Monday, April 30, 2012

Howard Levine Sentenced to 37 Months for Tax Fraud in The Preparation of False Income Tax Returns for Clients


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-547.html 

Howard Levine, owner of a Dix Hill, N.Y., tax preparation business was sentenced to 37 months in prison for tax crimes, the Justice Department and Internal Revenue Service (IRS) announced today. On Jan. 5, 2012, Levine pleaded guilty to obstructing the internal revenue laws and aiding in the preparation of false income tax returns for clients.

According to the plea agreement and statements made in court, Howard Levine owned and operated Milaur Associates, also known as Milaur Inc. Many of the tax returns prepared by Levine for 2004 through 2009 were false and contained fictitious deductions, business expenses and corporate losses created by Levine. According to court documents, Levine admitted to preparing no fewer than 56 false income tax returns, resulting in a tax loss of more than $620,000.

In 2009, the U.S. District Court for the Eastern District of New York issued an injunction that barred Levine from preparing federal income tax returns for anyone other than himself. According to the plea agreement, Levine violated that court injunction and continued to prepare false income tax returns for clients. In order to obstruct and mislead the IRS from determining his role in preparing the returns, Levine provided false information in the paid preparer section of the returns he prepared.




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Sunday, April 29, 2012

Richard Jaensch Sentenced for Filing a False Refund Claim Based on Forms-1099 and for Failing to File Tax Returns


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-552.html 

Richard Jaensch, 54, of Annandale, Va., was sentenced today to 36 months in prison by U.S. District Judge Gerald Bruce Lee, the Justice Department and Internal Revenue Service (IRS) announced. Jaensch had been found guilty on Dec. 7, 2011, by a federal jury sitting in Alexandria, Va., of corruptly endeavoring to impede the IRS, filing a false claim for a refund and four counts of failing to file tax returns for 2004 through 2007. Judge Lee also sentenced Jaensch to three years supervised release and ordered him to pay $197,984 in restitution to the IRS.

According to evidence introduced at trial, Richard Jaensch, a self-employed plumber, failed to file personal income tax returns for many years, beginning in 2002, despite the fact that he was required to do so by law because of income he made from his business and from stock trading. The first tax return he filed after 2002 was a false 2008 tax return claiming a $774,052 refund based on false Forms 1099-OID that the defendant submitted to the IRS.

Over the years, Jaensch also obstructed and impeded the IRS by, among other acts: filing numerous documents and pleadings in Fairfax County, Va., claiming, that he and his wife, a federal employee, were not persons required to file federal income tax returns; that his wife was not a party to the Constitution of the “united States of America” and that she was not a taxpayer; and providing false information to the IRS. In addition, Jaensch caused his wife to present letters to her employer directing them to stop withholding federal income taxes from her salary. The IRS began levying his wife's paycheck and bank accounts to satisfy her outstanding tax liability and Jaensch continued his obstructive conduct by filing or causing his wife to file correspondence with the IRS claiming that the IRS could not instruct her employer to withhold taxes from her paycheck.

Jaensch’s wife, Janet, was a former high-level civilian employee in the Department of the Navy during the time that she was not filing tax returns at Richard Jaensch´s direction. She pleaded guilty to willfully failing to file a tax return and was sentenced on Dec. 13, 2011, to three years of probation and order to pay more than $137,000 in restitution to the IRS.




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Thursday, April 26, 2012

Ernst Pierre Pleads Guilty to Identity Theft and Wire Fraud


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-525.html 

Ernst Pierre, a Port St. Lucie, Fla., tax preparer, pleaded guilty today to wire fraud and aggravated identity theft, the Justice Department and Internal Revenue Service (IRS) announced. Pierre was charged with a scheme to file false federal income tax returns using stolen identity information.

According to the indictment and Pierre’s admissions in his plea, from October 2009 through May 2011, Pierre filed false tax returns for clients of Tax Max, a Port St. Lucie tax return preparation business he owned and operated. Pierre obtained the names and Social Security numbers of relatives of clients for whom he had prepared and submitted federal income tax returns and then fraudulently used those names and Social Security numbers as “dependents” on other client tax returns and on his own tax return. Inclusion of a dependent on a federal income tax return can result in a higher tax refund.

Sentencing has been set for July 2, 2012, before the Judge Donald L. Graham of the Southern District of Florida. Pierre faces a maximum potential sentence of 20 years in prison for the wire fraud count and a mandatory two-year sentence for the aggravated identity theft count. Pierre also faces up to $500,000 in fines and an order of mandatory restitution.





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Wednesday, April 25, 2012

Kevin P. Mahoney Sentenced to 60 Months in Prison for Tax Crimes and Contempt


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-529.html 

Kevin P. Mahoney of Attleboro, Mass., was sentenced today to 60 months in prison, following trial convictions on corruptly endeavoring to obstruct the administration of the Internal Revenue laws, filing false tax returns with the Internal Revenue Service (IRS) and criminal contempt of court, the Justice Department and the IRS announced. U.S. District Judge Joseph L. Tauro presided over the trial and imposed the sentence. A Boston jury convicted licensed stockbroker, insurance agent and financial advisor Mahoney on Jan. 25, 2012. 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 on all counts. Judge Tauro also ordered Mahoney to pay $367,000 in restitution to the IRS. Mahoney was remanded to prison immediately following the sentencing hearing.

The evidence at trial showed that Mahoney had failed to pay all of his taxes for the years 1996 through 2001 but had attempted to pay tax-related debts by submitting to the IRS more than $2.2 million in fictitious financial instruments, called Bills of Exchange, and checks drawn on a closed bank account. The evidence further showed that Mahoney obtained fake Bills of Exchange from American Rights Litigators (ARL), a now-defunct Florida-based organization that was permanently enjoined from promoting and selling certain fraudulent tax schemes based on its prior promotion and sale of the same. ARL was also used by imprisoned actorWesley Snipes . After filing for bankruptcy, Mahoney caused a worthless promissory note made by now-deceased “sovereign citizen” Jerry Ralph Kane to be submitted to the IRS as purported payment for approximately $805,000 in taxes that Mahoney owed at that time.

The evidence also showed that Mahoney 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 had 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 in that he assisted 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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Tuesday, April 24, 2012

Federal Court Bars Cathy and Lashanda Vinnett from Preparing Tax Returns




Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-531.html 

A federal court in New Orleans has permanently barred Cathy and Lashanda Vinnett from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which the Vinnetts agreed without admitting the government’s allegations, was signed by Judge Helen G. Berrigan of the U.S. District Court for the Eastern District of Louisiana.

The government’s complaint alleged that Cathy Vinnett and her daughter Lashanda, both from Destrehan, La., and their companies – M&C Tax Service, D&C Tax Service, River Parish Tax Professionals and Remarkable Tax Services – prepared federal tax returns for customers claiming fraudulent tax refunds based on fabricated telephone excise tax refund claims, earned-income tax credits and first-time homebuyer tax credits. After claiming these improper refunds, the lawsuit alleged, the Vinnetts kept most of the resulting money for themselves, without telling their customers. The lawsuit alleges that the defendants’ misconduct caused as much as $2.2 million in harm to the government.

The court order also requires the Vinnetts to inform their customers of the order and to provide the government with a list of their customers since Jan. 1, 2007.




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Monday, April 23, 2012

Aristotle “Rick” R. Matsa Convicted of Tax Fraud and Obstruction of Justice Crimes


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-508.html 

The Justice Department and Internal Revenue Service (IRS) announced today that attorney Aristotle “Rick” R. Matsa, of Worthington, Ohio, was convicted of numerous tax fraud and obstruction of justice related offenses, including witness tampering and making a false statement. In addition, Rick Matsa and his mother, Loula Z. Matsa, were convicted of conspiracy to obstruct justice, commit perjury, and make false statements, following a five-week trial in Columbus, Ohio, before the Honorable Edmund A. Sargus Jr.

Rick Matsa individually was convicted of one count of a corrupt endeavor to obstruct and impede the IRS, 15 counts of aiding and assisting in the preparation of false and fraudulent tax returns, that related to five different trusts; one count of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR); one count of conspiracy to obstruct justice, commit perjury, and make false statements; two counts of witness tampering; one count of submitting a false statement; and one count of obstruction of justice.

According to the indictment, which was returned on June 23, 2010, and the evidence admitted at trial, Rick Matsa, who in addition to being an attorney was also an architect, a real estate broker, and a licensed minister in Ohio, created and operated several nominee entities in order to disguise and conceal his income and assets from the IRS. The false trust return charges relate to filings for at least five separate trust entities during the tax years 2003 to 2005. In fact, the evidence at trial showed that the trusts had been filing similar returns dating back to 1990. Each of the trusts reported receiving significant amounts of interest income each year, generated from funds held in numerous bank accounts, yet no income tax was reported due as a result of fraudulently claimed deductions for distributions on the trust returns that were purportedly paid to a foreign beneficiary each year. However, the evidence at trial showed, instead, that Rick Matsa used funds from those trusts to purchase a 150-acre farm in Hocking County and a home in Worthington, both of which he used as a personal residence.

The evidence at trial also showed that Rick Matsa violated FBAR, the foreign bank account reporting requirements, by failing to disclose his ownership and control over a foreign bank account held in The Netherlands. The evidence at trial was that Rick Matsa maintained more than $300,000 in funds in that undisclosed foreign bank during 2003.

The evidence at trial further showed that after learning of the federal grand jury investigation into his business activities in May of 2006, Rick Matsa, together with Loula Matsa and others, conspired to obstruct the investigation by misleading and concealing evidence from the grand jury, making false statements to the grand jury, creating false documents, tampering with witnesses, and lying to federal investigators.

George Pappas, formerly an attorney in Urbana, Ohio, who previously pleaded guilty to making false statements to federal agents and during the grand jury investigation, testified at trial. Pappas testified that he falsely claimed ownership of Rick Matsa’s law firm, located in the Short North area of Columbus, in their efforts to withhold records from the grand jury.

Rick Matsa’s tenant, P. Maria Galloway, the owner of an art gallery next door to Rick Matsa’s law firm, also testified after pleading guilty to conspiracy to obstruct justice. Galloway testified that she signed numerous documents at Rick Matsa’s direction, including federal income tax returns for Rick Matsa’s law firm and a number of his nominee entities, which Rick Matsa used as part of his scheme to obstruct the IRS.

“Today’s verdict shows that attorneys and other professionals who violate the tax laws or who attempt to obstruct justice will be held accountable for their actions,” said Assistant Attorney General for the Tax Division Kathryn Keneally. “Those who illegally attempt to hide their income and assets from the IRS through fraudulent trusts or offshore bank accounts will be prosecuted and punished.”

“The government will not tolerate abusive tax schemes that use offshore accounts to illegally escape taxes,” said Rick A. Raven, Acting Chief, IRS Criminal Investigation. “Those Americans who file accurate, honest and timely tax returns can be assured that the government will hold accountable those who don’t.”

Rick Matsa faces a maximum potential sentence of 108 years imprisonment, a fine of up to $3.25 million, and five years of supervised release. Loula Matsa faces a maximum potential sentence of five years imprisonment, a fine of $250,000, and three years of supervised release. No sentencing date has yet been scheduled.



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Sunday, April 22, 2012

Justice Department Seeks to Shut Down Five South Florida Tax Return Preparers


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-491.html 

The United States has sued to shut down five Florida tax return preparers, the Justice Department announced today. In the civil injunction complaint, filed in the U.S. District Court for the Southern District of Florida in Fort Lauderdale, Fla., the government alleges that since at least 2008, Jayvon Copeland, Kisha Andrews, James Daniels, Aundrea Luc and Brandon Johnson have knowingly understated their customers’ federal income tax liabilities and claimed improper tax refunds. The complaint states that the defendants reside in Broward and Miami-Dade County, Fla.

According to the complaint, the defendants fraudulently boosted tax refunds through false claims for the first-time-homebuyer tax credit, phony business expenses, false education expenses and fabricated income or withholdings that inflate a customer’s earned income tax credit. The lawsuit alleges that the defendants inflated customers’ tax refunds in order to extract exorbitant fees from the refunds.

The complaint also alleges that the defendants used stolen identities to prepare and file tax returns claiming fraudulent tax refunds, which the defendants kept. The complaint describes one instance involving a tax return prepared in the name of a man serving a life sentence in prison. According to the complaint, the return claimed a refund based on bogus education expenses and a fraudulent first-time-homebuyer credit. The prisoner allegedly did not know that a tax return was filed in his name.

The lawsuit also accuses the defendants of attempting to conceal their fraud by jumbling or falsifying various identification numbers that the Internal Revenue Service (IRS) requires tax return preparers to disclose on the returns they prepare. The defendants also allegedly established and operated a web of tax-preparation entities to perpetrate this fraud.




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Saturday, April 21, 2012

Beverly S. Beavers and James E. Beavers Charged with Tax Crimes


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-492.html 

On April 17, 2012, a federal grand jury returned a four count indictment charging Beverly S. Beavers and James E. Beavers of Knoxville, Tenn., with conspiracy to defraud the United States and filing false claims for tax refunds, the Justice Department and the Internal Revenue Service (IRS) announced today.

According to the indictment, Beverly and James Beavers filed a false 2008 personal tax return that was prepared by Penny Jones, a partner in PMDD Services LLC, an Idaho-based tax return preparation firm. Their 2008 return claimed a tax refund of $591,123 to which they were not entitled. Upon receiving the fraudulent refund, the indictment alleges that the Beavers paid $59,405 to Jones and the other principals of PMDD Services. Later, the Beavers allegedly filed amended tax returns for 2006 and 2007, seeking fraudulent tax refunds of $193,056 and $202,625, respectively, for those years.

The Beavers are also alleged to have taken steps to hide their assets from possible IRS collection efforts, including transferring the real estate title to their personal residence and Beverly Beavers’ store to nominee trusts.

Jones, other alleged principals of PMDD Services, and several other persons were charged in the Southern District of Florida in November 2011 with tax crimes, including conspiracy to defraud the United States and filing false claims. That case is scheduled for trial in October 2012. In July 2011, a federal court in Idaho permanently enjoined Penny Jones from filing federal tax returns on behalf of others.

The indictment alleges that Beverly Beavers owned a formalwear store in Knoxville and that James Beavers was previously employed as the research director of an academic engineering institute at the University of Tennessee, and as a private engineering consultant.

If convicted, the defendants each face a maximum potential sentence of 20 years imprisonment and a criminal fine up to $1 million. Both defendants may also be required to pay restitution to the IRS.





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Friday, April 20, 2012

Stephen Murphy Pleads Guilty in Nine-year Scam to Defraud the United States, Is Sentenced to Two-year Prison Term


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-496.html 

Stephen Murphy, a Utah resident, pleaded guilty in federal court in Salt Lake City to one count of conspiracy to defraud the United States, and was sentenced the same day to 24 months in prison, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Court Judge Dee Benson presided over the plea hearing and sentencing, which took place yesterday.

According to information disclosed at the hearing, Murphy, with the assistance of several tax defier promoters, filed numerous false income tax returns for the years 2002 through 2009, espousing various false and frivolous tax positions. For example, he filed a false return for 2002 reporting zero income and zero tax due, on the ground that he was “not a U.S. person” subject to tax. He filed several subsequent false returns fraudulently claiming income tax refunds, including a false return for 2008 based on fictitious Forms 1099-OID. Also disclosed at the hearing, Murphy established two fake charities, which were actually just names attached to certain of his personal bank accounts. He fraudulently claimed “charitable contribution” tax deductions for funds siphoned to these accounts. As part of his scheme, Murphy submitted Forms W-4 to his employers vastly overstating his withholding allowances, so as to minimize or eliminate tax withholdings from his wages. Murphy admitted that he intended to cause the U.S. Treasury a loss exceeding $200,000.

After accepting the plea, Judge Benson sentenced Stephen Murphy to two years imprisonment and one year of supervised release. Murphy was also ordered to pay restitution to the IRS in the amount of $83,831.




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Thursday, April 19, 2012

Justice Department Asks Federal Court to Shut Down Three Philadelphia-area Tax Preparers


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-498.html 

The United States has asked a federal court to bar three Philadelphia-area tax preparers from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint in the civil injunction suit, defendants Deron Joe, Edmund Dassin and James Tokpawhiea are Liberian nationals who are legal permanent residents of the United States. The suit alleges that most of the customers of their business, Urban Tax Professionals, are also from Liberia and were referred to the defendants by family or friends.

According to the complaint, the defendants have repeatedly prepared fraudulent federal income tax returns that intentionally understate their customers’ tax liabilities. They are alleged to have falsely claimed the first-time-homebuyer credit and the earned-income tax credit in order to claim large tax refunds. According to the complaint, Joe and Dassin told one of their employees to claim the first-time-homebuyer credit on every return he prepared. The complaint also alleges that the defendants claimed false dependents and fabricated deductions for employee business expenses.

The complaint states that the Internal Revenue Service (IRS) has disallowed at least $1.4 million in tax credits claimed by the defendants on customer returns.




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Wednesday, April 18, 2012

Stephen E. Hruby Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey


Source-  http://www.justice.gov/opa/pr/2012/April/12-at-486.html 

WASHINGTON – A former executive of a New York-based tax liens company who supervised the purchasing of municipal tax liens at auctions in New Jersey pleaded guilty today for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, N.J., against former Vice President Stephen E. Hruby, of Hainesport, N.J. Under the plea agreement, which is subject to court approval, Hruby has agreed to cooperate with the department’s ongoing investigation.

According to the felony charge, from at least as early as December 2002 until approximately February 2009, Hruby participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to, and directing others to, allocate among certain bidders which liens each would bid on. Hruby, and those under his supervision, proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“Today’s guilty plea demonstrates that the Antitrust Division will not tolerate illegal conduct that harms distressed homeowners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to prosecute the perpetrators of anticompetitive bid rigging schemes at municipal tax lien auctions in New Jersey and elsewhere.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition, in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Hruby conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Because the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum.




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Tuesday, April 17, 2012

Thomas Mitchell Pleads Guilty to Failing to File Income Tax Returns


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-482.html 

Thomas Mitchell of Mansfield, Ohio pleaded guilty before United States District Judge George J. Limbert of the Northern District of Ohio to criminal information charging him with willfully failing to file an income tax return with the Internal Revenue Service (IRS), the Justice Department and IRS announced today.

According to the plea agreement and statements made in court, Mitchell, an independent Aflac insurance salesman, failed to file individual income tax returns and pay taxes for the years 1999-2009, despite earning sufficient income during those years. As part of the plea agreement, Mitchell has agreed to pay restitution to the IRS in the amount of $111,639.




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Monday, April 16, 2012

Stephen A. Favato a Former Partner in BDO Seidman LLP’s Woodbridge, N.J., Sentenced to Prison for Tax Crimes


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-481.html 

Stephen A. Favato, a resident of Point Pleasant Beach, N.J., and a former partner in BDO Seidman LLP’s Woodbridge, N.J., office, was sentenced to 18 months in prison for tax crimes, the Justice Department and the Internal Revenue Service (IRS) announced today. In August 2010, a jury sitting in Newark, N.J., found Favato guilty of one count of corruptly endeavoring to obstruct and impede the Internal Revenue laws and one count of aiding and assisting in the preparation and filing of a false income tax return.

During the trial, evidence presented proved that from late 2001 through April 2005, Favato attempted to obstruct the IRS by, among other conduct, advising his client, Daniel Funsch, on how to include false items on the 2002, 2003 and 2004 joint income tax returns for Funsch and his then-wife. Additionally, the evidence proved that Favato knowingly prepared and signed false joint income tax returns for the Funsches for these years, causing over $114,000 of tax loss to the IRS in connection with the Funsches’ filed 2002 return and attempting to cause over $70,000 of tax loss in connection with tax years 2003 and 2004.

The evidence presented at the trial established that Favato advised Funsch to significantly reduce the salary payments that Funsch was receiving from his corporation and to instead have this compensation paid to Funsch’s limited liability company, Great Escape Yachts LLC, in the form of purported lease payments for Funsch’s yacht. However, his corporation had not leased the yacht. This course of action recommended by Favato enabled Funsch to fraudulently deduct his personal yacht expenses as business expenses. In addition, the evidence presented showed that Favato advised Funsch on how to falsely increase his expenses in order to fraudulently eliminate a portion of the gain on three properties that Funsch sold in 2002 and 2004. Finally, the evidence showed that Favato advised Funsch to report inflated charitable contributions on Funsch’s 2003 tax return. The jury acquitted Favato on one count of tax evasion.




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Sunday, April 15, 2012

Stephen Thomas Arrested for Tax Evasion and Three Counts of Attempted Evasion of his Personal Income Taxes


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-469.html 

Stephen Thomas of York, Pa., was arrested on charges of attempted tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. On April 4, 2012, a federal grand jury in the District of Columbia returned an indictment charging Thomas with three counts of attempted evasion of his personal income taxes. The indictment was unsealed following Thomas’s arrest.

According to the indictment, in 2004, in the District of Columbia, Thomas formed multiple entities whose names contained the acronym ECG, which stood for ESOP Capital Group. ECG purported to provide financial, business and other management services to companies that were interested in creating ESOPs, which are employee stock ownership plans. In or about 2005 and 2006, Thomas, through ECG, contracted to provide such services to two companies in Maine.

The indictment further alleges that, despite earning income, Thomas did not file his 2005 through 2007 individual income tax returns. In addition, he allegedly evaded assessment of his individual income tax liabilities for those years by diverting cash from the two companies he contracted with in Maine, using nominee bank accounts, titling assets in his spouse’s name and withdrawing substantial amounts of cash.




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Saturday, April 14, 2012

Bernard Lane Pleads Guilty to Mail Fraud and Tax Evasion


Source-  http://www.fbi.gov/buffalo/press-releases/2012/former-buffalo-man-pleads-guilty-to-mail-fraud-and-tax-evasion 

BUFFALO—U.S. Attorney William J. Hochul, Jr. announced today that Bernard Lane, 50, of Fort Wayne, Indiana, pleaded guilty before U.S. District Court Judge Richard J. Arcara to mail fraud and tax evasion. The charges carry a maximum penalty of 20 years in prison, a $250,000 fine, or both.

Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that between April 2003 and November 2006, the defendant was employed as the Director of the Information Technology Department at Williams Advanced Materials. During that time, Lane directed the purchase of 251 laptop computers and directed that invoices be submitted to Williams Advanced Materials for payment. After receiving the computers, the defendant then sold them to another individual for approximately $175,000. For the tax years 2005 through 2007, Lane failed to file federal income tax returns, which would have included the money he received for the sale of the laptop computers. As a result, the defendant owes the Internal Revenue Service approximately $58,524 in unpaid taxes.




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Friday, April 13, 2012

Alabama Tax Preparation Business Owner and Five Preparers Indicted for Tax Fraud Scheme


Source-  http://www.justice.gov/tax/2012/txdv12458.htm 

WASHINGTON – Bruce King, the owner of a Montgomery, Ala., tax preparation business, and five tax preparers from Montgomery have been charged with conspiring to defraud the United States and aiding in the filing of false tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. A federal grand jury in Montgomery returned an indictment on March 28, 2012, charging Bruce King, Jenika Williams, Antoinette Djonret, Nakesha Donaldson, Angela Smith and Vonecia Orum with participating in a scheme to file false tax returns. Williams, Djonret, Donaldson and Smith have also been charged with wire fraud and aggravated identity theft. The indictment was unsealed yesterday.

According to the indictment, from July 2007 to October 2010, King owned and operated Premier Tax, a tax preparation business in Montgomery along with four other locations in Alabama and Georgia. King allegedly instructed his employees how to falsify federal income tax returns for the purpose of inflating claimed tax refunds. Williams, Djonret, Donaldson, Smith and Orum then allegedly prepared false returns by reporting figures that they knew were not correct.

The indictment also alleges that Williams, Djonret, Donaldson and Smith used the names and Social Security numbers of individuals without their knowledge or consent. Williams, Djonret, Donaldson and Smith allegedly used these names and Social Security numbers to report the individuals as dependents on a customer’s tax return when, in fact, the individuals were not the legitimate dependents of the customer.

An indictment merely alleges that crimes have been committed, and each defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, King, Williams, Djonret, Donaldson, Smith and Orum face a potential maximum of five years in federal prison for conspiring to defraud the United States and a potential maximum of three years for each count of aiding in the preparation of false tax returns. Williams, Djonret, Donaldson and Smith also face a potential maximum of 20 years for each wire fraud count and a mandatory two-year sentence for the aggravated identity theft counts. They all are also subject to fines and mandatory restitution if convicted.




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Thursday, April 12, 2012

Troy A. Beam Convicted Of Tax Evasion, Obstructing and Impeding IRS


Source-  http://www.justice.gov/tax/2012/txdv12453.htm 

WASHINGTON – Troy A. Beam of Shippensburg, Pa., was sentenced today to 74 months in prison by U.S. District Judge Christopher C. Conner, the Justice Department and the Internal Revenue Service (IRS) announced. On May 4, 2011, a federal jury in the Middle District of Pennsylvania convicted Beam of tax evasion, obstructing and impeding the due administration of the Internal Revenue laws, and willful failure to file federal income tax returns.

According to evidence introduced at trial, Beam, a former certified public accountant and state auditor in the Pennsylvania Auditor General’s Office, earned substantial sums of income from 1992 to the date of the indictment while operating a home construction business known as “Sunbeam Builders,” as well as owning and operating two real estate businesses known as “Latrobe Leasing” and “Goldstar Property Management” that purchased, rented and sold real estate. Despite earning substantial income from these businesses, as well as other activities, Beam failed to file any federal income tax returns since April 1996, when he filed his 1995 tax return reporting a loss. In April 1996, Beam also filed false amended federal income tax returns for 1992, 1993 and 1994, seeking tax refunds for taxes he previously had paid for those years.

The evidence at trial proved that from 1999 to 2007, Beam earned more than $10.3 million in gross income from his various home construction and rental property businesses. Beam obstructed the IRS in its attempt to calculate and collect his taxes by using numerous sham trusts and other entities, including North Star Investment Holdings Ltd. to hide his income and assets. He used North Star to set up a bank account in the Cayman Islands into which he deposited nearly $3 million of income derived from his construction business.

“Convictions such as this send a loud and clear message that those who defy our nation's tax laws will be investigated and prosecuted to the fullest extent of the law,” said Kathryn M. Keneally, Assistant Attorney General of the Justice Department's Tax Division.

“The evidence showed beyond a reasonable doubt that Troy Beam is a consummate fraud and hypocrite who evaded his responsibilities as a citizen while participating in a charade to deceive the government, other citizens and himself for his own selfish ends,” said Peter J. Smith, U.S. Attorney for the Middle District of Pennsylvania.




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Wednesday, April 11, 2012

William S. Bene Charged with Copyright Infringement and Filing a False Tax Return


Source-  http://www.fbi.gov/losangeles/press-releases/2012/lakewood-man-charged-with-trafficking-counterfeit-computer-software 

LOS ANGELES—A former pitcher with the Los Angeles Dodgers has entered into a plea agreement in which he admits to operating a business selling counterfeit karaoke machines for years without paying taxes on the sales. The plea agreement, along with a two-count information, was filed today in federal court here in Los Angeles.

The information charges William S. Bene, 44, with criminal copyright infringement and filing a false tax return in violation of 17 U.S.C. § 506, 18 U.S.C. § 2319, and 26 U.S.C. § 7206(1).

Bene is expected to make his initial appearance in federal court on April 30, 2012.

According to the plea agreement, for several years between 2006 and 2010, Bene, a resident of Pasadena, sold counterfeit karaoke jukeboxes and did not report over $600,000 in sales from the business to the Internal Revenue Service. As part of his plea agreement, Bene admitted that between December 2006 and March 2010, he illegally copied and sold karaoke songs on hard drives. Each drive carried approximately 122,000 songs. Bene also admitted that he did not tell the IRS about the business, even going so far as to ask the IRS in 2008 for relief from back taxes because he claimed that he could not afford to pay.

“Intellectual property crimes are not victimless,” said United States Attorney AndrĂ© Birotte, Jr. “As this federal case shows, these crimes of stealth hurt the small businesses that do play by the rules, and they also deprive the federal government of tax revenue that could be put to beneficial use.”

IRS-Criminal investigation Special Agent in Charge Leslie P. DeMarco commented, “The charges in this information serve as an important reminder that IRS-Criminal Investigation will not tolerate those who make up their own rules. Income derived from illegal means is taxable and individuals who choose to participate in illegal schemes will be held accountable.”

The information charges a copyright offense that occurred in November 2009 and a false tax return filed for the year 2007.




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Tuesday, April 10, 2012

Darain and Cory Atkinson, Indicted on Conspiracy and Tax Fraud Charges


Source-  http://www.fbi.gov/stlouis/press-releases/2012/us-fidelis-brothers-indicted-on-conspiracy-and-tax-fraud-charges 

ST. LOUIS—The United States Attorney’s Office announced today the unsealing of an indictment involving the auto warranty company US Fidelis. The indictment alleges that company founders, Darain and Cory Atkinson, routinely used company funds for personal multi-million-dollar homes in St. Charles County, Lake Tahoe, and the Cayman Islands; numerous luxury vehicles and boats; and other personal living expenses of both themselves and relatives.

Darain Atkinson and Cory Atkinson were indicted on March 29, 2012 by a federal grand jury on one felony count of conspiracy to commit mail and wire fraud and two felony counts of filing false tax returns.

According to the indictment, the brothers jointly owned and operated National Auto Warranty Services Inc., which was structured as a privately held company with each brother owning 50 perent of the business. In January 2009, National Auto Warranty changed its name to US Fidelis Inc. National Auto Warranty/US Fidelis (NAWUS) routinely conducted business using the fictitious name of Dealer Services. The brothers also operated related businesses using some form of the name US Fidelis and owned a direct mail business, which was known as DS Direct.

The primary business of NAWUS was marketing and selling vehicle service contracts (VSCs) throughout the United States. Typically, NAWUS acted as a broker/seller of VSCs on behalf of other VSC administrators. In some cases, NAWUS sold VSCs on behalf of and in connection with one of its affiliated businesses, namely US Fidelis Administration Services. They used a variety of techniques to market and sell VSCs, including direct mail to consumers, media advertisements, and unsolicited telephone calls. A VSC was not a warranty or an extended warranty, and NAWUS had no affiliation with an automobile manufacturer, no authority to provide an automobile manufacturer’s factory warranty and no authority or ability to alter or extend a factory warranty, according to the indictment.

The indictment states that a VSC covered specified types of vehicle repair costs. The VSC administrators were responsible for paying covered claims under a VSC. Typically, a VSC administrator’s obligation to perform under the VSC was insured by a reinsurance group or a risk retention group. The cost and availability of a VSC depended on a number of factors, including the type, age, and mileage of the vehicle in question, as well as the term of the coverage. NAWUS made a profit and attempted to make a profit by marking up the price of the VSC, which was often more than $1,000. The total purchaser cost for a VSC was often greater than $2,000.

Some VSC purchasers financed the cost of the VSC, although some paid in full at the outset. NAWUS had contracts with Mepco Finance Corporation (Mepco), Chicago, Illinois. A typical VSC sale involved at least four parties: NAWUS as the seller, a VSC administrator, Mepco, and a VSC customer/purchaser. NAWUS typically received the largest percentage of the total sales price of a VSC, approximately 60 percent. The VSC administrator received the next largest percentage, about 30 percent, and Mepco received approximately 10 percent. When a VSC purchaser financed its purchase, NAWUS typically received its percentage up front from Mepco after the customer made an initial down payment and the first installment payment. The VSC administrator was also paid its share by Mepco.

The indictment alleges that as part of the conspiracy, Darain Atkinson directed NAWUS personnel to fraudulently withhold substantial portions of refunds due to customers who canceled their VSC and were owed a full or prorated refund. NAWUS routinely fraudulently withheld approximately 40 percent of the total refund due to customers who legitimately canceled and attempted to cancel their VSCs. Often, only customers who complained or threatened action were provided the full refund to which they were entitled. NAWUS personnel routinely made the cancellation and refund process difficult to discourage purchasers from being able to obtain refunds to which they were entitled.

The indictment states that between 2006 and 2008, Darain and Cory Atkinson received distributions totaling more than $71 million from NAWUS, a substantial percentage of which funds were used to pay for their personal expenses. Records from NAWUS indicate that in 2006, Darain Atkinson received distributions in excess of $13 million and Cory Atkinson received in excess of $14 million. In 2007, they each received distributions in excess of $8 million; in 2008, in excess of $13 million. For the tax years 2006 and 2007, Darain Atkinson and Cory Atkinson failed to report the taxable distributions as income.




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Monday, April 9, 2012

Enyinnaya Udo Indicted for Preparing False Tax Returns


Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-442.html 

A federal grand jury in the District of Columbia returned an indictment charging Enyinnaya Udo with 25 counts of aiding and assisting in the preparation of false income tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.

According to the indictment, the defendant operated a tax preparation business called Anic and Associates, located in Washington, D.C. The defendant allegedly aided, advised and prepared false individual income tax returns for the tax years 2005 through 2008 for at least seven taxpayers. These individual income tax returns allegedly claimed fraudulent filing statuses and false deductions.

If convicted, the defendant faces a potential maximum sentence of three years in prison and a maximum fine of $250,000 on each count.




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