Tax Fraud Blotter: Nothing in return
Biofool; give and it hurts; low Priority; and other highlights of recent tax cases.
Colorado Springs, Colorado: Thomas Forster Gehrmann Jr., 45, has been sentenced to two years in prison to be followed by three years of supervised release for conspiracy to defraud the U.S. and for filing three false federal returns.
According to information in the indictment and evidence at trial, from January 2007 until September 2011 Gehrmann conspired to defraud the U.S. by filing false 1040s after failing to disclose income that was diverted from cash and checks from Atlas Chiropractic Center at Briargate and SpineMed Decompression Centers of Colorado.
Patients of Atlas paid by check, cash, credit card or such third-party payers as insurance companies or attorneys. A sign on the reception desk directed patients to make checks payable to the individual chiropractic provider, rather than to Atlas Entities. Checks payable to Atlas or SpineMed were regularly deposited in the business bank accounts for the Atlas Entities.
The cash and checks made payable to Gehrmann were placed into a receptacle known as the “cookie jar,” which was typically kept in his office. Cash payments were kept separately and divided between Gehrmann and two other chiropractors. Gehrmann did not send the Atlas bookkeeper or the CPA many documents that included records reflecting payments by Atlas patients.
Towson, Maryland: Lauren Montillo, 47, has been sentenced to eight years in prison to be followed by five years of supervised release for conspiracy to commit wire fraud and for tax evasion. She was also ordered to pay $4,060,284.79 in restitution to the victims of the scheme and $276,240 to the IRS.
Montillo admitted that from 2010 through 2015 she and her co-conspirators sought at least $8.7 million in advance fees from foreign and U.S. victims, purporting to offer access to exotic bank financial instruments. Victims paid $4,342,540 in advance fees into Hong Kong bank accounts or attorney escrow accounts and received nothing in return.
For tax years 2012 through 2014, she reported no income other than $100, evading a substantial amount of income taxes. To conceal the fraud and to reassure a victim and his brokers, co-conspirators including Montillo created an insurance policy for a non-existent insurance company called International Insurance of Nebraska, which was back-stopped with a website hosted through Montillo’s GoDaddy account. Over the next several years, Montillo and her co-conspirators continued with the advance fee scheme. In all, the scheme sought at least $8.7 million from victims and obtained $4,342,540.
For tax years 2012 through 2014, Montillo filed personal returns showing either no income or just $100 in income. She used the victims’ funds transferred to the limited liability accounts for living expenses.
Sunset Hills, Missouri: Biofuel businessman Terry Zintel, 62, has been sentenced to a year and a day in prison for three counts of falsifying claims.
According to court documents, between 2012 and 2014 Zintel was a 50-percent owner and operator of Midwest Biodiesel Products in Roxanna, Illinois. He presented to the IRS at least three claims for refund for excise taxes in 2013 and because of these fraudulent claims and others, the IRS incurred a tax loss of $531,947.75, which Zintel was ordered to pay in restitution.
Stratford, Connecticut: Preparer Juan Silva, 38, has been sentenced to seven months in prison to be followed by a year of supervised release for preparing numerous false federal income tax returns.
According to court documents and statements in court, Silva operated Oficina Hispana, a multi-service business that included tax prep. Between about 2011 and 2017, Silva falsified itemized deductions and unreimbursed employee business expenses on numerous returns he prepared for clients.
For the 2011, 2012 and 2013 tax years, he made substantial deposits of business receipts from his prep business into his personal bank accounts and failed to report to the IRS more than $306,000 in income. The IRS, with Silva’s assistance, is taking action to recover unpaid taxes from Silva’s clients. His ordered restitution of $143,693 will be reduced if monies are recovered from his clients.
Silva, who pleaded guilty in December 2017, was also ordered to serve 45 days of home confinement and perform 80 hours of community service.
Kansas City, Missouri: Resident Tanisha Williams, 45, has been sentenced to three years and five months in prison and ordered to pay $182,410 in restitution to the government for a scheme to file false returns.
On Sept. 19, Williams pleaded guilty to filing a false claim with the IRS and wire fraud. She defrauded the IRS by helping to file false income tax returns on behalf of others who claimed undeserved refunds. Her conduct involved fraudulent returns for tax years 2010, 2012, 2013 and 2014 for 26 individuals. Williams recruited individuals to file federal income tax returns under their own names and Social Security numbers and at other times used stolen ID information to file returns.
Miami: A federal court has permanently barred Michael L. Meyer from organizing, selling and making statements about the tax benefits of an allegedly abusive charitable-giving scheme.
The court’s injunction prohibited Meyer from selling the Ultimate Tax Plan, sometimes referred to as a charitable LLC or charitable limited partnership. The court also barred Meyer from preparing federal returns, performing appraisals for federal tax purposes, representing anyone other than himself before the IRS, furnishing tax advice about charitable contributions and making statements about transactions having a significant purpose of tax avoidance.
According to the government’s amended complaint, Meyer organized, promoted and operated an elaborate charitable-giving tax scheme throughout the U.S. He allegedly told scheme participants they could claim significant tax benefits while retaining complete control over assets purportedly donated to charity. He allegedly organized and sold a plan in which participants transferred property to a limited liability company or partnership and purportedly donated their interest in the LLC or partnership to a charity.
The U.S. further alleged that Meyer appraised the “donations,” prepared tax forms for participants to claim unwarranted deductions and controlled the charities he used to perpetuate the scheme, including Indiana Endowment Fund Inc., Grace Heritage Corp. and National Endowment Association Inc.
The government argued that Meyer falsely advised participants that they could claim an immediate up-front tax deduction, grow assets tax-free, access assets through tax-free loans and preserve wealth for themselves and their heirs. The government alleged that the scheme cost at least $35 million in tax revenue.
The court also prohibited Meyer from advising, performing work for, receiving compensation from, or referring individuals to six other charities, and ordered him to dissolve other entities.
Hillside, Illinois: Preparer Laurie Helfer, 57, has pleaded guilty to two counts of aiding and assisting in the preparation of a fraudulent return in connection with preparing and filing fraudulent returns to bilk the IRS out of at least $550,000.
Helfer operated the prep businesses Laurie’s Freelance & Tax Preparation Services and The Tax Lady Laurie Inc. in the Chicago suburbs. According to a plea agreement, she filed some 162 false returns for the tax years 2007 through 2010. Helfer made false statements to obtain undeserved refunds for her clients. The statements included false information about employment, educational and child care expenses.
Helfer’s conduct resulted in an actual federal tax loss of some $54,797 and attempted losses of $550,000 to $1.5 million, the plea agreement states. Each count carries a maximum of three years in prison. Sentencing is Aug. 22.
Bridgeton, Missouri: Preparer Kela Burns, 36, has been sentenced to 44 months in prison for her role in preparing fraudulent returns, access device fraud, Social Security fraud, bank fraud and aggravated ID theft.
According to court documents, Burns fraudulently prepared federal returns and used the IDs of others through her business, Priority Tax Services between Jan. 1, 2016 and April 15, 2018. She also fraudulently used Social Security numbers not assigned to her to commit bank fraud between May 27, 2016, and Nov. 16, 2016.
Additional filings revealed that after her guilty plea, Burns continued to file fraudulent returns on behalf of previous clients of her prep business.