Tax Fraud Blotter: What so proudly we stole
Not so Smart; The Kings are dead; sick ideas; and other highlights of recent tax cases.
Greenville, Ohio: Glass company owner Gail Cooper, 64, has pleaded guilty to failing to account for and pay over employment taxes.
Cooper was the sole owner of Greenville Architectural Glass during 2007 through 2015. GAG primarily installed glass in commercial and residential buildings for clients in Ohio and paid wages to its employees during the years 2013 through 2015. Although Cooper caused GAG to withhold taxes from employees’ wages, she neither paid those amounts over to the IRS nor did she file the required quarterly returns for the first quarter of 2013 through the second quarter of 2015. Cooper also failed to pay over unemployment taxes to the IRS.
Cooper admitted that she filed false individual income tax returns for 2008 to 2010 on which she understated GAG’s gross receipts and overstated expenses. She also admitted that she failed to file for 2011 through 2014, which would have reported her income from GAG and other sources.
Sentencing is Aug. 2, when she faces up to five years in prison and a $250,000 fine. Cooper admitted that she caused a loss to the government of more than $500,000 and agreed to pay restitution to the IRS.
Oklahoma City: Preparer Timothy Alonzo Evans, of Gulfport, Mississippi, has pleaded guilty to a one-count information charging him with assisting in the preparation and presentation of a false federal return.
According to the charges, Evans assisted a taxpayer in submitting a 1040 that materially misstated the taxpayer’s alleged business losses for the 2014 tax year. Evans, who pleaded guilty on May 29, admitted he operated a prep business in Enid, Oklahoma, called House of Tax Smart and filed returns in 2014 and 2015 for the 2013 and 2014 tax years.
He has agreed to pay $82,227 in restitution to the IRS, plus statutory interest. He faces up to three years in prison and a fine of up to $100,000.
Southfield, Michigan: Healthcare management execs Edward Cespedes and Joseph DeSanto have each pleaded to failing to collect, account for and pay over federal payroll taxes.
According to court documents, Integrated HCS Practice Management provided management services to healthcare providers. As the managing partner of Integrated, a partial owner and a controller over the business’ finances, Cespedes was responsible for Integrated’s payroll taxes. DeSanto also had influence over Integrated’s expenditure of funds, and was responsible for the payroll taxes. The pair failed to timely pay Integrated’s federal payroll taxes for the third quarter of 2013, the fourth quarter of 2013 and the first quarter of 2014. DeSanto also pleaded guilty to one count of failure to file his personal tax return for 2013.
Sentencing is Feb. 20, Cespedes and DeSanto both face a maximum of five years of imprisonment on the payroll tax charge; DeSanto faces up to an additional year of imprisonment on the charge related to his failure to file a return.
Miami Gardens, Florida: A federal court has entered a permanent injunction against Katiusca “Kathy” Rigaud (a.k.a. Kathy Leger), Andy Jean and Bar Professional Services LLC (Tax Kings & Queens), barring them from preparing federal income tax returns for others.
The complaint alleges that Rigaud, Jean and Tax Kings & Queens — along with another defendant who was not subject to the order — prepared nearly 3,000 returns between 2013 and 2018, with most claiming a refund. According to the complaint, the defendants did not consistently identify themselves as the preparer on returns they prepared, as required by law. The complaint further alleges that the defendants’ practices included submitting Schedules C for fictitious businesses to secure bogus Earned Income Tax Credits and claiming false employee business expense deductions.
Rigaud, Jean and Tax King & Queens consented to the ban.
Boston: Healthcare business owners Hannah Holland, 51, of Quincy, Massachusetts, and Sheila O’Connell, 51, of North Weymouth, Massachusetts, have each been sentenced to six months in prison and three years of supervised release for underreporting to the IRS.
Holland and O’Connell, who pleaded guilty in November, co-owned and operated Erin’s Own Home Healthcare. Between 2010 and 2014, the two cashed more than $3.5 million of Erin’s Own business checks through nominee bank accounts controlled by a third party. These funds were never reported to the IRS or accounted for in the company’s tax filings. Instead, Holland and O’Connell provided their tax preparer with a limited set of financial records that did not cover the substantial amounts of business funds Holland and O’Connell diverted.
Erin’s Own caused a loss of $1,126,112 to the IRS, which Holland and O’Connell were ordered to pay $1,126,112 in restitution.
New Brunswick, New Jersey: CPA Amit Govil, 58, has been sentenced to 27 months in prison for underreporting his income on his personal tax return and avoiding paying more than $672,000 in taxes.
Govil operated P&G Associates, providing risk-management and audit services to community banks. Govil admitted that for the tax year 2010, he underreported and failed to report the gross receipts or sales of P&G Associates on Schedule C of his personal return.
He was also ordered to serve a year of supervised release.
Ozawkie, Kansas: Medical-staffing company owner David Monhollon, 62, has been sentenced to three years of probation with eight months of home detention for failing to pay over federal payroll taxes.
He pleaded guilty to failing to pay $68,261 for seven quarters of payroll taxes owed by First Call Medical Group, which provided medical staffing services to healthcare providers.
Monhollon will also pay more than $68,000 in restitution and a $3,000 fine.
Canton, Ohio: Richard Spencer, 52, owner of a company that manufactures American flags, has been sentenced to two years in prison for failing to pay $162,728 in federal employment taxes.
Spencer controls RS Sewing, which manufactures American flags. He oversaw production, source materials, paperwork and the company’s financial operations, according to court documents. Beginning around 2008, he reclassified some of his workers from employees to independent contractors. Following an audit in 2011, Spencer was informed he improperly classified the workers as independent contractors and a penalty was assessed against him.
From 2012 through 2015, Spencer failed to withhold taxes from workers he misclassified as independent contractors. For workers classified as W-2 employees, Spencer withheld federal income, Social Security and Medicare taxes from employees but never paid the IRS.
Spencer was also ordered to pay $197,040 in restitution.
Tulsa, Oklahoma: Earenest J. Grayson Jr., a software development executive, has pleaded guilty to failing to account for and pay over employment taxes.
For January 2014 through June 2016, Grayson caused a total tax loss of more than $1 million by not paying to the IRS income and Social Security taxes withheld from Zealcon employees’ wages.
Sentencing is Oct. 3.
Southwick, Massachusetts: Restaurateur Giuseppe Scuderi, 62, of West Suffield, Connecticut, has pleaded guilty to one count of failing to file a return for 2015, and Scuderi’s Inc. pleaded guilty to five counts of filing false returns for 2010 through 2014.
Scuderi owned a restaurant that generated a substantial amount of cash sales. From 2010 to 2014, Scuderi took cash from the business and did not declare it as income, and he kept two sets of books that depicted both the actual sales of the business and the sales disclosed on his returns. He failed to pay $170,769 in taxes.
Sentencing is Sept. 19, when Scuderi faces up to one year in prison, a year of supervised release and a $25,000 fine.