Tax Fraud Blotter: Watt a scheme!
All in the family; end of a Dream; more flags in Maryland; and other highlights of recent tax cases.
Great Neck, N.Y.: Brothers Parviz Hakimian, 70, and Khosrow Hakimian, 64, have pleaded guilty to filing false returns related to the failure to disclose overseas bank accounts.
According to charging documents, between 2009 and 2011 the two maintained undeclared bank accounts at an Israeli private bank in Tel Aviv. The Hakimians each failed to report these accounts and interest income from them in their tax filings.
Each agreed to pay $7.73 million in civil penalties. At sentencing, each faces a maximum of three years in prison.
Stapleton, Colo.: Husband and wife Daryl Yurek and Wendy Yurek, both 62, have been sentenced after being convicted of tax evasion and bankruptcy fraud.
Daryl Yurek, also convicted of three more related offenses, was sentenced to 50 months of incarceration followed by three years of supervised release; an asset forfeiture money judgment was also entered against him for $132,991.61. Wendy Yurek was sentenced to 27 months of incarceration followed by three years of supervised release. The couple was also ordered to pay $1,614,536.38 in restitution to the IRS.
According to the indictment and evidence presented at trial, Daryl Yurek was a partner in Bolder Venture Partners from 1999 through 2012 and Wendy Yurek was a partner from 2008 through 2012. Daryl Yurek acted as a consultant to startup and growing companies and provided a variety of services, including temporary management and fundraising. He also exerted significant control over other companies, including ID Watchdog, and Veracity Credit Consultants.
The Yureks reported tax due and owing for tax years 1999 and 2004 of $624,127 and $53,978, respectively. In 2006, the couple submitted a federal offer in compromise attempting to settle their tax obligation for $75,000; they indicated the reason for the offer was “Doubt as to Collectability.”
In September 2010, they filed with the U.S. Bankruptcy Court in the District of Colorado a voluntary Chapter 7 petition. Daryl Yurek testified that the primary reason for pursuing bankruptcy was “the $1.2 million that the IRS wants.” During the period the Yureks claimed to be unable to pay their tax liability, however, the couple caused Bolder Venture Partners and Veracity Credit Consultants to pay substantial personal expenses for the Yureks.
In March 2006, the Yureks purchased a downtown Denver loft as their personal residence for $1.3 million in the name of one of their sons. Between 2006 and 2011, Veracity Credit Consultants made mortgage payments of $526,511.99 for the Yureks’ loft and Bolder Venture Partners paid $43,866 for the loft’s condo association fees.
Between 2006 and 2010 Veracity Credit Consultants made $107,204.36 in rental payments for vacation homes in Tabernash, Colo., used by the Yureks. Daryl Yurek’s Pinehurst Country Club membership and associated expenses paid by Veracity Credit Consultants between 2007 and 2012 totaled $90,810.74.
The couple committed numerous acts of evasion, including submitting false statements on 433-A forms; Daryl Yurek also transferred shares he held in ID Watchdog to Veracity Credit Consultants and to his sons while falsely claiming to the IRS that he had not made any transfers for less than full value.
Newark, N.J.: Lashawn Porcher, 32, of Lawrenceville, Ga., has admitted devising a scheme in which he and others fraudulently collected unemployment benefits and tax refunds by pretending to have worked for several phony companies that he created.
Porcher pleaded guilty in federal court to charges of one count of conspiracy to commit mail fraud and one count of aiding and assisting in the filing of a false return.
According to case documents and statements in court, Porcher incorporated numerous fictitious businesses in New Jersey, including Computer Tyme Corporation, Cleaning Experience Corporation, Cleaning Time and The Dream Team, not one of which conducted actual business or had offices, employees or officers. From February 2010 through June 2014, Porcher used Computer Tyme Corporation and Cleaning Experience Corporation to seek unemployment insurance benefits for himself and other conspirators based on false claims that they had received compensation as employees of these companies.
He submitted fraudulent wage reports to the N.J. Department of Labor and Workforce Development for himself and others and supplied conspirators with false wage records so they could submit false claims as well. Porcher and others were able to fraudulently receive $436,982 in unemployment benefits.
Porcher used Cleaning Time and The Dream Team to prepare false federal returns for himself and other purported employees of these companies; he admitted falsifying information on W-2s to obtain inflated refunds for tax years 2009 through 2012. He and other conspirators scammed some $103,276 in refunds.
The mail fraud conspiracy charge carries a maximum of 20 years in prison; the filing of a false return charge carries a maximum of three years. Both charges carry a potential $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is July 11.
Annapolis, Md: The Maryland Comptroller’s Office has stopped processing returns from some practices in Maryland, Virginia, Texas and California for submitting questionable returns and expecting a refund.
The Maryland practices were: KC and Son Tax Service, Keystone Tax Solutions K2, Bencok One Inc., Freedom Tax Services and Double R Taxes, in Baltimore; New Valley & Co. (a.k.a. Prologix Tax) of Rockville and Baltimore; Annointed Tax & Consulting Service (a.k.a. ATP Too) of Towson and Baltimore; OAS of Germantown; Immaculate Money LLC of District Heights; Geneva Sanders of Odenton and Laurel; Brightway Professionals and Associates, Temple Hills; All Choice Tax & Payroll Services, Upper Marlboro; BOFMOT of Laurel; Alcantara Driving School Corp., Silver Spring; and Ardy Sowe Tax Service, Beltsville.
Elsewhere, the comptroller flagged Rhodes & O’Neil Accounting of Richmond, Va.; Safe STEM Institute of Sterling, Va.; Precise Financial, Houston; Gabriel Ajak of Dallas; and Michael Smith of Pomona, Calif.
These firms join 34 others that the Maryland comptroller had already flagged this season for questionable returns.
Burnsville, Minn.: Businessman Joseph Arnold McGlynn Jr., 33, has been sentenced to 30 months in prison for failing to account for and pay employment taxes to the IRS.
McGlynn, who pleaded guilty in November, is the former owner, CEO and president of McGlynn Marketing (d.b.a. United Credit Consulting), a credit repair service. According to the guilty plea and court documents, between approximately 2009 and 2016 he was responsible for ensuring that UCC’s quarterly federal tax returns were filed and that employment taxes were paid. Although McGlynn caused employment taxes to be withheld from the wages of UCC employees, he failed to pay over such taxes to the IRS for multiple quarters between April 2014 and April 2017.
Instead, he used the money to fund a lavish lifestyle, including luxury vacations, rentals of luxury vehicles, visits to strip clubs and purchases of luxury items such as jewelry, handbags and a boat.
McGlynn failed to pay to the IRS at least $159,157 in employment taxes.
Lincoln, Neb.: Accountant Sarah E. Batenhorst, 42, has received 10 months in prison for wire fraud.
From 2006 to 2016 she worked as an assistant bookkeeper and then accountant at the Nebraska Rural Electric Association, with access to the NREA checking account. Beginning in 2014, without the authorization or approval of the NREA board or other officers, Batenhorst increased her annual salary. Also in 2015, she began increasing printing and set-up rates for the Rural Electric Nebraska magazine and used the increased income to pay her own Discover credit card account and personal loans.
Batenhorst paid her Discover card and personal loan accounts from checks fraudulently written on the NREA account and then altered copies of those checks and the NREA bank statements.
Batenhorst was also ordered to serve three years on supervised release and pay $343,773.55 in restitution.