A roundup of our favorite recent tax fraud cases.
Windermere, Fla.: Tax preparer Kerny Pierre-Louis has been permanently barred from preparing returns for others and owning or operating a tax prep business. The court also entered a $1 million judgment against him on the federal government’s claim for disgorgement of the proceeds he derived from preparing returns.
In September 2014, the U.S. filed a complaint against Pierre-Louis alleging that he and his employees prepared fraudulent returns for clients and that preparers in his business targeted primarily low- to moderate-income clients with deceptive and misleading advertisements; prepared and filed fraudulent returns to inflate refunds; and profited through unconscionable, exorbitant and often undisclosed fees.
According to the complaint, Pierre-Louis and his employees prepared federal returns on which they falsely claimed earned income and education credits, reported improper filing statuses, concocted phony businesses, claimed bogus income and expenses related to the non-existent businesses and fabricated job-related expenses. The complaint also named Jehoakim Victor and Lauri Rodriguez, allegedly former managers at Pierre-Louis’s prep stores, as defendants. In February 2015, the court permanently enjoined Victor and Rodriguez from preparing returns for others and from owning or operating a preparation business. They also agreed to entry of the injunction without admitting the allegations in the complaint.
Pierre-Louis agreed to entry of the injunction and disgorgement judgment, but did not agree to any of the facts alleged in the civil complaint.
Davenport, Iowa: Preparer Gregory Scott Alcala, 44, has been sentenced to 33 months in federal prison for each count of preparing and presenting a false return, wire fraud and making a bomb threat in and affecting interstate commerce. The sentences were ordered to be served concurrently, and Alcala was also ordered to serve three years of supervised release following his prison term, pay $300 to the Crime Victims’ Fund, and pay a total of $115,841.84 restitution to 71 of his victims.
Alcala pled guilty to the crimes in February. According to the plea agreement, around early 2010 Alcala began operating Alcala Tax Service to prepare and file federal returns for clients. Beginning around February 2012 and continuing some two years, he devised a scheme to defraud by filing altered returns.
Specifically, Alcala prepared returns and provided a copy of the prepared return to the clients, told them he had filed that return with the IRS, and instead without the client’s knowledge “materially altered” the return to inflate the refund. Alcala then filed the unauthorized version of the return and directed the additional refund amount to his bank account.
During tax years 2009 through 2014, Alcala prepared at least 164 returns that included false or fraudulent information and directed at least a portion of 159 of those refunds to his account. Additionally, on Dec. 26, 2013, a switchboard operator for Badger Mutual Insurance in Milwaukee received a telephone call from Alcala in Davenport. During the call, Alcala threatened the operator by stating he was going to send her a bomb.
Flint, Mich.: Preparer Royal Alexander Jr., 51, owner and operator of Royal Publishing Inc., has pleaded guilty to one count of aiding and assisting in the preparation of false returns.
Alexander admitted that from 2010 through last year, he aided in the preparation and filing of 40 false individual income tax returns. Authorities said these returns included inflated or entirely fictitious Schedules C; claimed a false dependent; claimed a false IRA deduction; falsely claimed Head of Household status for a client; or claimed a false education credit, all to inflate refunds.
Sentencing is September 20. He faces a maximum of three years in prison, and agreed in his plea to pay $98,605 restitution to the IRS. Alexander also faces financial penalties and a term of supervised release.
New York: Preparer Awilda Rosario, 40, of Brooklyn, has received 36 months in prison and a year of supervised release and was ordered to pay $607,904 restitution to the IRS after pleading guilty in September 2015 to two counts of aiding and assisting in the preparation of false returns.
Authorities said Rosario owned and operated the prep business Edujas Multiservices Corporation and prepared false individual income tax returns for clients for tax years 2008 through 2013. She attached schedules that reported business losses the taxpayers did not incur as well as schedules that reported inflated or fictitious deductions. She also attached forms claiming fictitious education and fuel tax credits.
After the IRS revoked the EFIN for Edujas Multiservices, Rosario obtained at least two different EFINs and continued to prepare and submit false returns for her clients that listed a different paid preparer and prep firm.
St. Paul, Minn.: Preparer Frantz Pierre, 36, has been sentenced to 17 years and six months in prison for orchestrating a multi-million dollar tax fraud and for money laundering.
According to case documents filed in court, from July 2010 through May 2011 Pierre, who pleaded guilty in October, was the leader and organizer of a scheme to file hundreds of fraudulent income tax returns. He and co-conspirators used stolen Social Security numbers and other personal identifiers, as well as fabricated employment and income information to complete hundreds of returns and to claim millions in fraudulent refunds.
Authorities said that as part of the scheme, Pierre and his co-conspirators established fictitious tax prep businesses and then opened bank accounts in the names of those businesses. He directed the IRS to deposit the fraudulently obtained refunds into the bank accounts.
In total, Pierre and his co-conspirators submitted approximately 776 fraudulent returns to the IRS, resulting in $5,249,935 in refunds deposited into the fictitious companies’ accounts.
As part of his sentence, Pierre was ordered to forfeit his house in Parkland, Fla., and pay $906,556 in restitution.
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