Willie C. Grant Charged With Tax Fraud and Identity Theft

Source-   http://www.justice.gov/tax/2012/txdv12397.htm 

WASHINGTON – Willie C. Grant, a Bibb County, Ga., tax return preparer who owned and operated “Grant Income Tax Bookkeeping and Check Cash,” was indicted on March 15, 2012, by a federal grand jury with 23 counts of making false claims for tax refunds, four counts of theft of government money and four counts of aggravated identity theft, the Justice Department and Internal Revenue Service (IRS) announced today. The indictment was unsealed yesterday.

According to the indictment, Grant knowingly used the names and Social Security numbers of individuals to steal tax refunds from the IRS without lawful authority. The indictment further alleges that Grant directed the IRS to pay tax refunds intended for other people into his bank account.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Grant faces a minimum of two years in federal prison for aggravated identity theft, a potential maximum of five years in federal prison and a $250,000 fine for each false claims count, and a maximum of ten years in federal prison and a $250,000 fine for each theft of government money count.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

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Arthur Lee Ong Sentenced to 51 Months in Prision for Federal Tax Offenses

Source-  http://www.justice.gov/tax/2012/txdv12387.htm 

WASHINGTON – Arthur Lee Ong of Honolulu was sentenced Tuesday to 51 months in prison and ordered to pay $1 million in restitution to the Internal Revenue Service (IRS) by District Court Judge Leslie Kobayashi today, the Justice Department and IRS announced today. On Nov. 7, 2001, a federal jury in Honolulu convicted Ong of conspiracy to defraud the United States and six counts of tax evasion.

According to evidence introduced at trial, Ong, the owner and operator of Thunder Bug Inc., doing business in the state of Hawaii as Magnum Firearms, failed to report to the IRS millions of dollars of income he earned from the sale of firearms and related products to federal, state, county and military agencies, as well as to the general public. Ong, with the assistance of a Hawaiian attorney, created multiple sham trusts in 1990 for the purpose of hiding his income and assets. He stopped filing personal income tax returns beginning in 1994 and also filed false tax returns on behalf of the sham trusts that fraudulently reported to the IRS that the income from his businesses was attributable to these trusts and not to him.

The evidence at trial showed that Ong evaded more than $600,000 in federal income taxes from 2000 to 2006. In sentencing Ong, Judge Kobayashi found that Ong had attempted to evade more than $973,300 in federal and state income taxes from 1994 to 2009.

“There are some responsibilities that come with living in this great country, such as paying the federal income taxes that you legally owe,” said Kenneth J. Hines, the IRS Special Agent in Charge in Hawaii. “With Tax Day right around the corner, this sentence sends a clear warning to anyone contemplating a tax crime.”

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Steve Davidovici, Formerly a Part-Owner and Manager of the Pure Nightclub Located Within the Caesars Palace Hotel and Casino in Las Vegas Pleaded Guilty to Tax Fraud

Source-  http://www.justice.gov/tax/2012/txdv12381.htm 

WASHINGTON – Steve Davidovici, formerly a part-owner and manager of the Pure Nightclub located within the Caesars Palace Hotel and Casino in Las Vegas pleaded guilty in federal court to one count of filing a false federal income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service, Criminal Investigation (IRS-CI) announced today. The Justice Department and IRS-CI also announced that Mikel Hasen, the former head doorman at the Pure Nightclub, likewise pleaded guilty to one count of filing a false federal income tax return for the 2006 tax year. U.S. District Court Judge Kent Dawson presided over both plea hearings.

According to information disclosed at the plea hearings, during the years 2005, 2006 and 2007, in addition to fees charged for admission to the nightclub, some of Pure’s patrons made cash payments to Pure door personnel and “VIP hosts” to bypass the general admissions line and to obtain more desirable seating. This money was collected, pooled and generally distributed on a weekly basis to the door personnel and VIP hosts, as well as to managers of Pure such as Davidovici and Hasen. In Hasen’s case, distributions from this “tip pool” comprised the bulk of his compensation during the time he worked at Pure. Davidovici and Hasen each concealed large amounts of this income from the IRS.

Davidovici’s and Hasen’s sentencings are set for June 27, 2012, at 9 a.m.

“With the April 15 tax deadline looming, it is important for people to have confidence that when they pay their taxes, their neighbors and competitors will do the same,” said Paul Camacho, Special Agent in Charge of the IRS-Criminal Investigation, Las Vegas Field Office.

Two VIP hosts under Davidovici’s supervision, Ali (Sean) Olyaie and Richard Chu, have also pleaded guilty to tax crimes for failing to report income earned at Pure. At their respective plea hearings, Olyaie and Chu likewise admitted filing false federal income tax returns for 2006. Olyaie and Chu are also awaiting sentencing.

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Nacretia Lewis a Witness in Identity Theft and Tax Trial Convicted of Perjury and Lying to a Federal Agent

Source-  http://www.justice.gov/tax/2012/txdv12382.htm 

WASHINGTON – A federal jury in Montgomery, Ala., convicted Nacretia Lewis today of perjury and lying to a federal agent, the Justice Department and the Internal Revenue Service (IRS) announced.

According to the indictment and evidence introduced at trial, Lewis testified falsely in September 2011 in a tax fraud trial in the Middle District of Alabama. The defense in the tax fraud trial presented an alibi defense regarding the whereabouts of the defendant on trial on Jan. 20, 2011. Lewis was convicted of lying about being with Janika Fernae Bates at a place other than NCO Financial Systems Inc., their workplace, at precisely the same time witnesses at trial placed Bates at NCO. The evidence showed that after her testimony, Lewis met with federal agents and again lied about her whereabouts and Bates’ whereabouts on January 20, 2011. After a five-day trial, Bates was convicted of thirteen felony counts and sentenced to 94 months in federal prison.

Lewis faces a potential maximum sentence of ten years in federal prison and a fine of up to $500,000.

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Ronald James Davenport Sentenced to 41 Months in Prison for Filing False Liens Against Government Officials

Source-  http://www.justice.gov/tax/2012/txdv12376.htm 

WASHINGTON – Ronald James Davenport of Chewelah, Wash., was sentenced to 41 months in prison today for filing more than $20 billion in false liens against four federal government officials, the Justice Department and the Treasury Inspector General for Tax Administration (TIGTA) announced today. In addition, Judge Garr M. King, U.S. District Judge for the District of Oregon, sitting by designation, ordered Davenport to serve three years of supervised release.

Davenport’s convictions date from last November when, following a two-day trial, a federal jury in the Eastern District of Washington returned guilty verdicts against Davenport on four counts of filing retaliatory liens against government officials. According to the evidence presented at trial, in December 2009, Davenport filed false liens against the property interests of the U.S. Attorney and the Clerk of Court for the Eastern District of Washington, as well as an Assistant U.S. Attorney and an Internal Revenue Service Revenue officer.

The liens were filed in the county auditor records of Spokane and Whatcom Counties, Wash. Each lien claimed that the victim owed Davenport $5,184,000,000. It also purported to attach all of the victim’s real and personal property as security for this debt. As proved at trial, the defendant chose these four victims because of their involvement in an effort to collect from Davenport more than $250,000 in back taxes.

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Randy Alan Carpenter Indicted for $100 Million Fraud and Making False Statements on Tax Returns

Source-  http://www.fbi.gov/charlotte/press-releases/2012/spruce-pine-man-indicted-for-100-million-fraud

CHARLOTTE, NC—A Spruce Pine man was indicted by a federal grand jury, sitting in Charlotte yesterday, on charges of conspiracy, bank fraud, and making false statements on tax returns, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Joining U.S. Attorney Tompkins in making today’s announcement are Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division (IRS-CI); Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI); and Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation, Office of the Inspector General (FDIC-OIG).

According to the criminal indictment, Randy Alan Carpenter, 54, of Spruce Pine, North Carolina, and his co-conspirators operated a scheme to defraud federally insured banks and individual investors out of over $82 million in residential mortgage loan proceeds through a proposed real estate development near Spruce Pine, known as the Village of Penland. The indictment alleges that the conspiracy lasted from about December 2001 through about May 2007, and that during that time, Carpenter closed over 300 residential real estate loans to individuals secured by Penland lots and valued at approximately $108 million. The indictment further alleges that Carpenter defrauded both investors and banks by failing to provide the legal services indicated and through various false statements made to the banks to obtain the loans. The indictment also alleges that Carpenter was paid approximately $2 million in fees related to the Penland transactions.

The first charge in the indictment alleges conspiracy to make a false statement and application in relation to a loan, conspiracy to commit mail, wire and bank fraud. Counts two through five allege bank fraud, and counts six and seven allege that Carpenter filed false tax returns.

Five other defendants have already pled guilty and have been sentenced so far by U.S. District Court Judge Frank D. Whitney in connection with this case. It should be noted that these defendants had their sentences reduced by the court to reflect their cooperation with the United States in its investigation and prosecution of others.

Anthony Porter, 55, of Flat Rock, North Carolina, pled guilty on August 19, 2008 to conspiracy to defraud the United States, conspiracy to commit money laundering and making false statement on tax return. Porter was sentenced to 10 years’ imprisonment on June 4, 2010.

Frank Amelung, 63, of Boca Raton, Florida, pled guilty on August 21, 2008 to conspiracy to defraud the United States and tax evasion. Amelung was sentenced to 10 years’ imprisonment on July 2, 2010.

John Kevin Foster, 56, of Atlanta, Georgia, pled guilty on August 20, 2008 to conspiracy to defraud the United States. Foster was sentenced to five years’ imprisonment on March 1, 2010.

Michael Yeomans, 60, of University Park, Florida, pled guilty on May 9, 2008 to mortgage fraud. Yoemans was sentenced to three years’ imprisonment on November 1, 2010.

Neil O’Rourke, 44, of Cary, North Carolina, pled guilty on February 6, 2008 to conspiracy to defraud the United States. O’Rourke was sentenced to 39 months in prison on June 3, 2009.

Carpenter’s conspiracy charge carries a maximum sentence of five years, a $250,000 fine, or both. The bank fraud charges carry a maximum sentence of 30 years, $1,000,000 fine, or both; and the false tax return charges carry a maximum sentence of three years in prison, a fine of up to $100,000, or both.

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Federal Court has Permanently Barred Annie P. Williams From Preparing Federal Tax Returns for Others

Source-  http://www.justice.gov/tax/2012/txdv12349.htm 

WASHINGTON – A federal court has permanently barred Annie P. Williams, the former proprietor of PPH Tax & Realty Inc. in Brooklyn, N.Y., from preparing federal tax returns for others and from having any ownership or financial interest in any tax preparation business, the Justice Department announced today. The civil injunction order, to which Williams consented without admitting the allegations against her, was entered by Judge Dora L. Irizarry of the U.S. District Court for the Eastern District of New York.

According to the government complaint in the case, Williams fostered an environment at PPH in which her part-time tax preparers, who had little or no tax experience, were encouraged to prepare fraudulent tax returns. The improper conduct alleged in the complaint included preparing federal tax returns that claimed false expense and charitable contribution deductions, bogus dependents and unallowable child and childcare tax credits.

The complaint also alleged that, during the time that Williams owned PPH, her employees sold other persons’ names and Social Security numbers to customers so that the customers could falsely report that those other persons were their childcare providers for purposes of falsely claiming the childcare tax credit. Employees also allegedly sold fake charitable contribution letters to customers to present to the Internal Revenue Service (IRS) during audits to substantiate false deductions.

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Stewart David Nozette Sentenced to 13-Year Prison Term for Attempted Espionage, Fraud, and Tax Charges

Source-  http://www.fbi.gov/washingtondc/press-releases/2012/noted-scientist-sentenced-to-13-year-prison-term-for-attempted-espionage-fraud-and-tax-charges 

WASHINGTON—Stewart David Nozette, 54, a scientist who once worked for the Department of Energy, the Department of Defense, the National Aeronautics and Space Administration, and the White House’s National Space Council, was sentenced today to 13 years in prison for attempted espionage, conspiracy to defraud the United States, and tax evasion.

The sentence covered charges in two cases. In one, Nozette pleaded guilty in September 2011 to attempted espionage for providing classified information to a person he believed to be an Israeli intelligence officer. In the other, he pleaded guilty in January 2009 to fraud and tax charges stemming from more than $265,000 in false claims he submitted to the government.

The sentencing, which took place this morning in the U.S. District Court for the District of Columbia, was announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Lisa Monaco, Assistant Attorney General for National Security; and Principal Deputy Assistant Attorney General John A. DiCicco of the Tax Division.

Joining in the announcement were James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Paul K. Martin, Inspector General for the National Aeronautics and Space Administration (NASA OIG); Eric Hylton, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); and John Wagner, Special Agent in Charge of the Washington, D.C. Office of the Naval Criminal Investigative Service (NCIS).

In addition to the prison term, the Honorable Paul L. Friedman ordered that Nozette pay more than $217,000 in restitution to the government agencies he defrauded.

Nozette has been in custody since his arrest for attempted espionage on October 19, 2009. At the time, he was awaiting sentencing on the fraud and tax evasion charges. FBI agents arrested Nozette following an undercover operation in which he provided classified materials on three occasions, including one that formed the basis for his guilty plea. He was subsequently indicted by a federal grand jury. The indictment does not allege that the government of Israel or anyone acting on its behalf committed any offense under U.S. laws in this case.

“Stewart Nozette’s greed exceeded his loyalty to our country,” said U.S. Attorney Machen. “He wasted his talent and ruined his reputation by agreeing to sell national secrets to someone he believed was a foreign agent. His time in prison will provide him ample opportunity to reflect on his decision to betray the United States.”

“Stewart Nozette betrayed his country and the trust that was placed in him by attempting to sell some of America’s most closely-guarded secrets for profit. Today, he received the justice he deserves. As this case demonstrates, we remain vigilant in protecting America’s secrets and in bringing to justice those who compromise them,” said Assistant Attorney General Monaco. “I thank the many agents, analysts, and prosecutors who worked on this important case.”

“As this case demonstrates, those who attempt to evade their taxes by abusing the tax-exempt status of non-profit entities will be investigated, prosecuted, and punished,” said Principal Deputy Assistant Attorney General DiCicco.

“Today’s sentencing demonstrates that espionage remains a serious threat to our national security,” said Assistant Director in Charge McJunkin. “The FBI and our partners in the defense and intelligence communities work every day to prevent sensitive information from getting into the wrong hands, and I commend the hard work of the dedicated agents, analysts, and prosecutors who spent a significant amount of time bringing this case to resolution.”

“We are particularly proud that NASA OIG’s fraud investigation of Nozette, which began in 2006, served as the catalyst for further investigation and today’s outcome,” said NASA Inspector General Martin.

“IRS-Criminal Investigation provides financial investigative expertise in our work with our law enforcement partners,” said Acting Special Agent in Charge Hylton. “Pooling the skills of each agency makes a formidable team as we investigate allegations of wrongdoing. Mr. Nozette decided to betray his country to line his own pockets rather than play by the rules. He now is being held accountable for his actions.”

“Federal agents take an oath to protect our nation ‘against all enemies, foreign and domestic.’ That would include ‘insider threats’ like Stewart Nozette,” said Special Agent in Charge Wagner. “NCIS is committed to working with our law enforcement partners and prosecutors to find and hold accountable those like Nozette who put personal gain above national security.”

Nozette received a Ph.D. in planetary sciences from the Massachusetts Institute of Technology. Beginning in at least 1989, he held sensitive and high-profile positions within the U.S. government. He worked in various capacities on behalf of the government in the development of state-of-the-art programs in defense and space. During his career, for example, Nozette worked at the White House on the National Space Council, Executive Office of the President. He also worked as a physicist for the U.S. Department of Energy’s Lawrence Livermore National Laboratory, where he designed highly advanced technology.

Nozette was the president, treasurer, and director of the Alliance for Competitive Technology (ACT), a non-profit organization that he organized in March 1990. Between January 2000 and February 2006, Nozette, through his company, ACT, entered into agreements with several government agencies to develop highly advanced technology. Nozette performed some of this research and development at the U.S. Naval Research Laboratory (NRL) in Washington, D.C.; the Defense Advanced Research Projects Agency (DARPA) in Arlington, Virginia; and NASA’s Goddard Space Flight Center in Greenbelt, Maryland.

In connection with the fraud and tax case, Nozette admitted that, from 2000 through 2006, he used ACT to defraud the NRL, DARPA and NASA by making and presenting more than $265,000 in fraudulent reimbursement claims, most of which were paid. He also admitted that, from 2001 through 2005, he willfully evaded more than $200,000 in federal taxes. In addition, he admitted using ACT, an entity exempt from taxation because of its non-profit status, to receive income and to pay personal expenses, such as mortgages, automobile loans, sedan services, and other items.

The investigation concerning ACT led investigators to suspect that Nozette had misused government information. From 1989 through 2006, Nozette held security clearances as high as top secret and had regular, frequent access to classified information and documents related to the national defense of the United States.

On September 3, 2009, Nozette was contacted via telephone by an individual purporting to be an Israeli intelligence officer from the Mossad, but who was, in fact, an undercover employee of the FBI. That same day, Nozette informed the undercover employee that he had clearances “all the way to top secret/SCI” and that anything “that the U.S. has done in space I’ve seen.” He stated that he would provide classified information for money and a foreign passport to a country without extradition to the United States.

A series of contacts followed over the next several weeks, including meetings and exchanges in which Nozette took $10,000 in cash left by the FBI at prearranged drop-off sites. Nozette provided information classified as secret/SCI and top secret/SCI that related to national defense. Some of this information directly concerned satellites, early warning systems, means of defense or retaliation against large-scale attack, communications intelligence information, and major elements of defense strategy.

Nozette and the undercover employee met for the final time on October 19, 2009 at the Mayflower Hotel. During that meeting, Nozette pushed to receive larger payments for the secrets he was disclosing, declaring that, “I gave you even in this first run some of the most classified information that there is...I’ve sort of crossed the Rubicon.”

Nozette was arrested soon after he made these statements.

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Federal Court Bars Annie P. Williams From Operating Tax Preparation Businesses

Source-  http://www.justice.gov/tax/2012/txdv12349.htm 

WASHINGTON – A federal court has permanently barred Annie P. Williams, the former proprietor of PPH Tax & Realty Inc. in Brooklyn, N.Y., from preparing federal tax returns for others and from having any ownership or financial interest in any tax preparation business, the Justice Department announced today. The civil injunction order, to which Williams consented without admitting the allegations against her, was entered by Judge Dora L. Irizarry of the U.S. District Court for the Eastern District of New York.

According to the government complaint in the case, Williams fostered an environment at PPH in which her part-time tax preparers, who had little or no tax experience, were encouraged to prepare fraudulent tax returns. The improper conduct alleged in the complaint included preparing federal tax returns that claimed false expense and charitable contribution deductions, bogus dependents and unallowable child and childcare tax credits.

The complaint also alleged that, during the time that Williams owned PPH, her employees sold other persons’ names and Social Security numbers to customers so that the customers could falsely report that those other persons were their childcare providers for purposes of falsely claiming the childcare tax credit. Employees also allegedly sold fake charitable contribution letters to customers to present to the Internal Revenue Service (IRS) during audits to substantiate false deductions.

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Cynthia H. Carter Allegedly Claims Fraudulent Deductions and Credits on Customers’ Returns

Source-  http://www.justice.gov/tax/2012/txdv12344.htm 
WASHINGTON – The United States has asked a federal court to bar Cynthia H. Carter from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Carter, who does business as Cynthia’s Tax Service in Columbus, Miss., prepares returns for customers that report false income and expense amounts and falsely claim several tax credits, including the first-time-homebuyer credit.

Congress enacted the first-time-homebuyer credit 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.

The government complaint alleges that Carter claimed the first-time-homebuyer credit on her customers’ returns even though the customers had not bought new homes in those tax years and were ineligible for the credit. The complaint also alleges that Carter claimed fabricated deductions for employee business expenses and inflated earned income tax credits on her customers’ returns. According to the complaint, the Internal Revenue Service (IRS) estimates that Carter’s tax return preparation could have resulted in over $4.25 million in lost revenue to the United States.

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Former Pennsylvania State Senator Robert Mellow Charged with Conspiracy to Commit Mail Fraud and to File a False Tax Return

Source-  http://www.fbi.gov/philadelphia/press-releases/2012/former-pennsylvania-state-senator-robert-mellow-charged-with-conspiracy-to-commit-mail-fraud-and-to-file-a-false-tax-return 

The United States Attorney’s Office for the Middle District of Pennsylvania; George Venizelos, Special Agent in Charge, Federal Bureau of Investigation; and Akeia Conner, Acting Special Agent in Charge, Internal Revenue Service–Criminal Investigation Division, jointly announced that a criminal information was filed today in U.S. District Court in Scranton charging former Pennsylvania State Senator Robert J. Mellow, age 70, of Archbald, Pennsylvania, with conspiring with others between 2006 and 2010 to commit mail fraud in connection with a scheme and artifice to defraud the Pennsylvania Senate and to file a false federal income tax return.

According to United States Attorney Peter J. Smith, during the time relevant to the criminal information, Mellow was a member of the Pennsylvania Senate, Senate Democratic Leader, and a member of the Pennsylvania Democratic State Senate Campaign Committee and Caucus. Mellow was also, at various times, responsible for several Senate Democratic administrative offices including offices providing computer services, communications, and research. Mellow also supervised a staff in his Harrisburg Senate office and at two district offices located in Peckville and Mt. Pocono, Pennsylvania.

The information alleges that Mellow, as a public official with the responsibilities described above, owed a duty to refrain from the improper use of Senate resources and staff to perform political fundraising and campaign work and services for Mellow and for political causes and candidates he supported.

The information alleges that Mellow, in his capacity as a state Senator and the Democratic Leader from 2006 through 2010, conspired with others to misuse the staff and resources of the Pennsylvania Senate for political fundraising and campaign purposes.

The information further alleges that as part of the scheme, Mellow caused and knowingly permitted, through willful blindness, the submission to the Chief Clerk of the Senate of false job classification and re-classification forms and memos for Senate staff who performed political fundraising and campaign work while being compensated by the Senate.

The information alleges that Mellow conspired with others to misuse Senate staff and resources to raise hundreds of thousands of dollars for an organization known as the Friends of Bob Mellow and the Democratic State Senate Campaign Committee and to support political candidates and causes throughout Pennsylvania.

It is further alleged that Mellow caused and permitted the U.S. Postal Service to be used in furtherance of the scheme to defraud. The information cites as examples checks mailed by the Senate’s Chief Clerk’s Office to pay for the rental of Mellow’s district offices in Peckville and Mt. Pocono, both of which offices were allegedly used to perform political fundraising and campaign tasks; checks and pay stubs for Senate staffers who allegedly performed fundraising and campaign work; and letters prepared and mailed by Senate staff in connection with Friends of Bob Mellow fund-raisers.

The information also alleges that Mellow conspired with others to file a false individual federal income tax return for the year 2008.

Mellow faces a possible maximum sentence of five years’ imprisonment and a fine of up to $250,000.

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Christopher Proe Sentenced for First-Time Homebuyer Tax Credit Fraud

Source-  http://www.fbi.gov/boston/press-releases/2012/michigan-man-sentenced-for-first-time-homebuyer-tax-credit-fraud 

BOSTON—A Michigan man was sentenced yesterday afternoon in federal court for his role in obtaining tax refunds after falsely claiming the First-Time Homebuyer Tax Credit.

U.S. District Judge F. Dennis Saylor, IV sentenced Christopher Proe, 27, to 92 months in federal prison to be followed by three years of supervised release. Proe, who pleaded guilty in October 2011, was ordered to pay over $1 million in restitution and a $1,700 special assessment.

During the course of his scheme, Proe and a co-conspirator filed dozens of false tax returns after obtaining identity information from third parties under false pretenses and creating false W-2 forms for a fictitious company called Lawn Brothers Landscaping. For the tax year 2008 alone, Proe filed over 50 fraudulent tax returns and obtained over $500,000 in tax refunds, which were directed to bank accounts which he controlled.

As a part of the investigation, 14 individuals were previously charged and convicted with committing various crimes arising from their abuse of the federal government’s stimulus program by filing false claims with IRS in which they fraudulently claimed the First-Time Homebuyer Tax Credit.

“The filing of false tax returns and the abuse of the First-Time Homebuyer Tax Credit program are serious crimes. It is critically important that taxpayers who play by the rules do not end up paying for refunds to people who commit fraud and blatantly lie on the forms submitted to the IRS,” stated United States Attorney Carmen M. Ortiz.

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Veronica Sharon Cunningham Convicted of Health Care Fraud and Filing False Tax Return

Source-  http://www.fbi.gov/richmond/press-releases/2012/richmond-woman-convicted-of-health-care-fraud-and-filing-false-tax-return 

RICHMOND, VA—Veronica Sharon Cunningham, 49, of Richmond, Virginia, was convicted today by a federal jury on 26 counts of health care fraud, eight counts of making false statements on patient health care records, and a single count of filing a false tax return.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Michael F.A. Morehart, Special Agent in Charge of the Federal Bureau of Investigation’s Richmond Division; Eric Hylton, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation; Nick DiGiulio, Special Agent in Charge, United States Department of Health and Human Services Office of the Inspector General, Office of Investigations; and Michael McGill, Special Agent in Charge, Social Security Administration-Office of Inspector General, made the announcement after the verdict was accepted by United States District Judge Robert E. Payne.

Cunningham faces 10 years for each health care fraud count, five years for each false statement count, and three years for the false tax return count when she is sentenced on May 31, 2012.

Cunningham was indicted on these charges on October 4, 2011. According to court records and evidence at trial, Cunningham owned and operated Community Neurological Services (CNS), a Richmond business that administered intravenous immune globulin (IVIG) to patients suffering from immune deficiency disorders. Cunningham regularly and systematically billed insurance companies and the Medicare and Medicaid programs for IVIG not actually administered and made other false entries in patient records. She also falsely underreported the gross income of CNS by over $1 million in her 2005 tax return.

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Dominic J. Acquarulo Jr., Pleads Guilty to Illegal Gambling and Tax Charges

Source-  http://www.fbi.gov/newhaven/press-releases/2012/guilford-resident-pleads-guilty-to-illegal-gambling-and-tax-charges 

David B. Fein, United States Attorney for the District of Connecticut, today announced that DOMINIC J. ACQUARULO, JR., 42, of Guilford, waived his right to indictment and pleaded guilty yesterday, March 13, before United States District Judge Janet Bond Arterton in New Haven to illegal gambling and tax offenses.

According to court documents and statements made in court, between 2006 and 2008, ACQUARULO operated an illegal sports bookmaking business that involved a number of sub-bookmakers, each of whom had a network of bettors. As part of his gambling business, ACQUARULO used two online betting websites and he provided each sub-bookmaker with passwords to the sites so that each bettor in their network would be able to place bets through an individual account. On behalf of ACQUARULO, the sub-bookmakers collected losses from the bettors and paid out any winnings. The sub-bookmakers received a 10 percent commission on losses they collected from bettors, and they provided the remaining funds to ACQUARULO.

ACQUARULO also utilized at least two other individuals to receive and count funds collected from the sub-bookmakers, and to provide funds to sub-bookmakers to pay out to winning bettors.

Between 2006 and 2008, ACQUARULO also operated Shoreline Finance and Marketing Corporation, a mortgage brokerage company. During this time, ACQUARULO employed a close associate as a mortgage loan officer at the business. With ACQUARULO’s knowledge, his associate used corporate credit cards and corporate checks to pay for numerous personal expenses, including rent for her apartment, car lease payments, jewelry, and clothing. She then classified these payments and purchases, which totaled more than $19,000, as business expenses in the bookkeeping records of the business. As a result, ACQUARULO underreported his income generated from his business on his 2007 individual income tax return, resulting in a tax loss of $6,170.

In addition, ACQUARULO’s gross income in 2008 was $178,860, but he failed to file a 2008 tax return by October 15, 2009, as required. ACQUARULO filed his Form 1040 in May 2010, approximately 10 months after he was interviewed by federal agents and informed of this pending investigation.

ACQUARULO pleaded guilty to one count of operating an illegal gambling business, one count of filing a false tax return, and one count of willfully failing to timely file a tax return. Judge Arterton has scheduled sentencing for June 1, 2012, at which time ACQUARULO faces a maximum term of imprisonment of nine years and a fine of up to $600,000.

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David F. Kane Sentenced to Four Years in Prison for Tax Evasion Scheme

Source-  http://www.fbi.gov/philadelphia/press-releases/2012/phoenixville-man-sentenced-to-four-years-in-prison-for-tax-evasion-scheme 

PHILADELPHIA—David F. Kane, 39, of Phoenixville, Pennsylvania, a former member of the Limerick Township Board of Supervisors, was sentenced today to four years in prison for a tax evasion scheme that included mail fraud. Kane pleaded guilty December 12, 2011 to filing a false income tax return for 2004, failure to file income tax returns for 2005 through 2007, evasion of a $600,000 tax levied upon him in 2006 by the IRS, and mail fraud.

The last time Kane filed tax returns and paid legitimate federal income taxes was in the late 1990s. In late 2005, when Kane ran for office in Limerick Township, he filed a false 2004 income tax return. The return failed to report nearly $400,000 in income that Kane received as head of a Skippack real estate company, Kane Core Incorporated (KCI). Once he was elected a Limerick Township supervisor, Kane returned to failing to file income tax returns or pay taxes on nearly $800,000 of income he reaped from his company during 2005 through 2007.

When the IRS placed a $600,000 lien upon him in 2006, Kane evaded paying his taxes and undertook extraordinary steps to hide his income. Kane diverted KCI real estate sales proceeds to a shell corporation he controlled and to an escrow company which paid his personal expenses. He also diverted KCI proceeds directly from real estate sales to pay hundreds of thousands of dollars in additional personal expenses, including $43,000 in divorce payments to his ex-wife and $19,000 to purchase a boat. Throughout his scheme, Kane used KCI corporate accounts directly to pay hundreds of thousands of dollars in other personal expenses, including Eagles tickets, strip club expenses, golf trips, vacations, a housekeeper, a car, and personal credit cards. After the IRS placed its lien against him, Kane and his brother John stole some of the proceeds of the sale of Kane’s home, money which should have been turned over to the IRS.

Also charged as a result of the scheme were Kane’s brother John, of Berlin, New Jersey, who was sentenced in December to one year in prison; Kane’s father, Gregory M. Kane, who was sentenced to 15 months; his partner, Mark G. Marino, a former member of the Skippack Township Board of Supervisors, who was sentenced to 13 months; and Jamie E.E. Baugher, who was sentenced to seven months.

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CEO of Pleasanton-Based HT Oil Sean Brian Higgins, Pleads Guilty to Filing False Tax Return

Source-  http://www.fbi.gov/sanfrancisco/press-releases/2012/ceo-of-pleasanton-based-ht-oil-pleads-guilty-to-filing-false-tax-return 

OAKLAND, CA—Sean Brian Higgins pleaded guilty yesterday to filing a false tax return, United States Attorney Melinda Haag and Special Agent in Charge, Internal Revenue Service, Criminal Investigation, Marcus Williams announced.

In pleading guilty, Higgins, 44, of Livermore, California, admitted that from 2001 to 2005, he was the president, chief executive officer, and co-owner of HT Oil, LLC (HT Oil), a business engaged in the exploration and production of crude oil and natural gas. The company’s principal offices were located in Dublin, California (and subsequently moved to Pleasanton, California), while its production operations were located primarily in Kansas. In April 2005, investors learned of allegations that Higgins had commingled the assets of the limited partnerships and paid himself large sums in addition to his salary. The investors subsequently sought the appointment of a receiver to preserve the assets of the limited partnerships. On June 15, 2005, the receivership was perfected pursuant to a ruling from the Contra Costa County Superior Court.

According to court documents, Higgins had signature authority on all HT Oil bank accounts. He made numerous transfers of money from HT Oil accounts to his personal bank accounts, which exceeded his contributions to the business and the amounts that he reported on his income tax returns as income from HT Oil. He paid himself $399,070 in addition to his salary during the years 2002 through 2005, which resulted in an additional tax due and owing of $133,726. Higgins used the money for his personal use, including funding the start-up of a new, unrelated business called Fantasy Garage, LLC. Higgins used Fantasy Garage to acquire exotic cars and motorcycles, which he made available for rent to third parties. In his plea agreement, Higgins agreed to pay a civil fraud penalty in the amount of $100,294.50.

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Melinda Clayton Sentenced to More Than Five Years in Prison for Identity Theft and Tax Fraud Scheme

Source-  http://www.justice.gov/opa/pr/2012/March/12-tax-315.html 

Melinda Clayton of Montgomery, Ala., was sentenced today to 61 months in prison, following a guilty plea to conspiracy to make false claims, wire fraud and aggravated identity theft, the Justice Department and the Internal Revenue Service (IRS) announced. U.S. District Judge Mark Fuller also ordered Clayton to pay $494,424 in restitution.

Court records indicate that on April 8, 2011, Clayton was arrested on a criminal complaint following the execution of a search warrant at her house that same day. Clayton and Alchico Grant were both named in the original indictment which was returned in April 2011. On Aug. 31, 2011, Clayton, along with Veronica Dale and Alchico Grant, was charged in a 43-count superseding indictment with conspiring to defraud the United States by filing false claims, filing false claims, wire fraud and aggravated identity theft. That indictment also charged Stephanie Adams with conspiracy and with theft of government funds, and named Valerie Byrd as an unindicted co-conspirator. According to the indictment, the conspiracy involved using stolen identities to file false tax returns. Veronica Dale, Alchico Grant, Stephanie Adams and Valerie Byrd have all pleaded guilty to federal crimes.

According to the indictment and plea agreement, Clayton stored tens of thousands of stolen means of identification (names and Social Security numbers) at her house, which came from numerous sources, including private companies, health clinics and prisons. Dale and Clayton used the stolen identities to file false returns that fraudulently claimed tax refunds. They directed the refunds to bank accounts and debit cards. Grant and Dale would buy debit cards to use in the scheme, while Clayton, Adams and Byrd all provided bank accounts to receive fraudulent refunds. Between January and up to the day of the search warrant, April 8, 2011, the conspirators filed returns claiming almost $500,000 in fraudulent refunds.

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Six Plead Guilty in Ohio to Tax and Mail Fraud Conspiracies Involving I.D. Theft of Deceased

Source-  http://www.justice.gov/opa/pr/2012/March/12-tax-318.html 

Muaad Salem, Hanan Widdi, Najeh Widdi, Hazem Woodi, Daxesj Patel and Fahim Suleiman each entered guilty pleas before the Honorable James S. Gwin today to charges arising from a scheme to obtain false and fraudulent U.S. Treasury tax refund checks, the Justice Department, the U.S. Attorney’s Office for the Northern District of Ohio and the Internal Revenue Service (IRS) announced. Specifically, Salem, Najeh Widdi and Woodi entered guilty pleas to conspiracy to defraud the United States, conspiracy to commit mail fraud and mail fraud; Hanan Widdi entered a guilty plea to conspiracy to defraud the United States and conspiracy to commit mail fraud; Patel entered a guilty plea to two counts of submitting false claims and one count of false statements; and Suleiman entered a guilty plea to conspiracy to defraud the United States, conspiracy to commit mail fraud; mail fraud and aggravated identity theft.

According to the indictment, between April 15, 2009 to at least August 2011, Salem, Suleiman, Najeh Widdi, Hanan Widdi, Woodi, Patel and other unknown co-conspirators defrauded the United States by filing false and fraudulent tax returns, many in the names of recently deceased taxpayers, and directing refunds to controlled locations in the state of Florida. The U.S. Treasury checks generated by the false and fraudulent returns were then sent by the U.S. mail to co-conspirators in Ohio who sold and distributed the checks for negotiation at various businesses and banking institutions. As part of their plea agreements, the defendants admitted that the fraud loss caused by their conduct was between $1 and 2.5 million and that the offenses involved more than ten victims.

Sentencing is scheduled on May 29, 2012, for Najeh Widdi and Patel; on May 30, 2012, for Hanan Widdi and Woodi; and on June 1, 2012, for Salem and Suleiman. Mail fraud is punishable by a maximum potential sentence of 20 years in prison; conspiracy to defraud the United States is punishable by a maximum potential sentence of 10 years; conspiracy to commit mail fraud, making a false claim against the United States and making a false statement are each punishable by a maximum potential sentence of five years in prison; aggravated identity theft is punishable by a mandatory minimum prison sentence of two years to follow conviction on any other offense. All of the above sentences are also punishable by a fine of $250,000 for each count of conviction.

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Teresa Francis-Kasu and Tendai Busuman Charged in Fraudulent Tax Return Conspiracy

Source- http://www.justice.gov/usao/fls/PressReleases/120305-01.html 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CID), announced the filing of an Information charging defendants Teresa Francis-Kasu, 36, of Coconut Creek, and Tendai Busuman, 30, of Pompano Beach, in connection with a scheme to obtain significantly inflated tax refunds.

More specifically, the Information charges Francis-Kasu and Busuman with conspiracy to submit false claims to the Internal Revenue Service, in violation of Title 18, United States Code, Section 286. If convicted, the defendants each face a maximum statutory sentence of up to ten years in prison.

According to the Information, the defendants were employed as tax return preparers at Right Quick Tax Services, in Sunrise, Florida. The defendants and another co-conspirator allegedly prepared tax returns that contained false and inflated claims for deductions, specifically for substantially inflated income tax withholding credits and telephone excise tax refund credits, in order to grossly inflate the tax refunds due to their clients. The defendants and the other co-conspirator unjustly enriched their clients and themselves by preparing fraudulent tax returns that resulted in significant tax refund payments for their clients in addition to fees and compensation to themselves.

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Philip R. Lochmiller, Sr. Sentenced to Over 33 Years in Federal Prison for Conspiracy, Money Laundering Conspiracy, Money Laundering, and Mail Fraud

Source-  http://www.fbi.gov/denver/press-releases/2012/philip-r.-lochmiller-sr.-sentenced-to-over-33-years-in-federal-prison-for-conspiracy-money-laundering-conspiracy-money-laundering-and-mail-fraud 

GRAND JUNCTION, CO—This morning U.S. District Court Judge Philip A. Brimmer sentenced Philip Lochmiller, Sr., age 64, to serve 405 months (over 33 years) in federal prison for conspiracy, money laundering conspiracy, money laundering, and mail fraud, U.S. Attorney John Walsh, FBI Special Agent in Charge James Yacone, and IRS-Criminal Investigation Special Agent in Charge Sean P. Sowards announced. Following his prison sentence, Lochmiller, Sr. was ordered to serve three years on supervised release. He was also ordered to pay restitution totaling $18,649,999.40 to the victims of his crime. The restitution is to be paid joint and several with his two co-defendants. Following the sentencing hearing, which was held in the Mesa County Criminal Justice Center in Grand Junction, Judge Brimmer ordered that Lochmiller be immediately taken into custody by U.S. Marshals to begin serving his sentence. Over 30 victims attended today’s sentencing hearing.

Philip Lochmiller, Sr., Philip Lochmiller, Jr., and Shawnee Carver were indicted by a federal grand jury in Denver on December 15, 2009. A superseding indictment was returned on October 18, 2010. Lochmiller, Jr. pled guilty on November 16, 2010. Carver pled guilty on December 9, 2010. Both testified during the Lochmiller, Sr. trial. Lochmiller was convicted following a 10-day jury trial on July 21, 2011. The jury deliberated for three hours before returning their verdicts. Philip Lochmiller, Jr. and Shawnee Carver had earlier pled guilty and were sentenced. Lochmiller, Jr. was sentenced to serve 96 months (eight years) in prison, followed by three years of supervised release. He was also ordered to pay restitution totaling $18,649,999.40 to the crime victims. Carver was sentenced to serve 24 months (two years) in prison followed by three years of supervised release. She was ordered to pay restitution totaling $2,500,000 to the victims of the crime. Both were sentenced by Judge Brimmer.

According to evidence presented at trial, the superseding indictment, and other documents from the prosecution, Valley Mortgage, Inc. was incorporated in Colorado in September 1994 by Philip Lochmiller, Sr. The company originally engaged in the business of originating or brokering home mortgages. Lochmiller, Sr. owed 100 percent of Valley Mortgage’s stock and was principal, officer, and director. Lochmiller, Sr.’s stepson, Philip Lochmiller, Jr., joined Valley Mortgage in 1999 as a mortgage officer. Lochmiller, Sr. later added the name Valley Investments as a d/b/a for Valley Mortgage. Lochmiller, Jr. eventually worked his way to become responsible for day-to-day operations of the company. Beginning in 2000, Valley Mortgage entered into the “affordable housing” real estate market by buying vacant land or existing mobile home parks, entitling the land so residential subdivisions could be built, and then selling lots with either a mobile home or a manufactured home on them.

Valley Investments purchased land with financing provided by the sellers in a “owner-carry” arrangement. Valley Investments then began to advertise in local newspapers and solicit investment funds from the public. The company promised returns from 10 to 16 percent, and in some instances, as high as 18 percent. In exchange, investors were promised a promissory note and a recorded first “Deed of Trust” on individual lots. The advertisements and verbal representations by both of the Lochmillers characterized the investment as a “solid security” secured and recorded by a deed of trust in the investor’s name. Both of the Lochmillers represented to investors that Valley Investments used investor funds exclusively to acquire property and finance the development of the subdivisions Valley Investments owned. Both the Lochmillers further represented that Valley Investments generated large profits by selling manufactured homes together with lots within the subdivisions. Investors were not told that Lochmiller Sr. had a prior felony conviction and a bankruptcy.

Between 2000 and 2005, Valley Investments acquired five properties purportedly to develop “affordable housing” subdivisions. Between 2000 and 2009, Valley Investments received over $30,000,000 from approximately 400 investor contracts. The government’s expert forensic accountants shows that this influx of investor funds kept Valley Investments operating, particularly in its later years, and without investor funding, Valley Investments would have failed. The government accounting analysis also determined that investor funds were used by both of the Lochmillers for purposes other than what investors were told. Further, incoming investor funds were used to make interest and principal payments to existing investors. Once investor money started coming into Valley Investments, the funds went to personal expenses, family expenses, and other non-business expenditures. Both Lochmillers then engaged in monetary transactions involving more than $10,000 of the proceeds of the fraud.

Valley Investments did not own sufficient property or assets to secure the investments as represented. Unbeknownst to investors, the amount of investment funds, which were supposed to be secured by real property, far exceeded the value of the encumbered property and the business assets. Valley Investments failed to file all of the trust deeds on behalf of investors as promised, and many of the filed trust deeds were not the first encumbrances on the properties named and were thus worthless. Despite these facts, the Lochmillers and Valley Investment employee Shawnee Carver continued to misrepresent to investors that the business was thriving, and never disclosed to new investors how their money was being used.

“Make no mistake: today’s sentence, which amounts to a life sentence, demonstrates that those who rob with the pen and the computer cannot evade the painful consequences of their crimes,” said U.S. Attorney John Walsh. “Although this sentence can’t by itself undo the damage suffered by the many victims of this fraudulent scheme, justice was done.”

“Today’s sentencing provides 403 citizens victimized by Philip Lochmiller, Sr some justice for the devastating financial losses he caused with deceit and misrepresentations,” said FBI Special Agent in Charge James Yacone. “On behalf of the FBI, I’d like to express my sincere gratitude to the U.S. Attorney’s Office and agents from the IRS-CI and FBI who worked countless hours to bring Lochmiller and his co-conspirators to justice.”

“Defrauding innocent investors by peddling sham investment schemes is a serious and far too common offense,” said Sean Sowards, special agent in charge, IRS Criminal Investigation, Denver Field Office. “IRS Criminal Investigation will work with our law enforcement partners to vigorously pursue and hold accountable those who perpetrate these schemes to get rich quick at the expense of honest Americans.”

This case was investigated by the Federal Bureau of Investigation and the IRS Criminal Investigation and prosecuted by Assistant U.S. Attorneys Michelle Heldmyer, Pegeen Rhyne, and Tim Neff.

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