Tax Fraud Blotter: Packin’
Bad news; ’tis the season; injunction schmunction; and other highlights of recent tax cases.
Las Vegas: Josiah Ntekume has pleaded guilty to aggravated ID theft, wire fraud, theft of government property and access device fraud relating to a stolen ID tax fraud.
Ntekume was involved in a scheme to file false returns using stolen IDs to obtain refunds. Co-conspirators provided Ntekume with names, addresses, dates of birth and Social Security numbers that Ntekume used to establish prepaid debit card accounts. Co-conspirators then caused stolen federal refunds to be deposited into the accounts.
When arrested in 2012, he had in his backpack some 250 prepaid debit cards in others people’s names onto which more than $200,000 in fraudulent refunds had been loaded. The backpack also contained several pages of paper listing stolen IDs for nearly 200 individuals that were used either to file false returns or to establish additional prepaid debit cards.
Sentencing is March 4, when Ntekume faces a maximum of 20 years in prison on the wire fraud count, as well as up to 10 years on each count of theft of government property and fraud in connection with access devices. He also faces a minimum of two years for aggravated ID theft, as well as supervised release, restitution and monetary penalties.
Florence, South Carolina: Preparers Donna Faye Shird, 41, and Felicia Renee Shird, 42, have pleaded guilty to conspiracy to aid in the preparation and filing of false federal income tax returns.
The Shirds operated Donna’s Income Tax Service. From 2012 to 2017, both began routinely adding fictitious information to clients’ personal returns to inflate refunds. Investigators discovered that the clients provided correct information to Donna or Felicia with the expectation that they would accurately prepare and file the returns for the clients.
Instead, the Shirds created returns that falsely claimed deductions, credits, exemptions and other benefits. Falsely claimed items included child and dependent care credits, business profits and losses, education credits, residential energy credits and earned income credits. Donna’s Income Tax Service attracted more clients based on their reputation for producing large refunds.
The two face a maximum of five years in prison and a fine of $250,000.
Charlotte, North Carolina: Preparer Cletise Hammonds, 48, has pleaded guilty to preparing false returns.
From 2011 to 2017, Hammonds owned and operated Accurate Tax and Bookkeeping and prepared and filed returns for clients that included fraudulent Schedule C expenses, education credits and dependents, among other falsehoods. The fraudulent items resulted in reducing clients’ tax liabilities and inflating refunds. Hammonds charged $200 to $700 to prepare returns, his fees taken directly from the clients’ refunds.
The tax loss was $329,568.
Grand Prairie, Texas: Resident Emmanuel Akoto, a.k.a. Kofi, has been found guilty of conspiring to commit wire fraud, wire fraud and aggravated identity theft in connection with a scheme to file false returns using stolen identities.
From 2011 through 2014, Akoto purchased from third parties more than 560 stolen IDs and used them to file false federal returns. These returns listed fake income and withholdings and sought fraudulent refunds, which Akoto and his co-conspirators loaded onto prepaid debit cards. Akoto also tried to purchase identities from a federal Secret Service undercover agent, asking through email how much it would cost to buy the “newest” IDs. The conspiracy involved others in Texas, California, Georgia and Ghana.
Sentencing is Jan. 29. Akoto faces a maximum of 20 years in prison for conspiracy to commit wire fraud and each wire fraud offense. He also faces a minimum of two years in prison for aggravated ID theft, as well as a period of supervised release, restitution and monetary penalties.
Crane Hill, Alabama: A couple that owned a construction business has been sentenced to prison for failing to pay over payroll taxes.
Walter Michael Williams was sentenced to 13 months in prison and Amy Butler Williams was sentenced to seven months in prison. The couple operated Dixie Steel Erectors in Hanceville, Alabama. Walter Michael was the president and owner and Amy the bookkeeper and office manager, both responsible for withholding and paying over DSE’s payroll taxes. During 2012 and 2013, DSE accrued payroll tax liabilities and the Williamses withheld those taxes from the pay of employees but failed to pay the funds to the IRS.
Instead, the Williamses paid for a number of their personal expenses, including mortgages, alimony and football season tickets. The Williamses also failed to file personal returns and corporate returns for DSE.
The Williamses were also each ordered to serve three years of supervised release and to pay $502,683.23 in restitution to the IRS.
Denver: Preparer Gerardo Herrera, 63, has pleaded guilty to corruptly endeavoring to obstruct or impede the due administration of the Internal Revenue Code.
Between January 2011 and May 2017, Herrera operated Lobo Multiservicios, assisting taxpayers to submit personal federal income tax returns. LMS catered primarily to Hispanic taxpayers.
Herrera prepared and submitted or instructed LMS employees to prepare and e-file false returns using the firm’s EFIN. On each occasion, Herrera provided false information to ensure the taxpayer would receive an inflated refund.
The IRS obtained a permanent injunction in 2016, barring Herrera and his businesses from preparing returns or assisting others in preparing returns. About a month after obtaining the injunction, the IRS discovered Herrera had opened a new office and resumed preparing returns using new business names, including “Gabby Professional Service,” “Los Lobos Professional,” “FaroMultiservicios LLC” and “Lizeth Professional Service.”
Sentencing is April 1.
Fort Dodge, Iowa: Scott Wallace, 53, who failed to pay income taxes for at least five years and then evaded paying back taxes for at least seven years, has been sentenced to 18 months in prison.
Wallace, who pleaded guilty last summer, ran a trucking business from 2000 to 2006 and failed to file income tax returns for 2002 through 2006. The IRS calculated that he owed $130,903 in taxes for those years.
Wallace attempted to evade paying those taxes from 2008 through 2015. For example, in 2012 and 2013 while working in the trucking industry in North Dakota, he had his income deposited into bank accounts he had opened in his son’s name. His other steps to avoid paying taxes included hiding assets and income from the IRS, using his son’s name and the name of a business to hide that he made more than $350,000 between 2012 and 2014, buying two trucks and a house in others’ names and using a defunct business’s bank account.
Wallace hid from the IRS that he made $1,205,433 from 2007 through 2014. In May 2016, a judgment was entered against Wallace, ordering him to pay $313,853.88 in back taxes.
He must also serve two years of supervised release after the prison term.
Harrisburg, Pennsylvania: A state court has denied unemployment compensation to former IRS clerk Israel Chestnut, who was fired from the agency for failing to pay his federal taxes, according to news reports.
Chest received a 30-day suspension and signed a “last chance agreement” for failing to file his return and pay his 2011 federal taxes on time, reports said, adding that he then failed to pay his 2015 taxes on time and was fired in 2018. Soon after, he reportedly filed for retirement.
He appealed to Pennsylvania’s Commonwealth Court after the state Unemployment Compensation Board of Review rejected his argument that he was eligible for unemployment because the IRS had not proven him guilty of any misconduct, reports said. Reports said the court degreed that the IRS rightly judged that Chestnut’s failure to meet tax deadlines constituted willful misconduct.