more than five people to provide their personal information to apply for admissions at a nearby community college; all the students fraudulently enrolled in online classes. Hollins-Johnson submitted false financial aid forms and paperwork for the students and completed coursework for the students. The U.S. Department of Education issued nearly $220,000 to the college and as refunds to the defendants.
Hollins-Johnson submitted false returns by claiming fake defendants and educational credits and submitting fictitious W-2s. Johnson contacted the IRS pretending to be at least one of the other taxpayers and delivered portions of the refunds to other individuals.
Johnson also committed bank fraud by obtaining seven checks totaling at least $73,000 from an 87-year-old victim who had dementia. Johnson used the money on a variety of personal transactions, including at a pawnshop, at Gucci, at Louis Vuitton, in payments to vehicle dealers, and at a law firm. The couple also fraudulently obtained SNAP food stamp benefits and faked employment documents for a $200,000 home loan.
Worcester, Massachusetts: Leonard Ngunjiri, a.k.a. Leonard Gitonga, 50, has been sentenced to six months in prison and a year of supervised release for tax evasion and failing to file returns.
Since approximately September 2012, Ngunjiri attempted to evade paying taxes for tax years 2006 through 2008 and 2011 by concealing his assets, directing his paychecks into bank accounts in the names of others and using accounts in other individuals’ names for business and personal expenses. He also filed no federal income tax returns from 2012 through 2017.
In total, he defrauded the IRS of some $400,000.
Ngunjiri, who pleaded guilty in February, was also ordered to pay $406,407 in restitution to the IRS.
Gulfport, Mississippi: Chemical exec Lisa Gordon-Scruggs of Ocean Springs, Mississippi, has pleaded guilty to filing a false return.
Gordon-Scruggs was the COO and office manager of Highside Chemicals from 2013 through 2018. She embezzled more than $2 million dollars that she funneled into accounts owned by herself or to pay off credit cards for her and for a family member.
Gordon-Scruggs pled guilty to one count of knowingly filing a false income tax return for tax year 2014.
Sentencing is Oct. 16. She faces a maximum of three years in prison and a $250,000 fine.