Tax Fraud Blotter: Wise gals
Not ready for Primetime; copping a plea; preying on Puerto Rico; and other highlights of recent tax cases.
Minneapolis: Tax preparer Kenneth Mwase has been sentenced to 121 months in prison for managing and directing a fraudulent prep business.
Mwase, a.k.a. Chatonda Khofi, 54, of St. Paul, Minn., pleaded guilty to one count of conspiracy to defraud the U.S., one count of aggravated ID theft and one count of failure to appear at sentencing.
In April 2014, Mwase was charged along with Ishmael Kosh, 39, of Philadelphia, Amadou Sangaray, 36, of New York, Francis Saygbay, 43, of Minneapolis, and David Mwangi, 47, of Arlington, Texas, for their involvement with Primetime, a prep business with three storefronts in the Minneapolis area. With his co-defendants Mwase prepared and filed more than 2,000 fraudulent federal individual income tax returns on behalf of clients for 2006, 2007 and 2008. Mwase and his co-defendants also prepared about 1,700 fraudulent income tax returns filed with the State of Minnesota for those years.
In November 2014, Mwase pleaded guilty to one count of conspiracy to defraud the government and one count of aggravated ID theft. As part of his plea agreement, he admitted overseeing a conspiracy that caused a tax loss exceeding $2.5 million.
Mwase and his co-defendants established Primetime’s flagship location in Brooklyn Center, Minn., in late 2006. They then prepared returns for Primetime’s clients in 2007, 2008 and 2009 that reported false dependents, fake business income and losses, inflated deductions, inflated credits and false filing statuses to inflate refunds.
The defendants maintained control over clients’ federal refunds by instructing that those refunds be sent directly to Primetime. They then caused their prep fee to be directly withdrawn from the refund. When a client came to pick up their refund check or debit card, the defendants sometimes escorted that customer to a check-cashing location or ATM and demanded additional cash.
Mwase was scheduled to be sentenced on Aug. 18, 2016, following the two-week trial of co-defendants Kosh and Sangaray in September 2015, and the guilty plea of co-defendant Saygbay in November 2015. On Aug. 7, 2016, Mwase fled to South Africa using a fake ID and a fraudulently obtained Zimbabwean passport. In April 2017, he was charged with one count of failure to appear for sentencing. With the assistance of federal and international authorities, Mwase was arrested in South Africa in May.
In October, following an extradition request from the U.S., Mwase was surrendered to federal marshals and returned to Minnesota to face sentencing. On Nov. 16, he pleaded guilty to the charge of failing to appear for sentencing. Mwase’s co-conspirators were previously sentenced to prison.
Mwase was also ordered to serve three years of supervised release following his release from prison.
Harrison, N.Y.: Former police officer Anthony Marraccini, 54, has pleaded guilty to tax evasion.
According to the allegations, from 2011 to 2016 Marraccini was the chief of police for the Town of Harrison, owned and operated the construction business Coastal Construction Associates, and was employed as a salesperson for two title companies. In addition, he owned several residential rental properties.
Marraccini reported some of Coastal’s revenue and expenses and the rental income from some of his rental properties on his personal federal income tax return. He failed to report all of Coastal’s revenue on his returns from 2011 through 2016.
Instead, he deposited some checks Coastal received into his personal bank accounts and some he cashed at a check-cashing service and kept the cash for personal use. In some instances, Marraccini deposited Coastal checks into the company’s bank accounts but took portions of the deposits as cash. He then falsely represented to his preparers that Coastal’s account statements showed the vast majority of the company’s revenue for each year.
Marraccini failed to report more than $2.3 million in revenue for Coastal Construction for the tax years 2011 through 2016. He also failed to report more than $199,800 in rents received from two rental homes he owned in Purchase, N.Y., from 2011 through 2015, and failed to report $24,500 in rents he received from a rental home he owned in Rye, N.Y., in 2013 and 2014.
In total, Marraccini failed to report more than $2.5 million in revenue from Coastal Construction and the rental properties, evading more than $782,000 in federal income tax from 2011 through 2016.
Marraccini pleaded guilty to one count of tax evasion, which carries a maximum sentence of five years in prison. Sentencing is May 16.
Pocatello, Idaho: Preparer David Brannum, 55, now of Washougal, Wash., has pleaded guilty to preparing false federal income returns for clients of his business, Dave’s Tax Service.
Brannum pleaded guilty to one count of assisting, advising and counseling clients to submit materially false federal income tax returns to the IRS.
According to court records, from 2003 through 2015 Brannum operated his prep business in Idaho and Nevada and submitted hundreds of federal income tax returns. He often claimed false and fraudulent itemized deductions for his clients, decreasing their tax liability and generating improper refunds. Specifically, Brannum inflated his clients’ charitable contributions and entered amounts for unreimbursed employee expenses that were unsubstantiated, that he inflated or that he knew were not allowable.
In total, Brannum’s criminal conduct resulted in more than $101,000 in tax losses.
Sentencing is April 17. Assisting, advising, and counseling clients to submit materially false federal income tax returns is punishable by up to three years in prison, a term of supervised release of up to one year and a fine of up to $250,000.
Milwaukee: Deily Veras, 33, of Newark, N.J., has been sentenced to 52 months in prison for fraudulently obtaining more than $2.7 million in refund checks.
The sentence followed his guilty plea to theft of government money and aggravated ID theft. Veras was also ordered to pay $2,766,926.15 in restitution to the IRS.
Veras committed his theft by fraudulently obtaining the IDs and Social Security numbers primarily of Puerto Rican residents. (Residents of Puerto Rico are issued Social Security numbers, but are not required to file federal income tax returns or pay federal income tax unless they earn income from sources outside of Puerto Rico.) Veras used the names and Social Security numbers to fraudulently file false returns and receive refund checks. He then took the checks to an individual in Milwaukee for cashing.
IRS agents searched Veras’ home and business in New Jersey and seized evidence of personal ID information of more than 500 individuals, most of whom were Puerto Rican residents.
Columbus, Ga.: Four defendants have pleaded guilty to a scheme defrauding the IRS by using stolen IDs to file returns and obtain refunds.
According to the plea agreements, Erica Wise, 33, Ciourziae Weaver, 27, Linda Weaver, 52, and April Byrd, 40, all of Columbus, conspired to file multiple fraudulent returns from March 2012 to September 2013 under the business name Wise Tax using the names and personal information of real taxpayers, unknown to those victims.
The defendants used four addresses around Columbus to accept a total of 316 fraudulently filed refunds. They deposited the refunds, and further shielded their illegal activity by using stolen IDs as named preparers. None of the preparers had any knowledge of or involvement with the scheme.
The crimes are punishable to a term of imprisonment of up to five years, a fine of up to $250,000, or both, and up to three years of supervised release. Sentencing is April 11.