Personal and professional; off he goes (to jail); charity case; and other highlights of recent tax cases.
Durham, N.C.: Preparer Keesha Frye, 43, owner and operator of KEF Professional Tax Services, has been convicted of conspiring to defraud the U.S. and preparing fraudulent returns for herself and her clients.
According to public documents and information at trial, from 2012 through 2014 Frye and other KEF employees falsified clients’ returns by including fake and inflated sources of income to maximize the Earned Income Tax Credit. Frye also filed personal income tax returns that claimed bogus childcare expenses and business losses.
Sentencing is April 11. Frye faces a maximum of five years in prison for conspiracy and three years in prison for each charge of filing fraudulent returns, as well as a period of supervised release, restitution and monetary penalties.
Overland Park, Kan.: Preparer Alfred Reece, 58, has been sentenced to eight years in prison for aiding and assisting in the preparation and presentation of false income tax returns.
According to court documents, Reece owned and operated a prep business in Kansas City and from 2013 through 2015 prepared federal returns for individuals who claimed false business income and losses, medical and dental expense deductions, job-related expenses, charitable donations and other fraudulent items.
Reece also concealed himself as the preparer on these returns by falsely claiming that they were self-prepared.
He admitted to causing a tax loss of $550,000 and $1.5 million.
Reece, who pleaded guilty in October, was also ordered to serve a year of supervised release and to pay $648,442 in restitution to the IRS.
Harvey, Ill.: Local resident Jonathan Herring, 34, has been sentenced to 63 months in prison for his role in a stolen ID refund fraud.
According to court documents, from about November 2014 to March 2015, Herring, working with at least two others, prepared and filed federal income tax returns using the stolen names and Social Security numbers of U.S. Air Force service members and deposited the refunds into bank accounts that he controlled.
Herring, who pleaded guilty to wire fraud and aggravated ID theft in February 2016, filed approximately 225 fraudulent returns seeking approximately $845,979 in refunds.
In addition to the term of imprisonment, he was ordered to serve four years of supervised release and pay $593,786 in restitution to the IRS.
Edmond, Okla.: Marketing agent William G. Horn has received 15 months in prison for making false statements on federal returns for The Tommie Harris Foundation, a nonprofit corporation.
According to charges filed in September, Horn was a sports marketing agent who operated charitable organizations associated with NFL and NBA athletes. He registered one of these, The Tommie Harris Foundation, with the Oklahoma Secretary of State in late 2006 and used his home as the foundation’s principal office. Horn sought and received tax-exempt status from the IRS under Sec. 501(c)(3). He personally solicited donations for the foundation, which held an annual celebrity golf event to raise money for those in need. He also managed the foundation’s finances and filed its 990s.
According to the charges, Horn signed and filed 990s for the foundation for tax years 2007 through 2012. During those years, the foundation was alleged to have reported total donations received of $1,840,495 and total distributions to other organizations of $705,699. The majority of the difference of $1,134,796 was reported as “functional expenses.”
Horn was charged with making false statements on 990s for the 2011 and 2012 tax years. He reported falsely on both returns that he received no compensation from the foundation, but according to the charges actually diverted some $136,620.06 to personal bank accounts in 2011 and made approximately $39,205.42 in purchases for personal use on a foundation credit card. In 2012, according to the charges, he diverted approximately $129,451.04 to himself and made approximately $41,126.37 in purchases for personal use on a foundation credit card.
He also allegedly made false statements on these returns about having distributed tens of thousands of dollars to other charities, when in fact he controlled those charities and spent the money on himself. In one case, he used Tommie Harris Foundation credit cards to fund luxury cars, restaurants, vacations, living expenses, air travel, and a home in California.
Horn, who pleaded guilty to these charges in September, was also sentenced to three years of supervised release and will have to pay $697,842.69 restitution to The Boys & Girls Clubs of America.
Bloomfield, N.J.: Suspended lawyer Richard Roberts, 80, was sentenced today to three years of probation, including 10 months of home confinement, for failing to pay personal and employment payroll taxes.
Roberts previously pleaded guilty to an information charging him with one count of failing to pay payroll taxes and one count of failing to pay personal income taxes.
According to documents filed in the case and statements in court, Roberts was the sole owner of a legal practice in Newark. He maintained at least one employee, besides himself, and managed all aspects of the law office. For the 12 quarters of the tax years 2009 through 2011, Roberts failed to make any federal payroll tax payment and in each quarter either failed to file a 941 or failed to pay the payroll tax reflected on the form.
Roberts has also not paid personal income taxes since at least 2000. In June 2012, Roberts filed a return for the tax years 2007 through 2010, listing the amount of tax due on each return. For example, on the 2010 tax return, Roberts listed a tax due of $20,361 but he has to date failed to pay the tax for tax years 2007 through 2010.
In addition to the probationary term, Roberts was sentenced to 100 hours of community service and ordered to pay $224,962 in restitution.
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