Tax Fraud Blotter: Sovereign notion
GotTime.com; $1,600 a return; whole lotta hooch; and other highlights of recent tax cases.
Jacksonville, North Carolina: Preparer Gene Hersholt Williamson II has pleaded guilty to aiding and assisting in the preparation of false returns.
Williamson, who operated a local prep business between 2012 and 2018, fraudulently inflated low-income clients’ refunds by reporting fictitious Schedule C businesses, reporting additional income to maximize the Earned Income Tax Credit. For clients with substantial wage income, Williamson created fraudulent businesses with significant expenses. He received 10 percent of the refunds.
Williamson also did not list himself as the paid preparer on any returns.
Williamson filed false returns in his own name for the calendar years 2012 through 2017. On his personal returns, Williamson claimed credit for withheld taxes from wages paid by his solar business that were never paid to the IRS, claimed education credits he was not entitled to, reported fictitious business losses and failed to report the income he earned from preparing returns.
Federal tax loss exceeded $600,000. Williamson agreed to make full restitution. Sentencing is in mid-December.
Los Angeles: Sean Edin Talaee of Glendale, California, a former controller for a commercial printing company, has been sentenced to 87 months in prison for embezzling $2.8 million from his employer and failing to report the stolen funds as income to the IRS.
From October 2015 to June 2018, Talaee worked as the controller overseeing the accounting and tax payments of Printograph Inc., a commercial printing company that does business as GotPrint.com. During this time, Printograph made a series of periodic estimated tax payments based on the company’s expected gross income, deductions and credits for each year. Talaee enabled these estimated payments by bringing company checks to Printograph's president and sole owner — who had signing authority for the company's bank account — for her signature prior to their submission to the IRS.
On at least eight occasions, Talaee obtained company checks from Printograph’s president but instead inserted his own taxpayer information when filling out the IRS voucher forms that accompanied the estimated payments. Talaee was able to claim the estimated tax payments for himself and caused the IRS to credit the payments to his own personal account, embezzling the funds from Printograph and effectively laundering the proceeds through the IRS.
He embezzled $2.8 million from his employer and falsely claimed estimated tax payments in that amount for the years 2015, 2016 and 2017. These payments allowed Talaee to receive a total of $2,778,994 in fraudulent refunds for these years. He also failed to report the embezzled money as income for these tax years, causing a total tax loss of $740,085.
Talaee, who pleaded guilty last year, was also ordered to pay $2,933,585 in restitution.
New York: Accountant Richard Gaffey has been sentenced to 39 months in prison for wire fraud, tax fraud, money laundering, aggravated ID theft and other charges.
Gaffey, a resident of Massachusetts, was charged along with Harald Joachim von der Goltz and others in connection with a scheme perpetrated by Mossack Fonseca & Co., a Panama-based law firm. The case was in connection with a decades-long scheme commonly referred to as “the Panama Papers.” Gaffey previously pleaded guilty.
Since at least 2000 through 2018, Gaffey conspired to defraud the U.S. by concealing clients’ assets and investments and the income generated. Gaffey assisted U.S. taxpayers in evading their tax reporting obligations in a variety of ways, including by hiding the beneficial ownership of clients’ offshore shell companies and setting up bank accounts for those shell companies. Gaffey advised one taxpayer how to covertly repatriate approximately $3 million to the U.S. by reporting a fictitious company sale to the IRS.
Gaffey was the U.S. accountant for von der Goltz, who from 2000 until 2017 was a U.S. resident. Gaffey falsely claimed that von der Goltz’s elderly mother was the sole owner of the shell companies and bank accounts; she was a Guatemalan citizen and resident, and so not a U.S. taxpayer.
Gaffey was also ordered to serve three years of supervised release, to pay forfeiture in the amount of a sum of $5,373,609 and restitution of $3,459,315, and to pay a fine of $ 25,000.
Gulfport, Mississippi: Tax preparer Alvin Mays has been sentenced to 46 months in prison for aiding and assisting in the preparation of false returns.
Mays, who previously pleaded guilty, owned and operated City Tax Service, a prep business in the Gulfport area. From 2012 through 2017, he prepared and trained his employees to prepare false returns. To fraudulently inflate client refunds, the returns claimed false education credits and losses from fictitious business. Mays charged fees sometimes as high as $1,600 per return.
Tax loss to the U.S. exceeded $900,000.
Mays was also ordered to serve a year of supervised release and to pay $321,605 in restitution to the U.S.
Kankakee, Illinois: Liquor-store owners Raymond and Angie Adamee were each recently sentenced to 12 months in prison, followed by 12 months of home confinement for under-reporting income in returns.
Each pleaded guilty in February to under-reporting gross receipts of their business for the calendar years 2012 through 2016 by some $1,621,779.
The couple has operated the retail liquor store, predominantly as a cash business, since 1989. The under-reporting resulted in their failure to pay $409,117 in federal income tax and $233,619 in income tax, replacement tax and sales and use tax to Illinois.
In 2017, the IRS uncovered the fraud when the couple used a business broker to list the store for sale for $600,000. An IRS undercover agent contacted the broker and learned that the store’s reported income to the IRS was substantially lower than represented in the sale advertisement. When IRS agents searched the couple’s home and business, they found tens of thousands of dollars in cash in a safe.
Both were ordered to pay restitution to the IRS and the Illinois Department of Revenue in the amount of $642,736.
Metairie, Louisiana: Freight company exec Deepak “Jack” Jagtiani has pleaded guilty to wire fraud and making false statements on a federal income tax return.
From 2007 to 2019, Jagtiani served as the comptroller of Dan-Gulf Shipping, a freight forwarding company. He had the authority to manage the payroll and other accounts for the company and admitted that he paid himself excessive salaries and benefits from 2009 through early 2019. In total, Jagtiani defrauded Dan-Gulf and its business partners of more than $7 million.
Jagtiani also admitted to filing false personal tax returns. For tax years 2014 to 2017, he claimed business losses through a fake catering business; the claimed losses offset most of his income. In fact, neither Jagtiani nor his spouse operated any catering business.
In total, he avoided paying $1,232,267 in federal income tax.
For filing false returns, Jagtiani faces up to three years in prison, a $250,000 fine and up to a year of supervised release. For wire fraud, he faces up to 20 years in prison, a $250,000 fine and up to three years of supervised release. Sentencing is Nov. 17.
Kirkwood, Pennsylvania: Dorothy Recarde, 68, has been sentenced to a year in prison and a year of supervised release and been ordered to pay a $25,000 fine for filing false and fraudulent liens worth $15,000,000 against an IRS employee.
After an IRS revenue officer initiated levy actions to satisfy an outstanding federal tax obligation of some $24,000 incurred by Recarde’s company, Summerbeam Woodworking, Recarde retaliated by filing two fraudulent liens against the officer. Recarde, who pleaded guilty in December, responded to repeated attempts by the revenue officer to collect the outstanding tax obligation by mailing letters to the IRS that espoused sovereign citizen ideology, denying the government’s authority to impose taxes. She further claimed that correspondence she had mailed to the IRS and the U.S. Treasury had gone unanswered, nullifying her outstanding debts.