Tax Fraud Blotter: Semi-gloss guilt
PEG nailed; taken for a ride; fifth Canadian fraud conviction; and other highlights of recent tax cases.
Wichita, Kan.: A federal court has permanently barred Ma Guadalupe Valenzuela (a.k.a. Maria Guadalupe Valenzuela, a.k.a. Lupe Valenzuela, individually and doing business as Servicio de Income Tax) from preparing federal income tax returns for others.
She prepared federal returns that lowered her customers’ federal tax liabilities by claiming bogus child tax credits, improper dependency exemptions, and false filing statuses, according to the allegations in the complaint.
Valenzuela agreed to the civil injunction order.
Wilson, N.C.: Preparer Tawanda Denise Pitt has been sentenced to two years in prison for filing a false claim for refund with the IRS.
According to documents and information provided to the court, in early 2015 Pitt managed the prep business Integritax and falsified client returns by claiming phony dependents and education credits and reporting fake businesses. Pitt also admitted that she trained other preparers to file fraudulent returns.
She caused a tax loss of between $550,000 and $1.5 million; the total tax loss resulting from false education credits alone exceeded $780,000.
Pitt was also ordered to serve three years of supervised release and to pay $203,106 in restitution to the IRS.
Pompano Beach, Fla.: Former Boca Raton, Fla., resident Wilson Lasset, 48, who purported to operate a prep business, has pleaded guilty to wire fraud and aggravated ID theft in connection with a multi-million-dollar refund fraud.
According to facts filed in court, Lasset applied to the IRS for identification numbers, enabling him and the business he incorporated, Triangle International Training Center, to prepare and e-file returns for others. The business operated out of two addresses in Pompano Beach. In 2012, using these identification numbers, he filed some 1,606 federal returns, including at least 25 returns filed using the names and Social Security numbers of individuals living with cerebral palsy who did not need to file and who didn’t authorize Lasset to file on their behalf.
The unauthorized filings also included returns using the IDs of approximately 386 incarcerated individuals and also used falsely claimed Earned Income Tax Credits based on false claims of earning income as “household help” employees, and falsely claimed education credits designed to reimburse college and other education expenses.
Lasset’s ID numbers were used to claim more than $2.7 million in fraudulent tax refunds. The IRS paid approximately $788,611 in refunds based on these fraudulent returns; some $51,000 was deducted directly from these refunds as preparer’s fees that were deposited into a bank account Lasset opened and controlled for Triangle International Training Center. Lasset used the money for travel and other personal expenses.
He faces a maximum of 20 years in prison on the wire fraud charge and two years in prison on the aggravated ID theft charge. Sentencing is July 19.
Quechee, Vt.: Self-employed painter Kurt Devoid, 60, has pleaded guilty to filing false income tax returns.
According to court documents, Devoid’s personal federal returns for tax years 2010 through 2013 were prepared by a commercial prep office in Lebanon, N.H. On the returns, Devoid reported income he received from commercial customers of his painting business but failed to report substantial income he received from his residential customers.
His failure to report the true amount of his personal income during the four years caused a federal tax loss of $98,482. Sentencing is Aug. 22.
Myrtle Beach, S.C.: Contractor Stephanie Campellone, 46, has pleaded guilty to filing a false return.
Evidence established that Campellone owns and operates Mastercare Contracting, a lawn care/landscaping business. During 2012, 2013 and 2014, she diverted a large portion of Mastercare’s income into personal bank accounts and substantially underreported the taxable gross receipts of the business. Campellone also substantially underreported her income on her personal tax returns.
For the three years, Campellone understated more than $1.46 million in gross receipts. As a result, she owes more than $447,000 in additional income taxes.
The maximum penalty Campellone can receive is three years in prison and a fine of $100,000.
Chandler, Ariz.: William “Larry” Dorsey, 56, has been sentenced to three years in prison and three years of supervised release, and been ordered to pay $7.3 million in restitution to the IRS after pleading guilty to tax evasion.
Dorsey owned and operated several professional employment organizations, including Pinnacle Employee Group, and Pinnacle Planning Group, which contracted with small-business owners to provide payroll services. Dorsey, through PEG and PPG, collected federal employment taxes from his clients, but instead of paying the taxes over to the IRS, he kept a significant portion of the taxes for his own personal use and to fund other business ventures.
To conceal his theft, Dorsey filed federal employment returns that underreported the taxes due from PEG and PPG. From 2011 through 2014, he underreported and underpaid some $7.3 million in federal employment taxes due.
Fridley, Minn.: Preparer Charles Asong-Morfaw, 55, has pleaded guilty to one count of aiding and assisting in the preparation of a false individual income tax return.
According to the guilty plea and documents filed in court, between 2012 and 2015 Asong-Morfaw, through his prep business AJ & A Tax Services, helped prepare and present to the IRS false and fraudulent returns that claimed clients deserved deductions including unreimbursed employee business expenses, unreimbursed medical expenses and charitable deductions.
During the scheme, Asong-Morfaw prepared more than 100 returns resulting in a tax loss of some $103,095.
Dublin, Calif.: Executive Shiv D. Kumar, 61, has been sentenced to 16 months in prison for filing a false federal corporate return.
The sentence followed a guilty plea in April in which Kumar admitted underreporting income on a 2010 corporate return.
Kumar was the sole shareholder and president of A-Paratransit, a multi-million-dollar company that provided transportation services to disabled individuals in the Bay Area. Kumar filed false corporate federal returns for tax years 2008, 2009 and 2010 that underreported API’s gross receipts by more than $4 million, resulting in a tax loss to the U.S. of more than $1.4 million. Kumar deposited API’s gross receipts into multiple bank accounts, concealed millions of dollars in gross receipts and caused API to provide its tax return preparer with doctored and incomplete bookkeeping records showing less in gross receipts than API actually received.
Kumar also admitted that the unreported gross receipts were used to purchase real property in California.
He was also ordered to serve a year of supervised release.
Rochester, N.Y.: Daveanan Sookdeo, 46, formerly of Ontario, has pleaded guilty to conspiring to defraud the U.S. and making a false claim against the U.S.
According to documents filed with the court and evidence, Sookdeo and other Canadian citizens filed fraudulent claims for federal income tax refunds. Sookdeo promoted a scheme that involved falsifying IRS forms to claim that almost $10 million in income had been withheld by various Canadian financial institutions on the conspirators’ behalf.
Sookdeo charged his co-conspirators an upfront fee for the false documents in the scheme, as well as a percentage of any refunds. He travelled to the U.S. to open bank accounts and deposited the refund checks; co-conspirators then wire transferred portions of the fraudulent proceeds to Canada.
Sookdeo is the fifth Canadian citizen convicted for his role in this scheme.