Friday, September 30, 2011

Former Pennsylvania County President Judge Michael Conahan Sentenced for Tax Fraud


Source- http://www.fbi.gov/philadelphia/press-releases/2011/former-pennsylvania-county-president-judge-michael-conahan-sentenced

Peter J. Smith, United States Attorney for Middle District of Pennsylvania announced that Michael Conahan, former president judge of the Court of Common Pleas for Luzerne County, was sentenced in federal court in Scranton today to a term of 17-and-a-half years of imprisonment by Senior United States District Court Judge Edwin M. Kosik II.

Senior Judge Kosik also ordered restitution be paid in the amount of $874,167.37 to the Commonwealth of Pennsylvania for his judicial salary and a fine of $20,100.00. Conahan previously forfeited his right to his state pension.

At the conclusion of the sentencing hearing, Conahan voluntarily surrendered and was taken into custody by the United States Marshals Service.

The judicial scandal, described as the worst in Pennsylvania’s history, and the federal prosecutions, have had major consequences: Ciavarella and Conahan resigned from the bench in 2009. Reform efforts are underway in the Luzerne County court system. The Supreme Court of Pennsylvania was compelled to vacate thousands of juvenile convictions in Luzerne County as a result of Ciavarella’s conduct as a Juvenile Court Judge. A State Interbranch Commission on Juvenile Justice was established to study what happened and to recommend changes in the state’s justice system aimed at safeguarding the constitutional rights of juveniles and improving the oversight and disciplinary process for judges in Pennsylvania. In June 2011, a committee of the American Bar Association reviewed and made recommendations to improve procedures in the state’s Judicial Conduct Board. A procedure was established in Luzerne County for compensation of victims of the activities of Ciavarella and Conahan.

Conahan and his co-defendant, Mark Ciavarella, who also served as president judge of the Court of Common Pleas of Luzerne County, were initially charged in January 2009. The charges were the result of a federal investigation of alleged corruption in the Luzerne County court system. The inquiry began in 2007 and over the next four years expanded to include county government offices, state legislators, school districts and contractors in Northeastern Pennsylvania.

Ciavarella and Conahan were originally charged with honest services mail and wire fraud and tax fraud in connection with the use of privately owned juvenile detention facilities. Both defendants agreed to plead guilty. In July 2009, Judge Kosik rejected the proposed plea agreements because the defendants did not appear to accept responsibility for their conduct.

In September 2009 and September 2010, a grand jury in Harrisburg returned superseding indictments charging both defendants with racketeering, honest services mail fraud, money laundering, extortion, bribery, tax violations, and conspiracy. The government also sought the forfeiture of approximately $2.8 million in assets allegedly acquired by the defendants through racketeering and money laundering. In response to the United States Supreme Court’s 2010 decision in United States v. Skilling, the 2010 indictment specifically charged that bribes and kickbacks were paid to the defendants.

Conahan pleaded guilty to racketeering conspiracy in April 2010. After a jury trial in February 2011 Ciavarella was found guilty on 12 counts, including racketeering and tax fraud. Ciavarella was sentenced to 28 years’ imprisonment on August 11, 2011.



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Thursday, September 29, 2011

The IRS’s Role in Money Laundering Investigations - by Special Agent/Public Information Officer Scott M. Schneider, IRS Criminal Investigation, Tampa Field Office


Source- Blog contribution by Special Agent/Public Information Officer Scott M. Schneider, IRS Criminal Investigation, Tampa Field Office

While we may see mention of money laundering on television, the application of this legal violation of federal law is detailed and often fails to be the straight-forward crime it is often depicted. Through the use of sham corporations, nominee bank accounts, international havens of bank secrecy as well as good old-fashioned cash transactions, criminals attempt to evade detection by laundering their ill-gotten gain to make it appear legitimate. While the Criminal Investigation Special Agents of the Internal Revenue Service enforce the nation’s federal tax laws, they are also premier financial investigators who use this same skill in combating a myriad of financial crimes, including money laundering.

The actual legal violation known as money laundering consists, at its most basic elements, of conducting a financial transaction using the proceeds from a specified unlawful activity wherein this transaction is designed in whole, or in part, to conceal or disguise the source of such income. While this is a simplified view, and the actual statute for money laundering found in Title 18, United States Code, Section 1956 and 1957 is detailed and covers purposes of the financial transaction other than to conceal or disguise the source of the funds, the practical application and tracking of the unlawfully obtained proceeds can be arduous. In addition to the need to track the source of the funds, proving the money came from a Specified Unlawful Activity can also be difficult.

Where IRS Criminal Investigation is involved, this often means working jointly with other federal, state and local law enforcement agencies. Specified Unlawful Activities, or SUA’s, are crimes designated by Congress whose proceeds are subject to money laundering violations. These SUA’s can be found in the money laundering section of Title 18, United States Code, Section 1956 or under Section 1960, the section covering Racketeering activity.

According to Linda J. Osuna, the Special Agent in Charge of the Tampa Field Office of IRS Criminal Investigation, IRS-CI has the financial investigators and expertise that is critical to locating hidden illegal income and prosecuting the offenders. Our agency is united with the rest of the law enforcement community in our resolve to financially disrupt criminal organizations and take the profit out of their illegal activities. Money laundering is tax evasion in progress and in these tough economic times it is also a threat to the stability of our nation s financial system.

Over the past several months, the Tampa Field Office of IRS-CI has been involved with numerous cases involving the investigation and prosecution of money laundering violations. Most recently, Philip William Coon, a 55 year old resident of Bradenton, Florida, was sentenced to 18 months in prison and three years supervised release regarding conspiracy to commit wire fraud and money laundering. Coon was the Executive Vice-President, Mortgage Lending Department, of Coast Bank ("Coast"). As such, he owed a fiduciary duty to act honestly and faithfully in all of his dealings with Coast and to transact business in the best interests of Coast, which included a duty to make full and fair disclosure to Coast of any personal interest, profit, or kickback he expected to, or did, derive from any transaction in which he participated during the course of his employment.

In late 2004, Coon used his position with Coast to request that a coconspirator, John Robert Miller, the president of American Mortgage Link (AML), charge AML s clients who wanted residential home loans from Coast a mortgage brokerage fee that was one percent more than AML would otherwise have charged, and to pay three-quarters of the additional one percent to the defendant. Miller agreed. The additional one percent charged as a result of the conspiracy did not affect the amount paid by the borrower as the builder/seller was responsible for the payment of all closing costs. Coon and Miller split the proceeds of the additional percentage point. Coon received three-quarters, and Miller received one-quarter, of each additional percentage point. Then Miller transferred, via various means, Coon's share of the proceeds into checking accounts in the name of a shell corporation.

Coon prepared and transmitted, via e-mail and other means, instructions to Miller to make checks drawn on the accounts in the name of the shell corporation payable to, among others, various of Coon's creditors, charities, and family members. Miller gave Coon a debit/ATM card, along with the accompanying personal identification number (PIN), for the same accounts, and Coon used the debit/ATM card and PIN to make purchases of goods and services and to withdraw funds from the accounts.

In total, Miller transferred to Coon $1,146,462.35 in proceeds from the additional percentage point. Coon used the proceeds to, among other things, finance domestic and international travel, purchase real estate, a piano, jewelry, clothing and wine, make significant charitable contributions to a church and its food pantry, pay down mortgages, and provide financial support to family members.

Coon also had a forfeiture money judgment placed against him in the amount of $1,528,616.46 representing the amount of proceeds obtained as a result of the conspiracy to commit wire fraud. In addition to money forfeited, the court ordered Coon to forfeit a $20,000.00 piano and more than $36,000.00 in jewelry all of which were traceable to the illegally obtained funds.

Another case this year in the Tampa Field Office involved a former home builder division manager charged with fraud and money laundering. Lawrence L. Ripley (54, Bonita Springs) to 36 months in federal prison and 3 years of supervised release for mail fraud, wire fraud and money laundering. The court ordered Ripley to pay restitution to Maronda Homes in the amount of $220,412.00. Ripley pleaded guilty on December 27, 2010 to three counts of mail fraud, two counts of wire fraud and five counts of prohibited monetary transactions. Ripley devised a scheme to defraud his then employer, Maronda Homes, of money and honest services, in excess of $270,000.00. As part of the scheme he caused fraudulent invoices, from vendors he solicited, to be sent to Maronda Homes for payment. At Ripley’s direction, the vendors wrote checks back to Ripley for approximately ninety percent of the monies they received from Maronda. Ripley converted the monies he received from vendors to cashier’s checks, made payable to himself. Ripley personally received in excess of $220,000.00 as a result of his scheme.

For more information on the IRS’s role in money laundering investigations you can go to the IRS website at the following links:

http://www.irs.gov/compliance/enforcement/article/0,,id=112999,00.html (link to the history of IRS role in Money Laundering investigations);

http://www.irs.gov/compliance/enforcement/article/0,,id=228092,00.html (link to IRS Criminal Investigation work in Money Laundering).



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Wednesday, September 28, 2011

Gary J. Stocking Sentenced to Federal Prison for Failing to Pay Taxes on Income Derived from Fraud Scheme


Source- http://www.fbi.gov/newhaven/press-releases/2011/naugatuck-man-sentenced-to-federal-prison-for-failing-to-pay-taxes-on-income-derived-from-fraud-scheme?utm_campaign=email-Immediate&utm_medium=email&utm_source=new-haven-press-releases&utm_content=33430

David B. Fein, United States Attorney for the District of Connecticut, announced that GARY J. STOCKING, 45, of Naugatuck, was sentenced today by United States District Judge Janet C. Hall in Bridgeport to 24 months of imprisonment, followed by one year of supervised release, for failing to pay more than $643,000 in taxes on income derived from a scheme to defraud Webster Bank.

According to court documents and statements made in court, STOCKING’s wife, Susan Curtis, was employed in the Property Services Division of Webster Bank, which was responsible for, among other things, the acquisition and leasing of properties for Webster Bank’s Retail Banking business. In approximately November 2007, STOCKING formed, at Curtis’ request, a limited liability company called “Equity Realty LLC.” Curtis falsely represented to Webster Bank’s Vendor Management Department that the company was legitimate, and was entitled to certain fees because of real estate transactions entered into by Webster Bank. In fact, Equity Realty LLC never acted as a broker or landlord in any real estate transactions.

Between approximately December 2007 and October 2009, Webster Bank and its vendors made approximately 23 payments totaling more than $1.9 million to the Equity Realty LLC bank account based on false paperwork submitted by Curtis that falsely represented Equity Realty was due a commission as a result of a Webster Bank real estate transaction.

STOCKING did not file tax returns on behalf of Equity Realty LLC, or in any way report to the Internal Revenue Service the monies deposited to the Equity Realty LLC bank account. For the 2007, 2008 and 2009 tax years, STOCKING willfully failed to report approximately $1.91 million in income, causing a tax loss to the government of approximately $643,885.

On March 31, 2011, STOCKING pleaded guilty to three counts of failing to file a return, supply information, and pay federal income taxes.

Today, Judge Hall ordered STOCKING to pay $643,885 in back taxes, plus interest and penalties, to the Internal Revenue Service.

On January 20, 2011, Curtis pleaded guilty to two counts of bank fraud and four counts of filing false tax returns stemming from this scheme. She awaits sentencing.

STOCKING and Curtis have been detained since April 26, 2011, when their bonds were revoked. On October 14, 2010, a third defendant involved in the scheme, Kevin Caffrey, pleaded guilty to one count of bank fraud and one count of filing a false tax return. He also awaits sentencing.

As part of this case, the government is seeking the forfeiture of an interest up to an amount of $1,105,790.79 in real property in East Hampton, several automobiles, two Harley Davidson motorcycles, two boats and boat trailers, approximately $300,000 in artwork, approximately $100,000 in jewelry, and a Steinway piano valued at more than $77,000. The government also is seeking a money judgment in the amount of $7,002,589.85.



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Tuesday, September 27, 2011

Dr.Christopher Vassalluzzo Sentenced for Running Northeast Philadelphia Pill Mill. Ordered to pay IRS $1,066,000.00 for Unpaid Taxes.


Source- http://www.fbi.gov/philadelphia/press-releases/2011/bucks-county-doctor-sentenced-for-running-northeast-philadelphia-pill-mill?utm_campaign=email-Immediate&utm_medium=email&utm_source=philadelphia-press-releases&utm_content=32753

PHILADELPHIA—Christopher Vassalluzzo, D.O., 47, of New Hope, Pennsylvania, was sentenced today to 34 months in prison for a conspiracy that illegally distributed millions of prescription controlled substance diet drugs. Vassalluzzo and others operated an office at 3000 Holme Avenue in Northeast Philadelphia that was, in fact, a “pill mill.” In April, Vassalluzzo pleaded guilty to conspiracy to distribute controlled substances, mail fraud, conspiracy to commit mail fraud, structuring, aggravated structuring, conspiracy to commit tax evasion, and tax evasion. Vassalluzzo’s illegal enterprise generated more than $5 million in cash.

In addition to the prison term, U.S. District Court Judge Anita Brody ordered Vassalluzzo to forfeit over $5 million, which will include proceeds from the sale of a beach home in New Jersey, a timeshare in Florida, and sale of his home in Bucks County, Pennsylvania, as well as other assets. More than $1 million has been collected so far. Restitution was ordered in the amount of $1,066,000 to be paid to the IRS for taxes and interest that Vassalluzzo failed to pay from 2004 to 2009. Vassalluzzo also must complete three years supervised release, and pay a $1,000 special assessment.



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Monday, September 26, 2011

Federal Court Bars Damian Jackson and His Wife, Holly Jackson, From Preparing Federal Tax Returns for Others


Source- http://www.justice.gov/tax/txdv111237.htm

WASHINGTON - The United States has asked a federal court in Detroit to bar Damian Jackson and his wife, Holly Jackson, from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint, the civil injunction lawsuit also seeks to bar the Jacksons, of Sterling Heights, Mich., and a third defendant, Tammy Daniels, an attorney from Farmington Hills, Mich., from promoting an alleged tax-fraud scheme.

According to the complaint, the Jacksons and their business, Diamond & Associates Enterprises LLC, along with Daniels, operate “Diamond Tax Services” and promote a scheme involving the preparation of fraudulent federal income tax returns for customers seeking large tax refunds based on a frivolous theory called “redemption” or “commercial redemption.” The complaint alleges that Damian Jackson, a minister at the Perfecting Church in Detroit, prepares tax returns that claim huge fraudulent refunds based on fabricated income-tax withholding reported on false Internal Revenue Service (IRS) Forms 1099-OID. The complaint further alleges that Holly Jackson transmits the false forms to the IRS. Damian Jackson allegedly became acquainted with a significant percentage of his customers, which include a fellow minister, through the Perfecting Church.

According to the complaint, the IRS catches most frivolous refund requests before refunds are issued, but the defendants’ scheme has caused the IRS to issue at least $1.6 million in erroneous refunds to the defendants’ customers. Federal tax returns prepared under the auspices of Diamond Tax Services have allegedly sought more than $29 million in fraudulent refunds for more than 180 customers, and the Jacksons allegedly requested $2.5 million in bogus refunds on their personal tax returns, according to the complaint.



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Sunday, September 25, 2011

Federal Court in Los Angeles Has Permanently Barred Mario Placencia From Preparing Federal Tax Returns for Others


Source- http://www.justice.gov/tax/txdv111252.htm

WASHINGTON - A federal court in Los Angeles has permanently barred Mario Placencia from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Placencia consented, was signed by Judge Dale S. Fischer of the U.S. District Court for the Central District of California. The court also required Placencia to contact customers who have paid him to prepare returns since Jan.1, 2003, and inform them of his consenting to the injunction.

According to the government complaint, Placencia, of Alhambra, Calif., conducted business in Montebello, Calif., under the name MP Accounting Services. The government alleged that Placencia prepared federal income tax returns that contained false or inflated expenses on various schedules and fabricated false reports of his customers’ home-mortgage-interest payments.

According to the complaint, in April 2011 Placencia was indicted on 61 counts of aiding and assisting in the preparation and presentation of false income tax returns, as well as one count of corruptly obstructing and impeding the due administration of the internal revenue laws. The complaint states that Placencia entered a guilty plea as to three of the counts in July 2011 and admitted in the plea agreement that, for tax years 2003 through 2009, he caused the government to incur a tax loss of nearly $8 million by intentionally inflating amounts of home mortgage interest on his customers’ returns.



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Saturday, September 24, 2011

Haroon Amin Sentenced to 30 Months in Prison Today on False Tax Refund Conspiracy


Source- http://www.justice.gov/tax/txdv111233.htm

WASHINGTON – Haroon Amin of Upland, Calif., was sentenced to 30 months in prison today for conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced. U.S. District Judge Robert H. Whaley presided at the sentencing hearing. Judge Whaley also sentenced Amin to three years of supervised released following his prison term and ordered Amin to pay $258,594 in restitution to the U.S. Treasury. Amin was remanded into custody today.

In December 2008, Amin and Ather Ali of Diamond Bar, Calif., were indicted by a federal grand jury in Riverside, Calif., on charges of engaging in a scheme to file false returns with the IRS using the names and Social Security numbers of deceased individuals. Amin pleaded guilty on Jan. 25, 2010. Ali subsequently pleaded guilty on Feb. 12, 2010.

According to the indictment, in 2002 and 2003, Amin and Ali filed at least 250 fraudulent returns, falsely stating that these deceased individuals earned wages from which income tax was withheld. These false returns claimed more than $2 million in income tax refunds. Although the IRS rejected the bulk of these refund claims, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali and their co-conspirators, including various mailboxes opened by Ali. Most of these refund checks then were delivered overseas to be deposited in bank accounts in Armenia and Pakistan.

Amin admitted at his guilty plea hearing that he was a knowing participant in this scheme. According to the indictment and statements made at the plea hearing, Amin and his co-conspirators prepared various false tax returns using deceased people’s Social Security numbers and other identification information obtained from the Internet. The returns filed as part of the scheme had fictitious Form W-2 wage and tax statements as attachments, falsely stating that the deceased people earned income from various employers. Amin and his co-conspirators created fake W-2 Forms using employer identification numbers that they had obtained from an acquaintance of Amin’s, who was a certified public accountant. At his own plea hearing, Ali admitted using fake forms of identification to open mailboxes in the names of deceased people, from which the conspirators collected a number of these fraudulently obtained tax refund checks.



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Friday, September 23, 2011

Kansas Attorney James Scott Brown, British Real Estate Speculator Derek J. Smith Plead Guilty to $52 Million Ponzi Scheme


Source- http://www.fbi.gov/stlouis/press-releases/2011/kansas-attorney-british-real-estate-speculator-plead-guilty-to-52-million-ponzi-scheme?utm_campaign=email-Immediate&utm_medium=email&utm_source=st-louis-press-releases&utm_content=32516

KANSAS CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced today that a Leawood, Kan., attorney and a real estate speculator in the United Kingdom pleaded guilty in federal today to their roles in a fraud conspiracy that stole more than $52 million from their victims.

James Scott Brown, 66, of Leawood, and Derek J. Smith, 67, of Oxfordshire in the United Kingdom, pleaded guilty in separate appearances in the U.S. District Court in St. Louis, Mo., before U.S. Chief District Judge Linda R. Reade, Northern District of Iowa, to the charges contained in an April 28, 2011, federal indictment.

Brown and Smith each pleaded guilty to participating in a conspiracy to commit wire and mail fraud. During a 10-year period from 2000 to 2010, investors in the United States loaned a total of $52.5 million to Smith and co-conspirators through a Ponzi scheme that was known as the British Lending Program (BLP). Victims believed they were loaning money for legitimate real estate development projects, but in reality, most of their money was kept by co-conspirators (or used to pay interest and principal to other lenders).

Brown, an attorney, practiced law in England for several years prior to 2000. Brown also participated in the UMKC program at Oxford University. Between 2000 and 2010, Brown did not actively practice law; instead, Brown’s primary occupation was the BLP, from which he took substantial fees. Brown did business as British American Group and as J. Scott Brown and Associates.

Smith was a structural engineer and a business and real estate speculator/developer who resided near London, England. Smith did business as Princess Hotels Management and as Distinctive Properties. Smith was previously successful, but during the 1990s he acquired distressed hotel properties which were not profitable due to a recession in the English real estate market. By the end of the 1990s, Smith was in need of capital to maintain his ownership of several small hotels which were not trading profitably and to support his retention of several options to purchase land.

The British Lending Program

According to today’s plea agreements, the British Lending Program (BLP) operated as a Ponzi scheme and served as a fee-generating machine for the benefit of co-conspirators.

In the original, legitimate form of the BLP, funds were loaned by U.S. investors/lenders for short terms at high interest rates. Early loan funds were sent to the United Kingdom and lenders received written loan agreements through a British law firm. Borrowers paid interest to lenders directly or through intermediaries and loan principal was repaid at the termination of a loan (unless a loan was “rolled over,” or renewed, for an additional year). Brown and his family were lenders in the BLP, then Brown began soliciting other lenders and took finder’s fees for himself.

Brown and co-conspirators developed a packet of marketing materials and began marketing the BLP to other U.S. lenders in 2000. Later, they also utilized third-party recruiters to locate new investors and bring their funds into the BLP. Soon afterward, Smith became the sole and exclusive “borrower” in the BLP and became the focal point of marketing efforts.

According to today’s plea agreements, conspirators claimed that lenders’ loan funds were sent to Smith in England for use in his real estate activities, and that payments of interest and principal came from England out of Smith’s business revenues and profits. In reality, Brown admitted, the vast majority of BLP loan funds were never sent to or received by Smith for use in productive business activities. Instead, the vast majority of funds remained in the United States under the control of Brown and co-conspirators.

Between 2000 and 2010, Smith received the benefit of a total of approximately $6.1 million, while approximately $52.5 million in loan funds were received in the BLP. In contrast, Brown took “fees” totaling approximately $1.4 million. Approximately $27 million was used to pay interest and principal to lenders. All BLP funds were dissipated and as of June 2010, the BLP had no funds.

Brown admitted that conspirators marketed the BLP to lenders based upon a number of false, fraudulent and deceptive material representations.

Conspirators told investors that Smith and the BLP had a track record of success and a unique ability to identify undervalued properties and properties whose value could be greatly increased through the re-zoning process. Smith’s goal was to sell or “flip” the properties for a profit. Conspirators also allegedly claimed that Smith was a highly successful real estate owner and developer who generated cash flow and profits from “flipping” properties and options. In reality, Smith’s trading properties were unprofitable and required funding to avoid foreclosure; Smith’s re-zoning efforts did not produce successful property flips. Smith could never repay the large sums which had been borrowed in his name from BLP lenders.

Conspirators claimed that Smith was willing to borrow at, and could afford to pay, high rates of interest, and that British banking practices made it cumbersome for Smith to borrow funds in a timely fashion to take advantage of time-sensitive opportunities. In reality, no real estate developer could afford to make enough money from BLP loans with the small amount of funds left over after payment of interest and fees to make a profit and to meet BLP interest and redemption obligations. Smith could not borrow from a traditional lending institution because he lacked sufficient equity in his properties to serve as collateral, because his hotels were not profitable and because his options could not serve as loan collateral.

Conspirators claimed that there was little or no risk of not being repaid in full, because the present market value of Smith’s assets exceeded his liabilities by a ratio of at least 2-to-1 and often as high as 6-to-1. In reality, Smith’s financial statements were false and misleading.

Many victims loaned funds which had been saved for retirement and were held in Individual Retirement Accounts. Many IRA lenders let their “interest” accrue and also rolled their loans over annually for years, each time receiving a signed loan agreement for a new, larger amount. Thus, many IRA lenders were led to believe that their IRA accounts were growing and that they could be relied upon in retirement.

By pleading guilty today, both Brown and Smith agreed to forfeit to the government any property obtained through the conspiracy, including a money judgment of $52.5 million. Brown also agreed to forfeit to the government a 207-acre farm in Siloam Springs, Ark. Smith also agreed to forfeit to the government several real estate properties in England, including a hotel.

Under federal statutes, Brown and Smith are each subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Jess Michaelsen, Steven Holtshouser, and Richard Finneran, Special Attorneys to the U.S. Attorney General. It was investigated by the FBI and IRS-Criminal Investigation.



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Thursday, September 22, 2011

A Federal Court Has Permanently Barred Danesa Webb From Preparing Federal Tax Returns for Others


Source- http://www.justice.gov/opa/pr/2011/September/11-tax-1225.html

WASHINGTON – A federal court in Fort Lauderdale, Fla., has permanently barred Danesa Webb from preparing federal tax returns for others, the Justice Department announced today. In the civil injunction order issued by Judge William P. Dimitrouleas, the court found that Webb, of Broward County, Fla., prepared returns for her customers that falsely claimed several tax credits and reported false income and expenses. Webb did not contest the government’s allegations.

The court found that many of Webb’s customers were homeless and had no income, and that she “targeted and victimized unsuspecting distressed individuals with the promise of quick and easy cash.” According to the court’s order, Webb or her agents falsely told individuals that they were eligible for special credits or funds offered by the federal government, prepared tax returns for them with fabricated information and took a sizable portion of the tax refunds as a fee.

The court’s order states that one of the falsely-claimed tax credits was the first-time-homebuyer credit, which Congress enacted in 2008 to strengthen the real estate market and help the economy. Persons who had not owned a home in the previous three years could claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. Congress later expanded the program to allow current homeowners to claim the credit for a purchase of a new home, under certain conditions. The credit has since expired.

According to the court’s order, Webb claimed the first-time-homebuyer credit on her customers’ tax returns even though she knew the customers had not bought new homes. The order also states that Webb claimed fabricated business deductions and education credits on some customers’ returns, and on other returns she failed to report the proper amounts of her customers’ incomes. At times, according to the order, Webb prepared returns for persons without those persons’ knowledge.



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Wednesday, September 21, 2011

Crystal Ireland and Her Business Master Mind Preparation, Allegedly Falsifies Customers’ Returns to Maximize Earned Income Credits


Source- http://www.justice.gov/opa/pr/2011/September/11-tax-1213.html

WASHINGTON – The United States has sued Crystal Ireland and her business, Master Mind Preparation, to bar them from preparing tax returns for others, the Justice Department announced today. According to the government complaint in the civil injunction suit, Ireland, who resides in Detroit, allegedly fails to comply with due-diligence requirements imposed by federal law on tax return preparers who claim the earned-income tax credit (EITC) on their customers’ tax returns. The suit also alleges that Ireland falsified her customers’ income in order to claim the maximum EITC for them.

The EITC is a refundable tax credit available to certain low-income individuals. Due to the method used to calculate the EITC, individuals with higher annual incomes may be entitled to larger credits, up to a certain point. According to the complaint, Ireland fabricated businesses and reported fake business income on her customers’ returns to obtain larger credit amounts.

The complaint alleges that the Internal Revenue Service (IRS) previously penalized Ireland for failing to comply with the due-diligence requirements, yet a follow-up investigation revealed continuing failures and fraudulent claims. The complaint also alleges that, of the returns prepared by Ireland and claiming the EITC for tax years 2007 through 2009 that the IRS examined, the IRS reduced or disallowed the EITC claim on 93 percent of those returns.



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Tuesday, September 20, 2011

Bank Secrecy Act (BSA) information used by IRS to ensure that criminals do not use the U.S. financial systems to legitimize their illegal profits.


Source – Blog contribution by Special Agent / Public Information Officer Scott M. Schneider, IRS Criminal Investigation, Tampa Field Office.

While the investigation and prosecution of tax and tax-related crimes remains the mainstay of the mission of IRS Criminal Investigation, violations of the Bank Secrecy Act (BSA) remain part of the IRS enforcement efforts as a way of combating a variety of financial crime. According to Linda J. Osuna, the Special Agent in Charge of the Tampa Field Office of IRS Criminal Investigation, we use BSA information to ensure that criminals do not use the U.S. financial systems to legitimize their illegal profits. As in these cases in the Tampa area involving a large theft ring, we are able to evaluate the documents required to be filed as a result of the BSA in order to trace money from the criminal activity directly to the criminal themselves. Whether these investigations result in tax, money laundering or merely federal charges of transportation of stolen property, our agency works closely with local, state and other federal agencies to see that justice is done and bring to bear our expertise as financial investigators.

In Tampa, since November of 2010, four members of a larger conspiracy involving theft and structuring have all pled guilty and have been sentenced. According to Robert E. O’Neill, United States Attorney for the Middle District of Florida, U.S. District Judge Elizabeth A. Kovachevich sentenced Elier Boza in February to 37 months in federal prison for conspiring to transport in interstate commerce stolen goods with a value exceeding $5,000. As part of his sentence, the court also entered a $205,000 money judgment against Boza, representing the proceeds he obtained as a result of the thefts, and ordered him to forfeit to the United States a 21 foot Pleasure Pursuit Craft boat and a Ford F150 Truck. Boza pleaded guilty to the thefts on July 22, 2010. According to court documents, Boza, who was a driver for a transport company, and other co-conspirators who worked for Envirofocus Technologies, stole numerous tractor-trailer loads of used automotive batteries, which were then re-sold for a profit. Documents and records were falsified in order to conceal the thefts.

The conspiracy started in 2006 and continued through 2009, resulting in a loss to Envirofocus Technologies and Johnson Controls, Inc. of almost $3.4 million, which the court ordered Boza and his co-conspirators to repay. Co-conspirators Donald Vold and Emely Romero also pleaded guilty to federal charges and were sentenced in separate cases to 24 months and 21 months imprisonment, respectively. Most recently, Donald Lock, another co-conspirator who had previously pled guilty to similar charges in a separate case, received a five year sentence of probation with 8 months of home detention from Federal District Court Judge James D. Whittemore. Lock was also required to pay more than $384,000 in restitution to Envirofocus and Johnson Controls.

These cases were investigated by the Hillsborough County Sheriff's Office and the Internal Revenue Service-Criminal Investigations and were prosecuted by United States Attorney Robert E. O'Neill and Assistant United States Attorney Josephine W. Thomas. It is anticipated that the remaining conspirators will be tried later this year, however, it remains that all individuals are presumed innocent until proven guilty and that Indictments and Informations are mere charging documents alleging violations of federal law.

For more information on the IRS’s role in combating crimes through the analysis and use of financial information you can go to the IRS website at the following links:

http://www.irs.gov/compliance/enforcement/article/0,,id=113001,00.html (link to the history of IRS’s role in Money Laundering and the start of the BSA); 

http://www.irs.gov/compliance/enforcement/article/0,,id=117522,00.html (link to IRS Criminal Investigation s work in Financial Institution Fraud).
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Monday, September 19, 2011

Donald Turner (aka Donald Wood), Convicted in Pennsylvania of Conspiring to Defraud The Internal Revenue Service


Source- http://www.justice.gov/tax/txdv111197.htm

WASHINGTON – Donald Turner (aka Donald Wood), formerly of Littleton, Colo., was found guilty of conspiring to defraud the United States by a federal jury in the U.S. District Court for the Western District of Pennsylvania in Erie, Pa., the Justice Department and Internal Revenue Service (IRS) announced today. The Honorable Maurice B. Cohill, Senior District Judge, presided over the case.

According to testimony and evidence presented at trial, Turner promoted and sold memberships in First American Research (FAR) and a book entitled, “Tax Free! How the Super Rich Do It.” In 1991, Turner sold the program to Daniel Leveto, a Meadville, Pa., veterinarian. As part of the program, Leveto utilized various methods to conceal his income from the IRS as directed by Turner. One of these methods included the purported sale of Leveto’s veterinary business to an alleged offshore entity called Center Company. Leveto actually retained dominion and control over the veterinary business. The object of the conspiracy was to conceal and prevent the IRS from discovering and identifying income received by the Levetos and assets held by them. In June of 2005, a jury convicted Leveto of all counts, and he was subsequently sentenced to 46 months in prison.

Turner faces a maximum punishment of up to five years in prison and a $250,000 fine. Judge Cohill scheduled sentencing for Jan. 18, 2012.


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Sunday, September 18, 2011

Melissa Edwands Sentenced to Prison for Aiding in Preparation of False Tax Returns



Source- http://www.justice.gov/tax/txdv111195.htm

WASHINGTON - Melissa Edwards was sentenced by U.S. District Court Judge Brian A. Jackson to 30 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 Edwards to serve a one-year term of supervised release following her prison term and to pay restitution to the IRS in the amount of $56,040. The case arises out of a March 31, 2010, indictment filed in the Middle District of Louisiana.

According to her plea agreement, Edwards, who worked at Jasmine and Melissa’s Tax Service in Baton Rouge, La., prepared fraudulent tax returns for 20 clients that reported falsely inflated telephone excise tax refund (TETR) credits in the total amount of $126,856. 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 between $400,000, but less than $1 million.

John A. DiCicco, Principal Deputy Assistant Attorney General for the Department of Justice Tax Division, commended the IRS special agents who investigated this case and Tax Division Trial Attorneys Kevin C. Lombardi and Matthew J. Mueller and Assistant U.S. Attorney Rene Salomon of the Middle District of Louisiana, who prosecuted the case.



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Saturday, September 17, 2011

Texas Federal Court Bars Ronald Fontenot and Anthony Burrell from Promoting Alleged Tax Scam Involving Fictitious Methane at Landfills


Source- http://www.justice.gov/tax/txdv111192.htm

WASHINGTON - A federal court in Beaumont, Texas, has permanently barred two men from promoting an alleged tax fraud scheme involving bogus tax credits for the production of methane gas from landfills, the Justice Department announced today. Ronald Fontenot and Anthony Burrell consented to the civil injunction order against them without admitting wrongdoing. The order was signed by Judge Marcia A. Crone of the U.S. District Court for the Eastern District of Texas.

According to the government complaint, which was originally filed in Florida, the scheme involved bogus federal income tax credits available to producers of fuel from non-conventional sources. The government suit alleges that George Calvert and Gregory Guido of Florida, both previously enjoined and criminally convicted as a result of their involvement, concocted the scheme and promoted it through tax preparers like Fontenot and Burrell, who acted as sub-promoters to individual customers. The 32 defendants named in the civil injunction lawsuit allegedly helped customers claim more than $30 million in tax credits for the production and sale of fuel from landfill gas facilities that either did not exist or belonged to others. According to the complaint, Fontenot, of Lake Charles, La., and Burrell, of Livingston, Tex., are allegedly responsible for preparing federal income tax returns for customers that claimed at least $2.6 million in false tax credits.

Fontenot and Burrell are the 29th and 30th of the 32 defendants to be enjoined. The case against the two remaining defendants is pending. The order also requires Fontenot and Burrell to produce to the government a list identifying all customers for whom they prepared tax returns claiming the fuel credits between Jan. 1, 2003, and July 1, 2009.


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Friday, September 16, 2011

Becky M. McCord Sentenced for Tax and Bankruptcy Fraud


Source- http://www.fbi.gov/atlanta/press-releases/2011/former-dawson-county-public-official-sentenced-for-tax-and-bankruptcy-fraud?utm_campaign=email-Immediate&utm_medium=email&utm_source=atlanta-press-releases&utm_content=31791

GAINESVILLE, GA—BECKY M. MCCORD, 62, of Dawsonville, Georgia, was sentenced to federal prison today by Senior United States District Judge William C. O’Kelley for tax evasion and bankruptcy fraud.

United States Attorney Sally Quillian Yates said, “Public officials who are caught lying, stealing, and abusing their position of trust will end up in jail. This defendant stole from the people of Dawson County to enrich herself. She will now spend two years in federal prison.”

“Today, Ms. McCord not only has to face the consequences of failing to report all of her income on her federal tax return,” said IRS Criminal Investigation Special Agent in Charge, Reginael D. McDaniel. “She must also accept the consequences of betraying the trust of the people she served in Dawson County.”

Brian D. Lamkin, Special Agent in Charge, FBI Atlanta, said, “The FBI remains committed to investigate and hold accountable those who betray the public trust placed in them and their position. This case is an example of a public employee who blatantly stole from her employer—the taxpayers.”

MCCORD was sentenced to two years in prison to be followed by three years of supervised release, ordered to pay a $10,000 fine, and pay $51,611 in restitution to the IRS for back taxes. MCCORD pleaded guilty to the charges on June 17, 2011.

According to United States Attorney Yates, the charges, and other information presented in court: McCORD served as the Clerk of Court for the Superior Court of Dawson County, Georgia, from 1993 to February 2010. Between 2006 and 2009, McCORD wrote and signed checks payable to herself from the Dawson County Superior Court’s bank account to which she was not entitled. The total amount of these checks approximated $134,000. McCORD subsequently cashed those checks at various banks in Dawsonville and used the funds for personal expenses such as a car loan and mortgage payments.

McCORD did not report on her 2009 federal tax return the funds she withdrew from the Dawson County Superior Court’s bank account for personal use, nor did she report additional legitimate income that she received from the collection of passport fees. McCORD also failed to report this income on a bankruptcy petition that she filed jointly with her spouse in December 2007, and amended several times through June 2009.


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Gary Shapoff Pleads Guilty to Money Laundering and Tax Fraud


Source- http://www.fbi.gov/buffalo/press-releases/2011/man-pleads-guilty-to-money-laundering-and-tax-fraud?utm_campaign=email-Immediate&utm_medium=email&utm_source=buffalo-press-releases&utm_content=31947

ROCHESTER, NY—U.S. Attorney William J. Hochul, Jr. announced today that Gary Shapoff, 61, of Pittsford, New York, pleaded guilty before U.S. District Judge Charles J. Siragusa, to money laundering and tax fraud statutes. Money laundering carries a maximum penalty of 10 years in prison, a fine of up to $5,000,000, or both. Tax fraud carries a maximum penalty of three years, a fine of $100,000, or both.

Assistant U.S. Attorney Bradley E. Tyler, who handled the case, stated that between January 2004 and July 2008, the defendant participated in a scheme to defraud investors who had invested approximately $2.5 million in international currency trading investments through the company Atwood & James S.A. During the course of the scheme, Shapoff used the mail and wire communications to facilitate the execution of the fraud. He also used illegally obtained investor proceeds to promote the scheme, in violation of the federal money laundering provisions, and did not report the gains that he made from the fraud on his individual tax returns.

“This marks the third case in the last two days in which investors turned over their hard earned money to someone they trusted,” said U.S. Attorney Hochul. “I urge the public to be cautious, do your homework, know exactly who it is that you are giving your money to and do not be afraid to ask questions.”


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Wednesday, September 14, 2011

Maurice Goulet Sentenced for Obstructing and Impeding the Internal Revenue Service


Source- http://www.justice.gov/tax/txdv111179.htm

WASHINGTON – Maurice Goulet was sentenced today in Charlotte, N.C., by U.S. District Court Judge Robert J. Conrad Jr. to six months in prison for his conviction for corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, the Justice Department and Internal Revenue Service (IRS), announced today. Goulet pleaded guilty on Feb. 7, 2011.

According to court documents, between at least June 1, 1999 and 2001, Goulet was involved with several cigarette businesses, including, Birdtown Enterprises, Consumer Direct Buyers Network LLC and Greenwood Ventures LLC. Beginning in or about 1999, he obtained and used a series of bogus entities to conduct the cigarette business and to divert and conceal his income and assets from the IRS. Between 1999 and 2001, none of these entities filed tax returns with the IRS.

Goulet further admitted that he took a variety of steps to further conceal his income and assets from the IRS for the purpose of obstructing and impeding the due administration of the Internal Revenue laws, including that he used these nominee entities to purchase assets, including two motor homes and a vehicle in nominee names and entities; he used false Employer Identification Numbers (EIN) on bank accounts; he caused a false lien to be placed on at least one asset; and he made false statements to a special agent with the IRS. Goulet also admitted that prior to 2005, the last personal income tax return, IRS Form 1040, that he filed with the IRS was in 1996.


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Tuesday, September 13, 2011

Valerie Byrd and Isaac Dailey Plead Guilty for Role in Tax Fraud Conspiracy


Source- http://www.justice.gov/tax/txdv111172.htm

WASHINGTON – Valerie Byrd and Isaac Dailey, both residents of Montgomery County, Ala., each pleaded guilty to one count of conspiring to defraud the United States, the Department of Justice and the Internal Revenue Service (IRS) announced today.

According to court documents, between February 2011 and April 2011, Byrd conspired with others to fraudulently obtain tax refunds. The conspiracy involved using stolen identities to file false income tax returns claiming refunds. Byrd opened up four bank accounts to receive tax refunds from the scheme. Thirty different refunds, issued in the name of 30 different individuals, were deposited into the bank accounts. To disburse these proceeds, Byrd would transfer the funds to her co-conspirators or withdraw cash. Byrd retained a portion of the proceeds for herself.

Isaac Dailey was previously indicted by a federal grand jury sitting in Montgomery, Ala., on Dec. 14, 2010, on a variety of charges stemming from a large-scale tax fraud and identity theft conspiracy based in Montgomery. According to court documents, the conspirators used stolen identities to file millions of dollars in false tax returns claiming fraudulent refunds over a two-year period in 2009 and 2010. Between January of 2009 and May of 2010, Dailey was responsible for funneling tens of thousands of dollars in false tax refunds to his co-conspirators. Dailey permitted his co-conspirators to deposit fraudulent tax refunds into his bank account. Dailey would withdraw the money, provide the funds to various co-conspirators and retain a portion of each of these transactions.

Sentencing has not yet been scheduled for either Byrd or Dailey. Both face a maximum of 10 years in prison, three years of supervised release, restitution and a maximum fine of $250,000, or twice the loss caused by the offense.


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