According to her plea agreement in the tax fraud case, King willfully aided, assisted, and counseled a taxpayer in the preparation and presentation to the Internal Revenue Service of a false and fraudulent individual income tax return (Form 1040) for the year 2005. The tax return falsely claimed Schedule A and Schedule C expenses that King knew were not valid.
The tax case is the product of an extensive investigation by the IRS-Criminal Investigation. Assistant U.S. Attorney Mark E. Cullers is prosecuting that case.
According to the plea agreement in the mortgage fraud case, from approximately October 2005 to July 2006, King assisted other defendants in carrying out a scheme to defraud mortgage lenders, including WMC Mortgage Corp. and SunTrust Mortgage Inc. by submitting false documentation in support of loan applications prepared by the co-defendants. During this time period, King was a tax return preparer and owned The Tax Kings, a tax return business in Bakersfield. King prepared and provided to her co-defendants false and misleading verification letters that purported to verify loan applicants’ self-employment history and income, among other information. King received compensation payments from the co-defendants for providing the verification letters. King knew that the verification letters were to be submitted by the co-defendants to lenders in support of applications for loans for the purchase or refinance of properties and that the lenders would rely on the letters to approve the loans. King admitted that her actions caused lenders to incur losses of approximately $530,000.
As an example, in November 2005, King provided a false verification letter in support of applications by one of the co-defendants to WMC Mortgage to refinance a property in Bakersfield. In the letter, King falsely verified that she had prepared the co-defendant’s taxes for the previous five years, that the co-defendant had received self-employment income for the previous five years from “business operations,” and that such purported income supported the co-defendant’s living and personal expenditures. King also falsely claimed to be a CPA. Additionally, when WMC Mortgage subsequently contacted King in a prefunding audit, King verified the letter that she had submitted. WMC Mortgage ultimately funded loans for approximately $232,000 and $58,000 by wire transfer for the refinancing of the property. The property subsequently went into foreclosure when the co-defendant failed to make payments.
The mortgage fraud case is the product of a joint investigation by the IRS-Criminal Investigation and the Federal Bureau of Investigation, working with a Mortgage Fraud Task Force based in Fresno. The U.S. Attorney’s Office and the FBI created the Mortgage Fraud Task Force, which is composed of federal and local law enforcement, to further the prosecution of mortgage fraud cases arising out of the southern half of the Central Valley. Assistant U.S. Attorneys Kirk E. Sherriff and Henry Z. Carbajal III are prosecuting the mortgage fraud case.
King is scheduled to be sentenced by United States District Judge Anthony W. Ishii in both cases on April 23, 2012. The maximum statutory penalty for aiding and assisting the preparation of a false tax document is three years in prison, a $250,000 fine, and up to five years of supervised release. The maximum statutory penalty for each of the three counts of mail fraud is 20 years in prison, a $250,000 fine, and up to three years of supervised release. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.
In the mortgage fraud case, the remaining four co-defendants have pleaded not guilty. The charges as to those defendants are only allegations, and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt. Their next appearance in court will be on March 26, 2012 before U.S. Magistrate Judge Dennis L. Beck.
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Report IRS Tax Fraud by Calling 1-888-482-6825 or by visiting
www.irsrewards.com
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