Michelle Torres Charged in $45 Million Tax Refund Scheme

Source-  http://www.fbi.gov/buffalo/press-releases/2012/rochester-woman-charged-in-45-million-tax-refund-scheme 

ROCHESTER, NY—U.S. Attorney William J. Hochul, Jr. announced today that Michelle Torres, 36, of Rochester, N.Y., was arrested and charged by criminal complaint with conspiracy, mail fraud, identity theft, and filing false claims in connection with a large, nationwide tax refund scheme.

Assistant U.S. Attorney Richard A. Resnick, who is handling the case, stated that according to the Criminal Complaint, from February 1, 2011 to October 31, 2011, Torres was involved in a scheme to obtain income tax refunds by the filing of fraudulent federal income tax returns with the Internal Revenue Service. Specifically, stolen identities and fabricated wages and tax withholdings were utilized to file the fraudulent federal income tax returns. Most of the returns were filed using the names and Social Security numbers of individuals residing in Puerto Rico who had no knowledge of the filings. Refund checks issued as a result of the fraudulent returns were sent to various addresses in Rochester and other locations in the country.

A total of 8,336 federal returns were filed by a company in Bronx, New York claiming refunds totaling $45,768,391. A total of $3,321,542.00 for 590 of the returns were sent by the IRS to various locations in the Rochester area. Torres participated in the scheme by retrieving refund checks which were sent to Rochester and forwarding the money to individuals in the New York City area who were responsible for filing the false tax returns.

“This office is committed to pursuing those who would seek to defraud taxpayers and the American public,” said United States Attorney Hochul. “We will work with our federal, state, and local partners to bring anyone who engages in such behavior to justice.”

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Channavel “Danny” Kong Sentenced to Two Years in Prison for Bribery and Tax Scheme

Source-  http://www.fbi.gov/philadelphia/press-releases/2012/former-owner-of-temporary-labor-firm-sentenced-to-two-years-in-prison-for-bribery-and-tax-scheme 

CAMDEN, NJ—The former owner and operator of Philadelphia temporary labor firm Sunrise Labor was sentenced today to 24 months in prison for bribing a senior investigator with the New Jersey Department of Labor & Workforce Development (LWD) and failing to pay taxes, U.S. Attorney Paul J. Fishman announced.

Channavel “Danny” Kong, 40, of Philadelphia, previously pleaded guilty to an information charging him with one count each of bribery and failing to pay federal payroll taxes. Kong entered his guilty plea before U.S. District Judge Noel L. Hillman, who also imposed the sentence today in Camden federal court.

According to documents filed in this case and statements made in court:

From 2006 to 2009, Kong owned and operated Sunrise Labor (Sunrise), which was in the business of providing temporary employees to client businesses, including businesses located in New Jersey. Kong admitted that from 2006 to January 2009, he made illegal cash payments to Joseph Rivera, 55, of Winslow, N.J., a senior investigator with LWD’s Division of Wage and Hour Compliance. Kong admitted he paid Rivera bribes totaling approximately $55,281 with the intent to influence Rivera not to conduct audits and inspections, including inspections and audits examining Sunrise’s compliance with state payroll tax obligations.

Kong also admitted that he was responsible, as the operator of Sunrise, for withholding, collecting, and accounting for and paying to the U.S. all employment taxes imposed by the Internal Revenue Code and that he willfully failed to collect and truthfully account for these taxes, which caused a tax loss to the IRS of between $80,000 and $200,000.

In addition to the prison term, Judge Hillman ordered Kong to serve three years of supervised release and to cooperate fully with the IRS in paying his outstanding federal tax obligations. Additionally, Judge Hillman ordered the defendant to pay the state of New Jersey $15,000 in restitution.

On March 30, 2009, Rivera pleaded guilty before Judge Hillman to an information which charged him with one count each of solicitation and acceptance of a bribe, and tax evasion. At his plea hearing, Rivera admitted that Kong was not the only person from whom he accepted bribes, which totaled more than $1.86 million from owners and operators of temporary labor firms. In exchange for these payments, Rivera refrained from inspecting these firms and falsely certified that they were in compliance with state wage and hourly statutes and regulations. As part of his plea, Rivera forfeited $1.86 million. The forfeitures included $120,400 in cash; two properties in Ocean City, N.J.; a property in Fort Lauderdale, Fla.; a 2008 Lexus ES 350 automobile; eight gold plates; and numerous other gold and silver coins. Rivera awaits sentencing.

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Brandon C. Davis Receives 37-Month Sentence for Selling More Than $1 Million in Counterfeit Financial and Tax Preparation Software

Source-  http://www.fbi.gov/cincinnati/press-releases/2012/cincinnati-man-receives-37-month-sentence-for-selling-more-than-1-million-in-counterfeit-financial-and-tax-preparation-software 

CINCINNATI—Brandon C. Davis, 31, of Cincinnati, was sentenced in U.S. District Court to 37 months in federal prison for selling more than $1 million worth of counterfeit financial and tax preparation software through an Internet auction site.

Carter Stewart, U.S. Attorney for the Southern District of Ohio; Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS); Dugan T. Wong, Inspector in Charge, U.S. Postal Inspection Service, Pittsburgh Division; and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the sentence handed down today by Senior U.S. District Judge Herman J. Weber.

Davis pleaded guilty on June 6, 2011 to one count each of mail fraud, copyright infringement, and two counts of filing a false income tax return. His sentence is 37 months for the mail fraud and copyright infringement and 36 months for each of the two counts of filing a false income tax return. Judge Weber ordered the sentences to run concurrently.

According to a court documents, Davis purchased software by download or on a CD, with accompanying label and packaging that was protected by copyright, namely Quicken and Turbo Tax software manufactured by Intuit, Inc. Davis copied each CD of original software multiple times without permission and created counterfeit packaging and labeling for the CDs.

Davis sold the counterfeit Intuit software on eBay, received payment, and then mailed the counterfeit software to the purchaser via the United States Postal Service. Within the packaging, Davis sometimes included a false disclaimer claiming that he was merely acting as a broker for another seller. Davis also falsely represented on the online auctions that he was selling original software, but instead the defendant sold counterfeit software, usually at prices below manufacturer’s suggested retail price.

Davis failed to report the income from the counterfeit software sales when he filed his income tax returns for 2008 and 2009.

“To perpetuate his scheme, [Davis] created 37 different eBay accounts for the illegal sales, typically with false information used to set up the account,” Assistant U.S. Attorney Tim Mangan wrote in a sentencing memorandum filed with the court. “The funds from the sales were processed through… more than 20 different bank accounts controlled by the Defendant. This all stands in contrast to the Defendant’s tax returns, which represented that he made a modest living as an independent photographer.”

Davis was also ordered to pay $80,074.08 in restitution to the IRS, forfeit all computer items used to manufacture and distribute the fake software, as well as forfeiting a 2006 Hummer, and $192,117.31 that U.S. Postal Inspectors seized from his bank accounts. He also has to pay $158,980 in restitution to the software manufacturer.

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Ricky Walter Denton Sentenced for Using Fellow Inmates’ Information to Defraud IRS

Source-  http://www.fbi.gov/birmingham/press-releases/2012/tuscumbia-man-sentenced-for-using-fellow-inmates-information-to-defraud-irs 

BIRMINGHAM—A federal judge sentenced a Tuscumbia man Monday to almost six years in prison for a federal tax fraud conspiracy in which he took the Social Security numbers and birth dates of fellow prison inmates and used them to file false tax returns, announced U.S. Attorney Joyce White Vance, IRS Criminal Investigation Special Agent in Charge Rodney E. Clarke, FBI Special Agent in Charge Patrick Maley, and Colbert County Sheriff Ronnie May.

U.S. District Judge Inge P. Johnson sentenced RICKY WALTER DENTON, 46, to 70 months in prison for conspiracy to defraud the Internal Revenue Service, mail fraud, and conspiracy to commit mail fraud. Denton pleaded guilty to the charges in August.

Police discovered the evidence of tax fraud while investigating the December 2009 robbery of First Southern Bank in Colbert County. A federal jury convicted Denton in July for the First Southern armed bank robbery. He is scheduled for sentencing in that case Feb. 17.

“The cooperative work of law enforcement in these two cases closed the trail on someone who threatened another person’s life to steal money from a bank, and who took the identities of people around him so he could steal money from the taxpayers,” Vance said.

“The IRS is aggressively pursuing those who steal others’ identities in order to file false tax returns,” Clarke said. “Our vigorous enforcement efforts along with the U.S. Attorney’s Office and our law enforcement partners will help protect taxpayers in the Northern Alabama area from being victimized by this tax-refund related identity theft. The IRS is taking additional steps this tax filing season to further prevent, detect and resolve identity theft cases as soon as possible. To learn more about IRS related identity theft, please visit www.irs.gov.

The tax fraud involved a three-year scheme in which Denton and a co-defendant, JOANN SMITH CHOAT, 55, also of Tuscumbia, conspired to obtain $148,685 in false income tax refunds by taking inmates’ identifying information and filing false returns. Judge Johnson sentenced Choat in August to one year and a day in prison for her role in the tax fraud.

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Financial Advisor Kevin P. Mahoney Convicted of Tax Crimes and Contempt

Source-  http://www.justice.gov/tax/2012/txdv12104.htm 

WASHINGTON – A jury convicted Attleboro, Mass., licensed stockbroker, insurance agent and financial advisor Kevin P. Mahoney today on tax and contempt of court charges, the Justice Department and Internal Revenue Service (IRS) announced. Trial began on Jan. 23, 2012, before U.S. District Judge Joseph Tauro, sitting in Boston. Mahoney was charged with one count of corruptly endeavoring to obstruct the administration of the Internal Revenue laws, eight counts of contempt of court and eight counts of filing false tax returns. He was convicted of all counts.

The evidence at trial showed that Mahoney had failed to pay all of his taxes for the years 1996 through 2001, leading the IRS to assess Mahoney for taxes, interest and penalties for some of those years. Mahoney had attempted to pay these tax-related debts by submitting to the IRS more than $2.2 million in fake financial instruments called Bills of Exchange and checks drawn on a closed bank account. In addition, after filing for bankruptcy, Mahoney caused a worthless promissory note made by another individual to be submitted to the IRS as purported payment for approximately $805,000 in taxes that Mahoney owed to the IRS.

The evidence also showed that Mahoney had submitted to the IRS false individual income tax returns for the years 2000 through 2006 that he knew failed to report more than $1.3 million in taxable income received from various financial institutions. Along with his tax returns, Mahoney had submitted altered IRS Forms 1099-MISC on which he changed to zero the amount of non-employee compensation that the financial institutions reported paying him. For instance, Mahoney attached to his 2006 tax return an altered Form 1099-MISC in which he claimed that a life insurance company paid him non-employee compensation of zero when it had actually paid him approximately $73,000. Mahoney also filed a false 2007 Nonresident Alien Tax Return in which he falsely claimed a refund of almost $389,000.

According to evidence at trial, the U.S. District Court for the District of Massachusetts had permanently enjoined Mahoney in July 2002 from, among other things, engaging in conduct that interfered with the administration of the Internal Revenue laws. The injunction proceedings were brought against Mahoney in accordance with a lawsuit filed by the Justice Department’s Tax Division. Mahoney committed criminal contempt by violating the permanent injunction by assisting in the preparation and submission to the IRS of income tax returns for other people that falsely claimed more than $50 million dollars in refunds based on false IRS Forms 1099-OID and an IRS Form 1099-C falsely reporting $300 million in debt purportedly owed to a third party by an IRS employee.

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Douglas J. Kuester Indicted for Using Stolen Identities to Obtain Tax Refunds

Source-  http://www.justice.gov/tax/2012/txdv12098.htm 

WASHINGTON – Douglas J. Kuester of Silver City, N.M., was arrested today on identity theft and tax fraud charges, the Justice Department and the Internal Revenue Service (IRS) announced. A federal grand jury in Las Cruces, N.M., returned an indictment under seal on Jan. 18, 2012, charging Kuester with using stolen identities to file false tax returns. The 41-count indictment, which was unsealed after Kuester’s arrest, charges Kuester with filing false claims, wire fraud and aggravated identity theft.

According to the indictment, between 2007 and 2010, Kuester used stolen identities to file false tax returns that fraudulently claimed refunds. Further, Kuester had the fraudulent refunds delivered to him or deposited into accounts that he controlled.

U.S. Attorney for the District of New Mexico Kenneth J. Gonzales said, “Douglas Kuester is charged with using stolen identities to obtain fraudulent income tax refunds. This criminal conduct results not only in a financial loss to the U.S. Treasury, but also causes harm and hardship to the victims of identity theft. While I am committed to working with the IRS to identify, investigate and vigorously prosecute those who are involved in tax refund related identity theft schemes like the one charged in this case, it is important for each of us to take steps to protect ourselves against identity theft by safeguarding personal information such as our social security numbers and dates of birth.”

“The Justice Department is working closely with the IRS to investigate, prosecute, and punish tax refund crimes committed through the theft of identities,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “Now, more than ever, we must remain vigilant against the unauthorized use of identification information to defraud the U.S. government.”

“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement. “Our cooperative work with the U.S. Attorney’s Office and the Tax Division will help protect taxpayers in New Mexico from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, he faces a potential maximum penalty of five years in prison for each false claims count, 20 years in prison for each wire fraud count and a mandatory two-year sentence for each aggravated identity theft count, to run consecutive to any other sentence imposed. He is also subject to fines and mandatory restitution if convicted.

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David Newmark Pleads Guilty to Wire Fraud and Tax Evasion

Source-  http://www.fbi.gov/newark/press-releases/2012/former-cfo-of-new-jersey-investment-management-company-pleads-guilty-to-wire-fraud-and-tax-evasion 

NEWARK, NJ—The former chief financial officer of Columbus Hill Capital Management LP, an investment management firm based in Short Hills, N.J., today admitted to embezzling more than $10.4 million from his employer, announced U.S. Attorney Paul J. Fishman.

David Newmark, 39, of Towaco, N.J., surrendered to federal authorities today and pleaded guilty to an information charging him with one count of wire fraud and one count of tax evasion. Newmark entered his guilty plea before U.S. District Judge William H. Walls in Newark federal court.

“David Newmark admitted stealing from his own management company, creating a phony account to collect more than $10 million in fraudulent deposits,” said U.S. Attorney Fishman. “Making personal use of company cash, it was only a matter of time before he was caught with his hand in the piggy bank. Now not only will Newmark have to pay back the money he stole, he will have to pay a debt to society as a convicted felon.”

According to documents filed in this case and statements made in court:

Newmark admitted that between February 2008 and March 2011, he embezzled from his former employer by requesting checks and wire transfers from custodians of the investment management company accounts and diverting the funds to bank accounts he controlled. Newmark deposited the checks and wires—including a single wire transfer of more than $2.4 million in April 2010—into a bank account he set up with a name similar to that of his employer. The majority of the $10.4 million that Newmark embezzled came from the management company, rather than investor funds.

For the 2008 tax year, Newmark did not disclose to the Internal Revenue Service (IRS) more than $2.8 million he received in connection with the fraudulent scheme. That failure resulted in a tax loss to the United States of $1,012,441.

The wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine, or twice the pecuniary gain or loss resulting from Newmark’s criminal conduct. The tax evasion charge carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing is currently scheduled for April 24, 2012.

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Pamela Natoli Sentenced to 21 Months in Federal Prison for Wire and Tax Fraud

Source-  http://www.fbi.gov/albany/press-releases/2012/benson-woman-sentenced-to-21-months-in-federal-prison-for-wire-and-tax-fraud 

The Office of the United States Attorney for the District of Vermont stated that on January 17, 2012, Pamela Natoli, 54, was sentenced to serve 21 months in federal prison after she pled guilty to wire and tax fraud charges. U.S. District Court Judge William K. Sessions III also ordered Natoli, who lived in Benson, Vermont while she was committing the offenses, to serve three years of supervised release following her prison term. Natoli must also pay full restitution to her victims.

Natoli faced a prison sentence of up to 20 years on the wire fraud charge and up to three years on the tax fraud charge. Judge Sessions found that Natoli’s recommended prison term under the federal Sentencing Guidelines was between 27 and 33 months. In sentencing Natoli to a term of imprisonment six months below that range, Judge Sessions considered, among other factors, Natoli’s remorse, her efforts to provide restitution to her victims, and her lack of a criminal record.

According to court records, Natoli was employed as a personal assistant by Ms. Frances Bull from November of 2006 until she was fired in October of 2009. During most of that time, Natoli was, on average, stealing thousands of dollars from Ms. Bull every month. Typically, Natoli would write checks from Ms. Bull’s bank account to pay Natoli’s own credit card bills. Ms. Bull is an artist who was operating a gallery in Brandon, Vermont during the time of the offenses. In all, Natoli stole approximately $230,000 from her employer.

While she was embezzling money, Natoli filed false income tax returns with the Internal Revenue Service. Specifically, Natoli failed to report the proceeds of her criminal conduct as taxable income.

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Richard Bell Pleads Guilty in Fraud Scheme for Filing a False Federal Income Tax Return

Source-  http://www.fbi.gov/philadelphia/press-releases/2012/former-city-sheriffs-department-employee-pleads-guilty-in-fraud-scheme 

PHILADELPHIA—Richard Bell, 36, of Philadelphia, pleaded guilty today to his role in a scheme to defraud the Philadelphia Sheriff’s Office. Bell was charged with and pleaded guilty to one count each of wire fraud and of willfully filing a false federal income tax return. U.S. District Court Judge Legrome Davis scheduled sentencing for April 16, 2012.

Bell was employed in the accounting department of the Philadelphia Sheriff’s Office. Between 2007 and 2010, Bell wrote fraudulent checks drawn on bank accounts of the Philadelphia Sheriff’s Office to unauthorized individuals and companies. Bell forwarded over $400,000 of those checks to Robert Rogers. Rogers cashed the checks made payable to himself and forwarded the other checks to other individuals to cash or deposit. In particular, Rogers forwarded to Jackiem Wright and Reginald Berry over $147,000 in checks made payable to one company. Wright and Berry deposited those checks into the company bank account, and withdrew or attempted to withdraw the proceeds. Rogers, Wright, and Berry pleaded guilty to their roles in the scheme last week and are awaiting sentencing, scheduled in April.

Bell also assisted a person known to the United States Attorney in fraudulently purchasing properties at Sheriff’s sale for only ten percent of the bid price. Bell carried out the scheme by removing the checks that the person submitted to the Philadelphia Sheriff’s Office for the remaining 90 percent before the checks were deposited. For this, Bell charged and received a fee from the person.

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Jessica N. Childers Sentenced to Nine Years in Prison for Receiving Nearly $1 Million in Fraudulent Income Tax Refunds

Source-  http://www.fbi.gov/springfield/press-releases/2012/west-frankfort-woman-sentenced-to-nine-years-in-prison-for-receiving-nearly-1-million-in-fraudulent-income-tax-refunds 

Stephen R. Wigginton, the United States Attorney for the Southern District of Illinois, announced that Jessica N. Childers, 38, of West Frankfort, Illinois, was sentenced in United States District Court in Benton today to a term of 108 months’ imprisonment for her role in submitting false income tax returns to the Internal Revenue Service between 2008, and 2010, in which she fraudulently claimed entitlement to $1,532,184 in refunds and from which she actually received $998,614.34. Previously, on August 11, 2011, Childers pled guilty to a three-count information charging her with conspiracy to submit false, fictitious, and fraudulent claims to the United States; receipt of money stolen from the United States; and aggravated identity theft.

Evidence offered in support of the guilty pleas and sentence showed that in January, 2008, Childers began electronically submitting false income tax returns to the IRS using the names, dates of birth, and Social Security numbers of real individuals who were deceased. Between January 2008 and March 2010, Childers submitted 572 such false returns claiming over $1.5 million in fraudulent refunds. After discovering the scam, federal authorities were able to seize $192,512.55 from her bank accounts.

In addition to the nine-year term of imprisonment, Childers was ordered to pay $806,101.79 in restitution to the United States Treasury, a special assessment of $300, and was placed on a term of three years’ supervised release to follow her incarceration.

Under federal law, parole has been abolished meaning that Childers will be required to serve a minimum of 85 percent of her 108-month sentence.

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Philip Butcher Pleads Guilty to Claiming Fraudulent Tax Refunds

Source-  http://www.justice.gov/tax/2012/txdv12071.htm 

WASHINGTON – Philip Butcher pleaded guilty today before U.S. District Judge Patricia Seitz in Miami to filing a false claim for a tax refund, the Justice Department and the Internal Revenue Service (IRS) announced.

Butcher, formerly a resident of Rogers, Ark., admitted that he filed a false 2008 individual income tax return which sought a fraudulent tax refund of $672,781. According to court documents, PMDD Services LLC, an Idaho-based tax preparation firm, prepared the return and filed false IRS Forms 1099-OID with the IRS on Butcher’s behalf. In exchange, Butcher agreed to pay 10 percent of any fraudulent tax refund he received to PMDD Services. Butcher received a fraudulent tax refund of $672,781, paid $67,278 to the principals of PMDD Services, and then filed an amended 2008 individual income tax return, also prepared by PMDD Services, claiming a fraudulent tax refund of $1,456,696.

Butcher faces a maximum potential sentence of 5 years in prison and a $250,000 fine, plus restitution to the Internal Revenue Service.

The indictment against Butcher was originally returned by a grand jury in the Western District of Arkansas. Butcher elected to transfer the case to the Southern District of Florida for his guilty plea and sentencing under Federal Rule of Criminal Procedure 20, which allows a defendant, with the consent of the government, to transfer a case to the district where he is “present” if he states in writing that he intends to plead guilty and be sentenced in that district.

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Tracey Fergerson Pleads Guilty to Conspiring to Defraud The United States Government

Source-  http://www.justice.gov/tax/2012/txdv12068.htm 

WASHINGTON – The Justice Department and the Internal Revenue Service (IRS) announced that Tracey Fergerson pleaded guilty today before Magistrate Judge Charles S. Coody in Montgomery, Ala., to conspiring to defraud the United States government. Fergerson and a co-defendant were charged by a grand jury in a 22-count indictment that was unsealed on March 30, 2011.

According to the plea agreement, Fergerson participated in a tax fraud scheme that was perpetrated through a tax return preparation business called Fast Tax Cash in Montgomery. From 2005 through 2008, Fergerson recruited customers for Fast Tax Cash and coached them to provide false information in order to fraudulently increase their tax refund amounts. Fergerson also admitted that she improperly obtained personal information, including names and Social Security numbers, and used that personal information to have false tax returns prepared at Fast Tax Cash. Fergerson admitted that she would receive payment for the false refunds that were obtained.

A sentencing date has not yet been set. Fergerson faces a maximum potential sentence of 10 years in prison and fines of up to $250,000.

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Larry Carnell Dixon Sr., Allegedly Files Fraudulent Tax Returns for Customers

Source-  http://www.justice.gov/opa/pr/2012/January/12-tax-056.html 

The United States has sued Larry Carnell Dixon Sr., seeking to bar him and his business, Dixon’s Tax Service, from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction complaint, filed in the U.S. District Court for the Middle District of Louisiana, alleges that Dixon, of Zachary, La., prepares federal income tax returns for customers claiming fabricated and inflated business expense deductions for existing or fictitious businesses. The lawsuit alleges that Dixon fraudulently uses these fabricated business expenses to decrease his customers’ tax liabilities or increase their refunds, including refunds arising from the earned income tax credit.

According to the complaint, an Internal Revenue Service (IRS) investigation revealed that 194 of the 198 income tax returns prepared by Dixon’s Tax Service and audited by the IRS resulted in tax deficiencies. The lawsuit alleges that the tax harm caused by Dixon’s misconduct could be as much as $39 million.

The complaint also asks the court to require Dixon to provide the government with a list of all customers for whom Dixon’s Tax Service prepared returns after Jan. 1, 2006.

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Real Estate Investor Deangelo Wade, Sentenced for Tax and Mortgage Fraud

Source-  http://www.fbi.gov/detroit/press-releases/2012/detroit-real-estate-investor-sentenced-for-tax-and-mortgage-fraud 

DETROIT, MI—On January 11, 2012, Deangelo Wade, of Detroit, was sentenced to 40 months’ imprisonment and ordered to pay restitution to the IRS and the FDIC. In addition, Abe Beydoun was sentenced to 12 months and one day imprisonment and ordered to pay restitution to the FDIC, United States Attorney Barbara L. McQuade announced today. Ms. McQuade was joined in the announcement by Special Agent in Charge Andrew G. Arena, Federal Bureau of Investigation, and Special Agent in Charge Erick Martinez, Internal Revenue Service-Criminal Investigation.

Deangelo Wade, 41, and Abe Beydoun, 36, were sentenced by United States District Judge Robert H. Cleland. Judge Cleland also ordered Wade pay a special assessment of $200 and restitution to the IRS of $224,000; Beydoun was ordered to pay a special assessment of $100. Both, Beydoun and Wade, were ordered to pay restitution of $1.8 million to the FDIC and received three years of supervised released after jail time. Wade pled guilty in April 2011 to one count of mortgage fraud and one count of filing a false tax return. Beydoun pled guilty in June of 2011 to one count of mortgage fraud.

According to court documents, between 2004 and 2006, Deangelo Wade, Abe Beydoun and others executed a scheme to defraud IndyMac Bank in connection with the purchase of four properties located on Tuscan Hills Dr. in Plymouth, MI. Wade conducted real estate transactions by flipping houses and Abe Beydoun was a loan officer employed by Direct Lending Inc. in Dearborn. Wade used straw buyers and false information to obtain mortgages, from IndyMac Bank, on the properties under his real estate business with the assistance of Beydoun. Wade repaired the properties and sold them at higher values resulting in large gains. At the sales closing, the title company would issue a check to the straw buyer and the straw buyer would sign the check over to Deangelo Wade. At the time of the offense, IndyMac Bank was insured by the FDIC. From 2004 - 2006, Wade failed to report the income he made from his real estate business; Wade knowingly failed to report the commissions and gains he earned from the sale of the properties.

In November of 2006, Wade purchased a home and secured a mortgage for $1.6 million with the assistance of Beydoun. After inflating the value of the property, Wade received over $395K from the loan proceeds of the home. Wade also failed to report this additional income on his 2006 tax returns.

“Mortgage fraud remains a prosecution priority because it is a significant problem in Michigan. Mortgage fraud leads to foreclosed homes, which reduce property values and become havens for criminal activity,” McQuade said.

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Joseph A. Schillace IV Pleads Guilty to Operating an Illegal Gambling Business and Tax Evasion

Source-  http://www.fbi.gov/neworleans/press-releases/2012/hammond-man-pleads-guilty-to-operating-an-illegal-gambling-business-and-tax-evasion 

NEW ORLEANS—JOSEPH A. SCHILLACE IV, age 51, a resident of Hammond, Louisiana, pled guilty in federal court today before U.S. District Judge Nannette Jolivette Brown to operating an illegal gambling business and tax evasion, announced U.S. Attorney Jim Letten.

According to court documents, from on or about January, 1999, and continuously thereafter up to and including April 7, 2011, SCHILLACE did conduct, finance, manage, supervise, direct, and own all or part of an illegal gambling business, to wit: a gambling business involving sports betting. Specifically, SCHILLACE established a “call center” in an apartment in Hammond, Louisiana which was outfitted with multiple telephone lines and computer access. Gamblers seeking to place monetary bets with SCHILLACE’S operation called in to the center and placed their bets with one of several individuals within SCHILLACE’S organization whose responsibility it was to answer the calls and record the bets. After the sporting event, SCHILLACE or one of his associates would collect the gambling losses from or pay out the gambling winnings to each gambler. Regardless of the result of the bet, SCHILLACE’S gambling operation would keep a percentage or commission of each bet placed, commonly referred to as the “juice.” The gambling operation involved five or more persons who conducted, financed, managed, supervised, directed, or owned all or part of said illegal gambling business, which remained in substantially continuous operation for a period in excess of thirty days and had a gross revenue of at least $2,000.00 in any single day.

Further, for the calendar years 2004 through and including 2011, SCHILLACE did willfully attempt to evade and defeat a large part of the income and excise tax due and owing by him to the United States of America by concealing and attempting to conceal from the Internal Revenue Service the nature and extent of his income and gross wagers received by intentionally preparing and causing to be prepared, and by signing and causing to be signed, false and fraudulent Forms 1040, U.S. Individual Income Tax Return, and Forms 730, Monthly Tax Return for Wagers, on his behalf, which were filed with the Internal Revenue Service and which said returns reported amounts of his taxable income, income taxes and excise taxes due and owing thereon which the defendant then and there well knew and believed were substantially less than his actual taxable income, income taxes and excise taxes due and owing for the aforementioned months and years.

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Christopher J. Warren Pleads Guilty to $19 Million Fraud Scheme

Source-  http://www.fbi.gov/sacramento/press-releases/2012/folsom-california-man-pleads-guilty-to-19-million-fraud-scheme 

SACRAMENTO, CA—Christopher J. Warren, 29, of Folsom, California, pleaded guilty today to one count of wire fraud and one count of aggravated identity theft related to a $19 million fraud scheme, announced Benjamin B. Wagner, U.S. Attorney for the Eastern District of California.

This case is the product of an investigation by the Internal Revenue Service-Criminal Investigation, the FBI, and the Department of State Diplomatic Security Service. Assistant U.S. Attorneys Russell L. Carlberg, Paul A. Hemesath and S. Robert Tice-Raskin are prosecuting the case.

According to court documents, Warren was indicted in 2009 after defrauding lender Taylor, Bean & Whitaker of over $7 million and fleeing to Beirut, Lebanon, on a privately chartered jet. Warren was arrested attempting to reenter the United States under a fraudulently obtained passport with tens of thousands of dollars hidden in his cowboy boots. Warren’s plea today covered both the $7 million fraud against lender Taylor, Bean & Whitaker, and an additional $12 million in fraudulent loans involving his employment at Loomis Wealth Solutions in Roseville, Calif., in 2007 and 2008. He also pleaded guilty to aggravated identity theft in connection with fraudulently obtaining passports in the names of real persons without their approval. Warren used the stolen identities to purchase gold and to flee abroad.

“This is a very significant plea today involving brazen fraud on lenders,” said U.S. Attorney Wagner. “We will continue our relentless drive to bring to justice those who did so much harm to lenders and households in this district.”

Warren is scheduled to be sentenced by U.S. District Judge John A. Mendez on April 24, 2012. The maximum statutory penalty for a violation of wire fraud is 20 years in prison, a fine of $250,000, or twice the loss caused or gain received, and a three-year period of supervised release. Aggravated identity theft carries a mandatory two-year sentence consecutive to any other sentence. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the federal sentencing guidelines, which take into account a number of variables.

A co-defendant, Scott Cavell, remains a fugitive. The charges against him are only allegations, and he is presumed innocent until and unless proven guilty beyond a reasonable doubt.

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Douglas R. Madsen Convicted of Attempted Evasion of Payment of Income Tax

Source-  http://www.justice.gov/opa/pr/2012/January/12-tax-049.html 

Douglas R. Madsen, a chiropractor from Ephraim, Utah, was convicted today after a jury trial in the U.S. District Court in Salt Lake City of income tax evasion, the Justice Department announced.

According to court documents, Madsen owed more than $1.3 million in assessed income tax, interest and penalties for the years 1995, 1999, 2000, 2001, 2002, 2003 and 2004. According to court documents, Madsen’s tax debt had grown to more than $1.7 million, after accrued interest. The evidence presented at trial showed that Madsen failed to file a tax return for the last 10 years, and also failed to make any voluntary payments on his tax debt for the past decade.

According to court documents, Madsen used nominee trusts to conceal the ownership of property, ultimately causing the transfer of that property to Grand Scale Inc., a Washington corporation of which he was the president, vice president, secretary, treasurer and chairman of the board. In addition, Madsen used other entities to encumber property and cloud equity in that property, using entities such as Entry Level and Willow Valley Trust. According to court documents, Madsen also attempted to obstruct Internal Revenue Service (IRS) levies, on two occasions sending letters to the purchaser of his chiropractic business, once threatening the possibility of felony charges. Madsen was previously held in civil contempt by the U.S. District Court, for failure to comply with court orders with respect to an IRS summons.

Madsen faces a potential maximum sentence of 5 years in prison and a fine of up to $250,000, or twice the gross gain or loss resulting from the offense.

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Largest Recruiter of Investors to Nevin Shapiro’s $930 Million Ponzi Scheme Sentenced to Prison for Lying to the IRS About Millions in Related Income

Source-  http://www.fbi.gov/newark/press-releases/2012/largest-recruiter-of-investors-to-nevin-shapiros-930-million-ponzi-scheme-sentenced-to-prison-for-lying-to-the-irs-about-millions-in-related-income 

NEWARK, NJ—The man who brought more individuals than anyone else to invest in Nevin Shapiro’s $930 million Ponzi scheme was sentenced today to a year and a day in prison for failing to report to the IRS millions of the more than $12 million in related commissions he received, U.S. Attorney Paul J. Fishman announced.

Sydney Jack Williams, 63, of Naples, Fla., previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an information charging him with one count of subscribing to a false tax return. During that proceeding, Williams admitted he recruited more than 60 individuals to invest in Capitol Investments USA, Inc. (“Capitol”), which Shapiro, 42, of Miami Beach, Fla., has admitted was a fraud.

According to the information to which Williams pleaded guilty and statements made in Newark federal court:

Williams was an investor in Capitol, which Shapiro used to solicit approximately $930 million between January 2005 and November 2009 from individuals who believed they were investing in Shapiro’s grocery distribution business. Shapiro has admitted that Capitol had virtually no income generating business during that time, and that he used new investor funds to make principal and interest payments to existing investors, as well as to fund his own lavish lifestyle—including by giving payments and gifts to student and professional athletes. Williams personally invested more than $100 million. Though Williams received more than $7 million in interest payments, he ultimately suffered an overall $3 million loss on his personal investment when the scheme collapsed.

In return for bringing new investors to Capitol, Williams was paid commissions equal to as much as the interest payments for those investors. Williams received more than $12 million for bringing more than 60 investors to Capitol—more money than any other individual received and for more investors than any other individual recruited. Individuals recruited by Williams invested more than $307 million with Capitol, eventually losing more than $38 million as a result of the scheme. The government does not allege that Williams was aware that Shapiro or Capitol were engaged in fraud.

In pleading guilty to subscribing to a false tax return that failed to report $1.7 million income for 2005, Williams admitted that he also failed to report Capitol related income for all tax years from 2004 through 2007. According to the Information, Williams failed to report more than $6.4 million in income during that time and owed approximately $2.2 million in taxes on that income.

Father and son Roberto Torres, 77, of New York and formerly of Lighthouse Point, Fla., and Alejandro Torres, 40, of Boca Raton, Fla.—the former chief financial officer and an accountant with Capitol, respectively—each pleaded guilty April 4, 2011, to one count of securities fraud, admitting that they assisted Shapiro in the operation of the Ponzi scheme. Roberto and Alejandro Torres were sentenced Oct. 5, 2011, to 48 and 46 months in prison, respectively.

In addition to the prison term, Judge Wigenton sentenced Williams to a year of supervised release and ordered him to pay a $25,000 fine. The judge also ordered Williams to cooperate with the IRS in paying his outstanding tax obligations.

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John J. Gross Sentenced to 33 Months in Prison on Fraud and Tax Charges

Source-  http://www.fbi.gov/buffalo/press-releases/2012/prior-felon-sentenced-on-fraud-and-tax-charges 

BUFFALO, NY—U.S. Attorney William J. Hochul, Jr. announced today that John J. Gross, 75, of Niagara Falls, New York, who was convicted of mail fraud and filing a false tax return, was sentenced to 33 months in prison and three years’ supervised release by U.S. District Judge Richard J. Arcara. Judge Arcara also ordered Gross to pay restitution in the amount of $161,000.

First Assistant U.S. Attorney James P. Kennedy, Jr., who handled the case, stated that the fraud arose out of a bid rigging scheme involving work performed by a plumbing and general contracting business that Gross ran out of Niagara Falls, N.Y. Specifically, following a December 2008 storm which caused damage to the Summit Mall in Wheatfield, New York, employees of the defendant’s contracting company submitted two false bids which purportedly came from his competitors. One bid was entirely fabricated by a Gross employee using a supply of letterhead from one competitor. The other bid was obtained under false pretenses from another competitor at Gross’ direction. The bids were then given to an employee of the Summit Mall who presented them to management claiming they were independently obtained. Gross had previously done repairs and improvements at the employee’s home at a substantially reduced cost. As a result of the defendant’s conduct, his company, which submitted the lowest bid, was awarded the contract.

Gross also admitted to defrauding Goodyear Tire and Rubber Company on two occasions. In one instance, he utilized a Goodyear employee to obtain bids provided by other contractors to perform work at Goodyear. This allowed Gross to underbid his competitors. Gross did home repairs at substantially reduced costs or at no cost at this employee’s home. The defendant also gave the employee free charter fishing trips. In the other instance, Gross simply prepared and submitted to Goodyear, a fictitious higher-priced bid purportedly made by one of his competitors.

In addition, Gross maintained two sets of books in order to hide income from the Internal Revenue Service which had an outstanding judgment against him as a result of a tax evasion conviction in the late 1990’s.

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Federal Court Bars Richard Gray Sr. From Preparing Federal Tax Returns for Others

Source-  http://www.justice.gov/tax/2012/txdv12026.htm 

WASHINGTON – A federal court in St. Louis has permanently barred Richard Gray Sr. from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Gray consented, was signed by Judge Rodney Sippel of the U.S. District Court for the Eastern District of Missouri.

According to the government complaint, Gray, who works periodically at a Chrysler plant in Kokomo, Ind., and resides the remainder of the year in St. Louis, prepared over 130 tax returns in 2009. His customers allegedly included family, friends, neighbors and co-workers. The complaint states that Gray listed fictitious businesses, fake deductions and bogus dependents on his customers’ returns in order to understate their tax liabilities or claim refunds to which they were not entitled.

The suit alleges that Gray has no formal training in tax law or return preparation. The complaint also alleges that Gray fails to report the income he receives from preparing returns on his own income tax returns.

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