Tax Fraud Blotter: Tooth and justice
Guns galore; game of Chicken; an ID you can’t refuse; and other highlights of recent tax cases.
Denver: Tax defier Lawrence Martin Birk has been convicted of tax evasion.
Birk founded a sole proprietorship, Tarryall River Log Homes, in 2000, which sold and built log homes. For more than 20 years, Birk did not pay federal income taxes. After the IRS began collection efforts, including visiting Birk at his home, he hired a tax firm to prepare eight years of delinquent returns. Birk concealed pertinent information from the tax firm, however, including more than $400,000 of retirement distributions that he funneled through a sham company.
After filing his returns, Birk did not pay the taxes the returns claimed was due. Instead, he sent the IRS threatening correspondence that included arguments of known tax-defier organizations, including the “We The People” foundation and the “Tax Honesty” movement. Birk also took steps to shield his money against the collection efforts. Immediately or shortly after depositing funds into his account, Birk purchased cashier’s checks to reduce his balance and impede the IRS’s ability to seize the money.
Birk’s outstanding tax liabilities, including taxes, interest and penalties, were more than $2 million for 1998 to 2005. He has not filed returns or made tax payments for the 2006 through 2018 tax years.
Elkins, West Virginia: Construction company owner Rocky Tingler, 54, has admitted to tax fraud.
Tingler, owner of McWilliams Building & Construction, admitted to understating the gross receipts or sales on his 2015 individual tax return by more than $988,000. He also admitted to collecting $790 in federal income tax from his employees at the construction business when the amount should have been $25,706 during the third quarter of 2014.
Tingler faces up to three years in prison and a fine of up to $250,000 for a false statement charge and up to five years in prison and fine of up to $250,000 for a failure-to-pay charge.
Easley, South Carolina: Preparer Sonny M. Ninan, 65, has been sentenced for tax evasion.
He was charged with multiple tax charges in January 2017 and was tried on six counts of tax evasion. Ninan was sentenced to five years in prison for the first count, suspended to service of 18 months. He was also sentenced to three years on the remaining counts, all to run concurrent with the first. Ninan also was ordered to pay the state $75,000 in restitution.
A tax and business consultant, Ninan operated Global Consultants and Taxpayer Services; he previously owned K&S Food Services d.b.a. Hailee’s Sports Bar and Grill in Mauldin, South Carolina. From 2010 to 2015, Ninan failed to report more than $1.13 million of income earned on state returns.
Kent, Washington: Dentists Mike Hsieh, 48, of Bellevue, Washington, and Christine Chen 45, of Renton, Washington, who conspired to avoid more than $460,000 in income taxes, have pleaded guilty to filing a false return.
Hsieh and Chen own Comfort Family Dentistry and between 2007 and 2014 took steps to illegally hide their income from the IRS to reduce their tax obligation. They maintained two sets of financial statements for the business: one showing actual expenses and another showing inflated expenses. The fraudulent expense statements were given to their accountant for tax preparation. The pair also established a bank account that was not disclosed to the preparer. Patient fees deposited into the account were not reported as income. Finally, the pair took cash proceeds from the dental practice and never reported that income to the accountant or on their taxes.
Hsieh admitted that he reported a taxable income of $232,753 in tax year 2013 when it was really more than $100,000 higher. For tax year 2013, Chen reported income of $319,131 when her income was $425,679. For the tax years between 2007 and 2014, the two each admit failing to pay some $231,000 in taxes.
Hsieh and Chen have agreed to make restitution of slightly more than $231,000 each to the federal government, and to pay any additional tax, penalties and interest. Sentencing is Nov. 22. Filing a false return is punishable by up to three years in prison and a $250,000 fine.
Boston: Restaurateur Burhan Ud Din, 50, of Watertown, Massachusetts, has been convicted of tax fraud.
Din was convicted of six counts of willful failure to collect and pay over payroll taxes.
Din avoided paying payroll taxes owed by a Crown Fried Chicken in Chelsea, Massachusetts, and a Kennedy Fried Chicken in Boston in 2010. He repeatedly falsified the number of employees and wages paid to the IRS. He provided the tax preparer for both stores with false information about the restaurants’ payroll.
The charging statute provides for a sentence of up to five years in prison, a maximum of three years of supervised release, a fine of up to $250,000, restitution, and payment of the costs of prosecution. Sentencing is Nov. 7. Din was acquitted of charges of procuring citizenship contrary to law.
Ashburn, Virginia: Businessman Lawrence Robert Gazdick Jr., 54, has pleaded guilty to employment tax fraud and illegally possessing a firearm.
Gazdick operated an audio/visual equipment rental business from 2013 through 2018. He withheld federal payroll taxes from employees’ paychecks but failed to file payroll tax returns and failed to pay over the withheld funds to the IRS. He failed to pay over some $5.35 million in payroll taxes. He also admitted to possessing a firearm despite having been previously convicted of a felony.
Gazdick agreed to pay more $200,000 in restitution for premiums he failed to pay for health insurance provided to his employees. He faces a maximum of five years’ imprisonment on the tax offense and 10 years on the firearm offense when sentenced on Oct. 18.
Waco, Texas: Preparer Janell Lightner has pleaded guilty to conspiracy to defraud the United States.
Lightner assisted co-defendant Stacey Anderson in the preparation and filing of false returns. Anderson operated her prep business, Anderson Professional Tax Services, out of her residence. Lightner and Anderson prepared 2013 and 2014 individual income tax returns that claimed false business items or education credits to inflate clients’ federal refunds. The two prepared returns for clients in Texas, Maryland and the District of Columbia. Lightner has admitted to causing a tax loss of more than $1.3 million.
In June, Anderson also pleaded guilty to the conspiracy charge, as well as to filing a false 2014 income tax return. Anderson admitted to causing a tax loss of more than $10 million; her sentencing is Oct. 9. Lightner’s sentencing is Dec. 5, when she faces a maximum of five years in prison on the conspiracy charge as well as a term of supervised release, restitution and monetary penalties.
Tampa, Florida: Aaron Troupe, 30, has been sentenced to five years and one month in prison for theft of government property and aggravated identity theft stemming from the filing of fraudulent returns using stolen identities.
From 2012 through 2018, Troupe, a member of the “Manche Boy Mafia” or “MBM” gang, engaged in stolen-ID refund fraud and credit card fraud. In 2016, a cleaning service unearthed a laptop, notebooks containing personally identifiable information and firearms from the back yard of an abandoned rental property in Tampa. Investigation determined that one of the ledgers contained information linked to Troupe, who also had debit cards issued in his name that had been loaded with fraudulently obtained federal income tax refunds.
The IRS determined that for the tax years 2011 to 2013, fraudulent returns associated with Troupe claimed refunds totaling $1,295,583, which resulted in the IRS paying out refunds totaling approximately $449,529.97. The court also ordered Troupe to pay $449,529.97 in restitution to the IRS.
Orlando, Florida: A U.S. district court has permanently barred Gladys Quiles from preparing federal returns for others.
The complaint alleged that Quiles did not sign the returns she prepares and does not identify herself in any way on the returns. The complaint further alleged that she repeatedly and continually prepared returns that understated liabilities and overstated refunds. Her alleged schemes included fabricating business income or expenses and deducting false employee business expenses.