Tax Fraud Blotter: Sleepy time
Dying to steal; just getting behind; apple and the tree; and other highlights of recent tax cases.
West Palm Beach, Florida: Preparer Paul Senat, 39, has been sentenced to 90 months in prison for aiding and assisting in the preparation of false returns and theft of government funds.
From at least 2012 to 2016, Senat owned and operated multiple local tax prep businesses. He falsified clients’ returns by reporting fictitious business losses and education credits to inflate refunds. Senat, convicted late last year, also stole a federal refund check worth nearly $10,000.
The tax loss to the U.S. exceeded $3.5 million.
Senat was also sentenced to three years of supervised release and ordered to pay $9,779 in restitution to the United States.
Miami: Two defendants involved in a stolen-ID and tax refund fraud have been sentenced to prison. The scheme involved using stolen IDs to file fraudulent income tax returns that falsely claimed refunds.
Maurice Marcellus, 37, of Miami, was sentenced to five years and Ludrick Joseph, 38, of North Miami Beach, Florida, to four years in prison. Both were also sentenced to three years of supervised release and are jointly responsible for paying $563,210 in restitution to the IRS. The two pleaded guilty late last year.
Joseph worked for the prep business Capital Financial Management and Marcellus was the manager and sole registered agent of the company and ran the day-to-day operations. Between 2012 and 2014, Joseph and Marcellus prepared and e-filed federal returns for individuals whose identities they stole. Some of the returns were filed under an EFIN assigned to a person later determined to be a victim of ID theft.
Joseph and Marcellus stored thousands of victims’ personal information at Capital. One of the lists contained the ID information of people Joseph knew were deceased. A spreadsheet in both Joseph’s and Marcellus's computer files also contained the names, addresses, phone numbers and Social Security numbers of more than 2,000 students who attended the ATI College of Health in Miami. Marcellus obtained that spreadsheet while working for ATI as an academic advisor.
Butler County, Pennsylvania: Anesthesiologist James G. Allen Jr., 54, has been sentenced to 30 months in prison for filing a false income tax return.
From 2010 through 2018, Allen filed and caused the filing of 16 false federal returns for himself and his wife. He did not report more than $3 million in income that the pair earned as anesthesiologists. Allen also took steps to conceal the couple’s assets and income from the IRS, including depositing money in an offshore bank account held in the Bailiwick of Jersey, wiring money to Columbia to purchase a house, purchasing cryptocurrency and gold, and registering a vehicle in the name of a purported church. In total, Allen caused a tax loss of more than $900,000 to the U.S.
He was also ordered to serve a year of supervised release and to pay $1,084,658.52 in restitution to the IRS.
District Heights, Maryland: Preparer Renita Jenifer, 52, has pleaded guilty to aiding and assisting in the preparation of a false return.
Between 2013 and 2016 Jenifer, who operated RAJen Business Tax Service in the District of Columbia, prepared federal returns for clients that included fraudulent and inflated business expenses and itemized deductions, such as charitable contributions and unreimbursed employee expenses.
In 2016, after the IRS searched RAJen’s office and revoked her EFIN, Jenifer formed DS Professional Tax Service, a new tax prep business, in Maryland. There she continued to prepare false returns for clients; in 2018, she moved this new business to D.C. and continued to prepare false returns. Jenifer used the name of another individual to obtain an EFIN for DS Pro and listed that individual’s name on returns she prepared, instead of her own.
In 2013 and 2014, Jenifer also filed false returns for herself, omitting income from her business. In 2017 and 2018, Jenifer did not file personal returns at all, despite earning income from DS Pro. Tax loss to the U.S. totaled $373,090.
Sentencing is May 12, when Jenifer faces up to three years, as well as monetary penalties. She has agreed to pay $357,819 in restitution to the U.S.
Houston: Preparer Winfred Fields has been convicted of 15 counts of fraud and tax violations.
Fields operated tax and bookkeeping businesses for many years under the business names Fields Enterprises, Your Tax Professionals and The Tax Boss. He participated in a scheme involving the submission of federal individual returns on behalf of foreign people working on vessels engaged in oil and gas activities in the Gulf of Mexico.
Fields falsely claimed the workers were exempt from U.S. tax under a tax treaty between the U.S. and the United Kingdom, Spain or New Zealand. The employing companies had previously provided to the IRS withholdings from the workers' wages and reported the income to the IRS. Fields submitted amended returns as well as original 1040NRs claiming a refund of the entirety of the amounts paid in as U.S. taxes for various tax years including 2007 through 2012.
Fields charged $2,500 for each crew member’s first return and required a $1,000 fee for each return after. He required direct receipt of the refunds so that he could negotiate the checks and take his fee off the top. Fields had some refund checks deposited directly into one of several bank accounts he maintained. He also cashed the checks at a check-cashing business or had the checks deposited into one of several trust accounts.
He agreed to provide the remainder of the refunds to the foreign clients for a while but ultimately stopped forwarding any money. As those workers began contacting him to ask for updates on their refund claims, he repeatedly sent misleading and materially false responses.
Fields fraudulently obtained $3,097,974.19 in federal refunds and kept some $1,302,271.75 for himself.
The defense attempted to convince the jury he acted in good faith and believed the wages were exempt. He also claimed he was trying to pay the crewmembers their refunds but “just got behind.”
Sentencing will be in May. Fields faces up to 20 years for conspiracy to commit mail and wire fraud, and mail fraud. For the other 13 convictions, he also faces up to three years in federal prison. He may also be ordered to pay restitution to his victims and up to $250,000 in fines.
Greensboro, North Carolina: Business owners Rebecca Adams, 57, and her daughter Elizabeth Wood, 40, have pleaded guilty to failing to pay over federal employment taxes.
Adams and Wood operated a temporary staffing business that changed names twice even though it did not otherwise change its business operations. The two withheld taxes from employees’ paychecks but did not pay those taxes over to the IRS.
In 2015, Wood began serving time after pleading guilty to embezzling employee state tax withholdings. During her incarceration, her mother, Adams, withheld taxes from employees’ paychecks but did not pay those taxes over to the IRS. Adams also did not file the required quarterly payroll return.
Upon being released from prison in 2015, Wood resumed her role at the staffing business and continued to withhold taxes from employees’ paychecks but again did not pay the taxes over to the IRS.
Adams will be sentenced on May 22 and Wood on May 29. They each face a maximum of five years in prison, as well as a period of supervised release and monetary penalties. They have agreed to pay restitution to the IRS.
Martinsburg, West Virginia: Clinton Jean-Pierre, 28, of Miami, has been sentenced to 70 months in prison for identity theft through use of a computer.
Jean-Pierre admitted to fraudulently accessing the IRS eAuthentication system, which has servers located in West Virginia, in December 2017. He admitted that he fraudulently ported an unknowing person’s cell phone number to his own phone to obtain the security code to create an unauthorized taxpayer account.