Tax Fraud Blotter: You're in Good Handcuffs
Some of our favorite recent tax fraud cases:
Rochester, N.Y.: Preparer Chauncee McFarland, 35, has pleaded guilty to conspiracy to defraud the U.S. and a scheme to defraud insurance premium finance companies.
Authorities say that from 2010 to 2012 McFarland owned McFarland Tax Company and conspired with an employee, Kenyatta Hubbard, to prepare false income tax returns for clients. McFarland and Hubbard reported fictitious employment to increase EITC refunds claimed on behalf of the clients, causing the IRS to pay refunds totaling $391,888.
From September 2012 to September 2013, acting on his own as a licensed insurance broker, McFarland devised a scheme to defraud premium finance companies (premium finance companies lend to finance insurance policy premiums for clients). McFarland prepared fraudulent premium finance agreements that falsely represented that he was seeking to obtain financing for purported clients. Based upon the fraudulent documents, the companies provided the requested financing. He then diverted the financing to his personal use and did not use it to purchase insurance policies for any clients. McFarland obtained $29,634 through this scheme.
Kenyatta Hubbard was convicted for her role in the conspiracy to prepare false income tax returns for clients and awaits sentencing.
The charges carry a maximum sentence of 20 years in prison.
Los Angeles: Jorge Balladares, 64, of Azusa, Calif., and former operator of Balladares Income Tax, has pleaded guilty to filing false individual income tax returns for clients for the 2007 and 2008 tax years.
According to the plea agreement, from at least 2004 to 2009, Balladares prepared at least 25 fraudulent federal returns for at least nine clients. He prepared and filed returns that included false information regarding dependent deductions and Schedule Cs without the knowledge of his clients. The total amount of tax loss from those 25 fraudulent returns is $85,355.
In most cases, Balladares arranged for the refunds to be sent to his office and then had clients visit a nearby check-cashing business to cash their refund and pay him from the money.
Balladares faces a maximum of six years in federal prison when sentenced on September 8. He may be further ordered to pay restitution to the IRS of $85,355.
Webster, N.Y.: Accountant Joseph Karl Muller, 54, has pleaded guilty to bank fraud and aggravated ID theft.
Investigators say that from April 2012 to August 2013, Muller used personal ID information he stole from a client to prepare 46 fraudulent checks drawn on the client's accounts. Muller then deposited the fraudulent checks into an account that he controlled, reaping $127,287.
Sentencing is September 10. The charges carry a minimum sentence of two years in prison and a maximum of 30 years, a fine of $1 million or both.
Maitland, Fla.: Preparer Passion McCall, 30, has pleaded guilty to tax fraud and agreed to pay restitution of $434,000, according to published reports.
Investigators told news outlets that McCall opened a Bank of America business bank account and cashed more than 70 refund checks she knew were from fraudulent returns.
McCall also reportedly agreed to testify against unnamed co-conspirators. In return for her plea, investigators told news outlets they'll recommend a lighter sentence than the 10-year maximum she faces.
Lake Station, Ind.: Preparer Michael Nash was reportedly expected to plead guilty to one count each of conspiracy to defraud the U.S. government and aggravated ID theft in connection with stealing at least $400,000 in inflated refunds after fraudulently preparing clients' returns.
Nash reportedly said that he paid a co-conspirator a commission for client referrals and then lied on those returns to generate a falsely large IRS refund. Nash didn't tell clients about the increased refunds, instead directing the extra money into his own bank account, according to published reports.
Nash also then reportedly used information from these clients to file their returns for 2008 without their knowledge, pocketing all the refunds.
Published reports said Nash faces up to 10 years in prison on the conspiracy count and two years on the ID count.