An unclean sweep; quite an education; Ferrari fever; and other highlights of recent tax cases.
Parkton, Maryland: Exec Brett Hill, of Parkton and Berlin, Maryland, has been convicted of 16 counts of failing to collect and pay over payroll taxes.
He was CEO of two telecommunications companies. From the second quarter of 2016 through fourth quarter of 2018, Hill withheld taxes from employees' wages at one or both of his companies but did not file returns or pay those taxes over to the government, nor did he pay over his companies' share. Instead, Hill paid himself a salary and paid other expenses.
Total tax loss to the U.S. exceeded $1 million.
Hill faces up to five years in prison for each count.
Philadelphia: Henry "Hank" Collins has admitted to conspiring to defraud the IRS by paying himself and his co-workers cash to avoid payroll taxes.
Collins worked at Davis Brothers Chimney Sweep & Masonry in Egg Harbor Township, New Jersey. He admitted that between Jan. 1, 2018, and April 30, 2024, he conspired with the spouse of the owner to defraud the IRS.
He used a commercial check casher to negotiate a substantial amount of the company's gross receipts checks and used some of the resulting funds to pay himself and other employees, giving the rest of the cash to the business owner and spouse. Collins then provided false and misleading information to the company's accounting firm that resulted in filing of payroll returns that omitted the employees paid in cash and their wages.
Collins also admitted filing false individual income tax returns for himself that concealed his cash wages.
He admitted that the conspiracy resulted in a tax loss of some $1 million.
Sentencing is Aug. 18. He faces up to five years in prison and a fine of up to $250,000.
Lake George, New York: Michael E. Conner has been found guilty of defrauding investors and failing to file tax returns.
The jury voted to convict Conner of 22 counts of wire fraud and two counts of failing to file returns.
He was an inventor of household products and held patents on his inventions, such as a paint bucket called the Paint Caddy, a knife with a heated blade and a rotatable refrigerator shelf. Starting around 2008, Conner convinced other people to invest in his patents and lend him money that he said would help him market and sell his patents.
In 2020 and 2021, Conner fraudulently sought and obtained loans from people who believed they were lending money for business purposes, including to complete the sale of patents, to pay the IRS and to pay legal and accounting fees. Conner instead used the money for personal expenses and to fund his lifestyle, including outings to high-end restaurants in Saratoga Springs, concert tickets and expensive wine.
Since 2008, Conner has received, from investors and lenders, approximately $6 million; he has never sold a patent nor earned revenue from any of his inventions. His victims included residents of Virginia, North Carolina and Warren County.
The jury also convicted Conner of failing to file personal income tax returns for 2020 and 2021. He received more than $136,000 in loans in 2020 and more than $257,000 in loans in 2021. During this time, Conner had no savings and no job. The jury found that he had no intention of repaying the loans and treated them as his income and willfully failed to file federal returns that would have reported the money.
The jury acquitted Conner on one count of wire fraud and two counts of failing to file tax returns (2018 and 2019).
Sentencing is Aug. 14. On the wire fraud convictions, Conner faces up to 20 years in prison, a fine of up to $250,000 and a term of supervised release of up to three years. On the tax convictions, Conner faces up to a year in jail and a fine of up to $100,000.
Redkey, Indiana: Christina Moles, a.k.a. Tina Lashley, 50, has been sentenced to 18 months in prison to be followed by three years of supervised release after pleading guilty to wire fraud and aiding and assisting the making of a false federal income tax return.
Between 2015 and 2021, Moles falsified 382 federal income tax returns for numerous clients without their knowledge. During this time, Moles was a tax preparer and frequently attracted clients by advertising that her business guaranteed large refunds. Many of her clients received refunds of $5,000 to $10,000 despite having modest incomes.
Moles falsely stated that her clients qualified for the American Opportunity Tax Credit, claiming that her clients incurred educational expenses to either Ivy Tech or Penn Foster online college. In fact, none of these clients had any education expenses and hadn't attended either school. Also, neither institution provided a 1098-T.
The loss to the IRS was some $567,010, which Moles has been ordered to pay in restitution.
Philadelphia: Rodney Ermel, a Colorado man who owned and managed an accounting firm in that state, has pleaded guilty to conspiring to defraud the United States and to tax evasion.
Along with co-defendant Kenneth Bacon, Ermel provided accounting and tax prep services for Joseph LaForte and his entities. Ermel conspired with LaForte, Bacon and others to hide some $20 million in income through various fraudulent accounting practices, such as fabricating shareholder loans and bad-debt deductions.
Ermel also filed returns that he knew underreported taxable income by more than $20 million between 2016 and 2018. Ermel's fraud caused a federal tax loss of more than $8 million.
He is the fourth defendant to plead guilty in this tax scheme. Sentencing is Sept. 3.
Palm Beach Gardens, Florida: Business owner Matthew Brown has been sentenced to 50 months in prison for not paying taxes withheld from his employees' wages and for filing a false return.
Brown owned and operated multiple local businesses, one of which was Elite Payroll. Between 2014 and 2022, Brown did not pay more than $20 million in taxes withheld from the wages of employees of clients of Elite and from other businesses he controlled.
He charged clients the full amount of their tax liabilities but then filed false employment returns with the IRS that substantially underreported their liabilities, pocketing the difference. Brown used the money to buy real estate, including his multimillion-dollar home, a Valhalla 55 Sport Yacht, a Falcon 50 Aircraft and a large collection of cars including Porsches, Rolls Royces and 27 Ferraris.
Brown was also ordered to serve two years of supervised release and to pay $22,401,585 in restitution and a $200,000 fine to the United States.
