Tax Fraud Blotter: The taxman goeth
Grass and guns; you owe bigtime; crazy schemes; and other highlights of recent tax cases.
Lauderdale Lakes, Florida: A U.S court has entered an injunction against Guary Louima, Guy Telfort and Tax Houses and Accounting Services, barring them from preparing federal returns for others and owning or operating a prep business.
The court also ordered that Louima, Telfort and the business disgorge $150,000, representing their gains for the preparation of returns. The defendants agreed to the entry of the injunction and judgment against them.
The government alleged that Louima and Telfort prepared returns making false or fraudulent claims for the Earned Income Tax Credit by claiming losses for non-existent businesses, misrepresenting filing statuses and inflating the number of dependents. The defendants also allegedly prepared returns that improperly lowered clients’ taxable income with false deductions for the use of vehicles.
Hoboken, New Jersey: Accountant Louis Picardo, 64, has pleaded guilty to failing to pay more than $914,000 in taxes on income generated from his accounting firm and various rental properties he owned.
According to case documents and statements in court, Picardo served as the tax collector in Hoboken between 1973 and 2008 and was a partner in Cannarozzi & Picardo. He also was a member of multiple entities that managed both commercial and residential properties.
Picardo failed to report $3,725,853 in taxable income that he collected from Cannarozzi & Picardo and the entities on federal income tax returns for tax years 2012 to 2015, resulting in a tax loss to the U.S. of $914,908.
Tax evasion is punishable by a maximum of five years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. Sentencing is Sept. 25.
Stuart, Florida: Landscaper Joseph J. Ferry III, 80, has pleaded guilty to filing a false federal return.
He pleaded guilty to one count of willfully filing a false corporate income tax return for his company, Ferry Enterprises Inc., for the tax year 2015. According to court documents, Ferry’s company provided landscaping services to local governments and residential and commercial customers.
He filed federal returns that understated the total income earned by Ferry Enterprises and himself for tax years 2012 through 2016. Income from Ferry Enterprises was deposited into bank accounts held in the name of the company; Ferry used funds from the corporate bank accounts to pay his personal expenses, including payments on his personal mortgage and loans, purchases of firearms, home renovations and jewelry. He also withdrew more than $2.9 million.
He also admitted that he willfully filed false individual income tax returns for the tax years 2011 through 2016 and that the tax loss for those years was $556,396.
Sentencing is July 26, when Ferry faces a maximum of three years in prison, supervised release, restitution and monetary penalties.
Pittsburgh: Two preparers have pleaded guilty in connection with preparing false returns.
Preparer Daniel K. Hamilton of Arnold, Pennsylvania, has pleaded to aiding or assisting in the preparation or filing of false federal income tax returns. Hamilton, a preparer for Cititax Refund Co. in Pittsburgh, prepared federal income tax returns for other persons that included false Schedule C information and that requested more than $2 million in false EITC refunds.
Sentencing is Oct. 2.
Lakisha K. Pinkney, 42, of Eastpointe, Michigan, has also pleaded guilty to charges of aiding or assisting in the preparation or filing of false federal income tax returns. Pinkney, also a former preparer for Cititax Refund between 2010 and 2013, prepared federal income tax returns for other persons that included false Schedule C information and that requested refunds for taxpayers totaling some $626,000. Sentencing is Sept. 18.
Both defendants face a total sentence of three years of imprisonment for each count, a fine of $100,000 or both.
Boston: Ashokkumar Patel, a.k.a. Andy Patel, 30, of Hoffman Estates, Illinois, and formerly of Worcester and Plainville, Massachusetts, has pleaded guilty to one count of conspiracy to commit wire fraud, two counts of wire fraud and one count of money laundering in connection with a scheme where victims were told they owed money to the IRS.
From December 2013 to October 2014, Patel was part of a conspiracy where victims were contacted by individuals, primarily in India, and told that they owed money to the IRS. The victims were told that to avoid arrest they had to purchase MoneyPak or other types of prepaid stored value cards, load thousands of dollars onto the cards and provide the serial numbers to the callers. The money was quickly transferred to a prepaid debit card, such as Green Dot Debit Cards, which were then used to purchase money orders. Patel was responsible for purchasing the prepaid debit cards, using them to purchase money orders and then depositing the purchased money orders into bank accounts, including his own.
Conspiracy to commit wire fraud, wire fraud and money laundering each carry a maximum of 20 years in prison, three years of supervised release and fines. Sentencing is Sept. 23.
Hobe Sound, Florida: Dr. Arthur John Kranz has been sentenced to 51 months in prison for tax evasion, wire fraud and Social Security disability fraud.
According to court documents and information provided to the court, beginning in 2002 Dr. Kranz, specializing in psychiatry, made a claim on his private disability policy that he was unable to work and began receiving disability payments from his insurance company. The following year he submitted an application to the Social Security Administration for disability benefits, which approved his application. Kranz then began receiving SSA disability payments in addition to the private disability insurance payments.
Kranz was required to notify his insurance company and the SSA if he returned to work. From January 2006 to March 2013, Kranz worked as a psychiatrist at a hospital in Pennsylvania and earned over $1.6 million in income. Kranz did not report his employment to either the SSA or his insurance company. Rather, to continue collecting disability benefits, he took steps to conceal his income from the insurance company, the SSA and the IRS. He directed that his income be paid to nominee individuals and sham corporations he had created. Kranz also filed false personal returns that did not report the income from his work as a psychiatrist, and provided fraudulent documentation to his insurance company that falsely stated that he was not working.
Kranz was also ordered to serve three years of supervised release and pay $1,013,284 in restitution.
New London, North Carolina: Office manager Terra Dawn Ferguson has pleaded guilty to employment tax fraud.
According to court documents, from approximately 1992 through at least September 2016, Ferguson was employed at a local pediatric office and had complete control over the office’s finances, including collecting, accounting for and paying over federal payroll taxes.
From March 2011 through September 2016, Ferguson withheld approximately $78,937 in payroll taxes from employees’ paychecks and willfully failed to pay that money to the IRS. She also failed to pay $35,472 for the employer’s share of employment taxes. Instead of paying these taxes to the IRS, she paid her personal credit card bills, funded personal business ventures involving a mountain cabin rental and a bar, paid for personal vacations and issued checks to herself totaling $1.4 million, all from the business’ bank account.
Ferguson prepared false individual income tax returns for her employer that falsely underreported gross receipts and inflated mortgage interest deductions, causing an additional tax loss of over $250,000. The total tax loss resulting from Ferguson’s fraudulent conduct is some $374,101.
Sentencing is Aug. 27. Ferguson faces a maximum of five years in prison as well as a period of supervised release, restitution and monetary penalties.