A roundup of our favorite recent tax fraud cases.
Fontana, Calif.: Preparer Kismaea Rouzan has been sentenced to a year and a day in prison and ordered to pay $312,600 restitution for filing bogus returns.
According to case records, Rouzan, who pleaded guilty late last year to two counts of aiding and assisting in the preparation of false returns, owned and operated a prep business named Mobile Tax Preparers in 2011 and 2012. There she obtained personal ID information, including names, Social Security numbers, dates of birth and addresses of taxpayers from runners who were also involved in the scheme.
Rouzan used the information to prepare fraudulent returns filed in the names of the taxpayers claiming fraudulent wages and qualified education expenses. The IRS refunds were deposited directly into Rouzan’s bank accounts in full or split between her bank accounts and prepaid debit cards. The refunds were divided between Rouzan, runners and taxpayers.
For the 2010 and 2011 tax years, Rouzan prepared or caused to be prepared more than 400 fraudulent returns that cost the government $846,782.
Minneapolis: Preparers Ishmael Kosh, 39, of Philadelphia, Amadou Sangaray, 36, of New York and Francis Saygbay, 43, have been sentenced to prison for their involvement with a fraudulent prep business.
Kosh was convicted of one count of conspiracy to defraud the U.S. and eight counts of aiding and assisting in the filing of false returns; Sangaray was convicted of one count of conspiracy to defraud the U.S., four counts of aggravated ID theft and eight counts of aiding and assisting in the filing of false returns; and Saygbay failed to appear for trial but later pleaded guilty to one count of conspiracy to defraud the U.S., one count of aggravated ID theft and two counts of aiding and assisting in the preparation of false returns.
Kosh received 52 months in prison, Sangaray 50 months and Saygbay 40 months in prison. Kosh and Saygbay were each also ordered to serve three years of supervised release and Sangaray to two years of supervised release following their release from prison.
According to the evidence at trial, Kosh, Sangaray, Saygbay and a fourth individual, Chatonda Khofi, 50, of St. Paul, Minn., established a storefront location of Primetime Tax Services in the Minneapolis area. Along with a fifth individual, David Mwangi, 47, of Arlington, Texas, the defendants prepared more than 2,000 fraudulent individual income tax returns on behalf of clients for filing with the IRS for the years 2006, 2007 and 2008. The defendants also prepared approximately 1,700 fraudulent state income tax returns for filing with the state of Minnesota for those years.
Authorities said the defendants’ conduct caused a total tax loss of $1.5 to $3.5 million. On the fraudulent returns, the defendants included false dependents, fake business income and losses, inflated deductions and credits and false filing status to inflate refunds. They also bought and sold dependents for use on clients’ returns to falsely qualify clients for inflated deductions and tax credits.
When a client came to pick up a refund check or debit card, the defendants sometimes demanded an additional fee in cash or escorted that client to a check-cashing location or ATM.
In November 2014, Mwangi pleaded guilty to one count of conspiracy to defraud the U.S. and Khofi pleaded guilty to one count of conspiracy to defraud the U.S. and one count of aggravated ID theft. They await sentencing. A sixth individual associated with this scheme, Stephanie Robinson, 33, of Minneapolis, pleaded guilty in August 2013 to one count of filing a false return in her own name and one count of aiding and assisting in the filing of a false return for another individual.
Birmingham, Ala.: The U.S. has filed to permanently bar tax preparer Jessica Leverett, a.k.a. Jessica Harris, from preparing returns for others and asked the court to order Leverett to turn over a list of all returns she has prepared.
According to the complaint, Leverett owns and operates a number of prep businesses in the area, including Tax Money Now, Dynamic Tax Services, Dynamic Tax Solutions and Express Money Tax. The government alleges that Leverett and her associates prepared returns that fabricate self-employment businesses and business losses to offset clients’ taxable income from other sources and increase clients’ EITC. When a client does have a small business, the complaint alleges, Leverett and her associates mischaracterize the business income as household employee wages to avoid paying self-employment tax. The complaint also alleges that Leverett’s businesses claim education credits that the clients are not entitled to.
According to the complaint, the IRS examined 264 returns that Leverett’s businesses prepared and found that 206 understated the tax owed by Leverett’s clients by, on average, thousands of dollars. The complaint also alleges that Leverett’s activities may have cost the federal government more than $2.5 million in understated taxes or fraudulent refunds, or both.
Phenix City. Ala.: Two men who conspired to file more than 1,200 false returns using stolen IDs have been sentenced to prison: Ernest James Simmons Jr., 29, was sentenced to 24 months and 15 days in prison followed by five months of home detention, and Calvin J. Perry, 28, of Atlanta, received 32 months in prison.
Simmons and Perry each pleaded guilty in December to one count of conspiracy to defraud the government with respect to filing false income tax refund claims and one count of aggravated ID theft.
According to court documents and evidence, between 2010 and 2012, Simmons and Perry conspired with Perry’s mother, Pamela Ann Smith, to run a large-scale stolen ID refund fraud scheme from Smith’s tax prep business, Jaycal Tax Service, in Phenix City. As part of the conspiracy, Smith, Perry and Simmons opened multiple bank accounts and post office boxes. They filed more than 1,200 federal income tax returns using the stolen personal ID information of actual individuals, which included their names and Social Security numbers.
Simmons was directly connected to false returns claiming more than $700,000 in fraudulent refunds and Perry was directly connected to false returns claiming more than $1 million in fraudulent refunds. U.S. Treasury checks were mailed to physical addresses and post office boxes and then deposited into multiple bank accounts, all under the control of Simmons, Perry and Smith. Perry personally obtained more than $300,000 and Simmons more than $150,000, from the scheme.
Perry and Simmons were also each ordered to serve three years of supervised release. Perry was also ordered to pay $308,152 restitution; Simmons was ordered to pay $167,194 restitution.
In February, Smith was sentenced to serve 51 months in prison after pleading guilty for her role in the scheme.
