Tax Fraud Blotter: Mother’s day
That’s Almorli; uniform justice; the cookie crumbles; and other highlights of recent tax cases.
Rocky Mount, North Carolina: Preparer Amber Gernell Porter, 32, has been sentenced to a year and a day in prison to be followed by a year of supervised release for preparing false returns.
Porter was a preparer at the now-defunct Everyday Taxes and T&T Taxes and between approximately 2011 and 2015 she and others prepared returns using false income, withholdings, education credits and dependents to inflate refunds. Porter used her mother’s identity to illegally obtain and use a PTIN.
Porter was also ordered to pay $14,738 in restitution.
New York: Broker Richard Josephberg has been sentenced to 42 months in prison and three years of supervised release for evading hundreds of thousands of dollars in taxes for 2011 and failing to file returns for 2013 through 2015.
Josephberg was convicted in 2007 of 16 counts of tax fraud and one count of healthcare fraud, which resulted in a sentence of 50 months in prison and three years of supervised release. While on supervised release, he began committing the crimes for which he was most recently sentenced.
In late 2010, Josephberg began employment with the investor relations firm CEOcast in Manhattan. Through the individual who operated CEOcast, Josephberg secured a commission-based arrangement with another investment firm, Socius Capital Group. Josephberg was entitled to commissions totaling some $1.57 million in 2011. After receiving payments totaling approximately $35,725 in his own name, Josephberg directed Socius to issue the remaining commission payments in the name of a newly formed corporate entity, Almorli Advisors. Josephberg opened a new bank account in the name of Almorli and deposited payments totaling some $1.53 million.
In March 2012, Josephberg tried to evade hundreds of thousands of dollars in federal income taxes by disguising and concealing the type of income that he’d received from Socius. He also formed a second corporate entity, Almorli Advisors NY, which served as a shell company to insulate him from IRS scrutiny. He also misclassified income, resulting in a reported tax liability hundreds of thousands of dollars lower than the true tax. Josephberg also schemed to evade assessment of federal income taxes for calendar years 2013 through 2016.
He cost the IRS some $1.2 million in lost taxes and caused a loss of $75,744.28 to New York State.
Boston: Dominican national Francisco Oscar “Frank” Grullon, 52, has been sentenced to seven years in prison and ordered to pay $1.6 million in restitution for laundering close to $1 million in fraudulently obtained IRS refund checks.
Grullon, who will face deportation following completion of his sentence, conspired with attorney R. David Cohen to deposit and launder more than 100 fraudulently obtained refund checks. Cohen was convicted in 2016.
The checks were based on returns with false W-2 information, usually using the name and Social Security number of a resident of Puerto Rico, where residents are not required to file federal income tax returns. Once the fraudulent returns were accepted by the IRS, refund checks were sent to addresses in Lawrence and East Boston, Massachusetts, and New York.
From October 2011 until November 2013, Grullon and his co-conspirators obtained and negotiated more than $1.6 million in fraudulent checks, including nearly $1 million in checks that were the product of fraudulent refunds. Grullon and his co-conspirators deposited the checks into bank accounts in the name of a front company, AD Professional Association, and in co-conspirator R. David Cohen’s attorney client trust accounts. When questioned by bank officials about the quantity of U.S. Treasury checks, Grullon claimed he was depositing them as a favor for friends and that he had a check-cashing license.
After their accounts were closed by several banks, Grullon and Cohen recruited a third co-conspirator and directed him to open accounts for AD Professional Association, deposit more than $500,000 in Treasury checks and make cash withdrawals of hundreds of thousands of dollars.
Indianapolis: Irene Woods, 35, has been sentenced to 37 months in prison for tax fraud and ID theft.
The case began when the IRS identified 69 returns with suspicious deductions filed from an IP address belonging to Woods. These returns sought more than $350,000 in refunds.
The IRS determined that 46 of the taxpayers who purportedly filed some of the returns were the victims of identity theft and had never filed the returns. The IRS searched Woods’s address in 2013 and found some 100 debit cards in more than 80 different names and some 70 business credit applications that contained victim names, Social Security numbers, dates of birth, driver’s license numbers, addresses and phone numbers.
Woods admitted to filing fraudulent returns for both the 2011 and 2012 tax years for people she knew and for herself using the stolen IDs.
She will be on supervised release for two years following her release from prison.
Marshall, Arkansas: Apparel business owner Eric De Priest, 47, has been sentenced to two years in prison to be followed by three years of supervised release and ordered to pay $284,736.30 in restitution for failure to pay over payroll taxes.
De Priest is the co-owner of ZacBac Apparel, which manufactures clothing for government agencies such as the U.S. Postal Service and the military. For multiple consecutive quarters from March 2009 through and including Dec. 31, 2015, De Priest signed each of ZacBac’s 941s. Between July 2012 and September 2015, ZacBac withheld more than $293,000 in trust fund taxes from employees’ wages and failed to pay over to the U.S. $284,736.30 of this amount. During this same time, ZacBac diverted more than $247,000 of the trust fund taxes collected from employees’ wages.
Sioux Falls, South Dakota: Preparer Isaiah Rangel, 50, has been sentenced to two years in prison to be followed by a year of supervised release for preparing fraudulent returns.
Rangel, who pleaded guilty in April, owned 1st Global Tax in Sioux Falls and Huron, South Dakota. Between January and April 2015 he prepared returns with false Schedules C and 1099s, resulting in fraudulent refunds for clients.
He was also ordered to pay $46,648 in restitution to the U.S. Treasury and a special assessment of $100.
Kansas City, Missouri: Antoinette Winston, a.k.a. Tweety, has been sentenced to 34 months in prison and ordered to pay $165,392.48 in restitution to the IRS after pleading guilty to one count of wire fraud and one count of aggravated ID theft.
From 2012 to May 2015, Winston stole and used personal ID information, including the names and Social Security numbers of others, to file fraudulent federal income tax returns requesting refunds. Winston also used this information to obtain prepaid debit cards in the names of these individuals and directed the IRS to pay the fraudulent refunds to these cards.
The intended tax loss to the IRS from Winston’s scheme exceeded $250,000.
Jacksonville, Florida: Preparer Nicole Johnson, 37, has pleaded guilty to aiding and assisting in the filing of a false return.
Johnson was the owner and operator of Financial Asset Tax Service, and for the tax years 2014 through 2017, she prepared returns for individuals in which she falsified deductions and credits to inflate undeserved refunds, causing the IRS to issue more than $1.3 million in undeserved refunds.
Johnson has agreed to repay the IRS that amount in restitution. She also faces a maximum of three years in prison.
Rochester, New York: Baker William Cruz, 54, who was convicted of subscribing false returns, has been sentenced to two years of probation and to 100 hours of community service.
Cruz operated the Borinquen Bakery from approximately 2005 through 2018. From at least 2012 through 2017, he hid more than $1 million in income from the IRS by underreporting the bakery’s revenues, resulting in a tax loss to the IRS of at least $365,840. Cruz was also ordered to pay this in restitution to the IRS, as well as penalties and interest.