Tax Fraud Blotter: The daily scheme
Contemptible; an extensive history; energy crisis; and other highlights of recent tax cases.
Pawtucket, Rhode Island: Former state senator and businessman James E. Doyle II, 47, has been sentenced to two years in prison for engaging in a $74 million dollar check-kiting scheme in which he wrote tens of thousands of worthless checks and failed to report more than $1 million dollars in income.
He admitted that as owner of Doyle Respiratory and Doyle Sleep Solutions he engaged in a fraud during which $74 million in worthless bank transactions were executed in check-kiting schemes through his accounts. He also admitted that for tax years 2013 through 2016, he and his wife failed to report to the IRS more than $1 million dollars in income and failed to pay $305,426 in federal taxes. Doyle executed the scheme daily, at times in excess of 50 transactions per day, including using ATMs to lengthen the time it took for checks to be presented for clearing.
He was also sentenced to three years of supervised release upon completion of his prison term, and ordered to pay $426,707.25 in restitution.
Detroit: Former preparer Dieasha Davis has been found in contempt of court for violating an injunction order barring her from operating a tax prep business and preparing federal returns for others.
Authorities said that Davis continued to prepare federal income tax returns and profited from preparing returns in violation of the injunction, which was entered against her and the business in September 2017 and to which Davis and the business agreed. In February, the government presented evidence that Davis had violated the injunction. The court entered an order requiring Davis to file a written response to show cause why she should not be held in civil contempt; she filed no response. Based on the evidence, the court also found that returns Davis prepared in violation of the injunction contained false and fraudulent information.
The court also ordered her to pay $24,671 for attorney fees and costs.
Apple Valley, California: Preparer Scott Cutting Sr., 69, has been found guilty of filing false and fraudulent federal returns as part of a scheme that illegally generated more than $1 million in refunds.
Cutting, who portrayed himself as a CPA despite his license having expired in 1989, prepared and filed returns and had the refunds directly deposited into his own bank accounts. Evidence showed that Cutting kept hundreds or thousands of dollars from each fraudulent return he filed, often giving clients nothing or only a small portion of the refund. He filed on behalf of low- or no-income individuals income tax returns that falsely claimed income or credits. He e-filed the returns but he didn’t identify himself as the preparer. Cutting also often filed returns for people when he had no authority to do so, using their names and Social Security numbers, as well as the names and Social Security numbers of their dependents, without their permission.
Investigation revealed that, from 2008 to 2012, Cutting prepared and filed approximately 314 false or fraudulent returns, that resulted in the IRS issuing some $1.09 million in refunds.
The jury did acquit Cutting of one count. Sentencing is June 27, when Cutting faces a maximum of 18 years in prison.
Kansas City, Missouri: Preparer Onrea Knox-Lewis, 45, has been sentenced to a year and one day in prison and ordered to pay $238,666 in restitution for filing dozens of fraudulent returns that resulted in $238,666 in refunds to individuals who were not entitled to receive them.
Knox-Lewis, a self-employed tax preparer, admitted that she filed income tax returns for the tax years 2012 through 2014 claiming false refunds. The fraudulent returns reported bogus wages, income tax withholdings or fraudulent dependents, as well as the Earned Income Tax Credit claims. In some instances, she prepared and filed returns using stolen personal ID information. After she filed the fraudulent returns over the Internet, Knox-Lewis had the bogus refunds loaded onto prepaid debit cards; she utilized all or a portion of the money for her personal expenses. According to court documents, her criminal conduct involved fraudulent returns for three tax years (2012, 2013 and 2014) for 25 individuals.
Also according to court documents, Knox-Lewis has an extensive history of fraudulent activity, including forgery and identity theft.
Youngstown, Ohio: Dr. William Houser Jr., 59, of Wexford, Pennsylvania, has been sentenced to five years of probation for willful failure to pay over taxes.
According to information presented to the court, Houser was required to withhold money from the paychecks of his employees to cover their individual income, Social Security and Medicare taxes (a.k.a. trust fund monies) and to remit the monies to the IRS quarterly. He was also required to pay over to the IRS matching contributions for Social Security and Medicare.
Houser failed to pay over both employment and trust fund taxes from September 2009 through December 2014. He also failed to file personal tax returns and pay income taxes for the years 2010 through 2014. Failure to pay the required taxes resulted in a total tax loss to the IRS of more than $899,269.
The court also sentenced Houser to pay $1,128,660 in restitution to the IRS.
Laplace, Louisiana: Preparer Sandra Raven, 53, has pleaded guilty to one count of wire fraud.
According to court documents, Raven owned and operated S & R Tax Service out of her home and filed fraudulent federal returns in the names of others. The returns claimed false wages and Raven directed the refunds and tax prep fees to her control.
Sentencing is July 11, when Raven faces a maximum of 20 years, three years of supervised release and a $250,000 fine.
Roanoke, Virginia: Preparer St. Julien Pierre has pleaded guilty to aiding and assisting in the preparation of false returns and filing a false personal return.
According to court documents, Pierre owned and operated the tax prep business JP Tax Services LLC, where he aided and assisted in the preparation of 2013 and 2014 returns that falsely claimed energy-related credits and illegitimate itemized deductions to inflate clients’ refunds. Pierre also filed a 2013 tax return for himself on which he fraudulently reported that he was entitled to the same fuel tax credit he falsely claimed on his clients’ returns.
Pierre faces a maximum of three years in prison for each count of preparing false tax returns and three years in prison for the false return count. He also faces supervised release, restitution and monetary penalties.
San Antonio: Preparer Richard Ortegon has pleaded guilty to assisting in the preparation of false U.S. income tax returns that contained fraudulent deductions.
Ortegon owned and operated Aztec Tax Consulting Group and assisted clients in preparing their federal income tax returns. On returns he prepared and submitted to the IRS, Ortegon admittedly included false residential energy credits and inflated expenses on Schedules A and C. On a client’s 2014 individual return, he provided such fraudulent figures as $8,092 in residential energy credits and false expenses totaling $24,040. Ortegon further admitted that the total tax due and owing attributed to the false returns he prepared is some $75,000.
He faces up to three years in prison and payment of restitution to the IRS when sentenced on July 8.
Charlotte, North Carolina: Former preparer Aminta Smith, 32, has been convicted of filing false tax returns for her clients and herself.
According to court documents and evidence, she prepared income tax returns for clients that claimed false education credits, false W-2 wages and false Schedule C businesses to inflate federal refunds. Smith also falsified her own returns by underreporting the fees she earned in her prep business for tax years 2013 to 2015 and failing to disclose that she was engaged in operating a prep business.
Sentencing is at a later date. Smith faces a maximum of three years in prison on each count, as well as supervised release, restitution and monetary penalties.