Some of our favorite recent tax fraud cases.
Agawam, Mass.: Preparer James F. Hansmann, 86, has been sentenced to three years of probation for embezzling more than $400,000 from a corporate client. He was also ordered to pay $408,035 in restitution to his client and $86,692 to the IRS.
Hansmann, who was also permanently enjoined from preparing returns and who pleaded guilty in July 2013 to mail fraud and tax evasion, prepared corporate returns for a West Springfield, Mass., company. Between 2007 and 2011, he instructed the company president to make out checks for estimated tax payments that Hansmann promised he was transmitting to the IRS. Instead, he deposited the checks into his personal bank accounts and used the money to pay personal expenses, leaving the company with a huge tax bill.
Jacksonville, Fla.: Preparer Thomas Bandzul, 71, has pleaded guilty to wire fraud. According to court documents, from January 2008 through May 2011, Bandzul made false claims for deductions and credits on 32 returns for clients, which resulted in additional federal refunds. Bandzul prepared and furnished to his clients one version of a return and then made fraudulent claims on a separate return and e-filed that with the IRS.
Bandzul prearranged with his clients to be paid a fee out of their anticipated refunds, and in many cases caused the additional higher refunds to be paid to him without his clients’ knowledge or consent. He also committed fraud on his individual federal returns for 2008 and 2009.
He faces a maximum penalty of 20 years in prison at his January 13 sentencing.
W. Palm Beach, Fla.: A federal court has permanently barred preparer Marvel Angelita Ebanks and her company, Marvelous Enterprises Inc., from preparing federal returns for others.
The complaint alleged that Ebanks and her company prepared federal income tax returns for clients that claimed phony business expenses and false or inflated education credits and child care credits, among other deductions and credits, to inflate refunds.
Grand Rapids, Mich.: The U.S. has asked a federal court to permanently bar Jim Sanzone, who does business as Lakeshore Professionals LLC, from preparing federal returns for others.
The complaint alleges that Sanzone inappropriately claims deductions and credits for clients, resulting in undeserved or inflated refunds. According to the complaint, Sanzone claims false deductions and credits by fabricating or inflating claims for charitable contributions, medical expenses, mortgage interest, and state and local taxes paid on returns that he and his business prepared since 2010. Sanzone also allegedly fakes business expenses to fraudulently reduce clients’ taxable income and allegedly prepares returns that falsely claim education credits.
Tampa, Fla.: Preparer Jeanne Covington and her company, Jeanne’s Tax Preparation and Bookkeeping Inc., has been barred from preparing federal returns for others.
The suit alleges that Covington prepared returns that unlawfully understated income tax liabilities and overstated refunds through a variety of schemes, including fabricating or inflating business expenses that her clients never paid or incurred. The complaint also alleges that she prepared returns that wrongfully claimed tax credits, including for education and residential energy credit.
The government complaint alleges that her activities may have cost the U.S. Treasury millions of dollars.
Hixson, Tenn.: The U.S. filed to enjoin preparer Kevin Walker from preparing federal income tax returns for others.
According to the complaint, Walker allegedly prepared federal returns for his clients that listed fake businesses; reported false profits, losses and expenses; improperly claimed false employee business expenses; and falsely claimed the EITC and education-related credits.
According to the complaint, two returns prepared over two years for one client claimed bogus receipts, but no expenses, from a fictitious business to maximize refunds based on the EITC. As a result, the client erroneously received refunds of more than $6,000.
The IRS estimates that Walker’s activities over the last five years cost the U.S. Treasury as much as hundreds of thousands of dollars in lost tax revenue.
Jonesboro, Ga.: Preparer Anita R. Ford, a.k.a. Anita R. Dixon, 50, has been sentenced to 51 months in prison to be followed by two years of supervised release, and ordered to pay $5,732,021.50 restitution to the U.S. Treasury for preparing and filing approximately $7 million worth of fraudulent personal income tax returns.
According to authorities and information presented in court, between 2004 and 2012, Ford owned and operated Georgia Peach Financial & Fast Tax Service, and during that time prepared and e-filed thousands of 1040s that intentionally misstated clients’ income to inflate refunds.
Ford made up fake side businesses with fake income and expenses and attached false Schedule Cs to the clients’ returns showing the made-up income and expenses, generating false credits and refunds.
In March 2011, an IRS agent visited Georgia Peach posing as a taxpayer seeking to have a return prepared. Ford began preparing a return in the agent’s cover identity based on a cover W-2 and informed the agent of approximately $200 due in taxes. In truth, the agent should have been due a refund of almost $400. Ford then fabricated a Schedule C for a fake beauty salon business with $30,000 in business expenses, generating a fraudulent refund of more than $4,000 and e-filed the return. To prepare and e-file the return, Ford charged $510 and did not provide a copy of the return to the undercover agent or review it with the agent before e-filing.
Returns in the scheme sought fraudulent refunds ranging from several thousand dollars to tens of thousands, including at least one fake refund exceeding $30,000. The returns sought a total of $6,934,337.92 in fraudulent refunds for Ford’s clients, portions of which she retained as tax-prep fees.
Ford was convicted of the charges on December 3 after she pleaded guilty.
Dayton, Ohio: The U.S. has filed a civil injunction suit to enjoin preparer Rodger S. Thomas Sr. from preparing returns that understate clients’ tax liabilities.
Thomas is alleged to have prepared returns that claimed false deductions on Schedule Cs and fictitious deductions on Schedule As from 2006 through 2009. According to the complaint, he also prepared false 1099s to inflate clients’ income and maximize their EITCs. The government alleges that Thomas then reported these payments on the Schedule C of his own income tax returns as expenses incurred by his business, Ramjet Express. The complaint also alleges that he failed to sign or affix a PTIN to many returns he prepared.
In 2012, Thomas pleaded guilty to one count of making a false statement on an income tax return and one count of aiding and assisting in the filing of a false income tax return. He was subsequently sentenced to 24 months in prison and released in March and, according to the government’s complaint, has indicated that he intends to continue preparing tax returns.
The federal government seeks, among other things, that the court bar Thomas from preparing or assisting others in the preparation of a tax form that understates a tax liability, and requests that he be required to identify himself on returns using his name and PTIN, keep a list of the names of individuals for whom he prepares federal tax returns, and provide the list of clients to the IRS for inspection.
Norcross, Ga.: Laura Romina Delgado, 33, of Lawrenceville, Ga., was sentenced to 51 months in prison followed by three years of supervised release and ordered to pay $2,148,440 in restitution and a special assessment of $100 for filing false returns that claimed over $3.6 million in fraudulent refunds.
According to authorities, the charges and other case information, Delgado operated Servicios Hispanos, which offered various financial and legal services, mainly to members of the Hispanic community. Between January 2013 and last May, she e-filed some 1,300 federal income tax returns, claiming more than $3.6 million in fraudulent refunds.
Many of the fraudulent returns filed by Delgado were in the names of individuals not documented to work in the U.S. In some instances, she assisted these individuals in obtaining ITINs to facilitate the fraud, submitted phony W-2s with the returns and helped in negotiating U.S. Treasury checks representing the proceeds. She also notarized and filed fraudulent ITIN applications.
She was convicted on July 7 after she pleaded guilty.
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