A roundup of some of our favorite recent tax fraud cases.
Orlando, Fla.: A federal court has permanently barred preparer Demetrius Scott from preparing tax returns for others and owning or operating a tax preparation business. The court also entered a $1 million judgment against Scott on the federal claim for disgorgement of the proceeds that he received.
Scott was allegedly a former franchisee of LBS Tax Services and operated a tax preparation company called Neighborhood Tax Pros and Tax Giant with locations in Florida, Georgia and the Carolinas. In September 2014, the U.S. filed a civil injunction complaint against Scott, alleging that he and his employees prepared fraudulent returns.
The complaint alleged that preparers in Scott’s business targeted primarily low-income customers with deceptive and misleading advertisements; prepared and filed fraudulent returns to fraudulently increase clients’ refunds; and profited through “unconscionable, exorbitant and often undisclosed” fees.
According to the complaint, Scott and his employees prepared federal returns on which they falsely claimed the EITC and bogus education credits, reported improper filing statuses and claimed income and expenses related to non-existent businesses, and fabricated job-related expenses.
Concord, N.H.: Preparer Okello Odongo, 36, of Snellville, Ga., has received 18 months in prison and been ordered to pay $34,822 restitution to the IRS for filing 19 false returns and fraudulently obtaining refunds.
Odongo is a former resident of Manchester, N.H., where he operated the prep business Tax Smart Solutions Co. In 2011 and 2012, he filed false returns for some of his clients that fraudulently overstated the refunds; Odongo also filed Allocation of Refund Forms that directed the IRS to electronically deposit the fraudulent portions of the refunds to bank accounts Odongo held or had access to.
None of Odongo’s clients knew that he used their doctored returns as a vehicle to defraud the IRS, authorities added.
Tallulah, La.: Preparer Frankie Cammack, 48, has pleaded guilty to aiding and assisting in the preparation and filing of a tax return containing false information.
According to testimony during the guilty plea, Cammack prepared 26 returns for eight taxpayers for tax years 2009 through 2012, all of which contained false information regarding either business expenses or education credits. The false information was used to generate refunds totaling $114,791 to the taxpayers.
Cammack faces a maximum of up to three years in prison, one year of supervised release, a $250,000 fine and restitution. Sentencing is September 12.
Bradenton, Fla.: A federal court has permanently barred preparer Guy Riston Paul from preparing federal returns for others.
In April, the U.S. filed a civil complaint against Paul, individually and doing business as G7 Financial Enterprises & More, G7 Accounting and Tax Services and Voltaire Multi-Services. Paul, currently serving a three-year prison term for preparing false returns and for failing to report income from his tax prep business, consented to entry of the injunction but he did not admit to the allegations.
According to the complaint, Paul prepared federal income tax returns that inflated refunds by taking the IDs of dependents from clients who were not U.S. citizens and claiming them on the returns of his U.S. citizen clients. He used this scheme to claim improper EITCs and Child Tax Credits, the complaint alleges. Paul also allegedly claimed other false credits, such as the education tax credit, on clients’ returns.
College Park, Md.: Local resident Charles W. Parker Jr., 49, has been sentenced to 97 months in prison following his conviction in November on one count of conspiring to defraud the U.S. and six counts of filing false income tax returns.
According to the evidence at trial, between March and June 2009 Parker recruited clients for co-conspirator Penny Jones, 65, a preparer formerly of Rigby, Idaho. Jones prepared returns falsely reporting the amount of taxes withheld and purportedly paid to the IRS. Parker collected financial information from clients and provided it to Jones for the preparation of the false returns; Parker also paid Jones to prepare false returns for himself and others. Parker mailed the false returns to the IRS for the years 2005 to 2008, claiming large and unjustified refunds. He caused the filing of 14 false returns in just one six-month period that fraudulently claimed more than $7.75 million in refunds.
Parker will also serve three years of supervised release and pay $2,007,568 restitution to the IRS. In 2013, Jones was sentenced to 144 months in prison for her role in the scheme.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access