A roundup of our favorite recent tax fraud cases.
Columbia, S.C.: A federal court has permanently barred Liberty Tax Service franchise owner Christopher Paul Haynes from preparing federal returns for others.
The civil injunction order prohibits Christopher Paul Haynes from acting as a federal return preparer and from supervising, managing or employing federal return preparers. Haynes must also provide the government with a list of all clients for whom he or his business prepared a return for any tax year from 2010 to the present.
Haynes agreed to the order.
Last February, the government alleged that Haynes and his employees prepared false federal income returns in order to inflate clients’ refunds at three Columbia-area Liberty franchises. According to the government’s complaint, Haynes and his employees prepared returns that included false or inflated income and expenses on Schedules C, bogus dependents, false filing statuses and improper unreimbursed employee business expenses.
Montgomery, Ala.: Preparer Nicole Coleman, 34, has been sentenced to three years in prison after she pled guilty to making false statements in a federal income tax return.
Coleman, previously the owner and operator of Community Tax Associates, filed federal income tax returns for herself and clients and knowingly made false entries to inflate refunds for clients. Coleman then took a portion of the refunds as a fee.
Between 2014 and 2015, she obtained some $1.65 million in fraudulent refunds from the U.S. government.
El Paso, Texas: Preparer Clarence Counterman, 59, is one of two men convicted of carrying out an estimated $2 million Ponzi scheme.
Counterman, owner of the tax prep business Taxrite, and 52-year-old Robert Loya, were convicted of one count of conspiracy to commit wire fraud. Jurors also convicted Counterman and Loya of 14 and 13 substantive counts, respectively, of wire fraud. Counterman was also acquitted of one substantive wire fraud charge and Loya of two substantive wire fraud charges.
Evidence revealed that from December 2008 to October 2013, the two conspired to convince others, including Counterman’s clients, into investing into their solar energy-related companies – including Renewable Energy Consultant, EP Solar Technologies, LITTCE Inc. and Eco Global Corp. – by promising high returns.
Contrary to the agreements with the investors, a significant amount of money was converted for personal use by Counterman, Loya and a third defendant, 54-year-old Leopoldo Parra of El Paso. The defendants also paid some returns to earlier investors from monies paid in by newer investors, rather than from profits earned by these companies, to avoid detection and to lull investors.
Testimony revealed that more than 50 investors lost more than a combined $2.1 million.
Counterman and Loya face up to 20 years in federal prison for each count of conviction, as well as restitution to their victims. Sentencing is Feb. 2. Parra, who pleaded guilty to the conspiracy charge and one substantive wire fraud charge, is scheduled for sentencing on Nov. 30.
Loomis, Calif.: Preparer Aleksandr Kuzmenko, 33, has been sentenced to two years and three months in prison and been ordered to pay $573,332 in restitution to the IRS for conspiracy to defraud the U.S. government.
According to court documents, Kuzmenko worked as a preparer at VK Tax Services in Citrus Heights, Calif., in 2009. Between February and November of that year, he conspired with others to file approximately 90 fraudulent federal returns.
The returns fraudulently claimed the First-Time Homebuyer Credit and the refunds electronically deposited into various bank accounts controlled by Kuzmenko’s co-defendants. The fraudulent claims totaled approximately $695,724, of which the IRS paid some $573,000.
New York: Attorney William Doonan, 69, of the Bronx, has pleaded guilty to charges related to his participation in filing fraudulent returns and falsely claiming more than $6 million in bogus deductions.
Doonan pleaded guilty to one count of aiding and assisting in the preparation of a false tax return, and one count of obstructing and impeding the due administration of the internal revenue laws.
According to the allegations, other case documents and statements at the plea proceeding, since at least 2009 Doonan has been in the business of preparing federal returns for clients in exchange for fees. A New York-licensed attorney since 1982, he carried out his prep business in the Bronx using the firm name William Doonan, Esq.
Doonan prepared and filed more than 3,000 returns with the IRS each year and regularly prepared and filed client returns that were false and fraudulent. On some of his clients’ returns, Doonan added false medical and dental expenses, state and local taxes, home mortgage interest, gifts to charity, job expenses and certain miscellaneous deductions. He also attached Schedules C to his clients’ returns that reported “consulting” businesses that the relevant clients did not own, operate, and materially participate in, and business losses that the relevant clients did not incur.
From tax year 2009 through tax year 2012, Doonan included more than $6 million of these fabricated and inflated items on clients’ federal returns.
Sentencing is Feb. 10, when he faces a maximum of three years in prison on the aiding and assisting in the preparation of a false return count and three years in prison on the obstruction of the internal revenue laws count, as well as a period of supervised release and monetary penalties.
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