Tax preparer David Canales was arraigned in a San Diego federal court on an 18-count indictment charging him with mail fraud, wire fraud and tax evasion after he created checking accounts named after the IRS and the California Franchise Tax Board.
Canales, 53, was arrested Wednesday by agents from the IRSs Criminal Investigation division and the Treasury Inspector General for Tax Administration. Between 2001 and 2008, he operated a tax preparation and bookkeeping management business in Chula Vista, Calif., called Executive Management Services. He also owned and controlled two bank accounts under the fictitious business names, International Recovery Systems/IRS and Freight Transport Brokers/FTB.
The indictment alleges that Canales directed his clients to write checks payable to the IRS and FTB. According to the indictment, his clients believed that they were paying the Internal Revenue Service and the California Franchise Tax Board for the tax they owed and that Canales would submit the checks along with their tax returns to the relevant taxing authorities. However, instead of forwarding his clients checks and the tax returns to the IRS and FTB, Canales allegedly deposited the checks into his own IRS and FTB bank accounts and either did not submit the clients returns to the relevant taxing authority or submitted different returns showing little or no tax due and owing.
The indictment also charges Canales with willfully evading taxes for the years 2003-2007. If convicted, he faces up to 45 years in prison and a fine of $600,000.
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