A roundup of our favorite recent tax fraud cases.
New York: CPA Stuart Becker, 72, has been arrested and charged with seven counts of criminal tax fraud, one count of grand larceny and two counts of offering a false instrument for filing.
Through his business, Becker CPA LLC, Becker withheld payroll taxes from his employees and from 2012 to 2014 allegedly stole $71,517 in withheld tax. In addition, Becker is charged with failing to pay $41,406 in personal income taxes owed for 2012 through 2014.
If convicted, he faces a maximum of 15 years in prison and a fine of up to $50,000. He was released on his own recognizance.
Southfield, Mich.: A U.S. court has permanently barred preparer Mia Jordan from preparing federal returns for others.
According to the complaint, Jordan, who consented to the civil injunction order, operated a tax prep business under the name MIA-FILE as recently as 2014. The complaint states that Jordan prepared some 371 returns for tax years 2013 and 2014. IRS examination of 94 of the returns prepared by MIA-FILE resulted in additional tax assessments of 87 of them, the complaint alleges.
Many of the returns allegedly contained false deductions and credits, including inflated deductions for charitable contributions, home mortgage interest and real estate taxes. The complaint also states that the returns manipulated taxpayer data to claim the EITC, for which the client would otherwise be ineligible.
The U.S. alleged in the complaint that the actual purpose of MIA-FILE was to permit Jordan’s cousin, Nataki Davis, formerly known as Nataki Barnes, to continue to prepare returns herself and together with Jordan, despite an IRS investigation into Davis’s own abusive prep practices: In 2013, Davis was enjoined for five years from preparing returns either individually or through any individual or entity working with her; in January, a federal court entered an agreed injunction order permanently barring Davis from preparing returns.
Mount Vernon, N.Y.: Preparer Samuel Gentle, 59, has been charged with 50 counts of aiding and assisting the preparation of false and fraudulent U.S. individual income tax returns.
According to the allegations in the indictment, Gentle operated the tax prep business GenGen Inc., which from 2009 through 2012 prepared and submitted to the IRS an average of 3,400 returns each year. Some of these returns contained various inflated deductions for business expenses and gifts to charity, according to the allegations.
As part of the investigation, an undercover IRS agent posed as a client and provided Gentle with a W-2. Despite seeing no records to support any other deductions, Gentle included false and fraudulent deductions for business expenses and gifts to charity on the return he prepared for the agent, generating a phony refund.
According to the indictment, the loss from Gentle’s conduct exceeded $630,000. Each of the counts of aiding and assisting the preparation of false and fraudulent individual income tax returns carries a maximum of three years in prison.
Lynn, Mass.: Preparer Claudia Carredano, 46, has pleaded guilty to charges of one count of wire fraud and one count of ID theft in connection with a scheme to file fraudulent returns without her clients’ knowledge and pocket the excess refunds.
Carredano co-owned the tax prep business Maya Multi Services, and from 2008 to 2011 devised and executed a scheme to file dozens of false returns for clients by including fraudulent dependents to inflate refunds. She then directed the refunds to be deposited into her bank account.
To conceal the scheme, Carredano gave her clients versions of their returns that did not reflect the fraudulent dependents and sought smaller refunds than the returns she actually filed with the IRS.
The charge of wire fraud carries a maximum sentence of 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain to the defendant or loss to the victims, whichever is greater. The charge of ID theft carries a maximum of 15 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain to the defendant or loss to the victims, whichever is greater. Sentencing is June 23.
Douglasville, Ga.: Preparers Frederick Jenkins, 43, and Willie Jenkins, 46, have each been sentenced to more than six years in federal prison after a jury convicted them last fall of preparing and filing false federal returns.
According to authorities, the charges and other information in court, between 2009 and 2012 the two prepared and filed thousands of returns at Global Tax Service, which they managed together. They created fictitious, unprofitable businesses that they listed on clients’ returns to generate fraudulent deductions to lower taxable income and inflate refunds. The clients were left to resolve their situations with the IRS and state authorities while the defendants kept the tax prep fees.
The pair’s activities resulted in a tax loss exceeding $3.5 million.
Frederick Jenkins received six years and six months in prison to be followed by three years of supervised release and was ordered to pay a special assessment of $1,100 and $3.5 million in restitution to the IRS. Willie Jenkins was sentenced to six years and three months in prison, to be followed by three years of supervised release, and was ordered to pay a special assessment of $700 and restitution of $3.5 million to the IRS.
