Tax Fraud Blotter: Pacific skim
Off by $7 million; iPads and custom sofas; PEO rip-off; and other highlights of recent tax cases.
Anchorage, Alaska: Corina Ifopo, 54, of American Samoa, has been sentenced to two years in prison to be followed by three years of supervised release for filing dozens of fraudulent returns on behalf of others in American Samoa.
According to court documents, Ifopo, who pleaded guilty in December to 28 counts of false claims to a government agency, became the subject of an investigation when the IRS identified some 200 returns claiming more than $1 million in refunds that were fraudulently claimed by Samoan residents. These claims were linked with commonalities including a fictitious post office box used by Ifopo, with some or all of the related funds being funneled through accounts linked to Ifopo.
Investigation revealed that beginning in May 2014 and continuing to February 2016 Ifopo falsely claimed that the individuals lived in the U.S., including in Alaska, and falsely claimed that they were owed refunds. The claims included listing false dependents and withholdings and claiming inapplicable earned income credits.
Circleville, Ohio: Businessman John Anderson Rankin, 55, has received 60 months in prison for tax crimes that included a total tax loss of some $8.1 million.
Rankin was convicted of 17 tax-related charges in September. A federal grand jury indicted him in 2015 with seven counts of failing to account for and pay over federal employment taxes, six counts of willfully filing false federal individual income tax returns, three counts of willfully filing false federal corporate income tax returns and one count of obstructing and impeding due administration of the IRS.
According to court documents and testimony, Rankin operated a number of local businesses, including Connectivity Systems Inc., a mainframe software company that provides internet protocol development and servicing. Rankin Enterprises was a shell corporation including the Circleville Movie House, Screening Room, J.R. Hooks Café and Tootles Pumpkin Inn. Rankin also owned the Tuscan Table, an Italian restaurant.
Between June 2008 and April 2011, Rankin, d.b.a. Rankin Enterprises and Tuscan Table, failed to account for and pay over to the IRS all federal income and FICA taxes. He also filed false amended U.S. individual tax returns with the IRS for the 2005, 2006, 2007, 2008 and 2009 income tax years; he claimed a corrected AGI of a negative $1.7 million, when in actuality his corrected AGI exceeded $8.9 million.
In 2010, Rankin filed a false individual income tax return that reported an AGI of nearly $27,000 when his actual gross income neared $1.6 million. In addition, he filed false U.S. business tax returns with the IRS for Connectivity Systems Inc. for the 2008, 2009 and 2010 income tax years that claimed a fraudulent accelerated R&D credit of $1.7 million against the corporate taxes due and owing of Connectivity Systems.
Between January 2005 and July 2015, Rankin also made false and misleading statements to and concealed information from agents of the IRS.
He was also ordered to pay $7.1 million restitution.
Edgerton Wis.: Gary Auerswald, 61, pleaded guilty to failing to pay payroll taxes withheld from his employees’ paychecks.
Auerswald owned Full Spectrum Building Components, which withheld payroll taxes from its employees’ payroll checks and was required to deposit these funds with the IRS quarterly.
At the plea hearing, Auerswald admitted that he failed to pay to the IRS payroll taxes of $24,482.43 on behalf of Full Spectrum employees for Oct. 1 to Dec. 31, 2014, and instead kept the money for the business.
Sentencing is June 29, when Auerswald faces a maximum of five years in prison.
Feasterville, Penn.: Mohammad N. Ali, 41, has received 18 months in prison for bribing former Philadelphia District Attorney Rufus Seth Williams and evading taxes.
Ali previously pleaded guilty to one count of using facilities in interstate and foreign commerce to promote bribery in violation of Pennsylvania law and one count of making and subscribing to a false federal return.
According to documents filed in this case and statements in court, from July 2010 through May 2015, Ali provided a stream of bribes to Williams — which Williams concealed from timely public disclosure — in exchange for Williams performing and agreeing to perform official acts for Ali and to violate Williams’ legal duties.
He provided Williams with a $7,000 check, an all-inclusive vacation to the Dominican Republic worth $6,381, a custom sofa worth $3,212, $2,679 in dinners at high-end Philadelphia restaurants, some $2,000 in cash, a $842 Burberry watch, a Louis Vuitton tie worth $205, an iPad worth approximately $300 and a Burberry purse for Williams’ girlfriend. In exchange, Williams agreed to help Ali with security screenings when Ali returned from foreign travel.
In March 2013, Ali met with Williams and a police official and Williams asked the police official to help Ali avoid secondary screening at the airport. That day, Ali gave Williams a $7,000 check. Williams also repeatedly offered to write a letter under his authority as the DA on Ali’s behalf to pressure and advise another public official to assist Ali with the border encounters. Ali also sought Williams’s assistance with criminal charges brought by the Philadelphia DA’s office against Ali’s associate.
Ali used his business earnings to pay for more than $490,000 in personal expenses, including $112,635 toward the purchase of a dental practice, $15,000 toward a Porsche, purchases at clothing stores, meals at high-end restaurants and domestic and international travel. Ali fraudulently deducted these personal expenses on corporate income tax returns and did not report this income on his personal tax returns.
He caused a total tax loss of $163,498, and was also sentenced to three years of supervised release and a fine of $100,000 and was ordered to pay $63,498 restitution.
Ali testified in June at Williams’ trial, during which Williams pleaded guilty to a charge of bribery and admitted that he committed all of the bribery and fraud offenses alleged in a 29-count indictment. He resigned as DA at that time and in October was sentenced to 60 months in prison.
Waialua, Hawaii: Preparer Guillermo Dahilig has pleaded guilty to one count of aiding and assisting in the preparation and filing of false returns.
According to court documents and information in court, from 2009 to 2016 Dahilig owned and operated Speedy Gill Services, an Oahu prep business. He prepared 750 to 1,000 returns per year for clients, charging $100 to $200 per return. He falsified clients’ returns by claiming deductions for items such as medical expenses, personal property tax, job expenses and charitable contributions that he knew were greater than the figures provided. He then filed the returns, knowing that they would generate inflated refunds.
From at least 2010 through 2013, Dahilig also underreported the income of Speedy Gill Services on the income tax returns he prepared and filed for himself and his wife.
Sentencing is July 16. Dahilig faces up to three years in prison, a fine of up to $250,000 and a period of supervised release of up to one year. He agreed to pay restitution to the IRS in an amount determined by the court for the taxes due from fraudulent returns filed tax years 2010 to 2015 for himself and his clients.
West Bloomfield, Mich.: Dino Rotondo has pleaded guilty to willfully failing to pay over federal employment taxes.
According to documents and information provided to the court, Rotondo owned and operated PEOs in Troy, Mich., that provided payroll-related services to client companies. Rotondo processed payroll and agreed to withhold from client employee paychecks and send to the IRS employment taxes due.
He did not pay to the IRS employment tax withholdings that his PEOs collected during 2012 and the first quarter of 2013, and admitted that he did not pay to the IRS employment taxes due for an additional business that he owned.
Rotondo did not pay more than $1.5 million in employment taxes to the IRS.
Sentencing is Jan. 18, when Rotondo faces a maximum of five years in prison as well as a period of supervised release, restitution and monetary penalties.