Tax Fraud Blotter: Silver and gold and jail
No more prep for mother and son; big refund for undercover agent; this will hurt a bit; and other highlights of recent tax cases.
Houston: A federal court has permanently enjoined Levett Navarro Camarena and her son Chase Edward Camarena from preparing federal returns for others, including under the name of the business Hispanic Services.
Levett and Chase Camarena agreed to the civil injunction.
According to the government’s complaint, the two routinely prepared federal returns for clients that contained false, improper or inflated individual deductions on Schedules A and C and reported Schedule C businesses that did not exist.
The complaint alleged that in some cases the returns overstated business income, explaining that while overstating business income increased self-employment taxes, the increase was substantially less than increased Earned Income Tax Credits also claimed.
The IRS reportedly examined 409 returns for years 2012 through 2014 filed by Hispanic Services and prepared by Levett or Chase Camarena and adjusted 278 (68 percent) of the returns examined with average deficiencies of between $1,848 and $2,352, according to the complaint.
The IRS selected 20 tax returns prepared and filed by Hispanic Services for 2015 and was able to talk to 17 taxpayers, according to the complaint, which added that each taxpayer interviewed stated the charitable contributions or business expenses on the returns did not exist or were grossly exaggerated. Each taxpayer also allegedly denied giving the amount used on the return to the preparer.
According to the complaint, the IRS selected and interviewed 17 taxpayers whose 2016 returns were prepared by Hispanic Services and reported that at least nine of the 16 clients whose returns were prepared by Levett Camarena said the returns understated their respective tax liabilities by reporting false business information.
Scott, La.: Preparer Vida Prejean Thomas, 44, has pleaded guilty to putting false information on clients’ tax forms that caused the IRS to pay out more than $105,000.
Thomas pleaded guilty to one count of aiding and assisting in the preparation of false documents under Internal Revenue laws.
According to the guilty plea, the IRS began investigating Thomas’ prep business after receiving a tip alleging fraudulent activity. They interviewed nine of her customers and found that their 2010 through 2013 personal income tax returns contained false information put there without their knowledge or authorization. The false returns Thomas prepared caused a loss of $105,813 to the IRS.
Thomas faces up to three years in prison, one year of supervised release and a $100,000 fine when she is sentenced on Jan. 2.
Grand Junction, Colo.: Timothy Stubbs, 52, has been sentenced to 88 months in prison for tax evasion and failing to file personal and corporate income tax returns.
Stubbs was convicted in 2015 of tax evasion, willful failure to file an individual income tax return and willful failure to file a corporate income tax return.
According to evidence at trial, Stubbs owned National Rebate Fund Inc. and despite earning more than $7 million between 2005 and 2007, did not file corporate income tax returns. He also earned more than $2 million in income taxable to him personally during those same years and did not file individual tax returns.
According to the evidence, Stubbs had not filed a personal tax return since 1992 and had not paid individual income taxes since 1993. To conceal his income, he paid more than $700,000 in personal expenses from the business bank accounts and acquired more than $370,000 in gold and silver in 2007. Evidence also showed that during those three years Stubbs purchased real estate in Grand Junction and Crested Butte, Colo., and two condos in Hawaii, which cost in total more than $2.9 million dollars.
In December 2015, two weeks prior to his sentencing, Stubbs removed his electronic monitoring ankle bracelet and fled to Costa Rica, where he had been living in 2014 prior to being arrested for the indictment. According to documents filed with the court, Stubbs lied to immigration officials in Costa Rica in an attempt to renew his residency in Costa Rica and stay there permanently. In April, Costa Rica deported Stubbs.
Stubbs was also ordered to serve three years of supervised release and pay $639,114 in restitution to the IRS and a fine of $50,000.
Houston: Preparer Crystal T. Kemp has pleaded guilty to willfully aiding and assisting in the preparation of a false return for a client.
Kemp admitted she prepared income tax returns for clients of her business CQ Tax Preparation and willfully placed several false items on the tax returns, including false losses from sole proprietorships, false refundable American Opportunity Credits, false Earned Income Credits and false Child Tax Credits.
According to the plea agreement, Kemp admitted she prepared 41 false income tax returns for clients with a combined tax loss to the U.S. of $429,131. Kemp also prepared a false 2015 income tax return for an undercover IRS agent posing as a taxpayer, claiming a false income tax refund of $5,546 when the return should have reflected a tax due and owing of $1,270. Kemp further admitted that she claimed a false income tax refund on her 2013 and 2014 personal income tax returns that resulted in a combined tax loss to the federal government of an additional $96,608.
Sentencing is Jan. 19, when Kemp faces up to three years in prison and a maximum $250,000 fine.
Cordova, Tenn.: Dentist Andrea M. Henry, 44, has pleaded guilty to tax evasion.
According to court documents and information provided, Henry owned the Henry Polk Dental Group DPC and The Smile Spa LLC and filed federal personal income tax returns for 2005, 2006, 2008 and 2010 to 2013, but did not pay $113,781 in income and self-employment taxes. She also failed to pay over the employment taxes withheld from her employees’ paychecks for numerous quarters between 2006 and 2015.
The IRS assessed more than $160,000 in trust fund recovery penalties against Henry, making her personally liable for the unpaid employment taxes.
Instead of paying the taxes owed, she spent hundreds of thousands of dollars on personal expenses, including private school tuition, expensive housing and luxury cars. After the IRS assessed penalties against her, Henry stopped using personal bank accounts and instead began using business accounts to pay for personal expenses.
In early 2011, prior to her home being foreclosed on, Henry transferred $130,000 to a nominee buyer, entered a sham lease arrangement with the nominee to create a false explanation as to the source of the funds in the nominee’s bank account and caused the nominee to repurchase the home for her. Henry later used that same nominee and other nominees to purchase and lease exotic cars, including a Dodge Viper and a Porsche Panamera.
Henry admitted to causing a tax loss of $528,882.07. Sentencing is Jan. 12, when she faces a maximum of five years in prison, a period of supervised release, restitution and monetary penalties.