Tax Fraud Blotter: The spirit was weak
Underfoot and underhanded; hysterical hysterectomy; no way to get a head; and other highlights of recent tax cases.
Orlando, Fla.: A federal court has permanently barred Ndaiziwei Kaya Chipungu and Society Financial Solutions from preparing federal tax returns for others and from owning or operating a tax prep business.
The government alleged that the defendants prepared returns making false or fraudulent claims for the Earned Income Tax Credit. The government further alleged that the defendants prepared returns that falsely claimed the customers had non-existent businesses and allegedly prepared returns with fabricated unreimbursed employee business expenses to falsely lower taxable income.
The court also ordered that Chipungu and Society Financial disgorge $487,879.24, representing the ill-gotten gains from the preparation of returns.
Stilwell, Kans.: Flooring store owner Randall Barker, 50, has been sentenced to a year of federal probation for tax evasion.
Barker, owner of Wholesale Flooring Inc., pleaded guilty to one count of tax evasion. In his plea, he admitted he failed to report the full amount of income from his business in 2011, 2012, 2013 and 2014. He admitted he took direct payments from customers, removed cash from business deposits and altered invoices to show less income for the business.
Barker also paid $101,014 in restitution.
New Brunswick, N.J.: CPA Amit Govil, 58, has pleaded guilty to underreporting his income on his personal return, avoiding more than $672,000 in taxes.
According to case documents and statements in court, Govil, licensed as a CPA in New York and New Jersey, operated P&G Associates in East Brunswick, N.J., providing risk management and audit services to community banks. Govil admitted that for the tax year 2010 he underreported and failed to report the gross receipts or sales of P&G Associates on his Schedule C.
The count of making and subscribing a false tax return carries a maximum sentence of three years in prison and $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is May 13.
Dayton, Ohio: Cynthia A. Faulkner, 32, has pleaded guilty to fraudulently obtaining food card benefits and submitting false income tax documents.
She pleaded guilty to three counts of making a false document, two counts of aiding in the filing of a false income tax return and one count of misprision of a felony.
According to court documents, Faulkner made false statements on her April 2013 application to receive Supplemental Nutrition Assistance Program benefits. As part of her request to reapply for cash and food assistance, Faulkner misrepresented the cost of her rental residence in Mason, Ohio, for which she paid more than $2,000 per month. The following year, Faulkner falsely reported her and her husband’s total gross income as some $36,000, when in fact their total gross for the application period was nearly $91,000.
Faulkner also aided in the filing of materially false income tax returns by underreporting business receipts by nearly $125,000 over tax years 2011 and 2012. She also had firsthand knowledge of a bank fraud scheme and failed to report it to authorities: The scheme involved Capital Group Properties and Consultants Corp. of Mason and Cincinnati, Ohio, and National Appraisal Sources of Cincinnati, both co-owned by Faulkner, and included payment for fraudulent real estate appraisal reports.
During her federal case, Faulkner submitted false documents asking for continuance on a court hearing. She told the court she had received a hysterectomy and provided a false patient medical discharge summary from a hospital in Tampa, Fla. In fact, Faulkner underwent no such surgery.
Charlotte, N.C.: Former local minister William Todd Coontz, 51, of Fort Lauderdale, Fla., has been sentenced to 60 months in prison for failure to pay taxes and aiding and assisting in the filing of false returns.
Coontz was also ordered to serve a year under court supervision after his release from prison and to pay $755,669 in restitution.
According to filed court documents and evidence, from 2010 to 2014 Coontz was the minister of Rockwealth International Ministries and the author of such books on faith and finances as “Please Don’t Repo My Car” and “Breaking the Spirit of Debt.” He also operated two for-profit companies, Legacy Media and Coontz Investments and Insurance.
Beginning in tax year 2000 and continuing through tax year 2014, Coontz filed delinquent 1040s and consistently failed to make timely payments on the taxes he owed despite multiple letters and late notices from the IRS. For example, for tax years 2011 through 2013, he filed late returns and did not pay the total assessed taxes, resulting in total tax liabilities of more than $326,394 for those years.
Coontz also filed federal returns for tax years 2010 through 2013 that underreported his income. He engaged in a check-cashing scheme involving payments for travel reimbursements for speaking engagements and the sale of books and other products, hiding income from the IRS by claiming the travel as a business expense while simultaneously receiving travel reimbursement that he kept as personal income.
During 2010 through 2013, Coontz also directed that other checks, such as payments for speeches and for the purchase of books and other products, be made payable to “Todd Coontz” and sent to his personal address. In total, he concealed and cashed at least 102 checks for travel reimbursements, speeches and books and other products, totaling at least $252,037.99 for the time period, causing his total income for the tax years to be underreported on his federal returns. During 2014, he cashed at least 32 checks totaling $105,454.90 that were not reflected in his accounting records.
Coontz also underreported his income on his tax returns for tax years 2010 through 2013, failing to include as income payments made by his corporations and ministry for his personal expenses, including payments for the benefit of his family members and for meals and entertainment. These expenses included more than $227,700 for clothing and more than $140,000 for meals and entertainment at various restaurants, including more than 400 charges at movie theaters.
In addition, instead of holding assets in his own name, Coontz utilized residences and luxury vehicles titled in the names of companies he owned and controlled. Luxury vehicles purchased by Legacy Media, Coontz Investments and Insurance and Rockwealth International Ministries during 2011 through 2013 included three BMWs, two Ferraris, a Maserati and a Land Rover, as well as a Regal 2500 boat, among others. He treated payments for those as business expenses, even though some of them were used by family members and there were no records kept about their supposed business use. Additionally, in 2012 Rockwealth International Ministries purchased a $1.5 million condominium as a parsonage for Coontz.
Phoenix: Long-time preparer Elias Bermudez, 68, has been sentenced to 18 months in prison and ordered to pay $131,651 in restitution to the United States for filing fraudulent returns.
Bermudez worked as a preparer for over 20 years and owned the prep and immigration services business The Help Center (a.k.a. El Centro de Ayuda), which prepared approximately 3,000 to 4,000 income tax returns each year between 2007 and 2010. He admitted to filing fraudulent returns by including the Additional Child Tax Credit when he knew the credit didn’t apply.
Lawrenceville, N.J.: Brian Gimelson, 48, has been sentenced to 18 months in prison followed by three years of supervised release for tax evasion in connection with more than $1.2 million in income from the sale of a painting.
According to his guilty plea in September, Gimelson earned a substantial income for his role in a transaction involving the sale of a purportedly original painting by the Italian painter Michelangelo Merisi, commonly known as Caravaggio, entitled, “David with the Head of Goliath.” Despite earning more than $1.2 million in income on this transaction, Gimelson admittedly did not timely file income tax returns and he did not timely pay the federal tax due.
To conceal his income and evade payment of his taxes, he created a company to facilitate the painting transaction. Gimelson admitted that he in fact controlled the company and its bank accounts; he further admitted that he directed his wife to make frequent and substantial withdrawals on his behalf from company accounts; he used funds to purchase collectibles and precious metals, among other items.
Gimelson was also ordered to pay $432,456 restitution.