Tax Fraud Blotter: Run and gun
Yet another fictional company; more tooth and justice; unsafe bets; and other highlights of recent tax cases.
Denver: Tax defier Lawrence Birk has pleaded guilty to failing to surrender to serve his prison sentence for tax evasion and illegal possession of a firearm.
Birk, convicted a year ago of tax evasion, founded a sole proprietorship, Tarryall River Log Homes, which sold and built log homes. Although the company was profitable, Birk did not voluntarily pay federal taxes on its income. When the IRS began collection efforts, Birk hired a tax firm to prepare eight years of delinquent returns but concealed from the firm $400,000 of retirement distributions.
Even after filing returns, Birk still did not pay what the returns acknowledged he owed in taxes. Instead, he sent the IRS threatening correspondence and sought to impede its efforts to seize money from his bank accounts. He did not file returns or make any tax payments for 2006 through 2018. On Oct. 30, Birk was sentenced to five years in prison and three years of supervised release and to pay $1,858,826 in restitution to the IRS.
Birk was ordered to report to prison in November but instead fled Colorado with a fully automatic assault rifle, two pistols, over a dozen loaded magazines, hundreds of additional rounds of ammunition, ballistic helmets, ballistic vests and gas masks. He was caught and arrested in Florida in January.
Sentencing is Sept. 10, when Birk faces a maximum of five years in prison for his failure to appear and 10 years for possession of a firearm after being convicted of a felony, in addition to the original 60-month term.
Kansas City, Missouri: Michael A. Kheop has been sentenced to eight years and six months in prison for a scheme to obtain more than $2.5 million in fraudulent federal income tax refunds, in part by stealing his children’s identities.
Kheop created a fraudulent business entity in 2013. He then created W-2s that contained false income and withholding to fraudulently claim refunds in his own name and using his three minor children’s names. Kheop filed 12 fraudulent claims for refunds on behalf of his three children for tax years 2014 through 2017. He filed four fraudulent claims for refunds in his own name for tax years 2015 through 2017.
Kheop attempted to defraud the government of $2,591,706; the U.S. Treasury paid Kheop $24,322. In August 2017, the IRS sent Kheop a check for $717,910 based on his false 2016 return but a bank refused to deposit the check due to suspected fraud and contacted the IRS. In 2018, the IRS also sent Kheop a check for $1,596,765 based on his false 2017 tax return, which Kheop attempted to deposit at another bank. Once again, the bank suspected the check was fraudulent and refused to release the funds.
In October 2018, Kheop was out on bond after indictment in this case and filed yet another false return for tax year 2018, claiming he worked for “Michael Kheop,” that he earned $17,500 and withheld $1,451 in federal income taxes. Kheop also filed false unemployment claims with the state of Missouri in 2017 and 2018, while on pre-trial release, claiming he worked for and was laid off from yet another fictional company, Quddus. The state of Missouri paid Kheop $7,680 based on his false unemployment claims.
He was also ordered to pay $24,322 restitution.
Boston: Former office manager Yuliya Vaysglus, a.k.a. Julia Vaysglus, of a local dental practice, has pleaded guilty to charges of bank fraud and tax fraud stemming from her embezzlement from her former employer.
Vaysglus, now residing in Campbell, California, pleaded guilty to eight counts of bank fraud, one count of aggravated ID theft and three counts of filing false returns.
From 2009 until she was terminated in February 2015, Vaysglus was the office manager of a Boston-area dental practice where her duties included tracking client invoices, depositing insurance payments into the practice’s bank account and recording those deposits for accounting purposes. Between 2009 and December 2014, Vaysglus embezzled more than $348,000 from the practice by diverting to herself at least 276 checks from various insurance companies and failed to report the funds on her federal returns.
Sentencing is Nov. 17. Filing a false return provides for a sentence of up to three years in prison, one year of supervised release and a fine of $250,000. Bank fraud provides for a sentence of up to 30 years in prison, five years of supervised release and a fine of $1 million. Aggravated ID theft carries a mandatory two-year sentence that must be served consecutively to any other sentence, one year of supervised release and a fine of $250,000.
Beaumont, Texas: Businessman Larry Earnest Tillery, 70, his wife Judy Kay Tillery, 63, and his son Brian Tillery, 47, have been sentenced for federal monetary and tax violations.
Larry Tillery pleaded guilty to engaging in monetary transactions in property derived from specified unlawful activity and tax evasion. He was sentenced to 33 months in prison and ordered to pay $1,000,040 in restitution and to forfeit some $2 million in cash, jewelry and sports memorabilia, proceeds of his illegal gambling enterprise. A money judgment of $32,758,541 was also ordered.
Judy Tillery pleaded guilty to structuring financial transactions to evade reporting requirements and was sentenced to two years of probation; she shares the forfeiture judgment with her husband. Brian Tillery pleaded guilty to engaging in monetary transactions in property derived from specified unlawful activity and was sentenced to two years of probation. Brian Tillery was ordered to forfeit some $245,477 and a local residence with an appraised value of some $600,000 that was the proceeds of the illegal gambling enterprise. A money judgment of $700,000 was also ordered.
Larry Tillery accepted illegal bets on sporting events from 1985 until 2017. He owned and operated Daylight Motors, a used car dealership, and Lamar Capital, a holding company for Daylight Motors, and used these two companies as a front to launder illicit proceeds from his gambling enterprise. He used a website to receive and track wagers from his betting clients, allowing his bettors to place wagers on sporting events, including professional and collegiate basketball, baseball and football games.
Judy assisted her husband in laundering cash proceeds of his illegal gambling activities by depositing cash into her personal bank account and then writing checks to bank accounts controlled by her husband. Brian Tillery collected money from and made payments to bettors; checked the online wagers; accepted gambling money from Larry and made wire transfers to pay gambling debts for his father, among other activities.
Between 2011 and 2016, Larry Tillery accepted at least $52 million in illegal wagers on sporting events and avoided $1,040,000 in taxes.
Lexington, Kentucky: Health care execs Ann Sonderman Giles and Lu Anne Wallace have pleaded guilty to conspiring to defraud the U.S.
From January 2014 through July 2017, Wallace served as the CEO and Giles as the CFO for multiple health care-related companies. The two admitted to failing to pay over trust fund taxes for the companies. Additionally, the companies failed to pay over their matching portions of Social Security and Medicare taxes.
When the IRS moved to take civil enforcement actions, the two facilitated the transfer of business operations to different LLCs, including changing bank accounts, while continuing to fail to pay the trust fund taxes due each quarter.
In total, Giles and Wallace conspired to defraud the U.S. out of some $1,595,726 in tax revenue.
Sentencing is Sept. 21. The two face a maximum of five years in prison and a fine of not more than $250,000, or twice the amount of loss.
Salem, Oregon: Resident Lawrence Collins has pleaded guilty to conspiracy to defraud the U.S. by filing false claims after conspiring to file false returns that claimed more than $400,000 in fraudulent federal refunds.
From 2009 through 2014, Collins obtained names, Social Security numbers and dates of birth from other persons, including from inmates from a state penitentiary, and provided them to co-conspirators who used this information to seek fraudulent refunds. Collins also provided bank account information and third-party mailing addresses for use on the returns.
Sentencing is Sept. 14, 2020, when he faces a maximum of 10 years in prison as well as supervised release, restitution and monetary penalties.