Tax Fraud Blotter: Winning big

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Spook central; short of a grand; a low bar; and other highlights of recent tax cases.

Mansfield, Texas: Innocent Wangwamba, 36, a Zambian national who operated a scheme to steal U.S. taxpayer IDs and fraudulently claim refunds, has been sentenced to 97 months in prison.

Wangwamba, who pleaded guilty last year, admitted that from February 2012 to March 2014 he participated in a stolen-ID refund fraud involving falsely claimed federal refunds. Co-conspirators submitted more than 7,400 fraudulent returns in the names of U.S. taxpayers using stolen personal IDs. The schemers attempted to obtain $36 million from the U.S. Treasury but the IRS blocked more than $29 million of the attempted fraud.

Most of Wangwamba’s participation occurred while he was outside of the U.S.; at the end of one of his trips to the U.S., he was arrested in New York attempting to board a flight out of the country.

Stratford, Connecticut: Theresa Foreman, 58, of St. Cloud, Florida, and formerly of Madison, Connecticut, has been sentenced to a year and a day of imprisonment, followed by three years of supervised release, for a wide-ranging tax-evasion scheme.

Foreman operated Equinox Home Care, a home health care staffing agency. Beginning as early as 2012, she took money out of the company by depositing or cashing checks written to individuals who did not actually work for Equinox. Between May 2012 and December 2013, approximately $413,000 in payroll checks to these “ghost employees” were deposited into accounts controlled by Foreman’s brother.

Foreman failed to report the amounts that she received through this scheme on her federal returns for 2012, 2013 and 2014. She also owed tax for the 2010 and 2011 tax years, and provided false information about her income and assets. She also failed to declare ownership of a property in Florida that she had purchased jointly with her brother in March 2012; failed to declare a bank account held in the name of her adult son, but which she controlled and used; and failed to declare recent purchases of two cars.

Tax loss was $641,941.46 to the IRS. Foreman, who pleaded guilty last March, was ordered to pay all back taxes, plus penalties and interest.

South River, New Jersey: Michael Watsey, 43, has pleaded guilty to his role in a conspiracy to defraud the U.S. by filing false tax claims for gambling winnings.

Watsey admitted that he was involved in a conspiracy with his family members and others to file 16 fraudulent U.S. income tax returns for 2014 through 2016. He and his conspirators created false W2-Gs showing significant winnings and federal tax withheld by casinos in Atlantic City. The returns falsely claimed $3.9 million in federal refunds; the IRS paid out $1.3 million.

Watsey admitted to creating the false forms on his home computer, preparing false documents to send the IRS after refunds were questioned, pretending to be a casino host by phone with an IRS representative and devising a way to have false W2-Gs filed with the IRS.

The charge carries a maximum of 10 years in prison and a $250,000 fine. Sentencing is April 7.

Gulfport, Mississippi: Preparer Stacey Pritchett Williams has been sentenced to 15 months in prison for aiding and assisting in the preparation of false returns.

Williams owned and operated Stacey’s Unique Tax Service, and from 2015 through 2016 filed federal returns for her clients that reported false business income, education credits and fuel credits to inflate refunds. She often deducted her fee from the refunds and, at times, charged $999 to prepare a return.

Williams caused a tax loss to the U.S. of at least $100,000.

She was also ordered to serve a year of supervised release and pay $102,382 in restitution to the federal government.

Camden, New Jersey: Alberto Sanchez, 34, has been sentenced to 45 months in prison for cashing fraudulently obtained federal refund checks, unlawfully utilizing the stolen IDs of residents of Puerto Rico in the scheme, and tampering with a witness.

Sanchez and conspirators obtained stolen IDs of residents of Puerto Rico to fraudulently generate income refund checks. The conspirators recruited mail carriers from the U.S. Postal Service to steal the checks and paid “check couriers” to cash the checks in a variety of ways, including at local check-cashing businesses. The couriers presented false IDs at the check-cashing businesses matching the names on the refund checks. The scheme cost the U.S. Treasury $565,091.

Sanchez admitted that he used an Alien Permanent Resident Identification Card, which had his photograph but the name, address and ID information of another individual, and a Social Security card that had a name and Social Security number that matched the information on the refund check. Sanchez also admitted that he told another person arrested for the scheme to lie to investigators.

Sanchez was also sentenced to three years of supervised release.

For the 2013 tax year, more than 3,300 phony returns were filed using the names and Social Security numbers of residents of Puerto Rico, and the refunds were directed to be mailed to a small section of Pennsauken, New Jersey.

Allentown, Pennsylvania: Trucking company owner Michael Gerstenberg, 51, of Emmaus, Pennsylvania, has been sentenced to 18 months in prison for failing to collect and pay federal employment taxes for employees of his company, A. E. Logistics Inc., and for his scheme to inflate the wages of his former girlfriend on federal returns as a means to syphon additional funds from that company for his personal use.

From January 2012 through December 2014, Gerstenberg caused A.E. Logistics to make thousands of dollars of expenditures for his personal benefit while, at the same time, failing to pay IRS payroll taxes that were withheld from his employees’ paychecks. He caused A.E. to spend thousands of dollars to pay for such personal expenses as a Caribbean vacation and other travel, gambling, jewelry, dining, country club dues, nightclubs and entertainment.

He also put his former girlfriend on the company’s payroll and reported inflated wages for her that were deposited into a joint account controlled by Gerstenberg; he paid no income taxes on those wages.

Gerstenberg was previously convicted of failing to pay state employment taxes in Pennsylvania, and he violated the conditions of his state probation by committing the federal offenses.

He was also sentenced to three years of supervised release and ordered to pay $750,427.36 in restitution.

Fort Myers, Florida: Preparer Augustin Dalusma has been sentenced to 97 months in prison for filing false claims and tax fraud.

Between 2012 and 2015 Dalusma, convicted last year, falsified information in returns for at least 630 of his clients, fraudulently qualifying them for thousands of dollars in refunds. He also falsified his own returns from 2012 through 2014, significantly underreporting his own income to evade more than $30,000 in personal income tax in each of those years.

Dalusma was also ordered to pay $2,170,538.77 in restitution to the IRS.

Andover, Massachusetts: Former attorney Daniel P. Gibson, 62, has been sentenced to two years in prison and two years of supervised release, and been ordered to pay restitution for engaging in a years-long scheme to defraud the IRS.

Gibson conspired with his accountant to prepare and file false returns in the tax years 2005, 2006, 2008 and 2009 that underreported some $3.7 million in income earned by the law firm of which Gibson was the managing partner. Gibson underreported his personal income by some $2.5 million and avoided taxes of more than $875,000.

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