Tax Fraud Blotter: Opportunities to steal
Status guilty; felony charges dropped against New York CPA; sales fails; and other highlights of recent tax cases.
West Palm Beach, Fla.: Preparer Manuel Antonio Severino, 44, has been found guilty of 13 counts of aiding and assisting in the preparation of false returns, two counts of wire fraud and two counts of aggravated ID theft.
According to the evidence, Severino operated a purported prep business from his home and submitted false individual federal returns on behalf of others claiming such fraudulent credits and deductions as the American Opportunity Credit.
Without clients’ knowledge or consent, he also diverted portions of the refunds to bank accounts that he controlled.
Over three years, Severino sought more than $1.6 million in federal refunds on behalf of himself and his clients, and diverted tens of thousands of dollars into his own bank accounts.
Sentencing is May 14. Severino faces a maximum of three years in prison for each count of aiding in the preparation of false returns, 20 years in prison for each count of wire fraud and a mandatory two years in prison for each count of aggravated ID theft.
Holcomb, Kan.: Preparer Marcelino Almaraz has pleaded guilty to filing a fraudulent income tax return and aiding and assisting in the preparation of fraudulent returns.
According to documents and information provided to the court, Almaraz owned Accounting Services, a business that provided tax prep and other services. Almaraz admitted that he fraudulently sought to obtain refunds for individuals by including false filing statuses such as head of household and adding phony dependents to trigger and inflate child tax credits. He also admitted to underreporting his income on his own income tax returns for 2010 and 2011.
Sentencing is May 14, when Almaraz faces a maximum of three years in prison for each count. He also faces a period of supervised release, restitution and monetary penalties. Almaraz has agreed to pay $397,552 restitution to the IRS.
Sacramento, Calif.: Resident Arsen Muhtarov, 39, has pleaded guilty to conspiracy to defraud the U.S. by filing fraudulent returns.
According to court documents, Aleksandr Kuzmenko, 34, of Loomis, Calif., was a preparer at VK Tax Services in nearby Citrus Heights. Muhtarov conspired with Aleksandr Kuzmenko, Petr Kuzmenko, 39, of West Sacramento, and Valeriy Nikitchuk, 45, of Kent, Wash., in the scheme.
Between February and November of 2009, using stolen ID information and fictitious addresses, they filed approximately 90 fraudulent returns with the IRS that claimed the First-Time Home Buyer Credits on behalf of filers who were not entitled to the credit. The resulting fraudulent refunds were e-deposited into bank accounts that the defendants controlled.
The fraudulent claims totaled some $695,724, of which the IRS paid approximately $573,000.
Petr Kuzmenko was sentenced to 78 months in prison and ordered to pay $573,332 in restitution to the IRS. Aleksandr Kuzmenko was sentenced to more than two years in prison; Valeriy Nikitchuk was sentenced to 10 months in prison.
Muhtarov’s sentencing is June 1, when he faces a maximum 10 years and a $250,000 fine.
New York: CPA Stuart Becker has had felony counts of tax fraud, grand larceny and other charges dismissed and has pleaded guilty to a non-tax misdemeanor of filing a false instrument with New York state.
The dropped charges stemmed from allegations two years ago that Becker withheld payroll taxes from his employees and allegedly stole the withheld tax. He was also charged with failing to pay $41,406 in personal income taxes owed for 2012 through 2014.
The misdemeanor to which Becker recently pleaded involves an understatement of state income tax for 2014 of approximately $4,500, he said.
Newport, R.I.: Michael Lynch, 52, a national sales executive for Dr. Pepper/Seven Up Inc., has pleaded guilty to wire fraud and filing a false return in connection to charges that he submitted more than $1.7 million dollars in fraudulent invoices to Dr. Pepper through a promotions and marketing company he formed in his wife’s name.
Lynch admitted that in April 2003 he incorporated Seacoast Unlimited Marketing and Promotions in his wife’s name and through that company from 2007 to 2017 submitted to Dr. Pepper more than 200 fraudulent invoices. The invoices totaled $1,716,949 for services such as promotional signs and banners, delivery of sample products to retail stores and the offering of discount prices to retail stores.
None of the services billed to and paid for by Dr. Pepper was provided.
Lynch also admitted that he failed to declare any of the income he derived through Seacoast on the joint federal tax filings he filed with his wife. The tax loss totals $386,320.
Sentencing is June 1. Wire fraud carries penalties of up to 20 years in in prison and a fine of $250,000. Filing a false tax return is punishable by up to three years in prison and a $100,000 fine.
New Orleans: CPA Brendel Deemer, 48, was sentenced to three years of probation and ordered to pay a $3,000 fine for willfully filing a false return for herself.
Deemer was charged in June with a single count of filing a false tax return and pleaded guilty in September.
According to court documents, she filed a false 2010 individual income tax return that excluded income and inflated expenses for businesses under her control. Deemer operated Deemer CPA & Consulting Services since at least 2009; from 1999 through 2005 she also operated Building Blocks Academy, a day care center. She ceased operating Building Blocks after Hurricane Katrina and did not resume the business.
Deemer admitted that for tax years 2009 and 2010 she filed individual income tax returns that falsely reported her Schedule C business income from Deemer CPA and Consulting Services and her expenses for Building Blocks Academy.
She was also ordered to pay $88,651.22 restitution to the IRS and a $100 special assessment, and received 100 hours of community service.
Hamden, Conn.: Salesman Ira Malkin, 48, has waived his right to be indicted and pleaded guilty to one count of tax evasion.
According to court documents and statements in court, Malkin was a salesman for Good Copy Printing Center in New Haven, Conn., and earned substantial commissions. Between approximately 2003 and 2012, GCP paid many of Malkin’s personal expenses and, with his consent, reduced his commissions by the amount of expenses. GCP then reported to the IRS that Malkin had earned substantially less income than he truly earned.
In addition, GCP handled printing jobs for Comcast, which included GCP mailing out flyers and paying the relevant postage expense with the expectation that GCP would subsequently be reimbursed. Malkin had GCP pay the postage for the Comcast mailings, had Comcast reimburse him for the cost of the mailings and then had GCP reduce his earned commissions by the amount of postage. Through this arrangement, between approximately 2009 and 2012, GCP further underreported Malkin’s income with the IRS.
Through this scheme, Malkin failed to pay $484,581 in federal income taxes.
Sentencing is May 22, when Malkin faces a maximum of five years in prison. He has agreed to make full restitution to the IRS and pay penalties and interest.