Tax Fraud Blotter: Laundry day
Sentence stayed; stealing on multiple levels; the loot you took; and other highlights of recent tax cases.
Milaca, Minnesota: Preparer Cindy Halgren has been sentenced to up to 23 months in prison for preparing and filing fraudulent returns and failing to pay individual income tax.
In March, Halgren pleaded guilty to 15 tax-related felonies consisting of 12 counts of preparing and filing fraudulent tax returns and three counts of failing to pay individual income tax.
The sentences were stayed while she is placed on probation for five years. She must also repay more than $24,000 in fines and restitution and perform community service.
Glendale, California: Armen Martirosyan, 62, has pleaded guilty to a federal fraud charge for opening more than a dozen bank accounts used to launder refunds that were stolen by filing returns under stolen IDs.
After federal agents interviewed him in connection with this case, Martirosyan fled the U.S. He ultimately was arrested in Colombia.
He admitted that in April 2009 he opened a bank account in his name to deposit refunds that had been fraudulently obtained using stolen identities. The IRS deposited $189,000 in 24 fraudulently obtained tax refunds into that account. Martirosyan signed blank checks from that account, which he then gave to co-conspirators. Martirosyan opened 14 other bank accounts for the scheme.
He admitted using some of the money for personal expenditures, including credit card payments, rent and Amazon charges. The accounts were used to launder more than $1,866,000 in stolen refunds. Martirosyan also admitted to filing a false federal income tax return for himself for 2012, which falsely reported that he had worked for a national retailer. The false tax return resulted in a fraudulent refund of $9,900.
Sentencing is Aug. 24. Martirosyan faces a maximum of 30 years in prison.
This case is related to a scheme that involved conspirators who used false identities and fake Republic of Armenia passports to open hundreds of bank accounts to launder stolen federal refunds. The fraud involved some 7,000 fraudulent returns that cumulatively sought about $38 million in refunds, about $14 million of which the IRS issued. Twelve convictions have been obtained so far.
Baltimore: James Edward Bender, 35, has pleaded guilty to conspiracy and tax fraud charges.
From 2014 through August 2019, Bender controlled three eBay accounts, which he used with others to sell stolen merchandise from 2014 through last August.
More than $3 million of these goods and merchandise had been stolen, including more than $125,000 worth of iPods from a New Mexico school district that were intended for underprivileged children. In 2018, SC1 and Bender sold more than $550,000 of goods and merchandise that had been stolen from a Delaware FedEx facility.
Bender received more than $10,000 per year from the eBay sales of stolen goods.
He further admitted that he filed false returns for the tax years 2014 through 2018, falsely inflating the gross receipts and cost of goods sold from his businesses. In each of these years, Bender reported as his gross receipts amounts that had actually been generated by sales through his friend’s eBay stores, and reported as his cost of goods sold the difference between gross receipts and the amount his friend paid him for the use of his eBay stores. Bender also subscribed to additional false information on his tax returns, including overstating his postage expenses.
Bender failed to pay the U.S. an additional $36,518 in taxes for the tax years 2014 to 2018.
He faces a maximum of five years in prison for conspiracy and a maximum of three years in prison for tax fraud.
Sun Prairie, Wisconsin: Video gambling machine vendor Thomas Laugen, 69, has been sentenced to a year and a day in prison for income tax evasion.
Laugen, who pleaded guilty last summer, owned Global Vending, which supplied video gambling machines to taverns, restaurants and bowling alleys. Laugen split the cash profits generated by the machines with the tavern owners where the machines were placed, with Global typically receiving a quarter of the cash profits.
Laugen skimmed the machines’ cash receipts and did not report the receipts on his state sales returns or on his state and federal income returns. The tax loss totaled more than $548,000 for 2010 to 2017.
The sentencing judge said he was “appalled by the idea that it is O.K. to cheat on your taxes because everyone else in the business community does as well and that the only way to make money is to cheat.” Laugen was also ordered to pay $548,416.43 in restitution to the IRS and Wisconsin Department of Revenue, with the judge noting that “restitution is not punishment — it is only paying back the loot you took.”
Greensboro, North Carolina: Business owner Elizabeth Wood has been sentenced to 18 months in prison for failing to pay employment taxes.
Wood and her mother, Rebecca Adams, operated temporary staffing businesses and withheld federal and state taxes from employees’ paychecks but did not pay those taxes over to the IRS or the state.
In 2015, Wood pleaded guilty to embezzling employee state tax withholdings and was sentenced to prison. After her release, Wood resumed her role at the staffing business where she continued to withhold federal taxes from employees but again did not pay those taxes over to the IRS. She also did not file a quarterly payroll tax return with the IRS. Wood and Adams pleaded guilty in February.
Wood was also ordered to serve three years of supervised release and to pay some $2,338,766 in restitution to the U.S.
Allentown, Pennsylvania: Business owner Stalyn Morales of Easton, Pennsylvania, has pleaded guilty to one count of submitting false claims to the U.S. and one count of aggravated ID theft.
The charges stem from his participation in a scheme to obtain federal income tax refunds using others’ identities. Morales admitted to seeking more than $295,000 in fraudulent federal refunds. Nearly all of the refunds were denied to Morales because the IRS detected the fraud in time.
Investigators discovered the fraud through analysis of the computers and servers located in his business, MDFA Auto. Evidence recovered from the shop showed that an IP address associated with the business was the source of fraudulent e-filings. Also found were a digital cache of stolen identities, fraudulent taxes, falsified ID documents and a spreadsheet documenting the criminal activity.
Morales will be ordered to pay restitution of the funds that were disbursed before the fraud was detected. He also faces a maximum of seven years in prison and four years of supervised release and a fine of up to $500,000.