Tax Fraud Blotter: My kids, honest!
Select falsehoods; buffet of crime; unmerrie melodies; and other highlights of recent tax cases.
Pensacola, Fla.: Preparer Benell English, 57, has been found guilty of 18 counts of preparing false returns.
English, of Select Tax Service, was found guilty of preparing and filing false federal returns between 2013 and 2017. Without the clients’ knowledge, English fraudulently represented that they had Schedule A deductions, Schedule C business losses or profits or household employee income. English earned some $10,600 for preparing the 18 false returns; the IRS paid $182,887 in undeserved refunds.
The maximum for each count is three years in prison. Sentencing is Aug. 19.
McClelland, Iowa: Businessman Michael Collins, 49, has been sentenced to a year and a day in prison and three years of supervised release for tax evasion.
According to case documents and information, Collins was part-owner of a real-estate development firm that earned significant income in 2006; he received some $289,000 in income that year but didn’t report it on his individual income tax return. In 2008, the IRS contacted Collins regarding the unreported income and he filed an amended return reporting the income and reflecting a tax due of more than $100,000, which Collins didn’t pay.
From 2006 through the present, he also operated an excavating and trucking company that generated more than $5.5 million in gross receipts. To evade payment of his outstanding tax liability, Collins registered the business as well as its bank accounts in the name of nominees, used nominee entities to conceal more than $5 million in gross receipts from the business, filed fraudulent corporate returns that listed nominees as the owners of the business and paid his personal expenses using the unreported income of the business.
Collins also filed fraudulent documents with the IRS claiming to have no gross business receipts for the company and falsely told IRS employees that his only source of income was unemployment benefits.
Collins, who admitted to causing a tax loss of more than $250,000 and who in December pleaded guilty to tax evasion, was also ordered to pay $70,274.14 in restitution to the IRS and to pay a fine of $34,770.
Pittsburgh: Former resident Reginald Harris, 51, has been sentenced to eight years of incarceration to be followed by five years of supervised release and been ordered to pay $246,170.03 in restitution on his convictions for conspiracy to commit bank and mail fraud and conspiracy to defraud the U.S.
According to information presented to the court, from around September 2009 through December 2012 Harris, while imprisoned on state offenses, conspired with others to file fraudulent federal returns and collect refunds in the names of other people, many of whom were fellow inmates at state prisons.
After his release from prison, Harris was charged with a federal drug-related offense. When serving that sentence and while awaiting sentencing on the tax-related offenses, he continued to commit tax offenses while in federal custody. He also arranged for the filing of fraudulent returns of other individuals in custody. Harris also taught other inmates how to conduct the scheme.
Authorities described the criminal history of Harris as a “buffet of criminal conduct” that included a wide array of offenses involving fraud, theft, drug sales and threats of violence, and expressed concern that a prison sentence alone seemed unlikely to deter his further criminal conduct.
Troy, N.Y.: Preparer Bryant Hardnett, 45, of Cohoes, N.Y., has pleaded guilty to stealing the personal ID information of children to falsely claim the children as his own dependents on his returns.
Hardnett admitted that he formerly operated the tax prep business BH Tax Services and through that business met a woman who asked him to file a return in her name for 2013. She provided her two children’s personal ID information, including their names and Social Security numbers. Hardnett never filed a return in her name and instead claimed the two children as his nephews and dependents on his federal returns in 2013, 2014 and 2015.
He faces at least two and up to 15 years in prison as well as up to three years of supervised release when sentenced on September 19. Hardnett has also agreed to pay at least $25,000 in restitution to the IRS and to be permanently enjoined from filing a return for anyone other than himself.
As part of the same investigation, Guy Rochelle, 59, of Troy, pled guilty to filing false returns for the tax years 2011 through 2014. Hardnett prepared these returns on which Rochelle falsely claimed two children as his nieces and dependents; Hardnett supplied the children’s personal ID information and filed the returns. Rochelle faces up to three years in prison when sentenced on September 10.
New York: Karaoke bar owner Kae Wook Lee, of Queens, has pleaded guilty to failing to collect and pay over employment tax.
According to court documents, Lee was sole owner and CEO of Mona Lisa 7 Corporation, through which he operated a karaoke bar in the Flushing neighborhood of Queens. Between 2011 and 2013, Lee diverted part of his karaoke business’ receipts to bank accounts in the names of shell corporations he created. He then withdrew funds from those bank accounts to pay employees’ wages in cash without collecting or paying over federal employment taxes.
Lee concealed the cash payroll from his accountant and signed and filed false returns that underreported employee wages. The tax loss to the IRS was $612,500.
Sentencing is September 6, when Lee faces a maximum of five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Milton, Mass.: Roofing company owner Harry S. Richard, 68, has pleaded guilty to filing a false return which failed to disclose substantial business receipts.
Richard owned and operated Richard Roofing, a business established by his great-grandfather in 1865. From 2010 through 2013, Richard deposited the bulk of the payments he received for roofing services into his personal bank accounts and failed to disclose those receipts to his preparer or on his returns. Many of the checks he received from his customers were made payable to Richard personally, at his direction.
Over four years, Richard failed to report more than $2.1 million in business receipts on his returns, avoiding paying some $353,246 in taxes.
Filing a false return carries a sentence of no greater than three years in prison, one year of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Sentencing is Sept. 11.
York, Ala.: Preparer Sandra Lenora Green, 61, has received 63 months in prison for aiding and abetting the filing of false returns.
Green pleaded guilty in November to her role in filing false returns in the names of three people, who were not charged. According to her plea agreement, Green falsely claimed credits and losses on clients’ returns to inflate the refund.
Green agreed to pay $247,174 in restitution to the IRS and admitted that her crimes involved actual or intended losses of $1.5 million to $3.5 million.
At the time of her guilty plea, Green was ordered not to prepare returns other than her own between then and her sentencing date. The government has since presented evidence that she ignored that order and had served as a preparer during this year’s filing season, again submitting false returns in clients’ names.
Memphis, Tenn.: Preparer Gina Holley has pleaded guilty to filing false claims.
According to the charging instrument, from 2014 to 2016 Holley filed false and fraudulent returns when she included false Fuel Tax Credits. The IRS suffered a loss of more than $400,000.
She pleaded guilty to three counts of presenting false claims to the U.S. The maximum penalty is three years in prison and a $100,000 fine. Sentencing is Sept. 20.