Tax Fraud Blotter: Pain and gain

Register now

On the run; Talent for fraud; relative chips in; and other highlights of recent tax cases.

Providence, Rhode Island: Chiropractor Eugene Kramer, 50, has agreed to plead guilty to charges relating to a scheme to defraud health care benefits programs and that he allegedly failed to pay taxes to the IRS for some of the income he received from his business, authorities said.

It is alleged that Kramer, sole owner of New England Spine and Disc Center, devised a scheme to defraud insurance companies by billing for days patients did not attend treatment, for treatment not provided and by falsifying medical notes and documentation to support nonexistent personal injury claims.

Court documents say that throughout 2018 Kramer provided invoices for chiropractic treatment to various attorneys, who then, to support a patient’s bodily injury claim, provided those invoices to various automobile insurance companies in Rhode Island. At times, Kramer provided falsified medical notes and documentation.

An individual assisting the FBI in the investigation of Kramer’s activity visited Kramer’s office on 15 occasions for chiropractic treatment under the pretext of having been involved in an automobile accident, court papers say, adding that in most instances little or no treatment was provided and few if any medical notes were taken. At no time did Kramer provide the person with a diagnosis or discuss a treatment plan.

Court documents maintain that the undercover operative was emailed a package requesting a monetary settlement in connection with the individual’s supposed injury claim to Progressive Insurance requesting, among other things, reimbursement for chiropractic services.

For tax years 2015, 2016 and 2017, Kramer failed to report a portion of his personal income, resulting in him owing the IRS $66,914.

An information and plea agreement filed in U.S. District Court charges Kramer with health care fraud and filing a false tax return.

Health care fraud is punishable by up to 10 years in prison, a fine of $250,000 and three years of supervised release. A false tax return is punishable by up to three years in prison, a fine of $100,000 and a year of supervised release.

Denver: Wilma Hau, 45, formerly of Littleton, Colorado, has been sentenced to 18 months in prison for fleeing the U.S. to evade the sentence in a previous tax fraud.

Hau and her spouse were sentenced in 2014 for conspiracy to make false and fraudulent claims to the government. Investigation determined that Hau conspired in a scheme where stolen identities were used to file 138 false federal income tax returns that generated $430,753 in fraudulent refunds. A significant portion of these refunds were used for Hau’s personal benefit, including the purchase of a residence.

Hau was to report to prison in Minnesota in March 2014 but instead fled. She was arrested near the Mexican border in El Paso, Texas, last July.

Atlanta: Dr. Xiao-Jiang Li, 63, has pleaded guilty to filing a false return and been sentenced to one year of probation.

A former Emory University professor, Dr. Li worked overseas at Chinese universities and did not report any of his foreign income on his federal returns.

In late 2011, while employed at Emory, Li joined Thousand Talents, a Chinese-government talent-recruitment initiative that targets professors and researchers to work in China. From 2012 until 2018, Li, while still working at Emory University researching, among other things, the use of large animal models to investigate Huntington’s disease, also worked at two Chinese universities — the Chinese Academy of Sciences and then Jinan University — conducting similar research. Over those six years, Li earned at least $500,000 in foreign income that he never reported on his federal income tax returns.

Li’s false returns came to light after the National Institutes of Health reviewed his NIH research grant applications and became concerned that he had failed to disclose, among other things, foreign research activity. Those concerns prompted Emory University, and later federal law enforcement, to investigate the matter.

Li was also ordered to pay $35,089 in restitution and ordered to file lawful returns for 2012 through 2018 within the first two months of his probation.

Ronan, Montana: Kerry Snow Yeager, who pleaded guilty in October to stealing more than $300,000 from her employer and evading income taxes, has been sentenced to 25 months in prison and three years of supervised release.

Yeager worked for a local company for several years and embezzled $316,231 from 2015 until 2017. She used various methods to steal the money, including unauthorized cash withdrawals at ATMs and unauthorized use of a company debit card, and cashing and depositing checks written on the company's account with a forged signature of the owner. Yeager also failed to pay taxes on the embezzled money in 2015, 2016 and 2017.

The owner discovered Yeager was stealing in August 2017. When confronted, Yeager admitted to the fraud and a relative of Yeager’s later paid the owner $100,000.

Yeager was also ordered to pay $252,740 in restitution.

For reprint and licensing requests for this article, click here.
Tax-related court cases Tax scams Tax fraud Tax crimes Tax preparation