Tax Fraud Blotter: Sovereign inmate
A quarter million for phony work; pools, snow and fraud; bogus figures all around; and other highlights of recent tax cases.
Vincennes, Ind.: Preparer Deborah L. Richards, 56, was sentenced to four years in prison after pleading guilty to three counts of willfully aiding and assisting in the preparation of false returns.
In 2015, Richards worked for Desirable Tax Services in Washington, Ind., and prepared returns for clients; in 2016, Richards established Terry’s Tax Service and prepared returns for clients in 2016 and 2017.
On more than 350 federal returns in those years, Richards claimed false education credits, false American Opportunity Credits and false itemized deductions to inflate refunds. She also provided altered copies of the returns to clients different from the returns filed.
Richards then charged increased fees for her preparation of these fraudulent returns, earning more than $250,000 in fees for her fraudulent prep. The tax loss was $550,001.
Durham, N.C.: Former preparer Maria Streater has received two years in prison for aiding and assisting in the preparation of fraudulent income tax returns.
According to court documents, Streater worked for KEF Professional Tax Services and from 2012 through 2014 prepared fraudulent returns for clients by creating false sources of income to maximize the Earned Income Tax Credit claimed and obtain undeserved refunds.
Streater, who agreed that she caused a tax loss of $274,090, was also sentenced to a year of supervised release and ordered to pay $83,083 in restitution to the IRS.
Fair Lawn, N.J.: Preparer Shirley Arias, a.k.a. Shirley Zambrano, 43, has received 13 months in prison for preparing fraudulent income tax returns on behalf of clients.
According to case documents filed and statements in court, Arias was an owner and operator of Santos & Associates in Union City, N.J., where for tax years 2012 through 2014 she assisted in the filing of income tax returns based on false information. She used a number of fraudulent practices, including falsely claiming deductions and fabricating educational credits, to inflate refunds for clients.
The bogus returns resulted in a tax loss to the government of approximately $130,279.
Arias, who previously pleaded guilty, was also sentenced to a year of supervised release and ordered to pay restitution of $130,279.
Norwalk, Conn.: Landscaper Candido Valadares, a.k.a. Candide Valadares, 57, has pleaded guilty to one count of filing a false return.
According to court documents and statements in court, Valadares operates Candide’s Landscaping and Water Gardens and Candide Contractor & Natural Pools. He also provides snow-removal services to clients during winter. Investigation revealed that he deposited receipts from his businesses into both his business and personal bank accounts and also paid various employee wages out of both accounts.
Valadares used a preparer to prepare his yearly returns. The preparer took figures from certain P&Ls from Valadares or his bookkeeper to prepare the returns. Valadares knew that the statements did not reflect all revenues deposited in his business and personal bank accounts. As result, his federal returns for the 2009, 2010 and 2011 tax years underreported hundreds of thousands of dollars in total income.
Sentencing is Feb. 8, when he faces a maximum of three years of imprisonment and a fine of up to $100,000. Valadares also has agreed to repay the U.S. Treasury $175,898 in restitution for the taxes he failed to pay and additional penalties and interest accrued on unpaid taxes.
Springdale, Ark.: Preparer Chad Michael Davis has been sentenced to 46 months in prison on one count each of making a false claim against the U.S. and filing a false income tax return, according to published reports.
According to cited court records, during 2015 and 2016 Davis worked as preparer and the owner of Lonetree Services, operated from his home. As part of the tax scheme, Davis provided clients with draft copies of their federal and state returns that he prepared and said he was going to file for the clients. Reports said Davis then changed the figures on the returns and inflated the refunds without clients’ knowledge.
Davis also changed the bank account information on the returns, which directed the IRS and state on where to electronically send the refunds, reports said. When the clients questioned Davis about their refund, Davis told them there was a mistake at the IRS, according to news outlets.
Davis also reportedly filed false personal federal income tax returns for himself for tax years 2012, 2013, 2014 and 2015, failing to report the stolen refunds as well as the income he earned for preparing client tax returns and claiming refunds when he should have owed taxes to the IRS.
Davis, who pleaded guilty in June, was also was sentenced to three years of supervised release and was ordered to pay $112,308 in restitution, reports added.
Greensboro, N.C.: Preparer Hassie Demond Nowlin, a.k.a. Demond Nowlin and Brilliant Knowlin, 44, has been sentenced to 37 months in prison for corruptly endeavoring to obstruct the IRS, filing a fraudulent return and bankruptcy fraud.
According to documents and information provided to the court, during 2008 and 2009 Nowlin filed several fraudulent federal returns that included fake income and withholding taxes and sought more than $750,000 in fraudulent refunds. He also filed documents with local county authorities purporting to renounce his U.S. citizenship and proclaiming to be a sovereign citizen.
Between 2008 and 2010, the IRS assessed taxes, penalties and interest against Nowlin related to the fraudulent returns. After being notified of the assessments, he began concealing his assets and placing them in the names of nominee entities.
He also admitted that between 2011 and 2017 he earned hundreds of thousands of dollars operating a prep business. He filed hundreds of returns for clients that claimed phony business and education expenses, sought undeserved refunds, and did not identify him as the paid preparer. Nowlin also admitted that he made false statements to IRS agents, including that he did not prepare returns for clients.
Nowlin also admitted to attempting to cheat his creditors by filing fraudulent personal bankruptcy petitions. Along with these petitions, he submitted false financial statements on which he did not fully disclose his income and assets.
Nowlin, who pleaded guilty in August, was also ordered to serve three years of supervised release and to pay $188,001.89 restitution to the IRS.