Thursday, February 28, 2013

Justice Department Sues to Shut Down Ahmed Gran and Lilian Madyun Tax Return Preparers


Source- http://www.justice.gov/tax/2013/txdv13225.htm

Memphis, Tenn., Return Preparers Allegedly Overstate Refunds by Fabricating Education Credits and by Unlawfully Claiming Earned Income Tax Credits

WASHINGTON – The United States has asked a federal court in Memphis, Tenn., to permanently bar husband and wife team Ahmed Grant and Lillian Madyun from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Grant and Madyun have operated multiple tax return preparation businesses in the Memphis area, including SuperFast Taxes, MG Services, and most recently, Taxes-R-Us.

The complaint alleges that Grant and Madyun have prepared returns that unlawfully overstate refunds and understate tax liability through a variety of schemes. Specifically, the government alleges that Grant and Madyun have prepared returns that unlawfully claim the Earned Income Tax Credit for their clients by reporting fictitious Schedule C business income. The government alleges that Grant and Madyun also prepared returns that claimed the American Opportunity Credit, to which their clients were not entitled, without their clients' knowledge or consent. According to the complaint, ninety percent of the American Opportunity Credits claimed on their clients' returns were false. The complaint further alleges that Grant and Madyun improperly ensured that their clients' refunds were deposited into their own business's bank account. The estimated harm to the government is over $2 million for the 2010 tax year alone, and may be as high as $5 million, according to the complaint.



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Wednesday, February 27, 2013

"Tax King" Business Allegedly Claimed Fraudulent Credits and Deductions on Tax Returns


Source- http://www.justice.gov/tax/2013/txdv13223.htm

WASHINGTON – The Justice Department announced today that it has asked a federal court in Detroit to permanently bar Calvin Carter and brothers Raheen Stroud and Laron Stroud, who do business as E-File Tax Pros LLC and Tax King, from preparing federal tax returns. The civil injunction suit alleges that Carter and the Stroud brothers falsify customers' income on their tax returns, frequently by fabricating business income and expenses, in order to claim the maximum earned income tax credit (EITC) for them.

The EITC is a refundable credit available to certain low-income people. The maximum credit in 2010 was $5,666. Due to the method used to calculate the EITC, people with higher annual incomes may be entitled to a larger credit. Some tax preparers refer to the range of earned income generating a maximum EITC as the "sweet spot." According to the complaint, Carter and the Stroud brothers fabricated businesses and reported fake business income and expenses on their customers' tax returns to achieve reported income in the EITC sweet spot. The complaint alleges that the defendants filed tax returns in 2009, 2010, and 2011 that had an extremely high refund-request rate of 97 percent.

The complaint also alleges that the defendants prepare returns for customers that falsely claim the first-time-homebuyer credit even though the customers had not bought new homes and were ineligible for the credit.



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Tuesday, February 26, 2013

The United States has asked a Federal Court to Bar Doris E. Baules


Source- http://www.justice.gov/tax/2013/txdv13222.htm

WASHINGTON – The United States has asked a federal court in Camden, N.J., to bar Doris E. Baules, who operates D'Vazquez Tax Solutions, from preparing tax returns for others, the Justice Department announced today. According to the government complaint, Baules continually and improperly claimed the Earned Income Tax Credit (EITC) on her clients' returns to enable them to receive erroneous tax refunds. The suit alleges that the defendant improperly increases their EITC claims.

According to the complaint, the Internal Revenue Service previously conducted an investigation into the tax returns that Baules prepared for the 2009 tax year, and assessed $12,500 in return preparer penalties against her because she failed to exercise due diligence in determining whether her clients were entitled to the EITC. Baules continued to claim increased EITC on returns she prepared even after the IRS contacted her. According to the complaint, the total harm to the U.S. Treasury caused by Baules' misconduct is estimated to be as high as $6.2 million.



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Monday, February 25, 2013

Susan Tomsha-Miguel, 52, Convicted for Impersonating Congressional Aide to Deceive Tax Client


Source- http://www.justice.gov/opa/pr/2013/February/13-crm-244.html

The operator of a California-based tax consulting business has been convicted by a federal jury in Fresno, Calif. for impersonating an aide to a U.S. Congressman in order to deceive a client, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

Susan Tomsha-Miguel, 52, of Atwater, Calif., was convicted late yesterday, Feb. 26, 2013, of the sole count in the indictment against her: impersonating an officer or employee of the United States. The jury deliberated for only 15 minutes before returning a guilty verdict.

As the evidence at trial showed, Tomsha-Miguel operated a tax consulting and bookkeeping business in Atwater. A client, who owned a commercial business in Merced, Calif., hired Tomsha-Miguel to resolve a tax dispute with the Internal Revenue Service (IRS).

Tomsha-Miguel requested help with the tax problems from the office of U.S. Representative Dennis A. Cardoza, who represents the 18th Congressional District – which includes Merced County, as well as parts of San Joaquin, Stanislaus, Madera and Fresno Counties. As the evidence revealed, Representative Cardoza’s office agreed to help, and transmitted written material – including a form printed under his official Congressional letterhead – to Tomsha-Miguel.

According to the evidence presented in court, Tomsha-Miguel then sent her client a counterfeit letter written under Representative Cardoza’s official letterhead and purportedly written and signed by a congressional aide. The letter falsely claimed that due to Tomsha-Miguel’s efforts on behalf of her client, the aide had contacted an IRS official. The counterfeit letter claimed that the IRS official had agreed to make resolving the client’s tax dispute his “number one priority” after he returned from “Washington, D.C. for an emergency strategy meeting with the U.S. Treasury Secretary and others for a planning session in the event a budget does not get passed by both the House and Senate.”

In reality, the aide did not exist, and Tomsha-Miguel had forged the letterhead by copying the official letterhead onto a blank sheet of paper. The evidence also showed that Tomsha-Miguel had written the letter from the non-existent aide herself and then sent it to her client in order to mislead him into believing she had succeeded in alleviating his tax problems.

Tomsha-Miguel faces a maximum potential penalty of three years in prison and a $250,000 fine at sentencing, currently scheduled for June 24, 2013 before U.S. District Judge Lawrence J. O’Neill, who presided over the trial.



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Sunday, February 24, 2013

A federal court in Los Angeles permanently barred Henock Teferi and Ruth Berhane


Source- http://www.justice.gov/opa/pr/2013/February/13-tax-237.html

A federal court in Los Angeles permanently barred a Rancho Palos Verdes, Calif., married couple – Henock Teferi and Ruth Berhane – and their company, Plover Financial Services LLC, from engaging in certain abusive tax-preparation practices, the Justice Department announced today. The defendants are former owners of a Los Angeles-area Instant Tax Service franchise. Instant Tax Service is a national tax-preparation chain based in Dayton, Ohio, and claims to be the fourth-largest tax-preparation firm in the nation.

According to the government complaint in the civil case the defendants operated Instant Tax Service offices at multiple locations in the Los Angeles area until 2011. During that time, defendants’ employees allegedly engaged in a variety of misconduct, including preparing tax forms with unsubstantiated business income, falsely claiming education credits, improperly claiming false filing status, reporting false dependents, selling deceptive loan products, and preparing tax returns based on information from employee paystubs rather than employer-issued W-2 forms.

Judge Michael Fitzgerald of the U.S. District Court for the Central District of California signed the permanent injunction order, barring the defendants from violating the federal tax laws and consumer protection laws, and requiring an outside monitor to review a sample of tax returns that the defendants prepare in connection with their current tax preparation business, and report to a designated representative of the United States to ensure compliance with the injunction. The order also bars the defendants from marketing abusive loan products, including holiday or instant cash loans or advance loan products offered to customers based on information obtained from customers’ paystubs. The defendants consented to the permanent injunction without admitting the allegations against them.

The Justice Department brought five civil injunction suits against Instant Tax Service and some franchisees last year. One of those suits is pending against the nationwide franchisor of Instant Tax Service and its owner, Fesum Ogbazion, in Dayton. The court in that case has entered apreliminary injunction , and trial on the government’s request to shut down the Instant Tax Service franchisor permanently is scheduled for May 2013.



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Saturday, February 23, 2013

Hak Ghun, 62, Pleads Guilty to Evading Federal Taxes



Source- http://www.justice.gov/usao/nm/pr/2013/2013-02-21_ghun_pr.pdf

ALBUQUERQUE – Hak Ghun, 62, of Durango, Colo., pled guilty this morning to a 
federal tax evasion charge under a plea agreement with the U.S. Attorney’s Office. Under the 
terms of the plea agreement, Ghun will be sentenced to prison for a period of 12 to 18 
months. He also will be required to pay $249,567 in restitution to the Internal Revenue Service 
(IRS). 

Ghun was charged on April 10, 2012, in a three-count indictment with evading an 
aggregate of $367,809 in federal taxes during tax years 2005, 2006 and 2007. According to the 
indictment, Ghun was the chief executive officer of BCDS Manufacturing, Inc. (BCDS), a 
manufacturing company located in Shiprock, N.M. In 2003 and 2004, the Navajo Nation 
invested economic development funds in BCDS and became the majority owner of the company, 
and in 2006, obtained a $2.2 million loan for the purpose of expanding the BCDS facility in 
Shiprock. The indictment alleged that, between 2005 and 2007, Ghun used BCDS funds to pay 
his personal expenses and evaded his personal tax obligations on those funds by concealing his 
conduct from BCDSDs corporate accountant and by filing false corporate tax returns on behalf of 
BCDS. 

During today’s proceedings, Ghun entered a guilty plea to Count 2 of the indictment 
charging him with evading federal income taxed in 2006. In his plea agreement, Ghun admitted 
that, during 2005, 2006 and 2007, he was the chief operating officer of BCDS, a company that 
sought military procurement contacts as a source of economic development for the Navajo 
Nation, and had access to the company’s bank accounts. Ghun also admitted withdrawing funds 
from BCDS’s bank accounts and spending a significant portion of the funds for himself. Ghun 
used the funds to make support payments to his ex-wife and paying for luxury cars, hotels stays 
and casino gambling. Ghun acknowledged that the funds he misused were taxable as personal 
income and that he failed to pay taxes on that income. 

More specifically, Ghun admitted receiving gross income of $207,726 in calendar year 
2005 and willfully evading approximately $29,197 in federal income taxes. He also admitted 
receiving gross income exceeding $620,361 in calendar year 2006 and willfully evading
 approximately $145,156 in federal income taxes, and receiving gross income exceeding 
$251,435 in taxable income in 2007 and evading approximately $65,214 in taxes.


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Friday, February 22, 2013

Aneal Maharaj, Stole Almost $1.5 Million Sentenced to Eight Years in Prison

Source- http://www.justice.gov/usao/nv/press/january2013/maharaj01162013.htm

LAS VEGAS, Nev. – A former resident of Las Vegas who defrauded 17 individuals of almost $1.5 million in an investment fraud and marketing scheme involving early mortgage payoffs, was sentenced today to just over eight years in prison for his guilty pleas to fraud and tax evasion charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

“Mr. Maharaj repeatedly solicited victims through fraud and deception knowing that they would never receive the monetary rewards he pitched,” said U.S. Attorney Bogden. “Although he tried to avoid facing the reality of a conviction by fleeing to Fiji and causing the United States to extradite him, he was eventually brought to justice and will spend much of the next decade behind bars.”

Aneal Maharaj, 65, currently in custody, was sentenced by U.S. District Judge James C. Mahan to 100 months in prison, five years of supervised release, and ordered to pay $1,473,111 in restitution. Maharaj received a greater sentence because of the significant loss amount and number of victims, and because he obstructed justice by failing to appear for trial in the case and fled to Fiji to avoid prosecution. Maharaj pleaded guilty on Oct. 18, 2012, to one count of mail fraud, two counts of wire fraud, one count of tax evasion, six counts of bank fraud, and one count of making a false declaration in a bankruptcy petition.

Beginning in about 1990 and continuing to about October 2004, Maharaj operated a multi-level marketing program from Las Vegas wherein he promised persons that they could pay off a 30-year mortgage in five years or less by investing and becoming franchise owners in a business he called “PowerNet Marketing Systems,” and a “home loan plan” he called Systematic Mortgage Amortization Reduction Technology (SMART). The system required the investors to recruit additional persons into the program, which Maharaj told them would entitle them to substantial commissions and income. Maharaj knew that no individual had ever paid off a 30-year mortgage in five years or less using the SMART plan, and that he had no intention of paying the commissions and income to the participants. At least 17 individuals each invested a minimum of $25,000 and up to $500,000 with Maharaj to become franchise owners in his fraudulent marketing program. The plea agreement states that Maharaj convinced one victim to sign over his interest in his $100,000 life insurance benefit.

Maharaj was originally charged in September 2005 with mail fraud and wire fraud. Additional charges were filed against Maharaj in October 2008, including structuring cash transactions, money laundering, tax evasion, bank fraud and making a false declaration in relation to a bankruptcy proceeding. Shortly thereafter, the government filed a motion requesting the court to detain Maharaj pending trial, alleging that Maharaj was committing new crimes while on pretrial release including engaging in the same conduct for which he was originally indicted. The court did not immediately detain Maharaj, and set a hearing on the matter. Maharaj fled to Fiji and failed to appear at the hearing. In February 2009, the U.S. Department of Justice began extradition proceedings. Maharaj fought extradition for more than two years, but on Nov. 15, 2011, he was extradited to Las Vegas to face the charges.

Maharaj has not filed a tax return since at least 1995, and admitted in his guilty plea that from 1995 to about October 2004, he kept a substantial portion of the payments that the victims made to “Powernet” for his own use and benefit and did not pay taxes on the income. Maharaj used the proceeds of the fraud scheme to purchase homes in Las Vegas and Henderson between December 2003 and August 2004. Maharaj financed the homes through Countrywide Home Loans and caused false and fraudulent information to be included in the home loan applications concerning his employment, income, assets and liabilities. Maharaj also filed for bankruptcy and made false statements in his petition concerning ownership of the homes.



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Thursday, February 21, 2013

Lawyer Sentenced to two Years in Prison for Tax Evasion


Source- http://www.justice.gov/usao/nv/press/january2013/lobello01152013.htm

LAS VEGAS, Nev. – Las Vegas lawyer Charles C. LoBello has been sentenced to two years in prison and ordered to pay $260,625 in restitution to the IRS for his guilty plea to one count of tax evasion for the 2002 tax year, announced Daniel G. Bogden, United States Attorney for Nevada.

LoBello was sentenced on Monday, Jan. 14, 2013, by U.S. District Judge James C. Mahan, and must self-report to federal prison by April 15, 2013.

According to the court records, LoBello, who operated as a sole practitioner in Las Vegas, concealed over $900,000 in income from the United States, intentionally gave incomplete information to his bookkeeper and tax return preparer, and used personal checking accounts to hide large checks he received as legal fees. LoBello admitted in his guilty plea agreement that for the years 2001 through 2005, he owed an additional $260,625 in income taxes.

LoBello’s brother, Mark LoBello, also a Nevada attorney, pleaded guilty to tax evasion in August of 2008, and was sentenced by Judge Mahan on Dec. 1, 2008, to 15 months in prison. Mark LoBello’s license to practice law was subsequently suspended by the Nevada Bar in December 2008.



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Wednesday, February 20, 2013

Michael Titus Sentenced to Prison for Felony Tax Crimes


Source- http://www.justice.gov/usao/nv/press/january2013/titus01142013.htm

LAS VEGAS, Nev. – A man who submitted false and fraudulent federal tax returns for himself and others causing hundreds of thousands of dollars of losses to the IRS, was sentenced today to 2½ years in prison, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

Michael Titus, 49, most recently of Cedar City, Utah, but currently in federal custody, was sentenced by Senior U.S. District Judge Philip M. Pro to 30 months in prison and three years of supervised release, and ordered to pay approximately $300,000 in restitution to the IRS. Titus pleaded guilty on Sept. 4, 2012, to one count of filing a false claim with the IRS.

According to plea agreement, beginning in about 2007, Titus prepared and filed fraudulent federal tax returns for himself and others in Nevada and Utah, for the purpose of obtaining significant tax refunds to which the taxpayer was not entitled. Through his fraudulent practices, Titus caused losses to the IRS of approximately $468,481. Among other things, Titus created fraudulent W-2 forms and claimed false business losses on the tax returns. Specifically on Jan. 9, 2009, Titus prepared and filed a fraudulent tax return for himself and his wife claiming over $450,000 in income from Medco Networks, Inc., as well as significant withholdings and business losses, when Titus knew that he had not been so employed or earned such income and did not have such withholdings or losses. By filing this false and fraudulent return, the IRS issued to Titus a refund of $49,682.

Titus has several prior felony convictions in Missouri and Arkansas for burglary and theft, as well as a gross misdemeanor conviction in Clark County in 2007 for securities fraud.



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Saturday, February 16, 2013

Ohio Federal Court Bars Michael Ehrmann Appraiser Of Historis-Preservation Easements


Source- http://www.justice.gov/tax/2013/txdv13192.htm

WASHINGTON – A federal court in Cleveland has barred MAI-designated real estate appraiser Michael Ehrmann and his firm, Jefferson & Lee Appraisals Inc., from preparing property appraisals for federal tax purposes, the Justice Department announced today. Judge Dan Aaron Polster of the U.S. District Court for the Northern District of Ohio signed the civil injunction order against Ehrmann and Jefferson & Lee Appraisals. The defendants consented to the injunction without admitting the allegations against them.

Federal law allows a taxpayer in certain limited circumstances to claim a charitable deduction for the value of a conservation easement donated to a qualified organization. The easement's value must be determined by a qualified appraiser. According to the government complaint, Ehrmann's appraisals repeatedly overstated the value of conservation easements placed on historic properties, including the Book Cadillac Hotel in Detroit and the Powerhouse Building in the Flats District of Cleveland.

In its complaint, the government contends that Ehrmann distorted data and provided misinformation or unsupported personal opinions to get artificially high values for conservation-easement donations. The complaint also alleges that "Ehrmann knows that his clients will use the inflated values provided in his appraisals to claim overstated charitable contribution deductions." According to the government complaint, the amount of improper tax deductions attributable to Ehrmann's flawed appraisals could reach hundreds of millions of dollars.



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Friday, February 15, 2013

Gilbert T. Lopez Jr.of Stanford Financial Group Entities Sentenced to 20 Years in Prison for Roles in Fraud Scheme


Source- http://www.justice.gov/opa/pr/2013/February/13-crm-200.html

Gilbert T. Lopez Jr., the former chief accounting officer of Stanford Financial Group Company, and Mark J. Kuhrt, the former global controller of Stanford Financial Group Global Management, were each sentenced today to 20 years in prison for their roles in helping Robert Allen Stanford perpetrate a fraud scheme involving Stanford International Bank (SIB). Both were convicted by a Houston federal jury on Nov. 19, 2012.

The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Kevin Perkins of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell; and Special Agent in Charge Lucy Cruz of Internal Revenue Service-Criminal Investigation.

The trial against Lopez and Kuhrt spanned five weeks. After approximately three days of deliberations, the jury found both Lopez, 70, and Kuhrt, 40, both of Houston, guilty of 10 of 11 counts in the indictment. Each defendant was convicted of one count of conspiracy to commit wire fraud and nine counts of wire fraud. Each was found not guilty on one wire fraud count. Both defendants were taken into custody immediately following the jury’s verdict.

In addition to the prison terms, U.S. District Judge David Hittner, who presided over the trial, sentenced Lopez and Kuhrt to serve three years of supervised release and ordered Lopez to pay a $25,000 fine. At today’s hearing, Judge Hittner also found that both defendants obstructed justice by committing perjury at trial.

Stanford, who was previously convicted in a separate trial, illegally used billions of dollars of SIB’s assets to fund his personal business ventures, to live a lavish lifestyle and for other improper purposes. He was later sentenced to 110 years in prison. James M. Davis, Stanford’s chief financial officer – who pleaded guilty and cooperated with the government soon after SIB was shut down in February 2009 and testified at both Stanford’s trial and the trial of Lopez and Kuhrt – was sentenced to 60 months in prison for his role in the scheme.

The evidence presented at Lopez and Kuhrt’s trial established that they were aware of and tracked Stanford’s misuse of SIB’s assets, kept the misuse hidden from the public and from almost all of Stanford’s other employees and worked behind the scenes to prevent the misuse from being discovered. They also helped Stanford falsely represent to SIB customers during the economic crash in late 2008 that Stanford had infused hundreds of millions of dollars into SIB when he had not. As part of that effort, Lopez and Kuhrt helped design a fraudulent real estate transaction that involved falsely inflating parcels of land purchased at $63.5 million to a purported value of $3.2 billion.



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Thursday, February 14, 2013

Fourteen Arrested for Market Manipulation Schemes That Caused Thousands of Investors to Lose More Than $30 Million


Source- http://www.fbi.gov/losangeles/press-releases/2013/fourteen-arrested-for-market-manipulation-schemes-that-caused-thousands-of-investors-to-lose-more-than-30-million

LOS ANGELES—Federal authorities have arrested 14 people named in two federal indictments that allege long-term schemes to manipulate stock prices that led to more than 20,000 investors losing over $30 million when artificially inflated stock prices collapsed. As one defendant described his scheme during a wiretapped phone call: “What I do is turn stock into money.”

The arrests were made yesterday after two grand jury indictments were unsealed Wednesday. The indictments detail two separate, large-scale fraud schemes in which conspirators gained control of the majority of the stock of publicly traded companies, often co-opting company management to assist in these efforts; concealed their control of the stock by purchasing and transferring shares to offshore accounts and to nominee entities with names such as “Dojo,” “Picasso,” and “Big Dog”; fraudulently inflated the prices and trading volumes of the companies’ stocks through slick marketing campaigns, misleading press releases, payments to stock promoters, and “cross-trading” among co-conspirators that made it appear the stocks were being actively traded; coordinated the sale of the companies’ shares at the peak of the fraudulently manipulated market; and hid profits in nominee and offshore accounts.

According to court documents, the defendants are serial market manipulators who carried out several fraudulent deals each year, each of which generated several million dollars. The defendants generally targeted marginal companies operating in areas they believed could easily be touted as generating breakthroughs or deals that would explain sudden increases in trading volume and price, including companies purportedly involved in pharmaceuticals, hair restoration, green technologies, entertainment, oil and gas development, and e-commerce websites. The indictments allege that increased trading volume and higher stock prices were actually the result of the defendants’ fraudulent actions. A company CEO brought into one of the schemes summed up a typical deal during a wiretapped call: “There’s nothing in there, there’s nothing to the company. It’s monkey business.”

The indictments allege that the schemes collectively engaged in five specific deals that defrauded more than 20,000 investors around the world and generated more than $30 million in illegal profits.

“This case has dismantled a far-reaching stock market manipulation scheme run with ruthless efficiency and operated with one goal in mind—to steal money from the investing public,” said U.S. Attorney AndrĂ© Birotte Jr. “This type of predatory behavior cheats the average investor, erodes overall confidence in the markets, and has a devastating impact on companies and their employees.”

One indictment alleges a scheme led by Sherman Mazur and his nephew, Ari Kaplan, charging that they “perpetrated a multi-million-dollar scheme to fraudulently inflate the prices and trading volumes of public company stocks and then sell millions of shares of those companies at the fraudulently inflated prices to the investing public for substantial profits.” The indictment alleges that the scheme involved a number of companies, but focuses on deals involving two businesses—GenMed, which purported to develop, manufacture, and distribute generic pharmaceuticals; and Biostem, which purported to develop and license regenerative stem cell treatments, including hair regrowth technology.

The 32-count Mazur indictment charges nine defendants, all of whom were taken into custody yesterday morning. They are Sherman Mazur, 63, of the Westwood district of Los Angeles, who controlled a company called the London Finance Group, Ltd.; Ari Kaplan, 40 of Venice, who is Mazur’s nephew and was his partner in the London Finance Group, as well as in a series of other business endeavors; Grover Henry Colin Nix IV (who generally used the name “Colin Nix”), 39, of the Los Feliz district of Los Angeles, who controlled the Santa Monica-based Calbridge Capital LLC, which purported to be a “boutique investment banking firm”; Regis Possino, 65, of the Pacific Palisades district of Los Angeles, a now-disbarred attorney who was Nix’s partner at Calbridge Capital; Edon Moyal, 32, of Carlsbad, California, who controlled a company called 8 Sounds, Inc. and while allegedly involved in this scheme was free on bond pending trial in a criminal case filed in federal court in San Diego; Mark Harris, 56, of Scottsdale, Arizona, a stock promoter who controlled Apache Capital LLC, an investor relations firm in Scottsdale; Joey Davis, 46, of the Los Feliz district of Los Angeles, who controlled Scripted Consulting Group, a public relations firm in Los Angeles and who was allegedly involved in this scheme while free on bond pending trial in a criminal case filed in federal court in Los Angeles; Curtis Platt, who turned 51 today, of Sarasota, Florida, who controlled Big Dog International LLC; and Dwight Brunoehler, 62, of Maitland, Florida, who is the CEO of Biostem, a company based in Clearwater, Fla.

The Mazur indictment alleges that the nine defendants conspired to commit securities fraud and wire fraud. The indictment alleges that members of the scheme generated at least $13 million in illegal proceeds when they sold their shares of manipulated companies, a figure that includes at least $2.1 million in illegal proceeds from the manipulation campaign for Genmed, as well as $500,000 in illegal proceeds from the ongoing manipulation campaign for Biostem. The indictment further alleges that Mazur, Kaplan, Nix, Possino, and Harris engaged in money laundering, using funds transferred from offshore accounts to promote their fraudulent scheme.

“The defendants’ alleged combination of celebrities, press releases, gimmicks, and lies was similar to a how a magician deceives unsuspecting believers into an illusion,” said Bill Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “While operating the schemes alleged in the indictments, the defendants kept their audience captive until stock prices peaked, while investor money vanished into defendants bank accounts.”

The second indictment concerns a stock manipulation ring allegedly headed by Possino—a former Los Angeles County deputy district attorney—and Nix, both of whom are also key players in the Mazur indictment. This second indictment also outlines a broad scheme to manipulate stock prices and it focuses on deals involving three companies—Sport Endurance Inc., which purported to develop, manufacture, and distribute energy drinks and nutritional supplements; Imobolis, Inc., which came to be known as FrogAds and which purported to operate an online bulletin board for classified advertisements; and Empire Post Media, which purported to provide media services, including post-production services, for feature films and television programs. This 37-count indictment charges 11 defendants, some of whom are also charged in the Mazur indictment. Those named in the second indictment are: Regis Possino, who along with Nix, controlled a series of companies used in relation to the stock manipulation scheme; Grover Henry Colin Nix IV, who was generally known as Colin Nix; Tarun Mendiratta, 42, of Weston, Conn., who claimed to have earned between $75 million and $80 from market manipulation schemes over the past decade and who allegedly participated in the current scheme, in part, by using a cell phone smuggled into the prison where he was housed; Ivano Angelastri, 49, a resident of Switzerland and Dubai, who controlled funds and securities in foreign accounts for himself and Mendiratta (Angelastri is the one defendants who was not arrested yesterday; he is currently being sought by authorities); Mark Harris, the Arizona-based stock promoter; Edon Moyal; the San Diego County man; Joseph Scarpello, 52, of Tustin, California, a disbarred attorney who controlled Taylor Financial, Ltd.; Julian Spitari, 47, of Encino, California, who was the CEO of the company that came to be called FrogAds; Peter Dunn, 72, of the Brentwood district of Los Angeles, who was the CEO of Empire Post Media; William Mackey, 61, a stock promoter who resides in Plantation, Florida, who allegedly was free on bond in a federal case filed in New York City when he committed the crimes alleged in this indictment; and Joseph Davis, the PR executive.

The Possino indictment alleges that members of the conspiracy made at least $18 million in illegal proceeds from selling their shares of manipulated companies. This figure includes at least $1 million in profits from the Sport Endurance campaign, at least $6.8 million from the FrogAds deal and at least $1 million in profits from the Empire Post Media deal. The defendants named in this indictment are charged with conspiracy to commit securities fraud and wire fraud. Possino, Nix, Mendiratta, Angelastri, Harris, Moyal, Scarpello, and Spitari are also charged with money laundering related to funds transferred from offshore accounts.

“This investigation took law enforcement above and beyond its traditional role in financial crimes,” said N. Dawn Mertz, Special Agent in Charge of Internal Revenue Service (IRS)-Criminal Investigation’s Los Angeles Field Office. “Using foreign bank accounts to promote their scheme, the case put us square in the middle of the world of international banking and the sophisticated electronic movement of money. IRS Criminal Investigation is proud to bring our accounting skills to this joint venture and to put a stop to this and other types of white-collar fraud.”

While the two indictments outline conspiracies to engage in wide-ranging market manipulation, each focuses on a small number of deals that illustrate the overall schemes. One deal concerns the alleged manipulation of FrogAds stock. After buying up all of the company’s stock just over a year ago, members of the conspiracy arranged for FrogAds to issue a series of press releases touting the company’s successes and growth potential, which included making bogus claims that the FrogAds website was among the most visited on the Internet. At the same time, several online stock pickers and at least one analyst recommended FrogAds after being paid by some of the defendants. After the company held a press conference with a well known actress (who was not part of the conspiracy) announcing that she would serve as FrogAds’ celebrity spokeswoman and while members of the conspiracy cross-traded stock to give the false appearance of increased market demand, the price for FrogAds stock went up. But the purported success of FrogAds and the apparent interest in the company’s stock were an elaborate fabrication. The indictment quotes one member of the conspiracy saying in a recorded phone call: “You’re dressing this thing up as a multi-million dollar deal, you gotta make sure that we have all our ducks in order.” The manipulation of FrogAds’ stock allegedly orchestrated by the conspiracy resulted in profits of nearly $7 million for the defendants.

The defendants arrested yesterday morning—all of the charged defendants except Angelastri—made their initial appearances in federal courts in the districts where they were arrested. Mazur and Possino, both of whom entered not guilty pleas to the charges in their indictments, are currently being held without bond, but they are scheduled to have detention hearings next week in U.S. District Court. Trial dates for both cases were scheduled for April 9 in federal court in Los Angeles.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

If convicted, each of the defendants would face statutory maximum penalties of at least 100 years in federal prison. Some of the defendants, including Mazur, Possino, Nix, and Mendiratta face potential life sentences.



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Wednesday, February 13, 2013

Leader of Professional Money Laundering Ring Pleads Guilty in Texas


Source- http://www.justice.gov/opa/pr/2013/February/13-crm-190.html

One of the leaders of an organization that laundered more than $20 million through “shell” business bank accounts pleaded guilty today in federal court in Houston, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

Enrique Morales, 42, of Houston and Guadalajara, Mexico, pleaded guilty today before U.S. District Judge Lee H. Rosenthal in the Southern District of Texas to conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business.

In August 2012, a federal grand jury in Houston indicted Morales and four of his co-defendants for their roles in operating a money transmitting business that provided professional money laundering services to narcotics traffickers as part of a scheme commonly referred to as “the Black Market Peso Exchange.” According to the indictment, from October 2009 to September 2011, the defendants placed U.S. currency obtained through the sale of drugs in the U.S. into bank accounts held in the name of shell companies, which were owned and operated by the defendants. The money was then transferred to different accounts in the U.S. and Mexico. In exchange, pesos were transferred to bank accounts owned by the defendants’ clients.

A total of five people arrested as part of this scheme have now been convicted. Willie Whitehurst, Fulton Smith and Anthony Foster, all from Houston and money couriers for the organization, previously pleaded guilty to conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. Smith, 40, pleaded guilty yesterday, while Whitehurst, 44, and Foster, 47, pleaded guilty in January 2013. An office manager for the organization, Sarah Combs, 48, of Dickinson, Texas, previously pleaded guilty to conspiracy to operate an unlicensed money transmitting business.

Foster, Whitehurst and Combs are scheduled for sentencing on May 9, 2013, while the sentencings of Smith and Morales are set for May 29, 2013. For the money laundering conspiracy, Morales, Whitehurst, Foster and Smith face up to 20 years in federal prison and a $500,000 fine, or twice the value of the property involved in the offense, whichever is greater. All five defendants face up to five years in federal prison and a fine of $250,000 for conspiracy to operate an unlicensed money transmitting business.



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Tuesday, February 12, 2013

Tara Denise Bonelli Pleads Guilty to Wire Fraud


Source- http://www.fbi.gov/sanfrancisco/press-releases/2013/santa-cruz-woman-pleads-guilty-to-wire-fraud

SAN JOSE, CA—Tara Denise Bonelli today pleaded guilty in federal court in San Jose to wire fraud, United States Attorney Melinda Haag announced. In pleading guilty, Bonelli admitted to promoting false and fraudulent real estate investments by knowingly making false promises about how investor funds were to be invested and repaid. Among other inducements, Bonelli promised investors that their funds would be used to purchase foreclosed and distressed properties for resale, when in reality she used those funds for personal expenses.

Bonelli, 33 of Santa Cruz, California, was indicted by a federal grand jury on March 16, 2011. She was charged with 18 counts of wire fraud in violation of 18 United States Code § 1343. Under the plea agreement, Bonelli pleaded guilty to one count of wire fraud that included the total charged loss of more than $3 million.

The sentencing of Bonelli is scheduled for June 25, 2013, at 9 a.m. before United States District Court Judge Edward J. Davila in San Jose. The maximum statutory penalty for each count of wire fraud, in violation of 18 United States Code § 1343, is 20 years in prison and a fine of $250,000, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.



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Monday, February 11, 2013

Eleven South Florida Residents Charged in $34 Million Stolen Identity Tax Refund Scheme


Source- http://www.fbi.gov/miami/press-releases/2013/eleven-south-florida-residents-charged-in-34-million-stolen-identity-tax-refund-scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service-Criminal Investigation (IRS-CI); Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; and Paula Reid, Special Agent in Charge, United States Secret Service (USSS), Miami Field Office, announced the unsealing of a 43-count indictment charging defendants 11 South Florida residents with stolen identity tax refund fraud. Charged in the indictment are Henry Dorvil, aka “D,” 35, of Hollywood; Herve Wilmore Jr., 29, of Aventura; Dukens Eleazard, aka “DK,” 33, of Pembroke Pines; Marie Eleazard, aka “Fanfan,” 32, of Miami; Jesse Lamar Harrell, 26, of Miramar; Luckner St Fleur, aka “Nene,” 32, of Miami; Ruth Cartwright, aka “Princess,” 30, formerly of Plantation; Miguel Patterson, 35, of Miami; Brandon Johnson, 29, of Miami Gardens; John Similien, 24, of Plantation; and Marc Leroy Saint Juste, 26, of Tamarac. Defendants Dorvil, Harrell, Patterson, Johnson, and Saint Juste made their initial appearances in federal court before U.S. Magistrate Judge Lurana S. Snow in Fort Lauderdale at 1:00 p.m. today. Defendant Cartwright was arrested in the Northern District of Georgia and will make her initial appearance there. Defendants Wilmore, both Eleazards, St Fleur, and Similien remain at large.

Specifically, each defendant is charged with one count of conspiring to defraud the Internal Revenue Service, commit wire fraud, and commit aggravated identity theft, all in violation of Title 18, U.S.C. § 371; as well as two counts of wire fraud, in violation of Title 18, U.S.C., §§ 1343 and 2. In addition, defendants Dorvil, Wilmore, Dukens Eleazard, Marie Eleazard, Harrell, St Fleur, Cartwright, Patterson, Johnson, and Similien are charged with two counts of aggravated identity theft, in violation of Title 18, U.S.C. §§ 1028A(a)(1) and 2. The indictment also seeks the forfeiture of $443,449.07 seized from a bank account; a 2011 Cadillac Escalade EXT Premium Sport and 2010 Nissan Maxima registered to defendant Dukens Eleazard; a 2011 Infiniti M37 registered to defendant Marie Eleazard; and a 2010 Porsche purchased by defendant Wilmore.

According to the indictment, the defendants recruited knowing participants and unknowing victims to put businesses, bank accounts, and Electronic Filing Identification Numbers (EFINs) in the defendants’ names. The defendants used this information to execute their fraud scheme, including tax refund fraud. The defendants also used the personal identification information of real people, including some deceased, to file false income tax returns with the IRS. In this way, the defendants received IRS refund checks [U.S. Treasury checks and Refund Anticipation Loan (RAL) checks] at addresses and bank accounts that they controlled. To avoid having the fraud discovered, the defendants negotiated the fraudulently obtained income tax refund checks at each other’s businesses.

According to the indictment, from about January 2009 through March 2012, the defendants filed with the IRS approximately 6,961 federal income tax returns, requesting refunds totaling approximately $34,096,321. Of the 6,961 field tax returns, 2,763 used the identities of deceased individuals.

U.S. Attorney Wifredo A. Ferrer, “Stolen identity refund fraud is spreading in South Florida like an out of control wildfire. Two days ago, we announced charges against 14 individuals in six separate cases on charges of stolen identity refund fraud. Today, in just one case, we are charging another 11 individuals who used stolen identities, including that of almost 3,000 deceased persons, to file fraudulent returns seeking close to $35 million in tax refunds. My office, in conjunction with the members of the South Florida Identity Theft Tax Fraud Strike Force, will continue to prosecute these thieves, not just to punish them, but also to deter others from thinking they can get away with stealing honest taxpayers’ hard-earned refunds.”

Special Agent in Charge Jose A. Gonzalez stated, “These defendants conspired to use the personal identification information of taxpayers, including deceased individuals, to file false income tax returns with the IRS. These actions not only pose a serious problem for taxpayers but adversely affect the integrity of our tax system. Together with our law enforcement partners, we will continue to remain vigilant in identifying, investigating, and prosecuting those individuals who seek to willfully defraud the United States Treasury and have a blatant disregard for the victims of their schemes.”

“Unfortunately, this is another example of the rapidly growing wave of stolen identity tax refund fraud,” said Xanthie C. Mangum, Acting Special Agent in Charge of FBI Miami Division. “The FBI continues to actively target these fraudsters who seek illicit gains by victimizing hard-working taxpayers.”

Secret Service Special Agent in Charge Paula Reid stated, “The existence of identity theft in the South Florida region is an unfortunate criminal epidemic. At any time, anyone is subject to being a victim. The investigative efforts of the law enforcement community must remain strong and unwavering as the offenders’ continuous success and harm with this stealthy crime cannot prevail.”

If convicted, the defendants face a possible maximum statutory sentence of five years in prison for the conspiracy count, 20 years in prison for each count of wire fraud and two years consecutive in prison for each count of aggravated identity theft.



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Sunday, February 10, 2013

Tanya Cullens University Community Hospital Employee Pleads Guilty to Tax Fraud and Aggravated Identity Theft


Source- http://www.fbi.gov/tampa/press-releases/2013/former-university-community-hospital-employee-pleads-guilty-to-tax-fraud-and-aggravated-identity-theft

TAMPA, FL—United States Attorney Robert E. O’Neill announces that Tanya Cullens today pleaded guilty to one count of conspiracy to defraud the Internal Revenue Service, wire fraud, theft of government funds, and one count of aggravated identity theft. She faces a maximum penalty of five years in federal prison for the tax fraud conspiracy and a consecutive two-year mandatory minimum term of imprisonment for the aggravated identity theft charge.

According to the plea agreement, in 2012, Cullens was a member of the cleaning staff at University Community Hospital. On January 17, 2012, Cullens stole a patient list from the hospital. The list contained the names, dates of birth, and Social Security numbers of 48 patients who had been treated at University Community Hospital.

Shortly after stealing the patient list from the hospital, Cullens provided the list to her friend and co-conspirator, who used the list to file fraudulent tax returns with the IRS. None of the individuals whose personal information appeared on the fraudulently filed tax returns knew that the conspirators were filing the returns on their behalf. In total, 10 fraudulent tax returns were filed by the conspirators, totaling approximately $79,204 in bogus tax refunds. Ultimately, the IRS paid out $44,080 in refunds to the conspirators.


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Saturday, February 9, 2013

Antoinette Djonret Sentenced to 12 Years in Prison for Running Sophisticated Million Dollar Identity Theft Tax Scheme


Source- http://www.justice.gov/opa/pr/2013/February/13-tax-178.html

Antoinette Djonret was sentenced today to 144 months in prison for her involvement in two separate tax fraud schemes, the Justice Department and the Internal Revenue Service (IRS) announced. She was also ordered to pay $1,291,658 in restitution. In October 2012, Djonret had pleaded guilty to charges in the two cases. In the first case, Djonret pleaded guilty to charges of conspiracy and aggravated identity theft. She pleaded guilty to filing false tax returns in the second case.

According to court documents from the first case, between October 2009 and April 2012, Djonret and her co-conspirators used stolen identities to file more than 1,000 false tax returns that fraudulently claimed over $1.7 million in tax refunds. Djonret and her co-conspirators filed most of these tax returns from her residence in Montgomery, Ala.

According to court records, Djonret orchestrated this scheme. She obtained stolen identities from multiple sources, including Alabama state databases. She also established an elaborate network for laundering the refund money by recruiting a number of individuals to purchase prepaid debit cards for use in the scheme. The individuals Djonret recruited to launder the refund proceeds recruited other individuals to purchase the debit cards. Djonret and her co-conspirators used the debit cards onto which the fraudulent tax refunds were placed. Three of the co-conspirators she recruited have also pleaded guilty and are currently awaiting sentencing.

Documents introduced as part of the sentencing established that Djonret was also involved in a separate tax fraud scheme. Prior to beginning her identity theft scheme, Djonret worked at a tax return preparation business called Premier Tax, where she prepared false tax returns for clients of the business.

“Sophisticated Stolen Identity Refund Fraud schemes have the potential to harm many taxpayers and put large amounts of public money at risk,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “Sentences like the one handed down today are a warning to criminal enterprises that there are severe penalties for committing these types of tax crimes.”

“These identity thieves are becoming more devious, creative, and conniving,” said George L. Beck, Jr., U.S. Attorney for the Middle District of Alabama. “They steal our identities, steal government money, and prey upon our citizens. However, my office is unrelenting. These criminals must be and will continue to be prosecuted in order to obtain justice for our victims from the Middle District of Alabama as well as justice for our nation.”



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Friday, February 8, 2013

Michael Farnell and James Farnell Sentenced for Tax Evasion


Source- http://www.justice.gov/opa/pr/2013/February/13-tax-177.html

Michael Farnell and James Farnell, residents of Boca Raton, Fla., were sentenced to prison terms today for income tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. Michael Farnell and James Farnell were previously indicted on April 19, 2012. Judge William P. Dimitrouleas sentenced Michael Farnell to a term of 18 months in prison and his brother James, Farnell, was sentenced to a term of 42 months. Michael Farnell was remanded into custody. James Farnell was already in custody.

According to statements made in court and publicly filed documents, Michael Farnell and James Farnell sold stock in a privately held Florida-based technology company between 2004 and 2006 and failed to report the capital gains or pay taxes on the capital gains from those stock sales. In 2004, the U.S. Securities and Exchange Commission (SEC) filed suit against the Farnell brothers for securities violations at another company that they operated the year 2000. A majority of the stock sales at issue in this case violated the injunction from the SEC’s lawsuit.

According to public documents and statements made in court, the Farnell brothers held their stock in this Florida-based technology company in the name of nominee trusts. The proceeds of the stock sales were deposited into bank accounts titled in the name of these nominee trusts. Neither brother filed tax returns in 2004 and 2005. James Farnell also failed to file a 2006 tax return. As part of the sentencing, Michael Farnell and James Farnell both agreed that they failed to report additional income paid to them by this Florida-based technology in 2001 through 2003.

Michael Farnell was ordered to pay restitution of $448,128 and James Farnell was ordered to pay restitution of $434,115, both to the IRS.



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Thursday, February 7, 2013

Justice Department Seeks to Shut Down South Florida Tax Return Preparers



Mother and Son, Operating Tri Stars Multiservices Corporation, Allegedly File Returns with Bogus Claims

The Justice Department announced today that it has sued two Miami tax return preparers, seeking to bar them from preparing federal tax returns for others. The civil injunction suit alleges that Marlen Monzon, her son Yanko Rodriguez, and their Miami business, Tri Stars Multiservices Corporation, claim bogus deductions and credits on customers’ federal tax returns.

Monzon and Rodriguez allegedly included fabricated claims for business expenses on customers’ tax returns even though the customers have no business. According to the complaint, these fabricated expenses offset the customer’s wage income and improperly lower the customer’s reported taxable income. This generates (or increases) a refund, and often qualifies customers for credits to which they are not entitled. The complaint alleges that the Internal Revenue Service has examined 498 tax returns for tax years 2008 through 2011, and found that nearly every return claimed that the customer operated a nonexistent business and reported a business loss. This allegedly reduced the customers’ reported tax liability by an average of $7,031 per return, for a total of $3,494,336 in lost revenue.

According to the complaint, in 2008, the IRS assessed penalties against Monzon in the amount of $43,000 based on her preparation of tax returns claiming bogus Fuel Tax Credits. The complaint alleges that, rather than claiming bogus Fuel Tax Credits, Monzon now simply reports bogus gasoline expenses related to nonexistent businesses on her customers’ tax returns.



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