Delane F. Alston Pleads Guilty to Preparing False Tax Returns

Source- http://www.justice.gov/tax/2013/txdv13132.htm

WASHINGTON - Delane F. Alston, a resident of Rocky Mount, N.C., pleaded guilty today before Judge Terrence W. Boyle to two counts of aiding and assisting in the preparation of false federal income tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. Alston's sentencing hearing is scheduled for May 6, 2013.

According to the charging documents, Alston worked as a return preparer at P&A Tax Services, a tax return preparation business, between 2007 through 2011. Alston initially prepared returns at a P&A Tax Services office located in Rocky Mount, but she later transferred to the Spring Hope, N.C., office. Alston was the manager of the Spring Hope office in 2008, 2009 and 2011. At the hearing, Alston pleaded guilty to preparing false 2008-2010 tax returns for P&A Tax Services clients that contained false and fraudulent claims for tax refunds. Alston generated the refunds by reporting false information on client tax returns, including false dependent information and false deductions.

Alston is subject to a maximum potential sentence of three years in prison and a fine of up to $250,000 for each count of conviction.

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Christopher B. Berg Pleads Guilty to Failure to Report Foreign Bank Accounts at UBS

Source- http://www.justice.gov/tax/2013/txdv13130.htm

WASHINGTON - Christopher B. Berg of Portola Valley, Calif., entered a plea of guilty today before the U.S. District Court in San Jose, Calif., to an information charging him with willful failure to file the required report of foreign bank account (FBAR) for an account he controlled at UBS in Switzerland in the year 2005.

According to the information, in 1999, Berg began working as a consultant. In 2000, Berg met with Beda Singenberger, a Swiss financial consultant, and a vice president of banking at UBS in San Francisco regarding setting up a bank account at UBS in Switzerland to shelter a portion of his consulting income from taxation. Beginning in 2001 and continuing through 2005, funds representing $642,069 in compensation earned by Berg from consulting services were deposited by wire transfer to UBS accounts. Berg used the money in these accounts at UBS in Switzerland to purchase a vehicle, to obtain cash while in Europe, and to pay the balance on a Eurocard he used while traveling in Europe. Berg did not disclose the existence of his accounts at UBS in Switzerland to his certified public accountant, and did not disclose the income earned by these accounts or the consulting income deposited to the accounts. The tax harm associated with Berg's conduct is $270,757.

"Individuals who shirk their civic duty and evade taxes by hiding their income and assets in offshore accounts are making a very poor choice," said Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division. "They risk criminal prosecution and jail, still owe the taxes due and may lose most of those assets to severe civil penalties."

"Those who hide their assets and income in offshore accounts should realize that there is no safe haven from the IRS," said Richard Weber, Chief Internal Revenue Service Criminal Investigation. "Mr. Berg admitted he disregarded his legal responsibility to file the required report of a foreign bank account and report all his income and interest. He now faces substantial monetary penalties and the risk of incarceration. Combating offshore tax evasion continues to be one of the IRS' top priorities."

United States citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns. Additionally, U.S. citizens and residents must file an FBAR with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority.

Sentencing has been scheduled for July 8, 2013. Berg faces a maximum penalty of five years in prison and a fine of up to $250,000.

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Lea'Tice Phillips Indicted for Providing Names to a Million Dollar Identity Theft Scheme

Source- http://www.justice.gov/tax/2013/txdv13120.htm

WASHINGTON - A federal grand jury in Montgomery, Ala., returned an indictment charging Lea'Tice Phillips for conspiring to file false tax returns using stolen identities, the Justice Department and the Internal Revenue Service (IRS) announced today. The 37 count indictment charges Phillips with conspiracy to file false claims, wire fraud, computer fraud and aggravated identity theft.

According to the court documents, Phillips worked for an Alabama state agency and had access to state databases which contained means of identification of individuals. Between October 2009 and April 2012, Phillips conspired with Antoinette Djonret and others to file false tax returns using stolen identities. On multiple occasions, Phillips accessed a state database to obtain means of identification. Phillips used her state email to send means of identification to Djonret. Djonret and others used those means of identification to file false tax returns. Djonret and her co-conspirators filed most of the tax returns from her residence in Montgomery. Djonret and her co-conspirators used an elaborate network of individuals to launder the tax refunds. They recruited individuals to purchase prepaid debit cards and to provide the cards to Djonret and her co-conspirators. The fraudulent tax refunds were directed to the prepaid debit cards. Djonret and her co-conspirators would then use the prepaid debit cards to obtain the proceeds. Some of the prepaid debit cards were in the name of Lea'Tice Phillips. In total, Djonret filed over 1,000 false tax returns that claimed over $1.7 million in fraudulent tax refunds.

On Aug. 9, 2012, a federal grand jury in Montgomery returned a superseding indictment charging Antoinette Djonret, Angelique Djonret, Tabitha Stinson, Melba Wilson, Chantresa Hayes and Corey Means for their roles in the same conspiracy.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the Phillips faces 10 years imprisonment for the conspiracy to file false claims, 20 years for each wire fraud count, 10 years imprisonment for each computer fraud count and a mandatory two-year sentence for the aggravated identity theft counts. She is also subject to fines, mandatory restitution and forfeiture.

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Steven Kern of Marine City, Mich., Pleads Guilty to Tax Fraud

Source- http://www.justice.gov/tax/2013/txdv13114.htm

WASHINGTON - Steven Kern of Marine City, Mich., pleaded guilty today before U.S. District Court Judge Arthur J. Tarnow in the Eastern District of Michigan to eight counts of filing false corporate tax returns and eight counts of failing to file his individual tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.

According to filed court documents and court proceedings, Kern operated the Kern Chiropractic Center from Marine City and diverted cash and check payments from the business for his own personal use. The indictment alleges that Kern failed to file individual tax returns for tax years 2003 to 2010, despite earning more $1.2 million in gross income during that time period. According to filed court documents and court proceedings, Kern told IRS-Criminal Investigation Special Agents he believed signing and filing a completed tax return was a violation of his constitutional rights.

Each count of filing a false corporate tax return carries a maximum penalty of three years in prison and a $250,000 fine. Each count of failing to file an individual tax return carries a maximum penalty of twelve months imprisonment and a fine of up to $100,000. Kern is scheduled to be sentenced on April 30, 2013.

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Federal Court Has Barred David Ray Franklin and His Company From Preparing Federal Tax Returns

Source- http://www.justice.gov/tax/2013/txdv13129.htm

WASHINGTON - A federal court in Indianapolis has barred David Ray Franklin and his company, Instant Refund Tax Service (IRTS) - which does business as Instant Tax Service-from preparing tax returns and from operating a tax-preparation business, the Justice Department announced today. Instant Tax Service is a national tax-preparation chain operated by ITS Financial LLC, based in Dayton, Ohio. A federal court entered a preliminary injunction against the Ohio firm and its owner last November.

The Indiana preliminary injunction order, which remains in effect pending final resolution of the civil lawsuit, was signed by Judge Sarah Evans Barker of the U.S. District Court for the Southern District of Indiana. The court also permanently barred an alleged IRTS manager, William Brown, from preparing federal tax returns for others. The defendants consented to the court orders without admitting the allegations against them.

The government complaint in the case alleges that Franklin owned and operated 22 Instant Tax Service locations that prepared and filed over 10,000 federal tax returns in 2010 and 2011 combined. Brown allegedly worked for Franklin and managed one of Franklin's busiest Instant Tax Service offices. The United States accused Franklin’s offices and Brown of preparing false and fraudulent income tax returns for customers, fabricating income for phony businesses to obtain larger tax credits, forging forms W-2, filing returns improperly based on paycheck stubs rather than W-2 wage statements, claiming false education tax credits and reporting false filing status. The complaint also alleged that Franklin's offices filed tax returns without authorization and sold false and deceptive loan products to Instant Tax Service customers.

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Scottie Alice Johnson Indicted for her Role in a Million Dollar Identity Theft Scheme

Source- http://www.justice.gov/tax/2013/txdv13119.htm

WASHINGTON - A federal grand jury in Montgomery, Ala., returned an indictment charging Scottie Alice Johnson with a conspiracy to commit theft of public funds and to defraud the Internal Revenue Service (IRS) and with theft of public funds, the Justice Department and the IRS announced today.

According to the indictment, between 2006 and 2012, Johnson conspired with others to defraud the IRS and commit theft of public funds. Co-conspirators filed false federal income tax returns with stolen identities and had refunds directly deposited into several bank accounts, including bank accounts in the name of Scottie Alice Johnson and another individual. The bank accounts associated with the conspiracy received at least $1.3 million in false tax refunds.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Johnson faces five years in prison for the conspiracy count and 10 years in prison for each theft of public funds count. Johnson is also subject to fines, mandatory restitution and forfeiture.

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William R. Herder Sentenced to 20 Months in Prision For Tax Obstruction

Source- http://www.justice.gov/tax/2013/txdv13105.htm

WASHINGTON - A federal judge in Cleveland today sentenced William R. Herder of Bellville, Ohio, to 20 months in prison for tax crimes, Assistant Attorney General for the Justice Department's Tax Division Kathryn Keneally, U.S. Attorney for the Northern District of Ohio Stephen M. Dettelbach and Special Agent in Charge, Internal Revenue Service (IRS) - Criminal Investigation, Cincinnati Field Office, Darryl K. Williams announced. U.S. District Judge Donald C. Nugent also ordered Herder to pay restitution to the IRS of $149,238 plus interest and penalties.

Herder pleaded guilty in October 2012 to corruptly endeavoring to obstruct the administration of the tax laws and currency structuring. According to documents filed in the case, Herder, an independent insurance salesman for Aflac Inc., failed to file timely and accurate income tax returns for the years 2000-2009 despite earning substantial insurance commissions and receiving warnings and notices from the IRS. Herder filed returns for the years 2010 and 2011 on which he reported that he owed taxes to the government, but failed to pay the almost $50,000 in taxes that he owed for those years.

According to the plea agreement and indictment filed in this case, to prevent the IRS from collecting his unpaid taxes, Herder attempted to conceal his assets and income. In 2004, Herder formed two entities in Nevada - one for the purpose of hiding his automobiles and another for the purpose of hiding his insurance business. Herder also began converting his insurance commission checks to cash and paying his expenses in cash to prevent the IRS from collecting his taxes from his bank account.

The plea agreement and indictment filed in this case also stated that Herder submitted numerous obstructive letters and documents to the IRS, Aflac and his credit union in an effort to prevent the IRS from assessing and collecting his taxes. In these letters, Herder falsely claimed, among other things, that the tax laws were not applicable to him. In 2005, Herder attempted to pay his taxes with a fake financial instrument called an "International Bill of Exchange."

Last year, William R. Herder's father, William A. Herder, was found guilty at trial of tax evasion, corruptly endeavoring to obstruct the administration of the tax laws and five counts of failing to file tax returns and was sentenced to 37 months in prison. William A. Herder also sold insurance for Aflac Inc. as an independent contractor. Another insurance salesman, Thomas Mitchell, the uncle of William R. Herder, also pleaded guilty to failing to file a tax return in 2012. William R. Herder has admitted in court papers that he, his father and his uncle participated in a tax defier "program" promoted by convicted felon Joseph Flickinger.

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Stephen Thomas of York, Penn., was Sentenced For Tax Evasion

Source- http://www.justice.gov/tax/2013/txdv13100.htm

WASHINGTON - Stephen Thomas of York, Penn., was sentenced today in U.S. District Court for the District of Columbia for tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Judge Amy Berman Jackson sentenced Thomas to 18 months in prison and ordered him to pay $154,362 in restitution to the IRS.

On Sept. 11, 2012, Thomas pleaded guilty to attempting to evade his 2006 federal income taxes. According to court records, between 2002 and 2004, in the District of Columbia, Thomas formed multiple entities whose names contained the initials 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.

As part of his guilty plea, Thomas admitted that he failed to file his 2005 through 2007 individual income tax returns and failed to file 2005 through 2007 corporate income tax returns for ECG. Thomas further admitted that he engaged in a series of affirmative acts of evasion during 2005 through 2007, including concealing his income by moving earnings from the Maine companies into bank accounts in the name of his wife, withdrawing cash on a weekly basis which totaled more than $400,000, using cashier’s checks, and titling his primary residence in the name of his wife. Thomas further admitted that he failed to report at least $573,785 of income and that his tax evasion during 2005 through 2007 resulted in a tax loss to the IRS of at least $154,362.

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Gerrit Timmerman III, 70, of Midvale, Utah, and Carol Sing, 73, of Henderson, Nev. Charged With Tax Conspiracy

Source- http://www.justice.gov/tax/2013/txdv13099.htm 

WASHINGTON - A federal grand jury in Salt Lake City returned an indictment Wednesday afternoon charging Gerrit Timmerman III, 70, of Midvale, Utah, and Carol Sing, 73, of Henderson, Nev., with one count of conspiracy to defraud the United States. The indictment was announced by Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division and U.S. Attorney for the District of Utah David B. Barlow.

According to the indictment, from April 23, 2004, through March 5, 2007, Timmerman and Sing conspired to defraud the United States by marketing corporations sole as a part of a scheme to evade the assessment and payment of federal income taxes. Timmerman and Sing falsely told their clients that so-called “corporations sole” were exempt from United States income tax laws, had no obligation to file tax returns, and had no obligation to apply for tax exempt status. They further claimed that individuals could render their own income non-taxable by assigning it to the corporation sole, could draw a tax-free stipend from their corporation sole, and could render property immune from Internal Revenue Service (IRS) collection activity by transferring property to the corporation sole. During the life of the conspiracy, Timmerman and Sing were responsible for the creation of approximately 90 corporations sole; at the time their corporation soles were created, these clients had outstanding federal income tax assessments totaling at least $5,000,000.

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Justice Department Sues to Stop South Carolina Tax Return Prepares Engaged in Earned Income Credit Schene

Source- http://www.justice.gov/tax/2013/txdv13091.htm

WASHINGTON - The United States has asked a federal court in Florence, S.C., to permanently bar Susann Allen of Darlington County, S.C., and Rachel D. Watson of Florence County, S.C., from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Allen and Watson have prepared federal income tax returns at a number of businesses in South Carolina including, most recently, Fludd’s Express Tax Service and Gold Valley Pawn. The complaint alleges that they have prepared returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes.

The government complaint alleges that Allen and Watson prepared returns that unlawfully claim the Earned Income Tax Credit by reporting fictitious Schedule C businesses or business income or fictitious dependents. The complaint also alleges that Allen and Watson fabricated or inflated deductions. According to the complaint, the Internal Revenue Service has examined 32 returns prepared by Watson and six prepared by Allen and found that every single one overstated their client’s refund. The total excessive refund of those returns is alleged to be greater than $100,000. Altogether, the government complaint alleges that Allen’s and Watson’s activities may have resulted in millions of dollars of loss to the United States.

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A Federal Court has Permanently Barred Nafeesah H. Hines and Rodney N. Chestnut From Promoting an Alleged Tax Fraud Scheme

Source- http://www.justice.gov/tax/2013/txdv13086.htm

WASHINGTON - A federal court has permanently barred Nafeesah H. Hines and Rodney N. Chestnut from promoting an alleged tax fraud scheme, as well as preparing tax returns for anyone other than themselves, the Justice Department announced today. The civil injunction orders, to which Hines and Chestnut consented without admitting the allegations against them, were entered by Judge Kiyo Matsumoto of the U.S. District Court for the Eastern District of New York.

According to the government complaint in the case, Hines and Chestnut promoted and personally participated in a scheme based on the frivolous “redemption” theory, which promoters falsely claim allows taxpayers to obtain funds from supposed secret Treasury accounts. The government alleged that Hines and Chestnut used Internal Revenue Service (IRS) forms, including Forms 1099-OID and 1099-A, to report large amounts of fictitious income tax withholding to claim large tax refunds on customer tax returns prepared by Chestnut or prepared by the customers with Chestnut’s help.

Chestnut, the government alleges, is a former captain with the New York City Corrections Department and promoted the scheme to former co-workers. Hines, who the complaint alleges is a U.S. Food and Drug Administration employee, prepared or filed false 1099 forms with the IRS, both for Chestnut’s customers as well as for other people, according to the lawsuit. The complaint alleges that Hines prepared or filed more than 3,000 fraudulent IRS forms that falsely reported over $54 million of purportedly withheld income taxes.

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Federal Court has Permanently Barred Virginia Company's Promotion of Tool Reimburstment and Tool Rental Schemes

Source- http://www.justice.gov/tax/2013/txdv13085.htm

WASHINGTON - The Justice Department announced today that a federal court has permanently barred Cash Management Systems, a Virginia corporation, from promoting two tax schemes that allegedly involve disguising wages as tool-reimbursement or tool-rental payments. Also subject to the civil injunction order were Cash Mangement’s marketing arm, Xell Enterprises, incorporated in Kansas; its principals, Bruce Lemay and Richard Herson Mills; and Allen Davison, of Overland Park, Kan. According to the government complaint, Davison provided legal opinion letters regarding the schemes and served on Cash Management’s board of directors.

Judge Eric F. Melgren of the U.S. District Court for the District of Kansas entered the permanent injunction, which the defendants consented to without admitting to the allegations against them. Davison was enjoined from promoting other tax schemes in 2010.

The complaint alleges that defendants promoted and implemented two fraudulent tax schemes to employers and employees in the automotive, construction and trucking industries across the United States. In the first, employers allegedly re-characterize a portion of employees’ wages as purported reimbursements for tools in order to evade federal income and employment taxes. The second plan allegedly involves re-characterizing a portion of wages as purported tool rental payments. The suit alleges that both plans are specifically designed and promoted as ways to reduce reported income and employment taxes.

The government asserts in its complaint that from 2004 through 2010 the schemes cost the U.S. Treasury an estimated $17 million.

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Mary and Christian Young and Octavious Reeves Were Indicted Stolen Identity Refund Fraud Conspiracy

Source- http://www.justice.gov/tax/2013/txdv13080.htm

WASHINGTON - Mary and Christian Young and Octavious Reeves were indicted by a federal grand jury in the Middle District of Alabama on a variety of charges stemming from an identity theft and tax fraud conspiracy, the Justice Department and the Internal Revenue Service (IRS) announced today. The alleged conspirators were charged in a 31-count indictment that was returned on Dec. 18, 2012, and unsealed today.

Mary and Christian Young and Octavious Reeves, all of Elmore County, Ala., were charged with conspiring to defraud the United States, along with access device fraud and aggravated identity theft. Mary Young was also charged with several counts of wire fraud. According to the indictment, the defendants’ conspiracy lasted from January 2012 through June 2012 and involved using stolen identities to file tax returns claiming fraudulent refunds.

The indictment further alleges that Mary Young obtained the names and Social Security numbers of individuals that were then used to electronically file false tax returns. Mary Young would direct the false tax refunds to bank accounts linked to prepaid debit cards. Mary and Christian Young and Octavious Reeves would then use the prepaid debit cards to withdraw cash or pay for personal items.

An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Mary Young faces face a maximum potential sentence of 328 years in prison, Christian Young faces a maximum of 27 years in prison, and Octavious Reeves faces a maximum of 78 years in prison.

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Jacksonville-Area Preparer Allegedly Falsifies Tax Returns, Costing U.S. Treasury More Than $17 Million Dollars

Source- http://www.justice.gov/tax/2013/txdv13075.htm

WASHINGTON - The United States has asked a federal court in Jacksonville, Fla., to stop Thomas G. Bandzul from preparing tax returns for others, the Justice Department announced today. According to the government complaint, Bandzul has repeatedly prepared federal tax returns that unlawfully understate customers’ federal tax liabilities. The suit alleges that Bandzul concocts bogus or inflated deductions, business expenses, education credits and charitable contributions, which he falsely reports on his customers’ federal income tax returns.

The suit alleges that the Internal Revenue Service (IRS) has examined over 250 tax returns prepared by Bandzul and found that over 90 percent of tax returns understated the taxpayer’s liability. According to the complaint, the total harm to the U.S. Treasury caused by Bandzul’s misconduct could exceed $17 million.

The suit further alleges that, in some instances, Bandzul filed returns that claimed a refund larger than what Bandzul had disclosed to the taxpayer. Once the refund was paid, Bandzul retained the additional amount without the taxpayer’s knowledge.

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Ronald E. Burrell, and Michael R. Elliott, Sentenced to 60 Months Imprisonment and Ordered Them to Pay Restituition of Over $4.8 Million

Source- http://www.justice.gov/tax/2013/txdv13072.htm

WASHINGTON - Ronald E. Burrell, former chief executive officer (CEO) of Caremerica Inc., and Michael R. Elliott, former chief financial officer (CFO) of Caremerica Inc., were sentenced today in Wilmington, N.C., the Justice Department and Internal Revenue Service (IRS) announced. Judge James C. Fox sentenced both Burrell and Elliott to 60 months imprisonment and ordered them each to pay restitution of over $4.8 million.

Burrell, a resident of Wilmington, N.C., pleaded guilty to conspiracy to defraud the IRS on Jan. 3, 2012, and Elliott, a resident of Loris, S.C., pleaded guilty to conspiracy to defraud the IRS on July 18, 2012.

According to the charging documents, Burrell and Elliott co-owned and operated a chain of assisted living facilities (ALFs) in North and South Carolina. The ALFs were managed by Caremerica Inc., a Leland, N.C.-based company that Burrell and Elliott also owned and operated. Burrell was the president and CEO for Caremerica, the Caremerica ALFs and other related companies. Elliott, formerly a certified public accountant, served as the CFO and tax return preparer for the Caremerica companies. Burrell and Elliott were the corporate officers responsible for ensuring that the Caremerica companies collected, reported and paid over federal employment taxes to the IRS. However, with Burrell and Elliott at the helm, the Caremerica companies accrued more than $4.5 million in employment tax liabilities between approximately 2003 and 2006. Among other things, Burrell and Elliott filed, or caused to be filed, false IRS forms that reported full payment of the employment taxes due, when in fact only a small fraction of the taxes, or none at all, were paid.

Charging documents further allege that in 2003, Burrell and Elliott acquired majority ownership of Partners Pharmacy Services Inc. (PPS), which provided prescription drug and related services to the Caremerica ALFs. In April 2005, Burrell and Elliott sold PPS to a subsidiary of Omnicare Inc. At the closing, Burrell and Elliott received $1.6 million and $1.4 million, respectively. The PPS sale proceeds were disbursed at a time when the IRS was attempting to collect unpaid employment taxes from the Caremerica companies, as well as from Burrell personally. To prevent the IRS from discovering their PPS proceeds, Burrell and Elliott took active steps to conceal them. Among other things, Burrell formed a nominee company in his wife’s name through which he funneled a portion of his PPS sale proceeds in order to avoid IRS collection action. As a result of his concealment efforts, Burrell deceived the IRS into accepting a $29,000 settlement on a $300,000 personal tax liability and opened another assisted living facility with the PPS proceeds. Elliott directed his $1.4 million share to be wired into the bank account of his then-girlfriend. Burrell and Elliott then filed false 2005 federal income tax returns that failed to report the PPS proceeds. Elliott and Burrell also obstructed justice by making false statements under oath in bankruptcy proceedings and in IRS disclosure forms.

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Masood Chotani, a CPA Pleads Guilty to Tax Refund Conspiracy

Source- http://www.justice.gov/tax/2013/txdv13066.htm

WASHINGTON - Masood Chotani, a CPA and tax return preparer from Los Angeles County, Calif., pleaded guilty today to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced.

On June 23, 2010, Chotani was indicted by a federal grand jury in Riverside, Calif., on charges of engaging in a scheme to file false returns with the IRS using the names and Social Security numbers of deceased individuals.

According to the indictment and the plea agreement, in 2002 and 2003, Chotani misappropriated employer identification information from his client files and provided the information to his co-conspirator, Haroon Amin. Amin and another co-conspirator, Ather Ali, used the stolen employer data, as well as deceased people’s Social Security numbers and other identification information obtained from the Internet, to prepare and file fraudulent returns. These returns had fictitious Form W-2 wage and tax statements as attachments, falsely stating that the deceased people earned wages from those employers from which income tax had been withheld.

Chotani admitted that he was a knowing participant in this scheme. He also admitted filing similar false returns himself, in his parents’ names, also using employer identification information misappropriated from his files.

According to documents filed in two related cases, the scheme resulted in the filing of over 250 false returns claiming an aggregate of more than $2 million in income tax refunds. Although the IRS rejected the bulk of these refund claims, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali, and their co-conspirators. Most of these refund checks then were delivered overseas to be deposited in bank accounts in Armenia and Pakistan.

Amin pleaded guilty to conspiracy to defraud the United States on Jan. 25, 2010, and is serving a 30-month prison term. Ali subsequently pleaded guilty to the same crime on Feb. 12, 2010, and is serving a 37-month prison term.

Judge S. James Otero scheduled Chotani’s sentencing for April 22, 2013. Chotani faces a statutory maximum sentence of five years in prison and a maximum fine of $250,000. In addition, under the plea agreement, Chotani has agreed to pay restitution to the IRS for the losses arising from the tax fraud scheme.

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Curtis Boggs, 54, Promoter of Cincinnati Grand Prix Pleads Guilty to Fraud, Money Laundering

Source- http://www.fbi.gov/cincinnati/press-releases/2013/promoter-of-cincinnati-grand-prix-pleads-guilty-to-fraud-money-laundering

CINCINNATI—Curtis Boggs, 54, formerly of Harrison, Ohio, pleaded guilty in U.S. District Court to wire fraud and money laundering in connection with a scheme he promoted to bring a Grand Prix race to Cincinnati in 2009.

Carter M. Stewart, United States Attorney for the Southern District of Ohio; Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI); and Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), announced the pleas entered today before Senior U.S. District Court Judge Susan J. Dlott.

According to court documents, Boggs was employed by an insurance company as a financial advisor in the Southern District of Ohio from 2000 to 2009. Beginning in approximately October 2008 and continuing through approximately August 2009, Boggs solicited his customers and others to invest in silver and gold, or in a grand prix race, through a corporation called Cincinnati Grand Prix (“CGP”). Today, Boggs admitted that, during that period, he fraudulently obtained investments of at least $352,745 for CGP in exchange for shares in the “stock” of CGP.

Boggs devised and intended to devise a scheme and artifice to defraud through fraudulent pretenses, representations, and promises. Specifically, he fraudulently obtained investment funds from individuals wherein the funds were not invested as represented and were diverted in part for his personal benefit. On or about October 27, 2008, in furtherance of his scheme, Boggs wired proceeds of a check from an investor to his personal account to pay property taxes on his house and pay down his personal mortgage debt. On or about October 21, 2008, Boggs laundered money derived from the fraud scheme by using $27,232.63 to buy a Lincoln MKX vehicle for his personal use.

A federal grand jury indicted Boggs in June. He was arrested on October 8, 2012, when he was stopped trying to enter the U.S. from Mexico.

The plea agreement calls for Boggs to serve a sentence of 27 months in prison, pay $352,745.21 in restitution, and forfeit any assets that he received as proceeds of the crimes. The court will conduct a presentence investigation before deciding whether or not to accept the terms of the plea agreement and schedule a date for sentencing.

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Victoria Finney Brewton, 37, Pleaded Guilty to Stealing a Therapist’s Identity to Commit the Fraud and to Filing a False Tax Return

Source- http://www.fbi.gov/charlotte/press-releases/2013/shelby-woman-pleads-guilty-to-defrauding-medicaid-of-8-million-aggravated-identity-theft-and-tax-fraud

CHARLOTTE—A Shelby, North Carolina woman pleaded guilty today for her involvement in a health care fraud scheme that defrauded Medicaid of $8 million for sham mental and behavioral health services, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In addition to defrauding Medicaid, Victoria Finney Brewton, 37, also pleaded guilty to stealing a therapist’s identity to commit the fraud and to filing a false tax return.

U.S. Attorney Tompkins is joined in making today’s announcement by North Carolina Attorney General Roy Cooper, who oversees the North Carolina Medicaid Investigations Division (MID); Roger A. Coe, Acting Special Agent in Charge of the FBI, Charlotte Division; Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); and Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region.

Brewton pleaded guilty today before U.S. Magistrate Judge David Keesler to seven counts of health care fraud and health care fraud conspiracy, one count of aggravated identity theft, and one count of filing a false tax return. At today’s plea hearing, the defendant admitted that from 2008 to 2012, Brewton, her co-defendant Linda Radeker, also of Shelby, and others submitted in excess of $8 million in false claims to Medicaid. According to filed court documents and statements made in court, Brewton operated a series of after-school and summer childcare programs in Shelby. Brewton recruited juvenile Medicaid recipients to her childcare programs by promising that the program would be free for Medicaid recipients. After Brewton obtained the children’s and families’ Medicaid recipient numbers, she used this information to fraudulently bill Medicaid for mental and behavioral health services that were never provided.

According to the criminal information, Brewton was not licensed or qualified to provide mental and behavioral health services, and she was not approved by Medicaid. Instead, Brewton enlisted the assistance of other complicit Medicaid-approved providers, such as Linda Radeker and, in other instances, stole the identity of Medicaid-approved providers in order to accomplish the fraud. Court documents indicate that Brewton conspired with Radeker, a licensed professional counselor enrolled with North Carolina Medicaid, to submit claims to Medicaid making it appear that Radeker had provided the claimed mental and behavioral health services when, in fact, Radeker did not provide any of the services. Radeker and Brewton then split the Medicaid payments 50/50 for these false claims.

Filed documents also indicate that Brewton hired licensed therapist K.S.M. in October 2010 to provide services at Brewton’s company, Healing Hearts. Although K.S.M. provided some mental and behavioral health services while she worked at Healing Hearts, Brewton submitted false and fraudulent claims to Medicaid through K.S.M.’s Medicaid provider number far in excess of the services actually provided by K.S.M. In or about October 2011, K.S.M. left Healing Hearts after learning that Brewton had submitted false claims through K.S.M.’s Medicaid provider number. Thereafter, Brewton misappropriated K.S.M.’s identity, specifically her Medicaid provider number, in order to continue to submit fraudulent claims to Medicaid after K.S.M. was no longer employed at Healing Hearts. Specifically, the defendant admitted that on or about October 27, 2011, Brewton submitted an Electronic Funds Transfer Authorization Agreement to Medicaid directing that reimbursements for claims submitted through K.S.M.’s provider numbers be deposited into a bank account held and controlled by Brewton. From in or about April 2011 to May 2012, Brewton submitted in excess of $1.8 million in false claims through K.S.M.’s provider number which K.S.M. did not provide. According to court documents, Brewton also misused the Medicaid provider numbers of other therapists employed by her companies in order to submit false claims to Medicaid through their numbers.

As part of her plea, Brewton also admitted that she defrauded the United States by filing a false tax return for the year 2009 that intentionally failed to report the income Brewton received from her scheme to defraud Medicaid. She also failed to file tax returns for 2010 and 2011, which further masked the income from her fraud scheme. Brewton agreed to forfeit a 2005 Dodge Magnum which was seized as the proceeds of fraud during the investigation.

Brewton, who was released on bond, faces a mandatory two years in prison consecutive to any other term of imprisonment and a $250,000 fine for the aggravated identity theft charge, a maximum term of 10 years in prison, and a $250,000 fine for the health care fraud charges; and a maximum term of three years in prison and a $250,000 fine for the filing of a false tax return charge. In her plea agreement, Brewton has agreed to pay full restitution to Medicaid for any losses resulting from her criminal scheme. The final restitution amount will be determined by the court at Brewton’s sentencing hearing, which has not been scheduled yet.

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John Giannelli of Danvers, Massachusetts, Sentenced to 24 Months in Federal Prison on Money Laundering, Gambling, and Tax Violations

Source- http://www.fbi.gov/boston/press-releases/2013/massachusetts-man-sentenced-to-24-months-in-federal-prison-on-money-laundering-gambling-and-tax-violations

CONCORD—John Giannelli, Sr., 66, of Danvers, Massachusetts, was sentenced to 24 months in federal prison today after pleading guilty on September 27, 2012, in the United States District Court for the District of New Hampshire to one count of money laundering, one count of operating an illegal gambling business, and five counts of impeding the administration of the Internal Revenue laws, announced United States Attorney John P. Kacavas.

Giannelli operated a computer based sports betting business while he resided in Peabody, Massachusetts, and then Kingston, New Hampshire. Giannelli controlled access, through the use of user identifications and passwords, to a gambling site and granted access to that site to dozens of agents. Approximately 300 customers making sports related wagers were able to gain access to the site through the agents, and Giannelli was able to monitor the overall betting activity. A forensic analysis of betting records obtained from computers seized at Giannelli’s residence in March 2012 established that the operation generated gross profits of approximately $188,000 over a 12-week period.

The money laundering charges arose from a scheme in which Giannelli was listed as an employee on a former sports betting customer’s business. Giannelli provided the business with cash proceeds generated by the gambling business and, in return, the business issued paychecks to Giannelli, thus making it appear that Giannelli’s income was legitimate. The business also caused to be generated false W-2 forms that Giannelli used to support tax returns filed with the IRS. Between 2003 and 2007, Giannelli laundered approximately $452,000 in proceeds through the scheme. The District Court ordered a money judgment forfeiture in the amount of $452,000.

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A Nevada federal court has permanently barred Benyam Tewolde Preparing Tax Returns to Others

Source- http://www.justice.gov/tax/2012/txdv121549.htm

WASHINGTON – A Nevada federal court has permanently barred Benyam Tewolde from preparing tax returns for others, the Justice Department announced today. Tewolde and his wife, Yordanos Kidanits, are the alleged co-owners of an Instant Tax Service franchise that operates at multiple locations in the Las Vegas area. Instant Tax Service is a nationally franchised tax preparation company based in Dayton, Ohio.

Kidantis and the franchisee, Koraggio LLC, were also permanently enjoined from engaging in certain abusive practices. The civil injunction orders, to which the defendants consented without admitting the allegations against them, were signed on Dec. 27 by Judge Miranda M. Du of the U.S. District Court for the District of Nevada.

According to the government complaint, the defendants helped employees at their Instant Tax Service franchise offices to engage in a variety of misconduct, including:
Preparing phony tax-return forms with fabricated businesses and income,
Falsely claiming education credits,
Claiming false filing status,
Claiming false dependents,
Selling deceptive loan products,
Filing tax returns without customer consent or authorization, and
Preparing bogus W-2 forms, based on information from employee paystubs

The complaint further alleged that Tewolde personally prepared fraudulent returns.

The injunction permanently bars Tewolde from preparing or filing federal tax returns for others, training tax preparers and owning or managing a tax preparation business.

Kidane and Koraggio are enjoined from violating the federal tax laws and consumer protection laws. The court order requires them to hire a monitor at their expense who will periodically report to the Justice Department to ensure compliance with the injunction. The order also bars Kidane and Koraggio from marketing abusive loan products, including holiday, or instant cash loan or advance products offered to customers based on information obtained from the customer’s paystub.

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Larry J. Heath and Andrew R. Heath, Brothers in Cartersville and Acworth Allegedly Falsify Tax Returns

Source-  http://www.justice.gov/tax/2012/txdv121541.htm

WASHINGTON – The United States has asked a federal court in Atlanta to bar Larry J. Heath, who operates Heath’s Income Tax II in Cartersville, Ga., and his brother Andrew R. Heath, who operates Excellent Tax Service of Acworth, Ga., from preparing tax returns for others, the Justice Department announced today. According to the government complaint, the Heaths and their businesses have repeatedly prepared federal tax returns that unlawfully understate customers’ federal tax liabilities. The suit alleges that the defendants concoct bogus losses, expenses, education credits, business expenses and charitable contributions, which they falsely report on their customers’ federal income tax returns.

According to the complaint, the Internal Revenue Service (IRS) previously suspended Larry Heath’s IRS-issued electronic filing identification number (EFIN) because of the large number of erroneous returns he prepared. In response, the complaint alleges, Larry Heath purported to “sell” his business to two different individuals and used their EFINs to continue to file tax returns.

The suit alleges that the IRS has examined thousands of income tax returns prepared by the Heaths and their businesses and found that 94.5 percent of tax returns required IRS adjustments. According to the complaint, the total harm to the U.S. Treasury caused by Larry and Andy Heath’s misconduct could exceed $100 million.

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