Tax Fraud Blotter: Where’s the beef?
IRS experience is no shield from jail; $6 million in bogus deductions; ignoring injunctions; and other highlights of recent tax cases.
Greensboro, N.C.: Former IRS revenue officer Henti Lucian Baird has been sentenced to 43 months in prison for tax evasion and endeavoring to impede the due administration of the internal revenue laws.
According to documents filed with the court, from 1989 through 2014, Baird operated HL Baird’s Tax Consultants after previously working as an IRS revenue officer for 12 years. Although Baird filed returns every year, he has not paid taxes since at least 1998, using his knowledge and experience as a revenue officer to evade paying his own taxes. He hid hundreds of thousands of dollars earned from his consulting business in bank accounts that he created in the names of his children, and used money orders and cashier’s checks to pay his personal expenses.
In response to IRS collection efforts, he submitted a false collection form on which he claimed to have only one bank account and concealed the existence of his nominee accounts. When Baird learned that the IRS had become aware of these accounts and intended to levy them, he withdrew the funds before the IRS could seize them.
To stall impending liens and levies and evade paying the taxes he owed, Baird filed a cash offer in compromise, a request to discharge the levies on the nominee accounts and an application to subordinate his federal tax lien.
While Baird was refusing to pay the taxes he owed, he continued to pay the mortgage on his 4,300-square-foot home, annual fees for his timeshare in Florida and payments on his BMW.
Baird also used his stepson’s identity, without his knowledge, to apply for a PTIN that Baird used to file more than 900 returns for clients, as well as his own tax returns.
Baird advertised himself to clients as specializing in “IRS problems, delinquent returns, offer-in-compromise, tax problems, delinquent employee taxes and release of liens and levies,” and submitted at least 120 power of attorney forms to the IRS on behalf of clients falsely claiming to be an Enrolled Agent, even though the IRS revoked his authorization to represent taxpayers in 2009.
In addition to the prison term, Baird, who pleaded guilty in October, was ordered to serve a year of supervised release and to pay $573,422.74 restitution to the IRS.
New York: William Doonan, 69, a Bronx attorney who ran a tax prep business, has been sentenced to two years in prison for filing thousands of fraudulent returns that claimed more than $6 million in bogus deductions.
According to court documents, from 2010 through 2013, the New York-licensed attorney prepared and filed 3,000 to 5,000 federal returns for clients. Several thousand of these returns were fraudulent and reported bogus “consulting” businesses and business losses, while others claimed fake deductions based on false medical and dental expenses, state and local taxes, home mortgage interest, charitable donations and job expenses.
Doonan included more than $6 million in fabricated and inflated items on clients’ federal returns and caused a tax loss of more than $1.8 million.
Doonan was also ordered to serve a year of supervised release, to pay $65,820 restitution to the IRS and to pay a fine of $10,000.
He pleaded guilty in November to aiding and assisting in the preparation of a false tax return and obstructing and impeding the due administration of internal revenue laws.
Washington, D.C.: A federal court has found that Marvin L. Binion Sr. violated the court’s previous permanent injunction barring him from preparing returns for others and from operating a prep business.
The court ordered Binion to comply with the previously entered injunction and to pay the United States $29,914.38 for costs of investigating whether he had complied with the injunction.
According to the federal supplemental filing in this case, despite the 2013 injunction, Binion was preparing returns for others and running a tax prep business called Universal Tax Services. The United States also alleged that Binion had clients mail in paper returns without identifying him as the paid preparer.
Before the government filed for an injunction against Binion in 2013, a federal court sentenced Binion in 2008 to prison for aiding and assisting in the filing of false income tax returns.
The court also ordered Binion to produce bank records and client lists, and to send a letter to his clients informing them that he is barred from preparing federal returns for others.
Beverly, Mass.: The co-owner of Nick’s Famous Roast Beef has been sentenced for skimming nearly $6 million in cash receipts from the business over a six-year period and not reporting that cash as income on business and personal tax returns.
Nicholas Markos, 70, of Lynn, Mass., was sentenced to one year of probation to be served in home confinement, and was ordered to pay $2,063,394 in restitution.
In January, Markos pleaded guilty to one count of conspiracy to defraud the U.S. by obstructing the IRS in assessing and collecting taxes and 10 counts of aiding and assisting in the filing of false corporate and personal tax returns.
In April, co-owner Nicholas Koudanis, his wife, Eleni Koudanis, and their son, Steven Koudanis, were sentenced for their role in the scheme.
From 2008 to 2013, Markos and Nicholas Koudanis skimmed more than $1 million in cash receipts each year from their business, which they failed to report on their corporate tax returns or personal tax returns, thereby avoiding the payment of nearly $1 million each in personal income taxes during that same period.
Each week, Markos and Koudanis personally divided the cash receipts, determining how much to deposit into the business bank account and report on their returns, how much to use to pay suppliers and employees and how much to keep for themselves.
Eleni Koudanis was primarily responsible for the bookkeeping, and she provided some of the false income information to the tax preparer and recruited employees, including her son Steven, to create false cash register receipts to be used, among other things, in connection with an IRS tax audit of the business. The actual cash register receipts were not provided to the tax preparer who prepared the business and personal returns.