WASHINGTON – Mohammad Jafar Nikbakht, aka Freydoon Nikbakht, pleaded guilty to tax evasion before U.S. District Court Judge John A. Houston in San Diego, the Justice Department and Internal Revenue Service (IRS) announced today. According to the indictment and other documents filed with the court, Nikbakht ran a series of lucrative auto dealerships in the greater San Diego area. Between 1998 and 2007, Nikbakht significantly under-reported income earned from these businesses. The government claims that Nikbakht defrauded the U.S. Treasury of more than $400,000 in income tax revenue through the course of these years.
According to indictment and other documents filed with the court, Nikbakht pleaded guilty to tax evasion for the year 2007. Nikbakht admitted that during that year he earned income through auto dealership operations, including through a dealership called Southern California Car Exchange. Nikbakht further admitted that he willfully failed to file his personal tax return and pay his taxes, and that he engaged in various acts to conceal income from the IRS. For example, Nikbakht admitted that he ran an auto wholesale operation under another dealer’s license and that he instructed the other dealer to write his income payment checks to the order of a third-party or to “cash”.
The government contends that even at his plea hearing, Nikbakht only admitted to a fraction of his misconduct. Additional evidence concerning Nikbakht’s 2007 tax evasion and his alleged tax crimes for prior years as well as allegations that Nikbakht obstructed justice in the tax investigation, will be presented before Judge Houston at a preliminary sentencing hearing scheduled for April 12, 2011.
Nikbakht faces up to five years in prison. In addition, the government is seeking a fine of at least $250,000 and an order requiring Nikbakht to pay full restitution to the IRS as well as the costs of his prosecution.
Friday, April 29, 2011
Mohammad Jafar Nikbakht Pleads Guilty to Tax Evasion
Alchico Grant and Melinda Clayton Indicted of Charges Stemming From an Identity Rheft and Tax Fraud Scheme
WASHINGTON - Alchico Grant and Melinda Clayton were indicted by a federal grand jury in the Middle District of Alabama on a variety of charges stemming from an identity theft and tax fraud scheme, the Department of Justice, U.S. Attorney Leura G. Canary and the Internal Revenue Service (IRS) announced today. The 21-count indictment charges the two with filing false claims against the United States, wire fraud and aggravated identity theft.
Clayton had previously been arrested on a criminal complaint on April 8, 2011, following the execution of a search warrant at her house that same day. Grant had been indicted, along with several co-conspirators, in December 2010, for his involvement in an earlier conspiracy to obtain tax refunds using stolen identities. Grant was on pretrial release when indicted on the new charges. At a hearing on April 28, 2011, Grant’s pretrial release was revoked and he was ordered detained.
According to the new indictment, Clayton and Grant fraudulently obtained tax refunds using stolen identities. The two would illegally obtain identity information, file false tax returns claiming fraudulent refunds using the stolen identities and have the proceeds deposited into bank accounts and stored value card accounts they controlled. Grant would purchase stored value cards that were used to receive proceeds from some of the false returns.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Clayton and Grant both face a maximum of 189 years in prison and a mandatory minimum sentence of 2 years. If convicted, they will also face forfeiture of the proceeds of their crimes and mandatory restitution.
Thursday, April 28, 2011
Cynthia Peters Sentenced to Prision for Aiding in Preparation of False Tax Returns
WASHINGTON - Cynthia Peters was sentenced to 27 months in prison based on her plea of guilty to one count of wilfully aiding and assisting in the preparation and filing of a false income tax return, the Justice Department and Internal Revenue Service (IRS) announced today. The court also ordered Peters to serve a one-year term of supervised release following her prison term and to pay restitution to the IRS in the amount of $76,908. The case arises out of a March 31, 2010, indictment filed in the Middle District of Louisiana.
According to her plea agreement, Peters, who worked at Jasmine and Melissa’s Tax Service in Baton Rouge, prepared fraudulent tax returns for 23 clients that reported falsely inflated telephone excise tax refund (TETR) credits in the total amount of $92,932. The TETR credit was a one-time credit available to taxpayers for the 2006 year. The sentencing court found that the tax loss, including all relevant conduct, was approximately $501,376.
Wednesday, April 27, 2011
Thomas Robert Turne Pleads Guilty to Corruptly Endeavoring to Impede the Internal Revenue Service
WASHINGTON - Thomas Robert Turner, a resident of Prince George’s County, Md., pleaded guilty to corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws, the Justice Department and Internal Revenue Service (IRS) announced today. Sentencing is scheduled for Aug. 12, 2011.
According to the plea agreement and statement of facts, Turner worked as a bus driver for D & B Tours Inc., a tour bus company. He, along with at least two other people, devised a plan to file false corporate income tax returns for 2001, 2002 and 2003 for D & B Tours with the IRS in order to get money from the government to which they were not entitled. These corporate returns claimed false refunds of more than $177,000 based upon fraudulently inflated federal fuel tax credits. Turner received $70,000 as his share of the fraudulent refunds.
According to the court documents, Turner also admitted that he was aware that false individual tax returns for 2002 through 2005 were filed in his name. Although he never saw the tax returns, he was aware that, just as he had been in the case with the false D & B Tours corporate tax returns, his personal tax returns would report false information relating to fuel expenses to support false claims for tax refunds. Turner received two refund checks from the IRS -- one for more than $20,000 and a second for more than $19,000. He retained a portion of these refund checks. Turner also admitted that in January 2009 he made false statements to a criminal investigator of the IRS who had questions about the tax refunds related to the false D & B Tours corporate tax returns.
Tuesday, April 26, 2011
Richard Rosaire Routhier Pleads Guilty to Tax Fraud Conspiracy
WASHINGTON - Richard Rosaire Routhier of Lake Worth, Fla., pleaded guilty to a one-count information charging him with conspiring to defraud the Internal Revenue Service (IRS), the Justice Department and the IRS announced today. According to the information, Routhier and others conspired to defraud the United States and unlawfully enrich themselves by paying employees in cash and not withholding and paying over employment taxes to the U.S. Treasury.
According to court documents, Routhier owned and operated Drymension Inc., a custom drywall installation and framing contracting company in Lake Worth. From 2002 through 2008, the defendant caused Drymension checks to be issued to several shell corporations. These entities, while purporting to be legitimate subcontractors, existed only on paper and did not do any work for Drymension. The checks written to shell corporations totaled approximately $9,132,516. The checks were cashed at local check cashing stores that were aware of the scheme and Routhier used the cash to pay Drymension employees. Routhier neither withheld from the cash wages nor paid over to the IRS the employment and income taxes as required by law.
The court scheduled sentencing for June 2, 1011. The defendant faces a maximum of 5 years in prison and a fine of $250,000.
Monday, April 25, 2011
Eric Bernard Caldwell Pleads Guilty to Role in Tax Fraud Conspiracy
WASHINGTON - Eric Bernard Caldwell, a resident of Montgomery County, Ala., pleaded guilty to conspiring to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. The guilty plea took place before U.S. Magistrate Judge Charles S. Coody in the U.S. District Court in Montgomery, Ala.
According to the indictment and other court documents, Caldwell was part of a conspiracy to file false federal tax returns using stolen identities. Caldwell would provide identity information to co-conspirator Ora Mae Adamson, who would file the returns, in exchange for a portion of the illicit refunds generated by the false tax returns. In all, the conspiracy defrauded the United States of $621,738.
Adamson pleaded guilty to conspiracy and identity theft charges and was sentenced to 46 months in prison on March 10, 2011. Another co-conspirator, Jeffrey Leon Ceaser, also pleaded guilty to conspiracy and identity theft charges and was sentenced to 36 months in prison on March 2, 2011.
Sunday, April 24, 2011
Dennis Giroud and His Business, Refunds R Us, Allegedly Claimed More Than $20 Million in Fraudulent Tax Refunds
WASHINGTON - The United States has asked a federal court to bar Dennis Giroud of Victorville, Calif., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Giroud and his business, Refunds R Us, prepare fraudulent tax returns for their customers that claim large tax refunds based on a frivolous theory called “redemption” or “commercial redemption,” which has been rejected by numerous courts.
According to the government complaint, Giroud prepares tax returns that claim fraudulent refunds based on fabricated income tax withholding reported on false forms submitted with the returns. The complaint alleges that the Internal Revenue Service (IRS) catches most of the frivolous refund requests before refunds are issued, but that Giroud’s scheme has caused the IRS to issue at least $1.2 million in erroneous refunds to his customers. Giroud has allegedly sought more than $19 million in fraudulent refunds for more than 100 customers using returns based on the frivolous “redemption” theory and has also allegedly requested more than $1.3 million in bogus refunds for himself.
Saturday, April 23, 2011
Joseph A. Pingaro and his wife Christine Scola Pleads Guilty to Tax Evasion and Illegal Structuring Conspiracies
BOSTON—JOSEPH A. PINGARO, JR. and his wife, CHRISTINE SCOLA, both of Middleton, pleaded guilty today of conspiring to defraud the United States by filing false income tax returns and illegally structuring cash transactions to evade reporting requirements.
PINGARO, 55, and SCOLA, 52, each pleaded guilty to one count of tax conspiracy and one count of structuring conspiracy, both running from at least 2001 to 2006. U.S. District Judge Patti B. Saris scheduled sentencing for July 19, 2011. Each defendant faces a maximum penalty of five years in prison on each count, to be followed by three years of supervised release and a fine of $250,000 or twice the gross gain/loss, whichever is greater. Each defendant also faces restitution (including back taxes, penalties, and interest) on the tax conspiracy count, and criminal forfeiture under the structuring conspiracy count. PINGARO is the sole owner and operator of J&J Metals, a scrap metal yard in Roxbury.
Each of the defendants admitted that they transferred large amounts of money, totaling millions of dollars, from the J&J business bank account into their personal bank account. SCOLA then withdrew cash from the personal account in a series of withdrawals, each just under $10,000, over consecutive days. PINGARO and SCOLA then used substantial amounts of the cash to make large personal expenditures, both directly and indirectly. The indirect personal cash expenditures were accomplished by both using cash to purchase money orders and bank checks that were then used for personal expenditures and paying third parties to purchase money orders and bank checks which were then used for the defendants’ personal expenditures. PINGARO then falsely claimed on his income taxes that almost all of the cash withdrawn was used for legitimate deductible business expenses for J&J Metals.
PINGARO and SCOLA’s scheme was designed to conceal the actual profits of J&J Metals and evade federal income tax. SCOLA’s banking activity was designed to further this evasion by avoiding the requirement that financial institutions must file a Currency Transaction Report with the government for any cash transactions exceeding $10,000. Similarly, PINGARO and SCOLA conspired to avoid U.S. Postal reporting requirements for purchase of $3,000 or more in money orders from any one location in a single day, by conducting a series of transactions over consecutive business days and in various locations.
Friday, April 22, 2011
Federal Court Permanently Bars Eddie Madrigal from Preparing Tax Returns
WASHINGTON – A federal court has barred Eddie Madrigal of San Antonio and his business, Madrigal Tax Express Inc., from preparing federal tax returns for others, the Justice Department announced today. The permanent injunction order, to which Madrigal consented, was entered by Chief Judge Fred Biery of the U.S. District Court for the Western District of Texas.
The government complaint alleged that Madrigal and his firm prepared tax returns for their customers that claimed false and exaggerated business deductions, false earned income tax credits and improper miscellaneous itemized deductions. According to the complaint, Madrigal and his business, which has three locations in San Antonio, prepared approximately 28,000 returns from 2005 to 2007. The government further alleged that Madrigal Tax Express prepared approximately 9,000 returns in 2007 and that, of the returns that were audited by the Internal Revenue Service for that year, more than 93 percent understated the customers’ tax liabilities.
Thursday, April 21, 2011
Joseph A. Pingaro, JR and his Wife Christine Scola Pleads Guilty to Tax Evasion and Illegal Structuring Conspiracies
BOSTON—JOSEPH A. PINGARO, JR. and his wife, CHRISTINE SCOLA, both of Middleton, pleaded guilty today of conspiring to defraud the United States by filing false income tax returns and illegally structuring cash transactions to evade reporting requirements.
PINGARO, 55, and SCOLA, 52, each pleaded guilty to one count of tax conspiracy and one count of structuring conspiracy, both running from at least 2001 to 2006. U.S. District Judge Patti B. Saris scheduled sentencing for July 19, 2011. Each defendant faces a maximum penalty of five years in prison on each count, to be followed by three years of supervised release and a fine of $250,000 or twice the gross gain/loss, whichever is greater. Each defendant also faces restitution (including back taxes, penalties, and interest) on the tax conspiracy count, and criminal forfeiture under the structuring conspiracy count. PINGARO is the sole owner and operator of J&J Metals, a scrap metal yard in Roxbury.
Each of the defendants admitted that they transferred large amounts of money, totaling millions of dollars, from the J&J business bank account into their personal bank account. SCOLA then withdrew cash from the personal account in a series of withdrawals, each just under $10,000, over consecutive days. PINGARO and SCOLA then used substantial amounts of the cash to make large personal expenditures, both directly and indirectly. The indirect personal cash expenditures were accomplished by both using cash to purchase money orders and bank checks that were then used for personal expenditures and paying third parties to purchase money orders and bank checks which were then used for the defendants’ personal expenditures. PINGARO then falsely claimed on his income taxes that almost all of the cash withdrawn was used for legitimate deductible business expenses for J&J Metals.
PINGARO and SCOLA’s scheme was designed to conceal the actual profits of J&J Metals and evade federal income tax. SCOLA’s banking activity was designed to further this evasion by avoiding the requirement that financial institutions must file a Currency Transaction Report with the government for any cash transactions exceeding $10,000. Similarly, PINGARO and SCOLA conspired to avoid U.S. Postal reporting requirements for purchase of $3,000 or more in money orders from any one location in a single day, by conducting a series of transactions over consecutive business days and in various locations.
Wednesday, April 20, 2011
Todd Joyce Sentenced on Federal Mortgage Fraud and Tax Evasion Charges
CHARLESTON, WV—Todd Joyce, 38, of Hurricane, Putnam County, West Virginia, was sentenced to 18 months in prison today by U.S. District Judge Thomas E. Johnston on federal mortgage fraud and tax evasion charges. He will also serve five years on supervised release after his prison term. Joyce pleaded guilty in September 2010 to a two-count information charging him with making a false statement to a banking institution and tax evasion.
"This is exactly the sort of conduct that got our country into a financial mess," stated U.S. Attorney Booth Goodwin. "The defendant cheated on his taxes, lied to get money from a bank, and, in the process, hurt us all."
In 2006, Joyce applied for an $800,000 construction loan to build a "spec home" in the Stonegate subdivision located in Hurricane, West Virginia. In support of his loan application, the defendant sent United Bank a 2005 tax return in March 2006, indicating that he and wife earned nearly $450,000 in income for the previous year. Less than a month later, in April 2006, Joyce filed a 1040 tax return to the Internal Revenue Service (IRS) reporting that he made zero dollars in 2005. United Bank relied upon Joyce’s representations and tax return information in making the construction loan. The defendant ultimately defaulted on the construction loan. The court also ordered the defendant to pay $420,000 in restitution to United Bank.
For the year 2007, Joyce and his wife, Deborah, received more than $500,000 from various real estate and investment ventures during that year. The couple filed a tax return to the IRS that reported only $34,000 in income, including a claim for Earned Income Credit. Joyce and his wife admitted to willfully filing a false 1040 tax return form with the Internal Revenue Service that grossly underreported their actual income. Joyce agreed to cooperate with the IRS to determine the extent of his income tax liability.
At sentencing, Judge Johnston stated, "For someone who has had a mortgage now, and in the past, this is appalling." The judge further added, "A sentence that serves as a deterrence is important in teaching you and others that fraud has no place in the life of productive citizens."
The defendant's wife, Deborah, was sentenced earlier this month to 46 months in prison and five years of supervised release for various charges stemming from her involvement in a $2.3 million mortgage fraud scheme involving properties at the Stonegate subdivision in Hurricane. She previously admitted to misleading investors and banks in order to advance the mortgage fraud scheme.
Tuesday, April 19, 2011
Federal Court Bars Friday James from Claiming First-Time-Homebuyer Tax Credit for Customers
WASHINGTON – A federal court has barred a Philadelphia tax preparation firm and its owner from preparing federal tax returns claiming first-time-homebuyer tax credits and tax deductions for certain expenses, the Justice Department announced today. The court’s preliminary injunction order against Friday James of Landsdowne, Pa., who does business as Frika Tax Services, will remain in effect while the government’s lawsuit seeking a permanent injunction proceeds in court.
Following a court hearing at which the government presented evidence against James, including testimony from several of his customers, the court found that James “negligently or willfully understated tax liability on many of the federal income tax returns he prepared for his clients.” The court found that James claimed the first-time-homebuyer credit for customers who did not qualify for the credit and claimed deductions for business and miscellaneous expenses that were “erroneous, unrealistic or unreasonable.”
The court also stated that, absent an injunction, many of James’s customers would be likely to “underpay their tax liabilities and bear financial harm by having to pay overdue taxes, interest, and possible penalties.” The court required James to provide a copy of the injunction order to all persons for whom he has prepared any federal income tax returns.
Monday, April 18, 2011
Onuoha “Iggy” Nwokoro and John T. Hoang Charged with Preparing False Income Tax Returns
WASHINGTON – Two former Washington, D.C., tax preparers have been indicted on tax charges, the Justice Department and Internal Revenue Service (IRS) announced today. Onuoha “Iggy” Nwokoro, a former D.C. tax return preparer, made his initial appearance in federal district court on tax charges. On April 12, 2011, a grand jury returned a sealed indictment charging Nwokoro with 18 counts of aiding and assisting in the preparation of false income tax returns. The indictment was unsealed on April 13, 2011, following Nwokoro’s arrest in Washington, D.C. A trial date has not been scheduled.
According to the indictment, from prior to January 2005 through April 2007, Nwokoro operated BBC Tax Services, also known as BBC Tax and Medical Billing Services, a tax preparation business in Washington, D.C. For tax years 2004, 2005 and 2006, Nwokoro prepared and electronically filed tax returns for his clients that included fictitious business income and expenses for what purported to be a computer systems business. The indictment alleges that 15 of the returns collectively report more than $1.2 million in fraudulent business losses.
According to the indictment, Nwokoro’s own 2004, 2005 and 2006, personal tax returns were also false in that they under-reported his income. If convicted, Nwokoro faces a maximum sentence of 54 years in prison and a maximum fine of $250,000.
The case was investigated by IRS-Criminal Investigation and is being prosecuted by Department of Justice Tax Division Trial Attorneys Jorge Almonte and Jeffrey B. Bender. The case is CR-11-104.
In a related matter, the Justice Department and IRS announced that John T. Hoang, a former D.C. tax return preparer, made his initial appearance today in D.C. federal district court on tax charges. On April 12, 2011, a grand jury returned a sealed indictment charging Hoang with six counts of aiding and assisting in the preparation of false income tax returns. The indictment was unsealed on today, following Hoang’s arrest in Maryland. A trial date has not been scheduled.
According to the indictment, from prior to January 2005 through at least April 2005, Hoang operated “John T. Hoang CPA,” a tax preparation business in Washington. For tax year 2004, Hoang prepared and electronically filed for his clients tax returns that included fictitious business income and expenses for what purported to be a technology licensing business. The indictment alleges that six returns collectively report more than $400,000 in fraudulent business losses.
Sunday, April 17, 2011
Janet Jaensch Pleads Guilty to Failure to File Federal Income Tax Return
WASHINGTON - Janet Jaensch, a federal employee, pleaded guilty in U.S. District Court in Alexandria, Va., to one count of failure to file a 2008 federal income tax return, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents, between 2001 and 2011, Jaensch was employed by the federal government and was married to Richard Jaensch. Between 2001 and 2008, Janet Jaensch did not timely file U.S. Individual Income Tax Returns, Form 1040, with the IRS, despite the fact that she was required to do so. Specifically, in 2008, Jaensch admitted that she received $152,725 in gross income, yet she did not timely file a federal income tax return nor did she timely pay any income tax to the IRS. She further admitted that between 2002 and 2009, she failed to timely pay approximately $226,685 in taxes to the IRS.
In addition, according to the statement of facts, Jaensch admitted that beginning in 2002, and continuing each year through approximately 2009, at the direction of her husband, she presented a letter to her payroll department directing her employer to stop withholding federal income taxes from her salary. Jaensch further admitted that between 2002 and 2009, at her husband’s direction, she willfully committed the following acts: sending a document to the IRS claiming that she was not a person required to file federal income tax returns; recording in Fairfax County, Va., a “Declaration of Independence by Public Notice” claiming that she was “not a party to the Constitution of the united States of America”; sending correspondence to the IRS claiming they could not instruct her employer to withhold taxes from her paycheck; and sending certified letters to the Defense Finance and Accounting Service (DFAS) and IRS advising that she is not a taxpayer.
The defendant faces a maximum potential sentence of one year in prison. Sentencing has been scheduled for Aug. 16, 2011.
Janet Jaensch’s husband, Richard Jaensch, was indicted in March 2011 by an Alexandria federal grand jury with one count of corruptly endeavoring to impede the IRS, one count of filing a false claim for a refund and four counts of failing to file a tax return for 2004 through 2007. His trial is scheduled for July 20, 2011.
Saturday, April 16, 2011
Federal Court Permanently Bars Arthur Piner Grider III From Operating Businesses Because of Unpaid Payroll Taxes
DALLAS - A federal court in Dallas has barred Arthur Piner Grider III from operating businesses under any name, the Justice Department announced today. The final judgment and permanent injunction order, to which Grider agreed, finds him liable for more than $100 million in unpaid federal employment taxes, unemployment taxes and related penalties associated with numerous business entities, including Asgard Avionics Corp. of Florida, Talent Force Services LLC and NAG Financial LLC.
The court’s order also makes final a preliminary injunction entered against Grider in November 2010 that prohibited Grider and his employee leasing companies from, among other things, transferring funds to themselves or others before paying their current federal employment tax liabilities. The government’s complaint alleged that Grider and his business entities had a long history of “pyramiding” employment taxes.
According to the court’s orders, Grider and his wife agreed to allow the government to sell their Houston residence as a partial payment of his tax debts. The court also appointed a receiver to locate, preserve and distribute to creditors the assets of Grider’s businesses, including 69 company bank accounts and 14 antique automobiles manufactured between 1929 and 1970. The court also ordered the receiver to sell Grider’s interest in Pacific Aerospace Resources & Technologies LLC of Victorville, Calif., and to apply the sale proceeds to his tax debts.
Friday, April 15, 2011
Michael V. Collins Sentenced to 50 Months in Prison for Tax Evasion, Failure to File Income Tax Returns, and Election Fraud
Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today that on April 13, 2011, Michael V. Collins, 49, who resides in Swansea, Illinois, was sentenced to a total of 50 months in prison, followed by three years supervised release. Collins previously was found guilty, following a six-day trial, of tax evasion for 2003, tax evasion for 2004, tax evasion for 2005, failure to file federal income tax return for 2003, failure to file federal income tax return for 2004, failure to file federal income tax return for 2005, election fraud for the March 2006 election, and election fraud for the February 2008 election. As conditions of supervised release, Collins was ordered to pay restitution to the Internal Revenue Service in the amount of $342,375.14. Collins is also prohibited from serving in public office, or from holding an elected public office, while on supervised release.
Evidence submitted at trial established that Collins committed tax evasion and attempted to conceal his income by commingling business and personal assets; by failing to provide his correct Social Security number; by operating a business under an invalid Employer’s Identification Number; through the submission of false certified payrolls which falsely reflected that his employees’ federal income tax withholdings and FICA taxes were withheld and paid in; through the receipt and expenditure of cash, without record keeping; and through the failure to maintain accurate books and records. Evidence was submitted that Collins had not filed a federal tax return in 13 years at the time he became aware of the federal investigation. Further evidence was submitted that Collins had not paid Illinois state income taxes for 22 years.
Further evidence submitted at trial established that Collins knowingly and willfully give false information as to his address for the purpose of establishing his eligibility to vote in a voting district in East St. Louis in that he falsely represented that he lived at 22 Loisel in the City of East St. Louis when, in fact, he resided at 4382 Red Field Drive, Swansea, Illinois, and during that same period of time he was elected to be a precinct committeeman in East St. Louis when he was living in Swansea, Illinois. Evidence was submitted that Collins had family members sign petitions for him to get on the ballot to be precinct committeeman by falsely representing their address.
Thursday, April 14, 2011
Eddye Lovely Charged With Filing False Income Tax Returns
WASHINGTON - Eddye Lovely was indicted by a federal grand jury in Houston with 14 counts of aiding and assisting in the preparation of false income tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.
According to the indictment, Lovely owned and operated a Houston tax return preparation business called “The Tax Master.” For tax years 2004 through 2006, Lovely prepared materially false tax returns for seven clients. These tax returns included fabricated Schedule C losses for businesses that the taxpayers did not own or operate. They also included falsified or inflated Schedule A deductions for charitable contributions, non-reimbursed employee expenses, job search costs and/or uniform expenses.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Lovely faces a sentence of up to three years in jail and a maximum fine of $250,000 for each count of conviction.
Wednesday, April 13, 2011
Louis Leitch Sentenced to Prison in Scheme to Launder $20 Million in Proceeds of Stolen Merchandise
BALTIMORE—U.S. District Judge Benson E. Legg sentenced Louis Leitch, Sr., age 62, of Baltimore, today to 33 months in prison followed by three years of supervised release for conspiring to commit money laundering and attempting to evade taxes.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Postal Inspector in Charge Daniel S. Cortez of the U.S. Postal Inspection Service - Washington Division; Chief James W. Johnson of the Baltimore County Police Department; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Baltimore Police Commissioner Frederick H. Bealefeld III; and Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service - Criminal Investigation.
According to his plea agreement, from 2007 to March 2010, Leitch conspired with others to launder the proceeds of the sale of mass quantities of stolen over-the-counter medications, health and beauty aid products, gift cards, DVDs, tools, and other merchandise. Shoplifters, also known as “boosters,” stole products from Target, Safeway, Wal-Mart, Kohl’s and other retailers in Maryland and other states. Pawn shops bought large amounts of stolen items from the boosters. Louis Leitch, Sr. and others were owners of E-Z Money Pawn Shop and 2Brothers Liquidators, Inc. Leitch and others would receive stolen products at E-Z Money. The stolen items were “cleaned,” meaning that the security labels and retail tags from the stolen product were removed. Sometimes a heat gun and lighter fluid would be used to peel away the plastic security labels. In addition, Leitch worked with co-defendants to purchase and transport stolen material. Leitch knew that many of his co-defendants and others participated in the scheme. Some of the defendants also used on-line auctions sites, such as eBay and Amazon.com, to sell the stolen products far below normal retail value. The stolen products were then delivered to unsuspecting customers via the United States mail. The defendants received payment by interstate wire transfers using PayPal accounts and through various financial institutions in Maryland.
On March 25, 2010, agents from the U.S. Postal Inspection Service, Baltimore County
Police Department and the Federal Bureau of Investigation executed search warrants at E-Z Money and the other pawn shops in this case. Agents recovered well over $1 million in stolen merchandise, approximately $1 million in bank accounts and over $140,000 in cash, and 44 firearms. Although the entire conspiracy involved approximately $20 million in stolen merchandise, $2.5 million in stolen product was reasonably foreseeable to Leitch.
Thirteen defendants have pleaded guilty to the money laundering conspiracy to date.
In addition, Leitch failed to file income tax returns for tax years 2005 and 2006, although he received substantial income through his pawn shop and other business. During 2005 through 2006, Leitch withdrew from his bank accounts more than $2.5 million of his gross income, with each withdrawal being less than $10,000. During 2007, Leitch made cash deposits of more than $200,000 of his gross income into bank accounts, with each deposit being less than $10,000. By making deposits and withdrawals in amounts less than $10,000, Leitch was able to avoid bank reporting requirements and conceal from the Internal Revenue Service substantial income on which he knowingly failed to pay taxes. The amount of unpaid taxes as a result of this conduct is $401,600.
Tuesday, April 12, 2011
Peter Jerald Frommer Sentenced to Nine Years in Federal Prison for Bilking Victims Out of $8 Million
LOS ANGELES—The promoter of a bogus investment scheme that promised quick returns through the resale of office equipment was sentenced today to 108 months in federal prison for orchestrating a Ponzi scheme that caused victims across the United States to lose more than $8 million.
Peter Jerald Frommer, 35, of Santa Barbara, was sentenced by United States District Judge George H. Wu. In addition to the prison term, Judge Wu ordered Frommer to pay $8.1 million in restitution.
Frommer pleaded guilty in November to wire fraud, money laundering, and three counts of failing to file federal income tax returns for the tax years 2004 through 2006.
Frommer operated a bogus investment scheme under the names “Cap Exchange” and “Cap X,” companies that he falsely claimed traded in surplus property of defunct companies. Frommer told numerous victims throughout the United States that he used commercial auction websites to purchase large lots of equipment for resale at higher prices.
>From early 2004 through August 2006, Frommer solicited more than $13 million from more than five dozen victims by promising “guaranteed” returns of up to 15 percent in as little as six weeks. Frommer obtained money from 64 investors throughout the United States. Frommer claimed that he would use victims’ money to buy the distressed assets for Cap X, and then would share profits from the subsequent sales. Instead, Frommer used the victims’ money to make Ponzi payments and to maintain a lavish personal lifestyle, which included a $20 million Malibu mansion, parties that featured celebrity performers, and luxurious personal travel and automobiles.
Additionally, Frommer convinced many investors to put money into other bogus ventures that he pitched, including a wireless Internet company, a high-end automobile parts venture, real estate deals, and other investments beyond Cap-X.
In a series of filings made in relation to today’s sentencing hearing, prosecutors focused on the impact Frommer had on his victims. “Plainly put, Frommer’s greed led to pain, distress, and a terrible disruption of the lives of his victims,” according to one of the government’s briefs.
In one of the filings, prosecutors quoted extensively from a series of letters sent by victims who urged Judge Wu to impose a stiff sentence. Those comments included:
“The effects of Peter Frommer’s crimes have been devastating for me. The only event in my lifetime that was worse was the death of my child.”
“He is the West Coast version of Bernie Madoff.”
“I am sorry to admit my family was victimized by Peter Frommer. A close relative of ours introduced us when my family and I were in California seeking cancer treatment for our youngest son. In a moment of weakness, when we were struggling with the cost of his cancer treatment, we were duped and convinced ourselves, our adult children, and a sister that this was a smart and safe investment. We made a terrible mistake.”
“My son values his education and was very intent on attending a prestigious California university. Unfortunately, he has not been able to attend that college because of the change in financial circumstances caused by Peter Frommer’s actions. What value do you put on the quashing of a teen’s dreams?”
Judge Wu ordered Frommer to begin serving his sentence on May 31.
Monday, April 11, 2011
Corey Bishop Sentenced for Trafficking Counterfeit Nike Shoes, Filing False Tax Return, and Mail Fraud
BIRMINGHAM—A federal judge Wednesday sentenced a Birmingham man to 18 months in prison for a scheme involving trafficking of counterfeit Nike shoes, tax fraud, and mail fraud, announced U.S. Attorney Joyce White Vance, IRS Criminal Investigation Special Agent in Charge Reginael D. McDaniel, FBI Special Agent in Charge Patrick Maley, and U.S. Postal Inspector/Domicile Coordinator Frank Dyer.
U.S. District Judge Abdul K. Kallon sentenced COREY BISHOP, 35, on one count of trafficking counterfeit goods, one count of filing a false tax return, and one count of mail fraud. Bishop pleaded guilty to the charges Sept. 13, 2010.
“The United States believes the sentence imposed is just and deserved in light of the crimes committed by Mr. Bishop. He profited illegally off the success of an internationally known company, and he failed to report that income to the IRS,” Vance said.
“Individuals thinking about participating in illegal schemes, including failing to report all forms of income, should stop in their tracks and simply look at the consequences of taking the next step,” McDaniel said. “Those consequences can include going to prison, being branded a convicted felon for the rest of their lives, and paying back all the taxes owed, plus steep penalties and interest.”
“The sale of counterfeit goods undermines our economy and hurts legitimate businesses,” Maley said. “U.S. consumers spending their hard-earned dollars deserve the full value of a genuine product. If you think you got a ‘steal’ on that designer purse or watch, look again. It may be you who were ripped off. I want to extend my thanks to the Birmingham and Montevallo Police Departments, the Shelby County Sheriff’s Department and our federal partners for their efforts in bringing this case forward,” Maley said.
According to court documents, in 2007, 2008, and 2009, Bishop ordered multiple shipments of Nike footwear, which he knew to be counterfeit, from a business in China and had them shipped to the United States to sell in two of his retail stores, Fresh2Def Urbanwear, located in Birmingham and Montevallo.
Bishop’s sale of counterfeit goods generated a large taxable income, which he failed to report on his 2007 and 2008 individual income tax returns, according to court documents. Bishop was sentenced for filing a false tax return for the calendar year 2008, on which he reported his business gross receipts to be $22,262. The true amount of his gross receipts was $293,549. The tax loss was determined to be $75,961.
