See Ray run; superiority complex; Matrix unloaded; and other highlights of recent tax cases.
San Diego: Robin J. McPherson has pleaded guilty, in three separate cases, to failing to appear at his sentencing, attempting to evade the assessment of income tax, and wire fraud.
He failed to appear for his sentencing in 2001 after being convicted along with two co-defendants of conspiring to defraud the IRS and collectively evading more than $1 million in income taxes for 1993 and 1994. While a fugitive, McPherson was indicted for attempting to evade taxes due on income he received in 1999 and 2000 from individuals who believed they were investing in an internet shopping mall. He cashed checks from these individuals, directed the income from this to a Canadian bank account and did not file federal income tax returns for those years, causing a tax loss of some $79,367.
Between 2016 and 2020, McPherson, using the name Raymond James, defrauded other individuals of some $1.5 million by inducing them to invest in Costa Rican villas that were never built. In May, McPherson was apprehended in Costa Rica and deported back to the United States.
Sentencing is April 28. He faces a maximum of five years in prison for failure to appear, five years for tax evasion and 20 years for wire fraud. He also faces a period of supervised release, restitution and monetary penalties.
Columbus, Georgia: Tax preparer Nadine Word, 35, has pleaded guilty to charges that she submitted false claims for tax credits for her clients and failed to pay her own taxes.
Between at least 2014 and 2018, Word prepared and submitted fraudulent returns out of her tax prep business, Superior Taxes. These fraudulent returns resulted in greater refunds for Word's clients and greater fees for her, amounting to a total loss of $586,565.
Word submitted fraudulent claims for the Earned Income Tax Credit, education credits and business losses. She also failed to file her own returns during that time.
The most common fraudulent claim Word submitted was for education credits for individuals who did not attend the school listed on the 8863. Analysis revealed that 408 of 494 claims filed by Word had no supporting education records at the documented educational institution. The false credits from these 408 claims resulted in a tax loss of $556,145.
The IRS also evaluated 31 individual returns finding false education credits, false EITCs and false business expenses. Every return included at least one false item. The tax loss for those returns is $64,767.
Word pleaded guilty to one count of aiding and assisting in the preparation and presentation of false and fraudulent individual income tax returns and one count of willful failure to file, supply information or pay tax. She faces a maximum of three years in prison, to be followed by a year of supervised release and a $100,000 fine for the first count and a maximum of a year of imprisonment to be followed by a year of supervised release and a fine of $25,000 for the second count. Sentencing is June 13.
Marshall, Texas: Boyd Lynn Butcher, 50, who operated as a tax preparer though not authorized by the IRS, has pleaded guilty to making false and fraudulent statements, according to news reports.
The U.S. Attorney's Office, in a cited press release, said Butcher operated Boyd's Tax Service before 2015 and through at least 2017, preparing more than 450 federal returns in exchange for a fee, usually $300 per return. Officials reportedly said Butcher "created false or fraudulent information to generate unwarranted tax refunds" in many of the returns. The total tax harm to the IRS, officials told news outlets, exceeded $317,252.
For example, in April 2016, Butcher was paid $300 to prepare a return for the 2015 tax year, the U.S. Attorney's Office said. Butcher reportedly filed the return but it did not reflect that he had prepared and filed it. The return reportedly stated that the taxpayer was entitled to claim car and truck expenses from a farming business of $80,623 but Butcher knew the taxpayer didn't have a farming business.
Butcher agreed to pay over $300,000 in restitution and to be sentenced to three years in prison, news reports said.
Jacksonville, Florida: Former CEO Jason Cory, 49, has been sentenced to 32 months in prison for willfully attempting to evade assessment of his federal income taxes.
In 2015 and 2016, Cory was a manager at a New York-based IT services company and from 2017 through 2019 was CEO of a different IT services company in Jacksonville. From 2015 through 2018, he used his positions to cause more than $1.5 million to be deposited into the bank accounts of Gambit Matrix, a shell company he controlled. As CEO, Cory caused transfers to Gambit Matrix under the false pretense that they were payments for consulting services that had never been provided.
Cory did not report the income he earned through transfers to Gambit on his return for 2015 and did not file returns for 2016 through 2018. He invented fictitious owners of Gambit Matrix, made false representations to his employer and falsified emails and W-9s.
Cory used the money to pay personal expenses such as credit card bills, rent and club memberships. He evaded more than $600,000 in taxes.
He was also ordered to serve three years of supervised release and to pay some $606,195 in restitution to the United States.
Meraux, Louisiana: Tax preparer Cynthia Bowley has been sentenced to three years of probation and a $100 special assessment after pleading guilty to aiding and assisting in the filing of false returns.
Bowley caused false federal income tax returns to be filed for at least 10 clients. She created false losses on Schedules C and false charitable contributions on Schedules A. Bowley also created false Schedules E and false filing statuses for her clients.
For tax years 2013 through 2018, Bowley caused a total tax loss to the United States of $251,257. She was also ordered to pay restitution to the IRS in that amount.
Sandusky, Ohio: Jared Davis has been sentenced to 30 months in prison after pleading guilty to multiple counts of tax evasion.
Between 2012 and 2016, Davis and his business partner ran a binary options investment scheme that regularly committed fraud. One of the multiple entities involved was Erie Marketing; the options businesses used various trade names, including OptionMint, OptionKing and OptionQueen.
A binary option is a concept in which an investor seeks a future payout based on the future price of a given security or commodity. Binary options are sometimes traded on regulated exchanges that match two investors, one who believes the price of the asset will go up and the other who believes it will go down.
Davis and his partner used call centers, including those run by Erie Marketing, to solicit individual investors in the scheme to deposit money, often through credit cards, into foreign bank accounts that they controlled. Davis used this money to pay expenses, which included employee salaries, facility fees, fees to the companies that supplied the trading platforms on which the options businesses operated, and internet marketing services.
Davis created shell companies and used a network of foreign nationals and foreign bank accounts to receive credit card payments. He and his partner ultimately controlled this process and would eventually repatriate the money to a local Ohio bank, using it to pay employees and other expenses.
Davis pleaded guilty in April 2022 to tax evasion after he failed to file personal tax returns for 2014, 2015 and 2016. He had a substantial additional tax due and owing for each year as a result of the options scheme and made numerous attempts to avoid payment.
Erie Marketing was also sentenced to three years of probation and ordered to pay a fine of $4.4 million and restitution to all identified victims, a total the United States expects to be some $650,000. Davis was also sentenced to three years of supervised release, fined $300,000, ordered to pay restitution to the IRS and ordered jointly liable for the debts of Erie Marketing.
