Tax Fraud Blotter: On Top no more
Not ferry nice; bettering their living conditions; precious Metal; and other highlights of recent tax cases.
Grand Prairie, Texas: Preparer Oma Michel Ungu, 61, has been sentenced to 57 months in prison for his role in a more than $2.8 million tax prep scheme.
Between 2013 and 2016, Ungu admitted that Super Professional Tax Services, which he owned and operated, prepared and filed false returns on behalf of clients. Ungu admitted he personally prepared a return in 2015 that falsely claimed that one of his clients had significant unreimbursed business expenses.
A former employee of Ungu, Robert Poteet, previously pleaded guilty to aiding and assisting in the preparation and presentation of false and fraudulent returns and has been sentenced to 18 months in prison.
The pair are jointly liable for more than $2.8 million in restitution.
Ludington, Michigan: Tax business owner Paul Patrick Piper has pleaded guilty to bank fraud and federal income tax offenses.
Piper served for many years as the financial controller for Lake Michigan Carferry, a company operating the SS Badger ferry between Ludington, Michigan, and Manitowoc, Wisconsin. Piper defrauded various financial institutions and Lake Michigan Carferry of $550,000 to $3.5 million by overriding normal accounting systems and writing checks directly to himself and to two of his affiliated businesses, Piper Tax & Accounting and Piper Group. He either forged the signatures of company owners on these checks or used a signature stamp without the authorization of the owners.
Piper hid these transactions in the accounting system by booking the checks to an insurance expense code and by otherwise making false entries to balance company accounts. Additionally, Piper filed false personal federal income tax returns, knowingly failing to include the income he stole from the Carferry and other income earned from his tax business.
He agreed to pay the IRS $363,926 in past-due taxes, plus penalties and interest.
Sentencing is Aug. 11, when Piper faces a maximum of 30 years for the bank fraud offense and a maximum of three years for filing a false return. He will also be ordered to pay restitution to his victims and to forfeit certain assets obtained with the proceeds of his criminal offenses. Piper previously forfeited a 2018 Ram Truck, a 2008 Glacier Bay 5th Wheel RV and cash.
Durham, North Carolina: Preparer Sasha Shabley Jackson has been sentenced to 30 months in prison for aiding and abetting the preparation of false returns.
Jackson, who pleaded guilty in March, owned and operated Top Notch Professional Tax Services, preparing returns for clients from 2015 to 2019. During that time, she knowingly and willfully prepared and caused to be filed federal income tax returns that were materially false. False items on the returns included dependents, income, education credits and fuel tax credits, all of which produced fraudulently inflated refunds.
The tax loss is $1,196,263, which she was ordered to pay in restitution. Jackson was also ordered to serve a year of supervised release and pay a fine of $10,000.
Spring Valley, California: Married couple Geraldine and Clayton Hill have pleaded guilty to using a charity to defraud donors and to evade taxes.
They admitted that they used On Your Feet Inc., a 501(c)(3), to defraud donors and the IRS. The charities claimed to provide “assistance to low-income families and individuals in need to better their living conditions and quality of life.”
Beginning at least as early as March 2009, the Hills conspired to fraudulently obtain charitable donations of clothing and other items from multiple companies by falsely promising and certifying that they would not sell the merchandise for profit.
The Hills admitted to violating those promises by knowingly reselling donated merchandise and using the proceeds from the sale of donated items to support themselves, their family and other associates. Feed the Children and Forever 21 — just two of the Hills’ multiple victims — donated more than $16 million in goods between 2010 and 2017. In June 2015, Forever 21 donated some $5.6 million in clothing, and the Hills sold donated goods to an operator of for-profit discount retailers.
The Hills admitted that between 2011 and 2016, they personally received proceeds from the fraud totaling more than $1.3 million and paid no income taxes. The couple spent nearly $380,000 of the fraudulent proceeds on personal expenses including luxury retail purchases, vacations, entertainment and vehicles, in addition to spending more than $322,000 in cash.
The charity’s tax returns falsely claimed that On Your Feet received less than $25,000 in gross receipts in tax year 2009 and less than $50,000 in tax years 2011 through 2015. They caused an estimated U.S. individual income tax loss for 2013 and 2014 of $50,933.
They also falsified pay stubs purporting to show salaries paid and taxes withheld to advance other fraudulent schemes. They falsified pay stubs claiming that Clayton Hill earned more than $100,000 in salary, even though On Your Feet had never issued paystubs or W-2s and Hill was not claiming income in any tax filing, and used the false pay stubs for a rental application to rent a home that cost $6,000 a month.
Sentencing is Aug. 28, when the Hills face a maximum of five years in prison for each mail fraud conspiracy and tax evasion charge. The couple also faces a period of supervised release, restitution and monetary penalties.
Holland, Michigan: Brian John Scalabrino has been sentenced to three years in prison for wire and tax fraud.
Scalabrino, former director of finance for Metal Standard Corp., altered his payroll records to show a negative federal income tax withholding amount for most pay periods so his net income exceeded his reported gross. He used this method to fraudulently increase his annual pay by some $50,000 a year.
Scalabrino filed false federal income tax returns, causing a loss to taxpayers of $112,363. He also submitted W-2s that showed fictitious amounts of federal tax withheld from his paychecks.
He was also ordered to serve three years of supervised release and pay $348,365 in restitution to Metal Standard and $112,363 in restitution to the IRS.