Some of our favorite recent tax fraud cases.
Camden, N.J.: Preparer Yanitza Sanchez, 35, owner of the tax prep business Yanitza’s Multiservices, has pleaded guilty to filing false personal returns.
According to authorities, for the tax years 2008 through 2011 Sanchez prepared fraudulent tax returns for clients by intentionally including false and fraudulent dependents, child tax credits, EITC claims and education credits to inflate refunds; she also charged clients on average between $500 and $700 for the use of fraudulent dependents and other fraudulent items and credits.
For the tax years 2008 through 2011, Sanchez also admitted that she failed to report approximately $198,653 of income that she earned through Yanitza’s Multiservices and that she included false deductions and credits on her personal returns to inflate her refund. The unreported income and false deductions and credits cost the government some $83,367 in taxes.
The charge of filing a false return carries a maximum of three years in prison and a maximum fine equal to the greatest of $250,000, twice the gross amount of any pecuniary gain derived from the offense, or twice the gross amount of any pecuniary loss sustained by any victims.
Sentencing is Sept. 4.
Moreno Valley, Calif.: A federal court has permanently barred preparer Nancy L. Hilton, 69, from preparing returns for others.
The injunction concludes a lawsuit that alleged that Hilton, who also used the name Nancy L. Olson, prepared fraudulent returns and supervised at least five others who knew they were preparing false returns at Hilton’s business, Nancy Olson & Associates.
The suit alleged that Hilton obtained the names, dates of birth and Social Security numbers of numerous people and used this information to file fraudulent returns. Hilton allegedly kept a portion of the illicit refunds, typically half.
When Hilton learned of the government’s investigation, according to the suit, she intentionally deleted data from business computers.
Ashburn, Va.: Preparer Kouame “Innocent” Tanoh, 53, has pleaded guilty to wire fraud and aggravated ID theft in operating a long-standing fraudulent scheme involving stolen personal identifying information and claiming over $400,000 in false tax refunds.
The investigation began in August when the Metropolitan Washington Airports Authority Police stopped Tanoh on a traffic violation. A subsequent search yielded several financial documents and fraudulent ID cards. Tanoh claimed that he had the documents because he was a preparer and that they belonged to clients.
According to court documents, from April 2008 through February Tanoh obtained individuals’ names and personal ID information, including their Social Security numbers and dates of birth, sometimes by holding himself out as being in the business of preparing tax returns, in part through a Virginia corporation called Alpha and Omega Financial Services. Some who provided personal information to Tanoh were clients of this business.
Tanoh then used the names and other information for several purposes, including preparing and filing phony federal and state returns that made false claims for refunds. To inflate the refunds, Tanoh added such items to the returns as false dependents, false businesses on Schedule Cs and false education and moving expenses.
Loss to the IRS and state departments of revenue exceeds $400,000.
In addition to filing false returns, Tanoh used other people’s identities partly because he had no legal status to work or remain in the U.S. From at least 2009 through this year, he used the names and personal identifying information of at least eight individuals to seek and obtain employment, housing and bank accounts, among other uses.
He faces a maximum of 20 years in prison on the wire fraud charge and a mandatory consecutive term of two years in prison on the aggravated ID theft charge. Sentencing is July 31.
San Antonio: Businessman Marcus A. Garza, 38, has been sentenced to 30 months in federal prison and ordered to pay more than $680,000 restitution for defrauding several financial institutions.
According to court records, Garza owned multiple companies, including the tax prep business eTax Express, Inc.; Auto nSure, which sold insurance underwritten by other insurance companies to the general public; Liberty Pre-Owned Cars and Trucks; and Marcus Garza Enterprises, LLC, which handled payroll matters for all of the defendant’s business concerns.
On March 24, 2014, Garza pleaded guilty to one count of bank fraud and one count of failure to file an income tax return, admitting that from 2005 to 2009 he provided false returns and other documentation showing his income and credit worthiness to lenders to secure hundreds of thousands of dollars in loans and lines of credit, many of which subsequently went into default.
Garza also admitted that he failed to file an income tax return for calendar year 2006.
Pittsburg, Calif.: Local residents Michael Johnson and Nicole Berry have been indicted with conspiracy to file false claims, filing false claims, theft of public money, wire fraud, aggravated ID theft and effecting fraudulent transactions with access devices.
According to the indictment, between February and May 2012, Johnson and Berry conspired to defraud the IRS by filing or helping others file false claims with the IRS requesting refunds in the names of others. As part of the scheme, the defendants and their co-conspirators obtained returns, names and IDs of individual taxpayers from client tax files stolen during a 2011 burglary of a preparation business the initials of which are CTS.
Johnson and Berry prepared or assisted others in preparing fraudulent 2011 federal income tax returns in the names of CTS’s clients by copying information reported on the returns stolen from CTS, including names and Social Security numbers. Johnson, Berry and their co-conspirators also requested that the IRS transmit the fraudulent refunds to accounts linked to prepaid debit cards.
Johnson was released on a $100,000 bail. Berry is in custody on unrelated charges. If convicted, they face a maximum of five years in prison and a $250,000 fine for each count of filing false claims; 10 years in prison and a fine of $250,000 for conspiracy to file false claims; and 15 years in prison and a fine of $250,000 for each count of effecting fraudulent transactions with an access device, among other possible sentences.
Allentown, Pa.: Preparer Wendy Santana is charged with one count of filing fraudulent returns and six counts of aiding and abetting the fraudulent preparation of materially false returns, according to published reports.
News outlets said Santana ran a tax prep business from the basement of her home from 2006 to 2009 and charged clients $50 to $100 to prepare returns, adding that she allegedly filed false federal returns between 2007 and 2009 by reporting false business expenses and business losses to inflate clients’ refunds.
She also allegedly failed to report nearly $106,000 in earnings from her tax prep business between 2006 and 2009, costing the government more than $39,000 in lost taxes, reports added.
The alleged offenses each carry reportedly a maximum of three years in prison and a $100,000 fine.
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