Tax Fraud Blotter: What they deserve
What a steel; there go the judge; children’s books; and other highlights of recent tax cases.
North Scituate, Rhode Island: Steven M. Allard, owner of two businesses that supply steel and iron to construction sites, has admitted that over two years he intentionally failed to turn over to the IRS more than $570,000 in employment taxes withheld from his employees.
Allard admitted that from at least 2017 through 2018 he failed to turn over federal employment taxes and FICA payments withheld from his employees. Allard used the money to pay for personal expenditures such as the purchase of more than $216,000 in credits to an online dating website and $93,000 in rent payments for a luxury home.
This is the third conviction of Allard in federal court. In 2009 he pleaded guilty to tax evasion and bankruptcy fraud and was sentenced to 30 months in prison in connection with diverting some $1.6 million due the IRS in employment taxes. Prior to that he was found guilty of accepting kickbacks from public employees and was sentenced to 10 months in prison.
Allard’s latest sentencing is Nov. 30. Willful failure to collect or pay over taxes is punishable by statutory penalties of up to five years in prison, three years of supervised release and a fine of up to $250,000.
St. Paul, Minnesota: Former tax preparer Odessey Cherrell Curry, formerly of Columbus, Ohio, has pleaded guilty to one count of filing a false claim with the IRS.
For the year 2011 Curry filed fraudulent federal income tax returns claiming false income tax refunds for various taxpayers. The returns contained fraudulent Schedules C and fraudulent claims for earned income and education credits. Curry did not sign any return as the preparer.
With each bogus return, she filed an 8888 to allocate the refunds between herself and the client. The total she fraudulently claimed was $93,789.
Filing false claims for income tax refunds with the IRS carries a maximum of five years in prison and a $250,000 fine.
Carmel, New York: Attorney Marc A. Seedorf of South Salem, New York, has been sentenced to six months in prison for tax evasion.
From 2009 through October 2019, Seedorf was a justice for the town of Lewisboro, New York, and an administrative law judge for Westchester County. He also received income from a private law practice, yet filed no federal income tax returns for tax years 2005 through 2015. He incurred a total federal income tax liability of some $487,000, including interest and penalties.
In August 2012, Seedorf received $1,524,116 in connection with the settlement of a civil lawsuit. At his request, the law firm that represented him in the suit deposited the settlement proceeds into its attorney trust account, to be disbursed to Seedorf at an unspecified later date. In the following years, Seedorf instructed the law firm to disburse portions of the settlement proceeds to accounts other than his personal bank account, including his law firm’s operating account and attorney trust account and his brother-in-law's personal account to disguise the source of funds he used to make payments to the IRS and other creditors.
From January 2010 through June 2013, the IRS attempted to collect some of Seedorf’s tax liability, including by mailing him letters and requesting documents and records. Seedorf failed to provide any records to the IRS or make any payment toward a portion of his tax liability.
In 2013, after the IRS began attempting to place a levy on an investment account held by Seedorf, he instructed the law firm to wire $400,000 of the settlement proceeds to his own law firm’s attorney trust account, from which he then paid a first portion of his outstanding tax liability. During a conversation with an IRS agent, he falsely stated that he had borrowed the funds from his law firm’s trust account. In an interview the next year, an IRS agent asked Seedorf whether he had received any non-taxable income during 2009 through 2013. Seedorf never disclosed the 2012 settlement or the existence of the more than $540,000 of settlement proceeds that remained in an attorney trust account at that time.
In all, Seedorf caused the IRS to incur losses of more than $200,000, including penalties and interest.
Seedorf was also ordered to serve three years of supervised release and to pay a fine of $55,000. Seedorf has already paid $207,219 in restitution to the IRS.
Caneadea, New York: Resident Amanda L. Rickard has pleaded guilty to aiding or assisting in the preparation of a false or fraudulent return.
Between 2011 until 2018, she prepared income tax returns for friends and acquaintances, reporting false information on the individual income tax returns.
Between 2011 and 2018, Rickard prepared and filed 23 individual tax returns that identified dependents that the taxpayer was not entitled to claim. The defendant maintained a notebook identifying the names, dates of birth and Social Security numbers of children whose parents had not claimed them as dependents on their own returns. Rickard used this information to prepare the false returns. She also prepared and submitted individual returns for taxpayers who had not authorized her to do so.
Rickard will pay the IRS $78,591 in restitution and will pay New York restitution of $19,722. The charge carries a maximum of three years in prison and a $100,000 fine.
Philadelphia: Resident Vontia Jones has been sentenced to 102 months in prison and three years of supervised release and been ordered to pay $2,319,278 in restitution for obtaining others’ personal ID information and using it to file hundreds of fraudulent federal returns, netting her more than $2 million in fraudulent refunds.
Jones, who pleaded guilty in 2019, also engaged in real estate fraud by purporting to sell properties to buyers using fraudulent documents.
She operated a business she identified by various names, including “Jones Tax Service,” “Earned Income Credit Unit,” “EIC Unit” and “Eelysium” out of her home for about seven years. Together with conspirators, Jones filed or directed others to file over 900 fraudulent returns claiming fictitious self-employment income resulting in federal refund payouts of more than $2,319,000. The conspirators solicited the personal information of individuals and their dependents under the guise of getting them “tax money” even if they never worked.
Jones designed flyers advertising her services that stated: “Don’t you deserve some income tax money too? $750 [per child] welfare social security unemployment disability even if you never had a job.” Each of the returns submitted to the IRS was submitted by the defendant or her conspirators as self-prepared.
She also organized and operated a scheme to file phony deeds for multiple residential properties in Philadelphia, purporting to transfer ownership of the houses in order to sell them for a profit.
Milton, Florida: Former financial planner James A. Young III, 50, has been sentenced to 51 months in prison after having pled guilty to wire fraud and failure to file returns.
Between 2010 and 2014, while working as a financial planner, Young solicited his clients and others to invest money in false “side investments,” including real estate investments for property he did not own and investments in an oil and gas company with which he had no relationship. Young presented false documents to potential investors and falsely claimed that he was personally invested to convince them to invest. Almost all of Young’s victims were between the ages of 55 and 90.
For those who agreed to invest, Young simply pocketed their money, which totaled more than half a million dollars, for his own use. In some instances, he used money obtained from investors to pay back other investors. He fraudulently claimed that the funds represented returns or interest on their investments.
Young also failed to file his federal tax returns for 2012, 2013 and 2014.
He was also ordered to pay $402,207.71 in restitution to two dozen victims and $125,107.33 in restitution for unpaid taxes to the IRS. The Securities and Exchange Commission barred Young from being involved in the securities industry.