Tax Fraud Blotter: Tiles for iPhones
Props for scams: offshore bankrolls, iPhones, bricks
Repeat-offender preparer pleads guilty; false filing among many charges in $3 million fraud; Belize accounts; and other highlights of recent tax cases.
E. St. Louis, Ill.: Former preparer Victoria Foster, 55, has entered pleas of guilty to two counts of false claims against the U.S. by a paid preparer assisting in the preparation of a false federal return.
Foster worked at Elite Tax in Belleville, Ill. As part of the plea, she admitted that for the 2015 tax year she filed false returns that caused a loss of more than $180,000.
Foster faces up to 10 years in prison, a fine of up to $500,000 and up to three years of supervised release with mandatory restitution. Sentencing is June 27.
Springfield, Pa.: Preparer Mohamed Mansaray, 41, charged under a 2015 indictment alleging wire fraud and ID theft in a prep fraud scheme, has pleaded guilty to all 29 counts against him, according to published reports.
Sentencing is June 8 pending a pre-sentence investigation, reports added.
Prosecutors told news outlets that Mansaray operated several businesses in Philadelphia and in Upper Darby, Pa., among other locations, including “Your Tax Professionals” and “New Solution Tax Services.”
From at least December 2013 through May 2015, he prepared and filed federal income tax returns for clients that included the names and Social Security numbers of nonexistent children, which often netted returns of more than $5,000 for clients, according to the cited indictment.
Mansaray reportedly charged clients $800 to $1,000 to add a dependent to the returns, which he e-filed. Prosecutors told news outlets that the clients wrongly received an exemption for each false dependent, as well as a Child Tax Credit, a Child and Dependent Care Credit and an EITC.
Mansaray filed using PTINs issued in the names of other individuals, including two people known to the grand jury, according to the cited indictment.
Reports added that this is Mansaray’s second conviction in a tax prep scheme: He pleaded guilty in July 2014 to conspiracy and 13 counts of aiding or assisting in preparing or filing false income tax returns for fraudulently adding dependents to clients’ returns for the tax years 2008 through 2012.
Bellevue, Wash.: Area resident Maziar Rezakhani, 27, who defrauded a small bank, Apple Inc. and various shippers of more than $3 million, and filed a false tax return, has been sentenced to five years in prison.
According to case records, between 2014 and 2015 Rezakhani changed his business of reselling iPhones overseas to a fraud where he ordered thousands of iPhones and then claimed the actual phones had been stolen from the shipment and replaced with tiles cut to the size of an iPhone. Evidence in the case revealed that he had purchased the tiles himself at local home-improvement stores and used the stolen iPhones in his reselling business.
In addition to the iPhone fraud, Rezakhani submitted falsified tax and bank records to Bellevue’s Foundation Bank to get a multi-million-dollar line of credit. In all, Rezakhani withdrew some $6.5 million in loan funds from the bank and used some of the money for his personal expenses, such as $25,000 for a monthly rent payment for a penthouse; various luxury cars; and to pay off more than $400,000 in credit card debt. Some of the money was paid back to Foundation Bank, but Rezakhani defaulted on $2.8 million. The small bank was sold, and many employees lost their jobs.
Even as that fraud was uncovered by the bank, Rezakhani tried to start another fraud, attempting to defraud a shipper and insurance company: He shipped 116 boxes via Federal Express to a Delaware address and claimed the boxes contained more than $5 million worth of iPhones.
The boxes in fact contained a type of pumice brick Rezakhani bought at a local store. He claimed the iPhones had been stolen from Federal Express and filed claims with FedEx, with the insurance company and with a shipping subcontractor, and made complaints to the FBI, the Federal Trade Commission and State of California Department of Insurance. No claims were ever paid.
In July 2016, Rezakhani pleaded guilty to two counts of mail fraud, one count of bank fraud and one count of filing a false income tax return.
He agreed to a restitution amount of $3,567,756 and is forfeiting his luxury cars and more than $100,000 in cash. Because Rezakhani substantially underreported his income for 2009 through 2012, he may owe back taxes and penalties.
Port Charlotte, Fla.: Businessman Casey Padula, 48, has pleaded guilty to conspiracy to commit tax and bank fraud.
According to court documents, Padula was the sole shareholder of Demandblox Inc., a marketing and information technology business. He conspired with others to move funds from Demandblox to offshore accounts in Belize and disguised them as business expenses in Demandblox’s corporate records.
Padula created two offshore companies in Belize: Intellectual Property Partners Inc. and Latin American Labor Outsourcing Inc. He opened and controlled bank accounts in the names of these entities at Heritage International Bank & Trust Limited in Belize.
From 2012 through 2013, Padula caused periodic payments to be sent from Demandblox to his accounts at Heritage and deposited approximately $2,490,688. Padula used the funds to pay for personal expenses and purchase significant personal assets. He falsely recorded these payments in Demandblox’s corporate books as intellectual property rights or royalty fees and deducted them as business expenses on Demandblox’s 2012 and 2013 corporate returns, causing a tax loss of more than $728,000.
Padula also conspired with investment advisors Joshua VanDyk and Eric St-Cyr at Clover Asset Management, a Cayman Islands investment firm, to open and fund an investment account that he would control but that would not be in his name. He transferred $1,000,080 from the IPPI bank account at Heritage in Belize to CAM to fund a numbered account.
Padula also conspired with others to commit bank fraud. He had a mortgage on his Port Charlotte, Fla., home of approximately $1.5 million with Bank of America and in 2012 sent a letter to the bank stating that he could no longer repay his loan. At the same time, Padula provided Robert Robinson III, 43, who acted as a nominee buyer, with more than $625,000 from his IPPI bank account in Belize to fund a short sale of Padula’s home.
Padula and Robinson signed a contract that falsely represented that the property was sold through an “arms-length transaction,” and agreed that Padula would not be permitted to remain in the property after the sale. Padula in fact never moved from his home and, less than two months after the closing, Robinson conveyed it back to Padula by transferring ownership to one of Padula’s Belizean entities for $1.
Robinson also pleaded guilty to signing a false Form HUD-1 in connection with his role in the scheme.
Padula faces a maximum of five years in prison, a term of supervised release and monetary penalties. As part of his plea agreement, he agreed to pay $728,609 restitution to the IRS and $728,609 to BoA. Robinson faces a maximum of one year in prison, a term of supervised release, restitution and monetary penalties.
White Plains, N.Y.: CPA Joseph Cervone, 63, has pleaded guilty to one count of endeavoring to obstruct and impede internal revenue laws and one count of subscribing to false returns.
According to court and case papers, from 2009 through 2012 Cervone filed false returns claiming more than $23 million of energy and coal credits on behalf of his clients to obtain tax refunds. He also filed false returns for the tax years 2010 and 2011 that failed to report more than $500,000 in income.
Sentencing is June 29.