Tax Fraud Blotter: Zapped

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A roundup of our favorite recent tax stories.

Cranston, R.I.: Preparer Belkis M. Guzman, 48, has been sentenced to 36 months in prison for aiding and assisting in the preparation of false returns, wire fraud, theft of government funds, and aggravated ID theft.

Guzman is a former employee of El Centro Multiservicios, a tax prep business in Providence. Guzman was involved in two separate and distinct schemes. The first involved the preparation and presentation of false individual income tax returns on behalf of El Centro clients for tax years 2009, 2010 and 2011, on which she created, inflated and falsified dependents, exemptions, credits, deductions and expenses. 

The second scheme involved the deposit of more than 100 U.S. Treasury checks into Guzman’s personal checking account. The checks were generated by the filing of fraudulent individual income tax returns containing stolen personal ID information and fraudulent amounts of income, deductions and credits.

Guzman deposited more than $800,700 in fraudulently obtained refund checks into her bank account after signing many of the checks in place of the payees who were unknown to her, and then providing a majority of the proceeds to a third party in the form of cash and personal checks. Guzman received a percentage as payment.

She pleaded guilty in September to aiding and assisting in the preparation of false tax returns, wire fraud, theft of government funds and aggravated ID theft. In addition to the prison term, Guzman was sentenced to three years of supervised release and was ordered to pay $928,224.95 restitution to the IRS.

Loomis, Calif.: Preparer Petr Kuzmenko, 38, has been sentenced to six-and-a-half years in prison and been ordered to pay $573,332 restitution to the IRS for conspiracy to defraud the U.S.

According to court documents, Kuzmenko was engaged in a tax fraud scheme with four co-defendants, including his brother, who worked as a preparer at VK Tax Services in Citrus Heights, Calif., in 2009. Between February and November of that year, Kuzmenko conspired with others to file approximately 90 fraudulent returns with the IRS.

The returns fraudulently claimed the First-Time Homebuyer Credit, which was worth as much as $7,500. The refunds for the fraudulent claims were electronically deposited into various bank accounts controlled by Kuzmenko and his co-defendants.

The fraudulent claims totaled some $695,724, of which the IRS paid approximately $573,000.

Kuzmenko was previously convicted in two mortgage fraud cases and sentenced to a total of 21 years in prison for both cases. The sentence imposed in this case was ordered to run concurrent to those sentences.

Co-defendant Aleksandr Kuzmenko was sentenced to over two years in prison on Oct. 28. Valeriy Nikitchuk pleaded guilty to conspiring to defraud the United States and is scheduled to be sentenced on Dec. 16. Co-defendant Arsen Muhtarov has entered a plea of not guilty.

El Dorado Hills, Calif.: Unlicensed preparer Barbara Antonucci has received three years and six months in prison and been ordered to pay $1,895,833 in restitution for conspiring to file false claims and filing false claims.

According to court documents, Antonucci and her co-conspirator, Sherry Taggart, 56, of El Dorado Hills, prepared returns for clients, and in 2008 Antonucci began a scheme to obtain false refunds by preparing and filing false claims on behalf of clients with the IRS. After May 2010, Taggart joined Antonucci’s scheme and together the two conspired to prepare and file hundreds of false claims between June 2012 and March 2014, seeking refunds totaling approximately $1.4 million.

The IRS issued more than $757,000 in illegitimate refunds. In total, including the period in which Antonucci operated the scheme by herself, the IRS issued more than $1.8 million in illegitimate refunds from more than $2.5 million illegitimate claims filed during the scheme.

The fraudulent returns reported false wages and dependents for their clients and, in many cases, qualified the clients for the EITC when the client’s true wages or family situation would have qualified the client for no credit or a lower credit. Most of the fraudulent returns listed wages associated with self-employment not documented by a W-2, such as “housekeeper.”

The defendants obtained the names, Social Security numbers, and other personal ID information of minors and falsely listed those minors as dependents on returns for clients who were unrelated to those minors. Taggart and Antonucci also filed false claims on their own behalf.

In August, Antonucci pleaded guilty to conspiracy to file false claims and filing false claims. She was ordered to surrender to begin serving her sentence on Feb. 17. Taggart’s sentencing is Dec. 9.

Gulfport, Miss.: Former tax preparer Jeremi Washington, owner and operator of Flash Financial, has admitted not reporting all of his income and falsifying clients’ returns, according to published reports.

A federal indictment reportedly alleged that Washington under-reported his income for 2009 by $243,906 and failed to file his taxes for calendar years 2010 and 2011. He also reportedly filed returns for clients while knowing that they did not qualify for certain deductions.

Washington faces up to 10 years in prison, a fine and restitution at his sentencing on March 1, reports said, adding that a federal grand jury indicted him on six additional counts that will be dismissed in exchange for his plea.

Everett, Wash.: John Yin, 66, who worked for a Canadian company that sells POS software, has pleaded guilty to wire fraud and conspiracy to defraud the government for his role in a scheme to sell “tax zapper” software.

Yin admittied that he promoted and sold a revenue-suppression software that allowed restaurants to underreport their sales and illegally lower their tax bills. The software, a.k.a. a “zapper” program, resulted in a loss of more than $3.4 million in tax revenue.

According to case information, Yin was a salesman for Profitek, a British Columbia-based company selling POS systems for hospitality and retail industries. The company had designed, marketed, sold and supported revenue suppression software as an add-on to its Profitek software.

An RSS program deletes all or some of the business’ cash transactions and then reconciles the books of the business to make them appear complete and accurate when in fact they are fraudulent in that they show less than total income earned.

Yin sold the POS software and assisted in the widespread distribution of the zapper software to dozens of customers over several years. Between 2010 and 2013, eight restaurants in the Seattle area used the software and underpaid their state and federal taxes by amounts ranging from a low of just over $145,000 to more than $910,000.

When the restaurant owner who underpaid taxes by more than $900,000 was confronted about using the software, she admitted she used the unreported cash to pay some employees in cash. In addition, she did not withhold Social Security or Medicare taxes for these employees.

Wire fraud is punishable by up to 20 years in prison and a $250,000 fine; conspiracy to defraud the government is punishable by up to five years in prison and a $250,000 fine. Yin has agreed to pay $3,445,589 restitution to the U.S. and Washington State and agreed to pay for the costs of prosecution. Sentencing is Feb. 24.

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