Tax Fraud Blotter: Refund in the parking lot

Secret records; cashed out; relatives, acquaintances and Social Security numbers; and other highlights of recent tax cases.

Portland, Oregon: Gloria Harris, 48, of Las Vegas, has been sentenced to 39 months in prison and three years of supervised release for operating a fraudulent return business. She was also ordered to pay more than $548,000 in restitution.

As part of the scheme, Harris prepared more than 100 fraudulent returns requesting nearly $600,000 in fraudulent federal refunds. According to court documents, between 2012 and 2016 Harris would file client returns as “self-prepared” returns to mask her participation. She inflated refunds by claiming that unrelated children were dependents to qualify clients for various tax breaks, including the Earned Income Tax Credits. She began to raise suspicion among clients by refusing to provide copies of filed returns, chastising them for asking questions in writing and withholding refunds. On one occasion, Harris delivered a $1,400 refund in cash to a client in a parking lot. Investigators later learned that this client was due a federal refund of more than $8,500.

Harris pleaded guilty to one count each of making false, fictitious or fraudulent claims against the U.S. and aggravated ID theft on July 18.

Hillsboro, Oregon: Retired attorney Bruce L. Lamon, 64, has pleaded guilty to one count of tax evasion after failing to pay $744,000 in personal income taxes.

According to court documents, between 2006 and 2012 Lamon worked as a commercial litigator at a law firm in Honolulu, earning a substantial income. After retiring in 2012, he withdrew all the funds in his retirement account — some $395,000 — and moved to Hillsboro. As of mid-October 2015, Lamon owed approximately $744,000 in individual income taxes for calendar years 2008 through 2013.

To conceal his assets from the IRS and evade payment of taxes, Lamon paid cash for vehicles, titling them in his former spouse’s name, and purchased rental properties with cash using an LLC registered in Hawaii.

Lamon faces a maximum of five years in prison, a $250,000 fine and three years of supervised release. Sentencing is July 9. Lamon will pay $744,000 in restitution to the IRS. At sentencing, the government will move to dismiss Count 2 of the indictment charging Lamon with giving a false statement.

Toms River, New Jersey: George Gilmore, 69, a partner at a local law firm, has been convicted of two counts of failing to pay over federal payroll taxes withheld from the firm's employees and one count of making false statements on a bank loan application.

He was acquitted of two counts of filing false returns for calendar years 2013 and 2014; the jury could not reach a unanimous verdict on one count of income tax evasion for calendar years 2013, 2014 and 2015.

According to case documents and evidence at trial, Gilmore worked as an equity partner and shareholder at Gilmore & Monahan PA, where he exercised primary control over the firm’s financial affairs and was responsible for withholding payroll taxes. For the tax quarters ending March 31, 2016, and June 30, 2016, the law firm withheld tax payments from employees’ checks but Gilmore failed to pay over in full the payroll taxes that were due.

He also submitted a loan application to a local bank containing false statements. On Nov. 21, 2014, Gilmore reviewed, signed and submitted a Uniform Residential Loan Application to obtain refinancing of a mortgage loan for $1.5 million with a “cash out” provision that provided Gilmore would obtain cash from the loan. On Jan. 22, 2015, he submitted another URLA updating the initial application. Gilmore failed to disclose his outstanding 2013 tax liabilities and personal loans that he had obtained from others on the URLAs. Gilmore received $572,000 from the cash out portion of the loan.

The counts of failing to collect, account for and pay over payroll taxes each carry a maximum of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The count of loan application fraud carries a maximum of 30 years in prison and a $1 million fine. Sentencing is scheduled for July 23.

Hands-in-jail-Blotter
hand in jail

Independence, Missouri: Sheryl D. Hughes, 41, has been sentenced to three years in prison and ordered to pay $7,045 in restitution to her victims for stealing their identities to file fraudulent returns.

Hughes obtained Social Security numbers from several relatives and acquaintances and used them to prepare false and fraudulent individual income tax returns. The returns included false information concerning, among other things, income earned, federal income tax withheld, false education credits and false and fraudulent claims for income refunds. Hughes also used false addresses to have the refund checks mailed to an address accessible to her or for refunds to be e-transfers to debit cards or bank accounts accessible to her.

Port St. Lucie, Florida: Preparer Richard Maurival has been sentenced to 84 months in prison for filing false returns for clients and for failing to report his true income on his own income tax returns.

According to court documents and evidence, from 2012 through 2015 Maurival prepared income tax returns for clients that claimed false education credits, business expenses and other deductions to inflate federal refunds. He also falsified his own returns, underreporting the fees he earned in his prep business for tax years 2012, 2013 and 2014.

Maurival was also ordered to serve a year of supervised release and pay $267,995 in restitution to the IRS.

Inkster, Michigan: Preparer Gary Hairston has been sentenced to 30 months in prison after being found guilty at trial of 25 counts of preparing false federal returns.

According to evidence presented at trial, Hairston owned and operated Gary Y Hairston & Co., and from 2010 through 2014 prepared and filed false federal returns, charging up to $925 per fraudulent return. Hairston falsified the returns to inflate clients’ refunds or obtain undeserved refunds. In some cases, he created false Schedule C businesses for clients to facilitate the scheme.

In all, Hairston sought more than $175,000 in fraudulent refunds.

Hairston was also ordered to serve a year of supervised release and pay $118,048 in restitution to the IRS.

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