Debra A. Minshall to Serve 46 Months in Prison for Mail Fraud and Tax Evasion

Source- http://oklahomacity.fbi.gov/dojpressrel/pressrel11/ok022411.htm

OKLAHOMA CITY—DEBRA A. MINSHALL, also known as Debra Alzubi, of Oklahoma City, was sentenced today by United States District Judge Timothy D. DeGiusti to serve 46 months in federal prison for using the U.S. Mail to defraud her former employer, City Chevrolet, and for evading the payment of federal personal income taxes, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma. She was also ordered to pay restitution to the victims of her crimes totaling $1,409,114.00.

From 2002 until late 2008, Minshall worked as the controller at City Chevrolet, in Oklahoma City. Her duties included writing checks, including checks to pay off liens on automobiles purchased by the dealership. Minshall used her position and access to the financial accounts to steal from the dealership by signing City Chevrolet checks and mailing them to banks to pay her personal credit card bills. She then disguised these personal payments as lien payments on automobiles that did not exist, that did not require lien pay-offs, or that had liens held by different banks. For each of the years 2006 through 2008, Minshall also failed to report more than $200,000 in taxable income on her federal income tax returns.

In May of 2010, Minshall pled guilty to mail fraud and tax evasion.

At the sentencing hearing today, Judge DeGiusti also ordered that Minshall pay restitution of $1,081,475.00 to the dealership and its insurer and $327,639.00 to the Internal Revenue Service. Minshall is also ordered to serve two years of supervised release after she has completed her 46-month prison term.

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Jury Convicts Sharon Thurman of Aggravated Identity Theft and Making False Statements to The IRS

Source- http://www.justice.gov/tax/txdv11246.htm

WASHINGTON - A Montgomery, Ala., jury has convicted Sharon Thurman of Elmore, Ala., of 14 counts of making false claims, two counts of theft of government money and two counts of aggravated identity theft, the Justice Department and Internal Revenue Service (IRS) announced today. The trial began on Feb. 22, 2011.

According to the indictment and evidence introduced during trial, Thurman owned and operated Sharon’s Tax Service in Elmore. Between January and April 2008, Thurman filed 14 fraudulent tax returns using stolen identities. Thurman directed the tax refunds for those returns to be deposited into her bank accounts. At trial, the 14 victims of identity theft testified that they did not know Thurman, they did not authorize her to file tax returns on their behalf, the tax returns filed by Thurman were fictitious and they did not receive any of the tax refunds from those false returns.

U.S. District Judge W. Harold Albritton III, has not yet scheduled sentencing. Thurman faces a minimum of two years in prison, a maximum of 94 years in prison and a maximum fine of $4 million.

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U.S. has Sued a Chicago Tax Return Preparer Rita Augustus Seeking to Bar Her from Preparing Federal Tax Returns for Others

Source- http://www.justice.gov/tax/txdv11239.htm

WASHINGTON - The United States has sued a Chicago tax return preparer seeking to bar her from preparing any more federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Rita Augustus and her businesses, Windy City Insurance Agency Inc. and Windy City Tax Service, claim bogus tax deductions and credits on customer tax returns.

According to the government complaint, Augustus has included fabricated charitable donations, employee business expenses and other deductions on tax returns that she has prepared since 2006. For tax years 2005 through 2009, Augustus allegedly prepared more than 4,000 federal income tax returns for customers with an unusually high refund rate. The Internal Revenue Service estimates that her return preparation for those years could have resulted in as much as $20 million or more in lost tax revenue.

The government’s complaint alleges that Augustus prepared 2006 and 2007 tax returns for one customer, a supervisor at a steel mill, claiming that the customer had business losses related to a non-existent barber shop. Augustus allegedly used the address of her businesses as the location for the fake barber shop.

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Ruben Reyes Pleads Guilty to Tax Fraud

Source- http://www.justice.gov/tax/txdv11240.htm

WASHINGTON - Ruben Reyes, a South Florida resident, pleaded guilty today to one count of filing a false tax return, the Justice Department and the Internal Revenue Service (IRS) announced.

According to court documents, Reyes acted as a “recruiter” or “promoter” for two shell companies, which were used by construction businesses to avoid employment taxes and worker’s compensation insurance requirements. Construction companies wrote checks to Reyes’s shell companies, pretending that the shell companies were legitimate subcontractors. In reality, the shell companies performed no work for the construction companies.

Reyes arranged for businesses to use his shell companies and for the checks written to those companies to be cashed at local check-cashing stores. He would then give the cash to the construction companies, which would in turn pay their workers in cash. By doing so, the construction companies were able to avoid reporting their workers to the IRS or insurance companies, evading taxes and higher insurance premiums.

Reyes received a cut of each check written to one of his shell companies. Between 2005 and 2006, more than $15 million in checks were funneled through the shell companies. Reyes derived substantial income from his share of this money, which he did not report on his tax returns.

The court scheduled Reyes’s sentencing for May 4, 2011. He faces a maximum of three years in prison.

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Four Swiss Bankers Charged WithHelping U.S. Taxpayer use Secret Accounts at Swiss Banks to Evade U.S. Taxes

Source- http://www.justice.gov/tax/txdv11225.htm

WASHINGTON - Marco Parenti Adami, Emanuel Agustino, Michele Bergantino and Roger Schaerer, bankers at an international bank incorporated and with its headquarters in Zurich, Switzerland, with offices worldwide, including New York City and Miami, were indicted by a federal grand jury in the Eastern District of Virginia and charged with conspiring with other Swiss bankers to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today.

Neil H. McBride, U.S. Attorney for the Eastern District of Virginia; John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division; and Douglas Shulman, Commissioner of the IRS, made the announcement.

According to the indictment, the international bank’s managers and bankers engaged in illegal cross-border banking that was designed to assist U.S. customers evade their income taxes by opening and maintaining secret bank accounts at the bank and other Swiss banks. As of the fall of 2008, the international bank maintained thousands of secret accounts for customers in the United States with as much as $3 billion in total assets under management in those accounts. The conspiracy dates back to 1953 and involved two generations of U.S. tax evaders including U.S. customers who inherited secret accounts at the international bank.

The indictment asserts that Marco Parenti Adami, an Italian national, was a Geneva, Switzerland-based member of senior management at the bank where he catered to high net worth individuals in North America and managed other bankers with similar clientele. It is also alleged that Roger Schaerer, a Swiss national, worked for the bank in New York City where he assisted U.S. taxpayers with their secret accounts. The indictment also alleges that Emanuel Agustino and Michele Bergantino were bankers for the international bank who traveled to the United States to assist U.S. taxpayers in evading their U.S. taxes through the use of secret bank accounts in Switzerland. It is further alleged in the indictment that Emanuel Agustino left the international bank and continued the tax fraud scheme at two other private Swiss banks.

According to the indictment, the defendants and their co-conspirators solicited U.S. customers to open secret accounts because Swiss bank secrecy would permit them to conceal from the IRS their ownership of accounts at the bank and other Swiss banks. It is further alleged that they provided unlicensed and unregistered banking services and investment advice to customers in the United States in person while on travel to here, including at the international bank’s representative office in New York City and by mailings, e-mail and telephone calls to and from the United States.

The indictment further alleges that the defendants and their co-conspirators caused U.S. customers to travel outside the United States, to destinations including Switzerland and the Bahamas, to conduct banking related to their secret accounts; opened secret accounts in the names of nominee tax haven entities for U.S. customers; accepted IRS forms that falsely stated under penalties of perjury that the owners of the secret accounts were not subject to U.S. taxation; advised U.S. customers to structure withdrawals from their secret accounts in amounts less than $10,000 in an attempt to conceal the secret account and the transactions from American authorities; and advised U.S. customers to utilize offshore credit, and debit cards linked to their secret accounts and provided the customers with such cards, including cards issued by American Express, Visa and Maestro.

According to the indictment, after the bank decided to close the secret accounts maintained by U.S. customers, the defendants encouraged and assisted the customers to transfer their secret accounts to other banks in Switzerland and Hong Kong as a means of continuing to hide their assets from the IRS and discouraged the customers from disclosing their secret accounts to the IRS through the Voluntary Disclosure Program.

A criminal indictment is only an accusation and a defendant is presumed innocent until proven guilty. If convicted, the defendants each face a maximum of five years in prison and a maximum fine of $250,000.

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Giuseppe Cracchiolo a Romeo Home Builder Gets Jail Time in Mortgage Fraud Scheme

Source- http://detroit.fbi.gov/dojpressrel/pressrel11/de022211.htm

Giuseppe Cracchiolo, 60, of Romeo, Michigan, was sentenced for his role in a mortgage fraud scheme to six months’ imprisonment, followed by three years’ supervised release, United States Attorney Barbara L. McQuade announced today.

McQuade was joined in the announcement by Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation Division; Andrew Arena, Special Agent in Charge, Federal Bureau of Investigation, Detroit; Robert L. Davila, Special Agent in Charge U.S. Treasury Inspector General for Tax Administration; and Dean Tirro, Acting Special Agent in Charge United States Secret Service, Detroit.

United States District Judge George Caram Steeh also ordered Cracchiolo to serve an additional six months' home confinement and pay restitution of $1,654,500 to numerous financial institutions. In September 2010, Cracchiolo pleaded guilty to conspiracy to commit wire fraud.

According to court records, from 2002 through 2005, Atiim Collins, 38, of Detroit, Michigan, owner of Edgewood Property Management, in Shelby Township, Michigan, recruited and paid individuals to act as straw buyers in fraudulent mortgage loan transactions. The scheme to defraud involved homes built by Cracchiolo, through his company, Mark Christian, Inc (MCI), in Romeo, Michigan. The straw buyers generally had good credit ratings, but not enough income, and lacked the qualifications necessary to purchase the properties. Ted Carter, 59, of Detroit, Michigan, participated in the conspiracy by creating false documents, including fictitious W-2 forms and pay stubs. These false documents were used by the straw buyers to support the fraudulently inflated asset and income information submitted on their mortgage loan applications. After the loans were approved by the lending companies, Cracchiolo used MCI to receive and disburse the illegally gained proceeds. This scheme to defraud resulted in the approval and disbursement of over $4.1 million in fraudulent mortgage loans.

Cracchiolo admitted that, during the conspiracy, he arranged to have the illegally obtained loan proceeds transferred back to borrowers and others without the knowledge and approval of the lending companies. All of the properties involved in the fraud went into foreclosure resulting in approximately $2.5 million in losses to the lenders.

McQuade said, "We are all victims in a case like this because fraudulent loans lead to foreclosures and vacant homes, which lower property values and become havens for criminal activity."

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John B. Maia Charged with Tax Fraud, Making False Statement to Federal Law Enforcement

Source- http://newhaven.fbi.gov/dojpressrel/pressrel11/nh021811.htm

David B. Fein, United States Attorney for the District of Connecticut, today announced that a federal grand jury sitting in New Haven has returned an indictment charging JOHN B. MAIA, 71, of Waterbury, with four counts of making and subscribing a false federal tax return, and one count of making a false statement to federal law enforcement agents.

The indictment was returned on February 16 and was unsealed today following MAIA's arrest and initial appearance before United States Magistrate Judge Thomas P. Smith in Hartford.

The indictment alleges that MAIA overstated deductions for charitable contributions and listed fictitious business expenses on his federal tax returns for the calendar years 2005 through 2008. The indictment further alleges that, on April 14, 2010, MAIA submitted to a voluntary interview with special agents of the Internal Revenue Service - Criminal Investigation. During the interview, MAIA falsely stated that the charitable contributions and business expenses were legitimate and that he had provided supporting documentation for the charitable contributions and business expenses to his tax preparer.

It is alleged that MAIA failed to pay a total of $40,806 in federal taxes from 2005 to 2008.

If convicted, MAIA faces a maximum term of imprisonment of three years on each count of making and subscribing a false return, and a maximum term of imprisonment of five years on the count of making a false statement.

MAIA has been released on a bond in the amount of $25,000.

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Federal Court Bars Milagros Espinal from Preparing Tax Returns for Others

Souce- http://www.justice.gov/opa/pr/2011/February/11-tax-210.html

WASHINGTON – A Florida woman has been permanently barred from preparing federal income tax returns for others, the Department of Justice announced today. The injunction order, to which Milagros Espinal consented, requires her to provide a copy of the order to her customers, publish a copy of the order in The Miami Herald and El Nuevo Herald, and turn over to the government information identifying her customers.

According to the complaint, since at least 2004, Espinal, of Hialeah, Fla., has routinely prepared tax returns containing fabricated or overstated deductions and improper or false claims for tax credits, such as the earned-income tax credit and the child tax credit. The government estimates that her return preparation resulted in an understatement of her customers’ federal income tax liabilities of $10 million or more between 2004 and 2007. She allegedly prepared at least 2,000 returns during that period.

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Edward Gurary Charged with Failing to Report Foreign Bank Account at UBS in Switzerland

Source- http://www.justice.gov/opa/pr/2011/February/11-tax-211.html

WASHINGTON - An Ohio man residing in Switzerland was charged by information in the Northern District of Ohio for filing false personal income tax returns for the years 2004 through 2008, the Department of Justice announced today. The announcement was made by John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division , Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio , and Jose A. Gonzalez, Special Agent-in-Charge from the Internal Revenue Service (IRS) Criminal Investigation in Cincinnati.

According to court records, Edward Gurary, 45, lived in Orange Village, Ohio during the prosecution years. From approximately 2002 through 2008, Gurary owned and controlled a financial account at UBS AG (UBS) which was in the name of a Bahamian entity called Demko, Ltd., and which contained balances ranging from $490,000 to $947,000. Gurary controlled transactions in the Demko account by sending faxes using a code name “Vanda” to UBS from an OfficeMax in the Cleveland area, rather than his home or business. UBS would, in turn, send his requests for authorizations to officers of Demko in the Bahamas in order to make it appear that Demko owned and controlled the account. During the prosecution years, interest was paid by UBS into the Demko account in amounts ranging from $3,400 to more than $21,000.

The information charged Gurary with filing false income tax returns for 2004 through 2008 that failed to report interest income earned on his Demko bank account at UBS. In addition, for three of the years (2004, 2006 and 2007) the information charged Gurary with falsely stating on his Schedule B attached to his income tax return that he did not have signature or other authority over a foreign financial account. Finally, the information described that between 2004 and 2008, Gurary did not file any FBARs or otherwise disclose his Demko account at UBS to the IRS. An FBAR form is a form separate from an income tax return that the law requires taxpayers to file with the IRS every June to disclose additional information about foreign financial accounts over which a taxpayer has signature or other control over, and which had an aggregate value exceeding $10,000 at any time during the year.

An information merely alleges that crimes have been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Gurary faces a maximum of 3 years in prison and a fine of $250,000.

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Betty J. Foster Barred from Preparing Federal Tax Returns for Others

Source- http://www.justice.gov/tax/txdv11203.htm

WASHINGTON - An Arkansas woman who operates Foster’s Income Tax Service in Knobel, Ark., has been permanently barred from preparing federal tax returns for others, the Justice Department announced today. The injunction order against Betty J. Foster, to which she consented, was entered by Judge J. Leon Holmes of the U.S. District Court for the Eastern District of Arkansas.

The government’s complaint alleges that Foster, through her company, prepares federal income tax returns for her customers that claim losses for non-existent businesses, as well as inflated or fabricated deductions, in order to understate tax liabilities unlawfully. According to the complaint, Foster has been preparing tax returns for a fee for approximately 25 years, and she consistently prepares approximately 450 tax returns per year. The government estimates that Foster’s unlawful return preparation activity has cost the United States $5 million or more for the 2007 through 2009 tax years.

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Jon Robertson former president of Infinia Healthcare LLC, Charged with Tax Crimes

Source- http://www.justice.gov/tax/txdv11204.htm

WASHINGTON - The former president of Infinia Healthcare LLC, a company that operated long-term healthcare facilities in several states, was indicted by a federal grand jury in the U.S. District Court in Utah for three counts of tax evasion, the Department of Justice and the Internal Revenue Service (IRS) announced today.

According to the indictment, Jon Robertson, of Bountiful, Utah, attempted to evade taxes he owed in 2003 through 2005 by filing false tax returns, causing money to be transferred to bank accounts he controlled, and by directing others to make false record entries.

An indictment merely allege that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Jon Robertson faces a maximum of 15 years in prison and a fine of $250,000.

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Former Vice President of Charlie Brown’s Restaurants Michael Mulligan, Sentenced to Home Confinement and Probation for Fraud Conspiracy and Tax Evasion

Source- http://newark.fbi.gov/dojpressrel/pressrel11/nk021511.htm

TRENTON, NJ—The former vice president of the Charlie Brown’s chain of restaurants was sentenced today to eight months of home confinement and three years of probation for conspiring to defraud the company by accepting more than $1 million in kickbacks in exchange for awarding contracts to vendors, U.S. Attorney Paul J. Fishman announced.

Michael Mulligan, 51, of West Milford, N.J., previously pleaded guilty before U.S. District Judge Mary L. Cooper to an iInformation charging him with one count each of conspiracy to commit mail fraud and tax evasion. Judge Cooper also imposed the sentence today in Trenton federal court.

According to documents filed in this and related cases and statements made in court:

From at least as early as 1999 through 2008, Mulligan was the vice president of Charlie Brown’s Acquisition Corporation. Mulligan and a co-conspirator, Charlie Brown’s president and CEO Russel D’Anton, used their positions as executives at Charlie Brown’s to direct business to vendors who paid them kickbacks in the form of cash, checks, and in-kind payments.

Mulligan admitted that he accepted kickbacks from a variety of vendors, including a construction company and vendors who provided Charlie Brown’s with refrigeration services and bakery products. The kickbacks given to Mulligan and D’Anton included expensive home appliances, checks, and cash.

Mulligan also took steps to conceal the payments, purposely failing to report the value of the kickbacks as income on his personal federal tax returns.

In addition to the term of home confinement and probation, Mulligan will be required to pay restitution in an amount to be determined.

D’Anton pleaded guilty to one count each of conspiracy to commit mail fraud and tax evasion and was recently sentenced to two years in prison. David Slabon, 44, of Sea Girt, N.J., admitted to paying kickbacks while serving as the president and CEO of Designline Construction Services. Slabon pleaded guilty to a criminal information charging him with one count each of conspiracy to commit commercial bribery and conspiracy to commit wire fraud, and awaits sentencing.

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Douglas Todd Feller Sentenced for $4 Million Fraud Scheme

Source- http://kansascity.fbi.gov/dojpressrel/pressrel11/kc021111a.htm

SPRINGFIELD, MO—Beth Phillips, United States Attorney for the Western District of Missouri announced today that a Springfield, Missouri man was sentenced for his role in a nearly $4 million fraud scheme.

Douglas Todd Feller, 38, of Springfield, was sentenced on Monday, Feb. 7, 2011, by U.S. District Judge Richard E. Dorr to 28 months in federal prison without parole. The court also ordered Feller to pay $738,941 in restitution to the Internal Revenue Service. Feller will also be required to pay an as-yet-undetermined amount of restitution not to exceed $3,882,987 to Yakima Products, Inc.

On Aug. 4, 2010, Feller pleaded guilty to conspiracy to commit mail fraud, conspiracy to commit money laundering, and two counts of income tax evasion.

The scheme involved submitting fictitious invoices to defraud Yakima Products, Inc., of approximately $3,992,935. Yakima operates a luggage/bicycle rack manufacturing and distribution facility in Beaverton, Ore. During the time of the conspiracies, Yakima also operated a water craft (canoes, kayaks, etc.) manufacturing and distribution facility under the name Watermark Paddlesports, Inc. Watermark changed its name to Yakima in May 2005.

Feller was a transportation consultant and later the director of distribution and logistics for Yakima. He was a contract employee who worked out of his Springfield residence. Feller was responsible for approving invoices submitted by the carriers.

Feller admitted that he created Cooper Enterprises, a fictitious company that Feller used to bill Yakima for freight that was purportedly hauled by Cooper Enterprises, but which in fact, was never hauled. Feller received approximately $3,759,370 from Yakima, which he deposited in Cooper Enterprises bank accounts. Feller was assisted by Christopher Levato, of Simpsonville, S.C. Levato represented himself as an agent or employee of Cooper Enterprises and would field questions from Yakima employees regarding the Cooper Enterprises invoices. Levato received a portion of the scheme proceeds. Levato also pleaded guilty and was sentenced for his role in December 2010.

Feller also received more than $110,000 from fictitious invoices that he approved, and which were paid by Yakima, for freight that was purportedly hauled by Southern Logistics, but in fact was never hauled.

In addition, Feller submitted false inflated invoices under the name of United Transport, to Yakima for payment. Once payment was sent to United Transport, the funds were used to pay legitimate freight charges, and the inflated additional amount was split between Feller and another co-conspirator. Feller's role in all schemes was to approve the invoices for payment and submit them to Yakima. Yakima's accounting department relied on Feller's approval of the invoices as the basis for payment.

During the 2004 and 2005 calendar years, Feller had taxable income from the false invoicing schemes in the amount of $1,043,729 and $765,800. Based on the taxable income figures, Feller had an income tax due of $336,824 in 2004 and $250,803 in 2005. Feller attempted to evade and defeat the income tax due by failing to file a 2004 or 2005 income tax return, by failing to pay the IRS the income tax owed, and by concealing and attempting to conceal his true and correct income.

Feller agreed that the total amount of unpaid taxes due and owing the Internal Revenue Service for tax years 2002, 2003, 2004, and 2005, is $738,941.

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Joseph Romanello Admits Structuring Cash Withdrawals to Evade Paying Taxes

Source- http://newhaven.fbi.gov/dojpressrel/pressrel11/nh021011.htm

David B. Fein, United States Attorney for the District of Connecticut, announced that JOSEPH ROMANELLO, 45, of Stamford, pleaded guilty today before United States District Judge Christopher F. Droney in Hartford to one count of illegally structuring cash withdrawals to evade reporting income on his federal tax returns for the years 2003 and 2004.

Federal law requires all financial institutions to file a currency transaction report (CTR) for currency transactions that exceed $10,000. To evade the filing of a CTR, individuals will often structure their currency transactions so that no single transaction exceeds $10,000. Structuring involves the repeated depositing or withdrawal of amounts of cash less than the $10,000 limit, or the splitting of a cash transaction that exceeds $10,000 into smaller cash transactions in an effort to avoid the reporting requirements. Even if the deposited funds are derived from a legitimate means, financial transactions conducted in this manner are still in violation of federal criminal law.

According to court documents and statements made in court, ROMANELLO earned income by providing masonry and landscaping services to Connecticut residents. Between approximately January 2003 and March 2005, ROMANELLO structured cash transactions of approximately $2 million by routinely withdrawing cash from various bank accounts he maintained in amounts at or slightly below $10,000 to prevent the financial institutions from filing CTRs. For the years 2003 and 2004, ROMANELLO did not file any federal income tax returns, and he failed to pay almost $1 million in income taxes during those two years.

Judge Droney has scheduled sentencing for April 29, 2011, at which time ROMANELLO faces a maximum term of imprisonment of 10 years and a fine of up to $500,000.

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Denny Hecker Sentenced for Bankruptcy Fraud and Conspiracy to Commit Wire Fraud

Source- http://minneapolis.fbi.gov/dojpressrel/pressrel11/mp021111.htm

Earlier today in federal court in Minneapolis, local auto-mogul Dennis Earl Hecker, age 58, of Medina, was sentenced to 120 months in prison for crimes committed in connection with his scheme to defraud financial lenders and others out of millions of dollars. United States District Court Judge Joan N. Ericksen specifically sentenced Hecker on one count of conspiracy to commit wire fraud and one count of bankruptcy fraud. He was originally indicted on February 10, 2010, and pleaded guilty on September 7, 2010. In addition, Hecker was ordered to pay more than $31 million in restitution. He will remain in custody.

In imposing the sentence, Judge Ericksen said, "The actions you've taken are not consistent with someone who can be trusted, and you have not been as truthful as you could have been in the court system. Therefore, you do not get a break. You're going to get the full 10 years, which is appropriate and necessary. Behaving like a scoundrel is not tolerated in the court system."

U.S. Attorney B. Todd Jones added, "We are very pleased with today's sentence. It brings closure to a difficult investigation and prosecution. Although the victims in this case were primarily corporate entities and not individuals, and the losses resulting from the scheme were far less than what we have seen in other recent fraud cases, the severity of the sentence should serve notice that we will aggressively pursue those who lie, cheat, and steal and then seek refuge in the bankruptcy court."

Following sentencing, Col. Mark Dunaski of the Minnesota State Patrol, which initiated the investigation into this matter, said, "The sentencing of Mr. Hecker marks the end of a long and complicated investigation involving several law enforcement agencies. Complaints from Minnesotans are what prompted the investigation, and we hope there is a sense of justice for the victims impacted by Mr. Hecker and his criminal associates." The initial complaints were concerning tax, title, and licensing fees that Heckers' dealerships failed to pay when people purchased vehicles, although those complaints quickly led to the fraud investigation that resulted in federal charges being filed against Hecker and several of his business associates.

For many years, Hecker owned and operated numerous Minnesota auto dealerships and businesses that provided fleet vehicles to car rental companies. Those businesses operated under different corporate names but, collectively, were known as the "Hecker organization." In his plea agreement, Hecker admitted that from November of 2006 through June of 2009, he conspired with others to defraud Chrysler Financial Services and other commercial lenders from which he and the Hecker organization borrowed money for business operations.

In particular, in the fall of 2007, he conspired with Steve Leach and others to present fraudulent documents to Chrysler Financial in an effort to obtain $80 million in financing for the purchase of 5,000 vehicles from Hyundai Motor America. Among the documents submitted to Chrysler Financial was a letter from Hyundai Motor America that had been altered to benefit Hecker and the Hecker organization. The altered letter was transmitted via interstate wire transfer to Hecker himself, who then provided it to Chrysler Financial, knowing it was fraudulent.

Documents provided to Chrysler Financial also failed to specify the true nature and value of the collateral acquired by Hecker and the Hecker organization to secure the financing requested. Specifically, Hecker omitted details of the incentive payments he and the Hecker organization received from Hyundai Motor America, even though those payments totaled more than approximately $17.2 million and were material to the lender, Chrysler Financial. As a result of those false statements and misrepresentations, Chrysler Financial loaned Hecker and the Hecker organization more than $80 million and ultimately lost more than $10 million.

Ralph S. Boelter, Special Agent in Charge of the Federal Bureau of Investigation's Minneapolis Field Office, which also worked on the investigation of this case, said, "The FBI works diligently to investigate individuals and businesses that are not truthful with the representations they make to financial institutions. Fraudulent representations are taken seriously by the FBI because the damage that type of criminal activity causes. As in this case, it negatively impacts those individuals and businesses that legitimately seek financing."

According to Hecker's plea agreement, he also misled Chrysler Financial into financing Suzuki vehicles. Again, Hecker failed to inform the lender that the Hecker organization had received significant incentives from American Suzuki Motor Corporation. This particular fraudulent conduct was accomplished by removing material portions of Suzuki purchase contracts before providing them to Chrysler Financial.

When Chrysler Financial learned about the missing contract addendums, it insisted on receiving the incentive money. Hecker agreed to turn it over but, instead, continued the fraud scheme by providing the altered Suzuki contract to other lenders, including U.S. Bank, in an effort to obtain financing from them. As a result of those actions, the other lenders suffered a collective financial loss of more than $10 million.

Speaking of the efforts of the IRS agents on worked on this case, Kelly R. Jackson, Special Agent in Charge of the IRS Criminal Investigation Division, St. Paul Field Office, said, "High-ranking corporate officials hold positions of trust not only in their companies but also in the eyes of the public. That trust is broken when such officials abuse their power and commit crimes. With both law enforcement and financial investigation expertise, our agents are uniquely qualified to work with state and federal law enforcement agencies on these types of cases by 'following the money.' And we are very pleased with the successful resolution of this investigation due to the cooperative efforts of our law enforcement partners at the FBI and the Minnesota State Patrol."

The purpose of this fraud scheme, at least in part, was to fund Hecker's extravagant lifestyle. In an effort to maintain that fraud, Hecker carried out a cover-up and engaged in communications meant to lull creditors. Moreover, in an effort to avoid paying his debts, Hecker filed personal bankruptcy in June of 2009, seeking to discharge, among other amounts owed, the $10 million debt to Chrysler Financial.

After filing bankruptcy, however, Hecker admittedly concealed assets from the bankruptcy trustee. For example, he transferred $33,057 into someone else's bank account, over which he exercised control. He also transferred approximately $80,000 to that same individual, arranging for that individual to deposit the money, with instructions to return it to him later.

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Federal Court Permanently Bars North Carolina Woman Jody S. Ball, from Preparing Federal Tax Returns for Others

Source- http://www.justice.gov/opa/pr/2011/February/11-tax-177.html

WASHINGTON – A federal court has permanently barred Jody S. Ball of Bryson City, N.C., from preparing federal income tax returns for others, the Justice Department announced today. The injunction order, to which Ball consented, was entered by Judge Martin Reidinger of the U.S. District Court for the Western District of North Carolina. The order requires Ball to provide the government with a list of all persons for whom she prepared federal tax returns since January 2007 and to send each person a copy of the court’s order.

According to the government’s complaint, Ball, doing business as The Tax Lady Inc. and Jody Ball Accounting, included false claims for charitable donation deductions, business expense deductions and earned income tax credits on tax returns that she and her businesses prepared. Even after the Internal Revenue Service (IRS) imposed penalties on Ball in 2004, she allegedly prepared more than 1,600 federal income tax returns during and after 2006. According to the complaint, of those returns that the IRS audited, approximately 80 percent understated customers’ tax liabilities.

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Thierno M. Diallo Sentenced to 24 Months in Prison for Preparing False Returns

Source- http://www.justice.gov/opa/pr/2011/February/11-tax-172.html

WASHINGTON – Thierno M. Diallo of Cincinnati was sentenced to 24 months in prison by U.S District Court Judge Sandra Beckwith in Cincinnati for aiding and assisting in the preparation of false tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today.

On Aug. 6, 2010, a jury found Diallo guilty of seven counts of aiding and assisting the preparation of false tax returns. According to documents and testimony presented during the trial, for the 2005-2007 tax years, Diallo prepared materially false U.S. Individual Income Tax Returns (Forms 1040) for customers of his return preparation business, Madina Consulting Services. These returns caused the IRS to issue refunds that his customers were not entitled to receive. Witnesses testified that Diallo, a U.S. citizen originally from Guinea, used his knowledge of west African culture and language to recruit customers from other west African nations who live in the Cincinnati area. These witnesses testified that Diallo included false items on their returns without their knowledge.

At sentencing, Judge Beckwith found that the intended tax loss to the government associated with this scheme was $95,370.

In addition to the prison term, Judge Beckwith ordered Diallo to serve 1-year of supervised release. As a condition of supervised release, Judge Beckwith barred Diallo from engaging in the business of tax return preparation.

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Justice Department Announces Indictment and Six Lawsuits Targeting False Claims for First-time Homebuyer and Earned-income Tax Credits

Source- http://www.justice.gov/opa/pr/2011/February/11-tax-165.html

WASHINGTON – The United States has filed six lawsuits in five states to stop tax return preparers from fraudulently claiming the first-time homebuyer tax credit and the earned-income tax credit, the Justice Department announced today. The filings of those civil injunction complaints coincided with the indictment of a Philadelphia man on criminal charges of fraudulently claiming the first-time homebuyer credit. All of these actions are part of the Justice Department’s continuing efforts to halt tax scams involving false claims for tax credits and to prosecute those who fraudulently file tax returns containing those claims.

"We are working hard to ensure that those who try to cheat our country by filing phony claims for tax credits do not get away with it," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "Honest taxpayers will be pleased to see the Internal Revenue Service and the Justice Department continuing to investigate, prevent, and prosecute these types of schemes during the 2011 tax filing season. False claim cases are certainly a nationwide priority for the Tax Division. This kind of tax fraud is an insult to hard-working Americans who legitimately qualify for these tax credits."

First-Time Homebuyer Tax Credit Cases

According to the indictment, Jonathan Brownlee of Philadelphia was charged with 16 counts of filing false federal income tax returns that contained fraudulent claims for the first-time-homebuyer credit. He allegedly obtained personal information about several individuals through false pretenses and used that information to make false claims for the credit to the Internal Revenue Service (IRS), along with requests that refunds be deposited into bank accounts that he controlled or could access. Brownlee allegedly knew the individuals whose names he used were not entitled to the credit because they had neither purchased a home nor signed a contract to do so. If convicted, he faces a maximum prison sentence of 80 years and a maximum fine of $4 million.

The indictment was announced by Zane David Memeger, U.S. Attorney for the Eastern District of Pennsylvania; Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division; and Special Agent-in-Charge Eric Hylton with the IRS Criminal Investigation Division Field Office in Philadelphia.

In addition, three of the announced injunction complaints involved the first-time homebuyer credit:

A complaint filed in federal court in McAllen, Texas, alleges that tax return preparer Jose Cabrera and his business, JEC Business Consulting of Pharr, Texas, prepare federal income tax returns on which they falsely claim the first-time-homebuyer credit for their customers. The United States seeks a civil injunction order to stop them from improperly claiming the credit. The suit alleges that Cabrera makes no attempt to determine if his customers qualify for the credit and that he repeatedly claimed the credit on his customers’ tax returns even though he knew the customers had not purchased new homes. Cabrera allegedly claimed at least $985,000 in credits in 2009.

The government has asked a federal court in Philadelphia to stop Friday James, a former high school math teacher from Lansdowne, Pa., from preparing any federal tax returns for others. The complaint alleges that James and his business, Frika Tax Services, falsely claim the first-time homebuyer credit and claim false business expense deductions for his customers, many of whom are West African immigrants with little or no knowledge of the credit. The government alleges that James repeatedly claimed the credit on his customers’ returns when he knew they had not purchased homes within the applicable time period and that he fabricated the date of purchase on forms he submitted to the IRS. James allegedly claimed at least $1.2 million in credits in 2009.

The Justice Department sued tax-return preparer Delois Warren of Greensboro, Ala., and her business, Branjalo Tax Service, to stop her from preparing federal tax returns for others. Warren allegedly claimed the first-time homebuyer credit on her customers’ returns even after they told her that they did not purchase homes in the applicable tax years. The suit also alleges that Warren prepared returns containing false information in order to fabricate higher tax refunds through overstated earned-income tax credits.

The first-time homebuyer tax credit was created by the Housing and Economic Recovery Act of 2008, which included a refundable tax credit for first-time homebuyers equal to 10 percent of the purchase price, up to $7,500, for home purchases completed in 2008. The taxpayer was to repay the credit interest free over 15 years. Congress extended the credit in the American Recovery and Reinvestment Act of 2009, increased the maximum allowable amount to $8,000, and eliminated repayment of the credit if the taxpayer retained the residence for more than 36 months. The credit expired in 2010, so eligible taxpayers may still claim it on their 2010 federal income tax returns.

To protect the U.S. Treasury from fraudulent claims for this credit, the Tax Division, the U.S. Attorney’s offices and the IRS have vigorously prosecuted those who have abused the credit.

Examples of these criminal prosecutions in 2010 include:

In December 2010, Kenneth Harris and Lacrecia Ward of Memphis, Tenn., pleaded guilty to conspiring to file false claims against the United States by filing false tax returns claiming the first-time homebuyer credit. Each of them faces a maximum penalty of 10 years in prison and a fine of $250,000 upon sentencing.

In December 2010, Latricia Ann Williams, Gezelle Helena Amaechi and Shelton DeWayne Tanner were indicted by a federal grand jury in Arizona for conspiracy, wire fraud and aggravated identity theft. According to the indictment, the defendants filed 180 income tax returns falsely claiming more than $1 million in tax refunds based on, among other things, false statements of eligibility for tax credits such as the first-time homebuyer credit.

In November 2010, Jeffrey Leon Ceaser of Montgomery, Ala., pleaded guilty to conspiring to defraud the United States and identity theft for his role in the filing of 158 federal tax returns that falsely claimed the first-time-homebuyer credit and fuel tax credits. Ceaser faces a maximum of 25 years in prison when sentenced. In December 2010, Ora Mae Adamson of Montgomery pleaded guilty to the same charges before the same court.

In November 2010, Mary Singleton pleaded guilty in a South Carolina federal court to one count of assisting an individual in filing a fraudulent claim for the first-time homebuyer credit. She faces a maximum prison sentence of three years upon sentencing.

In November 2010, Georgia Ann Cloud of Tallahassee, Fla., was indicted on 17 counts of assisting individuals in filing fraudulent tax returns with false claims for the first-time homebuyer credit and one count of filing such a tax return herself.

In October 2010, Roderick Smith was sentenced by a federal court in Peoria, Ill., to 24 months in prison after having pleaded guilty to wire fraud and filing a false tax refund claim with the IRS. The indictment alleged that Smith falsely claimed on income tax returns that his clients were entitled to the first-time homebuyer credit. He was also ordered to pay $73,793 in restitution to the IRS.

In October 2010, Gregory Carter of Columbus, Ga., was indicted on 25 counts of assisting in the preparation of fraudulent tax returns that included, among other things, false claims for first-time-homebuyer credits.

In August 2010, Lois Torres of Uvalde, Texas, was indicted on 15 counts of assisting individuals in filing false federal income tax returns falsely claiming the first-time homebuyer credit.

In July 2010, Byron Meeks of Independence, Mo., was indicted on 15 counts of filing false claims against the United States for, among other things, fraudulent first-time homebuyer credits. In December 2010, Meeks agreed to plead guilty to one of those counts. He faces a maximum prison sentence of five years upon sentencing.

In April 2010, Kashawn Monique Savery of Los Angeles pleaded guilty to 10 counts of filing false claims against the United States. She admitted filing more than 200 false tax returns claiming more than $1.3 million in refunds based on fraudulently claimed first-time homebuyer tax credits and earned-income tax credits.

In addition, over the past year, the Justice Department has obtained civil injunctions against tax-return preparers on the basis of false claims for first-time homebuyer credits, including: Dianelys Armengol Guevara of Pembroke Pines, Fla.; Alberto Camejo of Hialeah, Fla.; and DavidSantiago , Paula Olivette Patrice, and Henry Ernesto Medina Jr. of Miami.

Earned-Income Tax Credit Cases

In addition to the lawsuit against Delois Warren discussed above, the Justice Department filed three other civil complaints seeking to stop tax-return preparers from filing false claims for the earned-income tax credit:

The government asked a Texas federal court to bar two Houston-area tax preparers, Christopher Helton and Marcia Johnson, from preparing any more federal tax returns. The pair, who do business as M.C. Tax Service, M.C. Tax Interprise and M.J. Tax Service, allegedly claim false earned-income and fuel tax credits on their customers’ tax returns. The complaint alleges that the defendants routinely prepare tax returns that either claimed the earned-income credit for taxpayers who do not qualify for it or overstate the amount of the credit for eligible taxpayers.

Helton and Johnson allegedly prepared tax returns claiming more than $1.5 million in earned-income tax credits during tax years 2007 through 2009, and the complaint describes fraudulent tax refunds based on false earned-income credits as a "rampant problem" at M.C. Tax Service.
The Justice Department sued Carmen Gonzalez of Allentown, Pa., who does business as Carmen Tax Services in New Brunswick, N.J., to stop her from preparing tax returns for others.

According to the complaint, Gonzalez fails to comply with due diligence requirements imposed by federal law on tax return preparers who claim the earned-income tax credit, and she falsifies her customers’ information in order to maximize their credits. She has allegedly prepared at least 2,500 returns since 2007.

A complaint filed in federal court in Miami seeks to bar Milagros Espinal of Hialeah, Fla., from preparing tax returns for others. The government alleges that Espinal claims improper or false tax credits, including earned-income credits, as well as fabricated or overstated tax deductions. She allegedly prepared at least 2,000 returns for the 2004 through 2007 tax years.

Originally enacted by Congress in 1975, the earned-income tax credit benefits low-income working individuals and families. The amount of the credit depends on several facts, including the individual’s filing status, annual wages and number of dependents. It is a "refundable" credit because, if the amount of the credit exceeds the amount of tax owed, the difference may be claimed as a tax refund by eligible persons.

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