Tax Fraud Blotter: No longer truckin’
From gems to jail; benefiting no one; all engines stop; and other highlights of recent tax cases.
New York: Tax preparer Emerson Gamory of Brooklyn has pleaded guilty to two counts of aiding in the preparation of false income tax returns for clients and one count of filing a false income tax return for himself.
Gamory owned and operated Emerson Gamory Income Tax Services Inc. and for tax years 2012 to 2016 prepared returns for clients that included inflated or fictitious itemized deductions, such as gifts to charity and unreimbursed employee expenses, as well as tax credits for fabricated education expenses. He also prepared false returns for Gamory Tax that did not report all gross receipts and returns for himself that underreported net profits. He admitted causing a tax loss to the U.S. of more than $550,000.
Gamory faces a maximum of nine years in prison, as well as forfeiture and a fine.
Providence, Rhode Island: Byron Urizar, 47, of Lincoln, Rhode Island, and president of a jewelry manufacturing company, has pleaded guilty to tax evasion and admitted that he diverted business receipts to avoid paying taxes.
Urizar, president and sole officer of B U, Inc., admitted that in 2014 and 2015 he diverted a portion of third-party checks made payable to his business by using a check casher. He admitted to using a check casher to cash 268 checks totaling some $399,593 in business receipts for the tax year 2015. Urizar did not inform his accountant that a significant portion of the businesses gross receipts were cashed at the check casher and not deposited into the business account.
Sentencing is July 19. Tax evasion is punishable by up to five years imprisonment, three years supervised release and a fine of $250,000 or twice the pecuniary gain or loss.
Las Vegas: Former attorney and former IRS employee Craig P. Orrock has been convicted of tax evasion and obstructing internal revenue laws.
According to court documents and evidence, starting in the early 1990s Orrock, currently of Sandy, Utah, evaded payment of federal income taxes and obstructed IRS efforts to collect those taxes. He filed federal individual income tax returns for the years 1993 through 2015 but failed to pay the income taxes reported as due. He attempted to prevent the IRS from collecting the reported income taxes through the use of nominee entities, bank accounts and trusts to hide his income and assets from IRS collection officers. He attempted to evade assessment of a large part of the income tax he owed for 2007, concealing from the IRS both the ownership of real estate he held through a nominee known as Arville Properties, as well as the proceeds from the sale of the property.
From 1993 through 2015, Orrock evaded paying more than $500,000 in federal income taxes. He faces up to five years in prison on each of the first two counts and up to three years in prison on the third count, as well as a period of supervised release, restitution and monetary penalties. Sentencing is Aug. 26.
South Euclid, Ohio: Preparer Karla Jenkins, 48, has been sentenced to 18 months in prison and ordered to pay $531,000 in restitution for preparing false returns
Jenkins, of Richmond Heights, Ohio, operated Vertical Tax Service and prepared false returns for clients, including taking false, inflated or improper deductions for medical and dental expenses, charitable contributions and other expenses, according to court documents. The clients received most of the refunds but Jenkins received a portion as her fee.
She was also ordered to pay $531,240 in restitution.
Las Vegas: Preparer Rosalio Amezcua Alcantar, 67, who falsified his returns as well as those of his clients, has been sentenced to 15 months in prison.
For tax years 2013 through 2016, Alcantar underreported his taxable income by more than $140,000 while operating his prep business, Direct Services Group. As part of the plea agreement, Alcantar also admitted that he fraudulently claimed charitable contribution and undeserved business expense deductions.
Alcantar caused more than $200,000 in tax loss and further admitted that he also misrepresented his income to the Social Security Administration to fraudulently obtain Social Security benefits for himself and his daughter.
He committed these acts while serving a three-year term of supervised release after his federal conviction for conspiracy to commit mail and wire fraud.
Alcantar was also ordered to serve a year of supervised release and to pay $62,597.40 in restitution to the IRS and the Social Security Administration.
Puryear, Tennessee: Debra Wyatt, who co-owned Pittman Trucking Co., has pleaded guilty to obstructing the administration of the IRS.
According to the charging instrument, she schemed to release two IRS levies against PTC, which owed some $214,373.40 in federal employment taxes. The levies were issued to Rush Trucking Corp., which was a source of income for PTC. Wyatt contacted an RTC representative about releasing the levies and sent fraudulent releases to RTC that purported to be from the IRS revenue officer. RTC released the levies based on Wyatt’s fraudulent correspondence.
The total amount of fraudulently released debt was $20,765.81. The charge carries a penalty of up to three years in prison and a fine of $5,000. Sentencing is July 25.
Honolulu: CPA Michael H. Higa, the controller of several engineering businesses, has been sentenced to 40 months in prison after his conviction for conspiracy to defraud the U.S., along with co-conspirator Wagdy Guirguis. Higa was also convicted of one count of assisting in the preparation of a false return.
The convictions arose from a scheme to divert funds from Guirguis’ business entities for his personal benefit and to avoid federal taxes and penalties.
Guirguis operated numerous engineering businesses; Higa was the controller of these businesses. When the IRS determined that Guirguis’ businesses owed more than $800,000 in federal employment taxes and assessed an $812,000 penalty, Guirguis and Higa took steps to place income and assets out of the reach of the IRS. The pair used a nominee entity to fraudulently convey a condominium to Guirguis’ wife. Later Guirguis and Higa instructed a bookkeeper to alter the books and records to conceal this transaction from the IRS.
From 2001 through 2012, Guirguis and Higa also used a nominee entity to divert approximately $1.3 million from Guirguis’ businesses for Guirguis’ personal use. Guirguis’ returns for 2010 through 2012 omitted $553,000 in income, resulting in a tax deficiency of $165,000. Higa also prepared a false corporate income tax return for one of Guirguis’ entities that failed to report more than $1.3 million.
Higa was also ordered to serve three years of supervised release and to pay $2,045,544.97 in restitution to the IRS. On June 27, Guirguis was sentenced to five years in prison and ordered to serve three years of supervised released and to pay $3,078,157.81 in restitution to the IRS.
New York: CPA Steven L. Henning, 58, who was a partner at a Manhattan accounting firm, has pleaded guilty to participating in two wire fraud schemes.
In the first, he falsely claimed to have entered into multi-million-dollar intellectual property deals and defrauded investors out of $2 million. In the second scheme, he falsely claimed to have entered into client engagements and defrauded an employer out of more than $270,000.
Henning established his own firm, OpportunIP, which he told victims was a company specializing in assisting other entities in taking intellectual property to the market. He induced victims to invest in OpportunIP with false documents showing OpportunIP’s transactions that would reap millions in profits. After leaving the New York firm, Henning induced a Chicago firm to hire him and provide him with $240,000 in draw payments, based on false and fraudulent statements. Henning pleaded guilty to two counts of wire fraud, which carry a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. Sentencing is Oct. 18.
Kenner, Louisiana: Preparer Dana Alvarez, 49, of Holden, Louisiana, has pleaded guilty to conspiracy to defraud the U.S. with regard to tax returns.
According to court documents, Alvarez worked for Crown Tax Service where he and others fraudulently minimized tax liability and inflated refunds for clients and for personal enrichment.
Alvarez faces five years in prison, three years of supervised release and a $250,000 fine. Sentencing is July 25.