Tuesday, April 30, 2013

Odalis Castillo-Lopez Pleads Guilty in Stolen Identity Refund Fraud Scheme.


Source- http://www.justice.gov/tax/2013/txdv13489.htm

WASHINGTON – Odalis Castillo-Lopez, 41, a citizen of the Dominican Republic and a resident of New York, pleaded guilty today to theft of government property and money laundering in connection with a scheme to cash U.S. Treasury tax refund checks fraudulently obtained using the stolen identities of Puerto Rican residents. The guilty plea was announced by the Justice Department, the Internal Revenue Service – Criminal Investigation (IRS-CI), Homeland Security Investigations and the U.S. Secret Service.

At a hearing before U.S. District Court Chief Judge Patti B. Saris in the District of Massachusetts, Castillo pleaded guilty to theft of government property and money laundering. According to the documents filed in this case, the criminal conduct involved the attempted negotiation of U.S. Treasury income tax refund checks obtained in the name of stolen identities. Castillo faces a maximum potential sentence of 10 years in prison and a fine of up to $250,000 for the theft of government property charge, and a maximum of 20 years in prison and a fine of up to $500,000 for the money laundering charge. Sentencing is scheduled for May 30, 2013.



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Monday, April 29, 2013

Alabama Residents Indicted for Stolen Identity Refund Fraud Conspiracy


Source- http://www.justice.gov/tax/2013/txdv13479.htm

WASHINGTON – Several residents of Montgomery, Ala., were indicted by a federal grand jury for their involvement in a conspiracy to receive fraudulent tax refunds into their bank accounts, the Justice Department and the Internal Revenue Service (IRS) announced today. Tarrish Tellis, Bobby Joe Means, Delancy Tolliver, Tracey Montgomery and Glenn Powell Jr. were indicted on various charges, including conspiracy and theft of government money. Tellis was also indicted on five counts of aggravated identity theft.

According to the indictment, Tellis obtained the means of identification of individuals, including their names, dates of birth, and Social Security numbers for the purpose of filing false federal income tax returns. Means, Tolliver, Montgomery and Powell provided Tellis with bank account numbers that were to receive the false federal income tax refunds. Tellis would then use the bank account numbers and means of identification to cause to be prepared and filed false federal income tax returns with the IRS. After the false refunds were deposited, Means, Tolliver, Montgomery and Powell would withdraw the funds. The bank accounts received at least $500,000 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, each of the defendants face a maximum potential sentence of five years in prison for the conspiracy charge, up to ten years in prison on each theft of government funds charges. Tellis also faces a mandatory two-year sentence for the aggravated identity theft counts. The defendants will also be subject to fines and mandatory restitution if convicted.



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Sunday, April 28, 2013

Masood Chotani CPA Sentenced to two Years in Prison and Ordered to pay Restitution for Role in Stolen Identity Tax Refund Scheme


Source- http://www.justice.gov/tax/2013/txdv13477.htm

WASHINGTON – Masood Chotani, a certified public accountant from Los Angeles , was sentenced today to 24 months in prison, followed by one year of supervised release, the Justice Department and Internal Revenue Service (IRS) announced. Chotani was also ordered to pay $60,705 in restitution to the IRS.

On June 23, 2010, Chotani was indicted by a federal grand jury on charges of engaging in a scheme to file false tax returns with the IRS using the names and Social Security numbers of deceased individuals. He pleaded guilty to conspiracy to defraud the United States on January 15, 2013.

According to the indictment and the plea agreement, in 2002 and 2003, Chotani misappropriated employer identification information from his client files and provided them to his co-conspirators, Haroon Amin and Ather Ali. Amin and Ali then prepared and filed fraudulent tax returns falsely stating that these deceased individuals earned wages from which income tax had been withheld. As part of the scheme, Chotani caused 47 tax returns to be filed with the IRS claiming an aggregate of $372,558 in false refunds. Although the IRS rejected the bulk of the refund claims filed in the scheme, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali, and their co-conspirators, including various mailboxes opened by Ali. Most of these refund checks then were delivered overseas to be deposited in bank accounts in Armenia and Pakistan. Chotani admitted that he was a knowing participant in this scheme.

Amin and Ali are serving prison sentences of 30 and 37 months, respectively.



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Saturday, April 27, 2013

Kenneth Jerome Blackmon Jr. Sentenced to Federal Prison for Stolen Identity Refund Fraud


Source- http://www.justice.gov/tax/2013/txdv13469.htm

WASHINGTON – Kenneth Jerome Blackmon Jr., a resident of Montgomery, Ala., was sentenced today to 51 months in prison, the Justice Department and the Internal Revenue Service (IRS) announced.

In January 2013, Blackmon pleaded guilty to aggravated identity theft and access device fraud. According to court documents, Blackmon was involved in a scheme to use stolen identities to file false federal income tax returns with the IRS. He admitted to acquiring names and Social Security numbers, to using that identity information on false tax returns, and to directing fraudulent tax refunds onto debit cards. Blackmon also admitted to possessing at least 15 Social Security numbers for the purpose of obtaining fraudulent tax refunds from the IRS.

In addition to prison time, Blackmon was ordered to pay $197,839 in restitution to the IRS and to serve three years of supervised release following his release from federal custody.



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Friday, April 26, 2013

Melanie Ferreira with Bank Fraud and Stealing Nearly Half-a-Million Dollars from the IRS


Source- http://www.fbi.gov/newyork/press-releases/2013/defendant-charged-in-white-plains-federal-court-with-bank-fraud-and-stealing-nearly-half-a-million-dollars-from-the-irs

Preet Bharara, the United States Attorney for the Southern District of New York; George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI); and Toni Weirauch, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI), today announced the arrest of Melanie Ferreira for engaging in a series of frauds, which included cheating the Internal Revenue Service (IRS) of nearly half-a-million dollars and perpetrating a bank fraud scheme. Ferreira was arrested by FBI and IRS agents this morning at her residence in Dutchess County, New York, and was presented this afternoon before U.S. Magistrate Judge Lisa M. Smith in White Plains federal court.

U.S. Attorney Preet Bharara said, “As alleged, Melanie Ferreira thumbed her nose at the IRS, stealing hundreds of thousands of dollars in refunds to which she was not entitled, and forged a check to satisfy a debt. We enjoy many rights and privileges in this country but not among them is the right to enjoy the fruits of law-abiding taxpayers’ money while evading the tax laws and defrauding the government and thereby your fellow citizens.”

FBI Assistant Director in Charge George Venizelos said, “As alleged, the defendant committed tax fraud that was as unsophisticated as it was audacious. She simply lied about the amount of taxes already paid in 2008. The method of Ferreira’s alleged bank fraud may be tied to her questioning the legitimacy of the government. Regardless, she apparently had no qualms stealing from the treasury.”

IRS-CI Special Agent in Charge Toni Weirauch said, “The privilege of living in the United States carries certain responsibilities, one of which is that one must pay his or her fair share of taxes. Filing a false claim with the IRS is stealing, not only from the U.S. Treasury, but from all law-abiding taxpayers. Whether through claiming fictitious deductions, exemptions or withholding amounts, the charge is serious, and so are the consequences.”

According to the allegations in the complaint unsealed today in White Plains federal court:

On October 15, 2009, Ferreira filed a U.S. Individual Income Tax Return, Form 1040, for the year 2008 (“2008 return”). In her 2008 return, she falsely reported interest income of $661,600 from three different banks. She then falsely claimed that she had paid taxes in the amount of $661,536 to the IRS for tax year 2008. On that basis, she claimed a refund of $440,924. In reality, she actually earned only $17 in interest income from those three banks. Furthermore, contrary to her claim on her 2008 return that she had already paid $661,536 in federal taxes, she actually paid only $236.

On October 23, 2009, the IRS wired $440,924 to Ferreira’s bank account.

The following spring, on April 15, 2010, Ferreira tried to carry out the same type of scheme when she filed her Form 1040 for the year 2009, but this time, the IRS rejected her refund request.

In addition, Ferreira also perpetrated a bank fraud scheme against the Bank of America (BOA), which was the bank that held the mortgage for her house in Dutchess County, New York (“house 1”). In May 2010, she caused a forged cashier’s check for $316,966.05, purporting to be drawn on the Federal Reserve Bank of Cleveland, Ohio (“check 1”), to be sent to BOA in satisfaction of the mortgage on house 1. Believing that check 1 was legitimate, BOA filed a satisfaction of mortgage with the Dutchess County Clerk’s Office. BOA subsequently determined that check 1 was fraudulent and filed suit in New York State Supreme Court in order to have the mortgage reinstated.

Similarly, on June 2, 2012, Ferreira sent a check in the amount of $305,000 (“check 2”) to BOA, purporting to pay off the balance of her mortgage from BOA on house 1. When BOA tried to negotiate check 2, it was returned since the originating bank account had been closed. On the memo line of check 2, Ferreira wrote, in red ink, “For discharge of debit EFT only.” On the back of the check, she wrote several lines in a different color of ink, including the following: “Not for deposit; EFT only; discharge of debt.”

Ferreira’s scheme—sometimes known as an electronic funds transfer or EFT scheme—is a scheme often used by adherents to the Sovereign Citizens Movement, a group composed of individuals who, although they reside in the United States, assert the position that they do not have to answer to any government authority, including courts, taxing entities, motor vehicle departments, or law enforcement.


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Thursday, April 25, 2013

William P. Stiles Sentenced for $594,000 Theft and Tax Evasion


Source- http://www.fbi.gov/albany/press-releases/2013/binghamton-area-man-sentenced-for-594-000-theft-and-tax-evasion

United States Attorney Richard S. Hartunian announced that William P. Stiles, 43, of Deposit, Broome County, New York, was sentenced today in United States District Court to twenty four weekends of incarceration and five years’ supervised release for the felony crimes of wire fraud and tax evasion.

Stiles was chief operating officer and part owner of Aeden Waterford Inc. (AWI), a payroll and human services company located in the city of Binghamton. Stiles stole more than $500,000 from approximately 100 business clients of AWI between November 2005 and November 2010.

The money stolen by Stiles was supposed to be used by Stiles to pay client employment with holding taxes but instead was deposited by Stiles into Stiles’ personal bank accounts. Stiles used the funds stolen from AWI clients for his own personal benefit. Stiles further admitted he evaded income taxes due on the stolen money.

In addition to home confinement and supervised release, District Court Judge Thomas J. McAvoy ordered Stiles to pay $64,466 in back taxes to the Internal Revenue Service and $529,607.29 in restitution to the victims of his crime.



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Wednesday, April 24, 2013

Mark Olkowski Pleads Guilty to Tax Charges


Source- http://www.fbi.gov/philadelphia/press-releases/2013/new-jersey-businessman-pleads-guilty-to-tax-charges

PHILADELPHIA—Mark Olkowski, 62, of North Wildwood, New Jersey, a business partner in K&O Sporting Goods, pleaded guilty today to tax charges for filing false personal income tax returns with the Internal Revenue Service from 2006 through 2009. K&O, on Moyamensing Avenue in South Philadelphia, is a distributor of T-shirts and other clothing items to labor unions, municipalities, and political candidates. During 2006 through 2009, Olkowski failed to report a total of approximately $148,000 of income to the IRS. The unreported income included significant sums of cash received by K&O but which Olkowski pocketed and did not deposit to K&O business accounts, and income he received from making personal expenditures using corporate credit cards. The tax loss on this unreported income is approximately $25,000. A sentencing hearing is scheduled for July 24, 2013.

In addition to filing false income tax returns, Olkowski also pleaded guilty to 15 counts of wire fraud concerning a fraud he committed upon the Pennsylvania State Unemployment Compensation system. Olkowski made two false applications for unemployment compensation benefits. In his applications, Olkowski falsely claimed to have been laid off from K&O and did not tell unemployment compensation authorities that he was an owner of K&O Sporting Goods and that he was receiving income from K&O while he was applying for unemployment benefits. The loss to the unemployment compensation system is approximately $16,000.

The maximum sentence for each of the four counts of filing false income tax returns is three years’ incarceration. The maximum sentence on each of the 15 counts of wire fraud is 20 years in prison. Olkowski also faces restitution to the IRS, a possible fine, and a $1,900 special assessment.



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Monday, April 22, 2013

Steven Martinez IRS Agent Sentenced to 24 Years in Federal Prison for Murder-for-Hire and Tax Charges


Source- http://www.fbi.gov/sandiego/press-releases/2013/former-irs-agent-sentenced-to-24-years-in-federal-prison-for-murder-for-hire-and-tax-charges

SAN DIEGO—Former Internal Revenue Service agent-turned-tax preparer Steven Martinez was sentenced today by U.S. District Court Judge William Q. Hayes to almost 24 years in prison for defrauding clients of more than $11 million and then plotting their murders to prevent them from testifying about the theft.

In addition to a 286-month sentence, the judge ordered Martinez to pay more than $14 million in restitution to the victims, the IRS, and the California Franchise Tax Board. Judge Hayes also entered a preliminary order of forfeiture as to certain real and personal property, including an $11 million money judgment. Following Martinez’s service of his sentence, Judge Hayes placed him on five years of supervised release.

In comments at today’s hearing, Assistant U.S. Attorney Joseph Orabona argued for a significant sentence in part because Martinez meticulously planned the murders by giving a would-be assassin—who was a cooperating witness for the FBI—detailed instructions and information about each of the four victims contained in “packets.” One of the exchanges between Martinez and the cooperating witness was captured on video.

“These victims were surveilled. They were watched. Their habits were documented. It’s disturbing,” Orabona said. “This was a cool and calculating individual. He knew how the victims lived. He’s explaining it to the hitman on the video.”

Before imposing a sentence, Judge Hayes noted that the defendant did not make a heat-of-the moment decision to commit a crime. Rather, it was a long-term fraud spanning years and culminating with the carefully planned murder-for-hire plots. “Mr. Martinez in my view had some time to think about what he was doing,” said Judge Hayes. He called the defendant’s actions “cold blooded.”

U.S. Attorney Laura Duffy said she was pleased with the outcome of the prosecution. “This is a case of greed so extreme that what began as serious—but not violent—white-collar crimes almost escalated to the murders of four people. Fortunately, FBI intervention prevented the violence and today justice was served with a decades-long sentence. As tax day quickly approaches, this is a reminder that anyone who chooses to undermine the integrity of our tax system risks prosecution.”

FBI Special Agent in Charge Daphne Hearn commented, “Once the FBI became aware of Mr. Martinez’s murder-for-hire plot, FBI agents took immediate steps to disrupt this plot. In doing so, the FBI ensured that no harm would come to potential witnesses or others. I commend the efforts of the agents and prosecutors who worked tirelessly in this investigation.”

N. Dawn Mertz, Special Agent in Charge of IRS-Criminal Investigation’s Los Angeles Field Office, commented, “The activities of Steven Martinez are an example whereby tax crimes, malicious financial greed, and a blatant disregard for the law can turn into potential violent criminal activity. Today’s sentencing reinforces IRS-Criminal Investigation’s commitment to pursuing those committing tax and financial crimes and to partner with our law enforcement community to bring justice to those who behave as if they are above the law.”

Martinez pleaded guilty on August 10, 2012, to criminal charges including murder-for-hire, witness tampering involving attempted murder, solicitation of a crime of violence, mail fraud, filing false tax returns, Social Security fraud, aggravated identity theft, and money laundering. Martinez pleaded guilty to 12 counts in a superseding indictment.

As part of his guilty plea, Martinez admitted that in late February 2012, he solicited a third party to murder four witnesses with the intent to prevent their testimony in his pending criminal tax case.

The third party contacted the San Diego division of the FBI on February 28, 2012, to report the murder-for-hire plot by Martinez and agreed to cooperate with the FBI in the investigation. According to the complaint, a subsequent meeting between the FBI’s cooperating witness and Martinez was recorded and videotaped by the FBI.

In reference to two of the murder targets, Martinez told the would-be assassin “he could make him rich for the rest of his life, $100,000 cash, if he eliminated the lady in Rancho Santa Fe and the lady in La Jolla,” according to court records. The cooperating witness said Martinez “suggested that the former employee use two different pistols for the murders and that he acquire a silencer.”

Martinez admitted in court that he tried to prevent the former clients’ testimony by offering the FBI’s cooperating witness $100,000 to murder them. He admitted he provided the third party with four written packets of detailed information about the former clients, including photos of the soon-to-be murder victims, their homes, and personal information. Martinez admitted that once the murders took place, he would pay the perpetrator $40,000 in cash, followed by the remaining $60,000 in cash within 72 hours of the murders.

In addition, Martinez admitted that he filed false tax returns and defrauded his clients by stealing over $11 million in tax payments. Martinez admitted that he presented his clients with completed tax returns indicating that they owed a significant amount of tax. He requested that his clients write checks payable for the amount of taxes due and owing to an alleged client trust account (instead of directly to the IRS or the California Franchise Tax Board).

Martinez also convinced these same clients to write checks during the tax year for estimated tax payments to the same alleged client trust accounts. Rather than deposit these checks into a true trust account, Martinez admitted that he took the checks and deposited them into several nominee bank accounts. In an attempt to conceal his fraud, Martinez admitted that he filed a different set of false tax returns indicating that his clients owed little or no income tax.

Martinez admitted that he converted approximately $11 million in stolen taxpayer funds for his own personal benefit and used them to make home improvements, purchase real estate, purchase a beach home in Mexico, pay for the use of a private airplane, make investments of more than $2 million in other entities, and make payments of more than $2 million for his personal use credit cards and loans.

As part of his fraudulent tax scheme, Martinez admitted that he committed Social Security fraud and aggravated identity theft by using the Social Security numbers of his clients without authorization when he filed the false tax returns with the IRS. Martinez admitted he committed mail fraud by mailing the false tax returns to the IRS. Martinez also admitted that he laundered approximately $2 million through nominee bank accounts for his own business and personal use.

Finally, Martinez admitted that he knowingly and intentionally filed false personal income tax returns for tax years 2004, 2005, 2006, and 2007.



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Sunday, April 21, 2013

Kerry Seaman Sentenced for $20 Million Fraud Involving Sacramento County


Source- http://www.fbi.gov/sacramento/press-releases/2013/comptroller-of-new-york-payroll-services-company-sentenced-for-20-million-fraud-involving-sacramento-county

SACRAMENTO, CA—United States Attorney Benjamin B. Wagner announced today that Kerry Seaman, 37, of Lake Ronkonkoma, New York, was sentenced today by Senior United States District Judge Garland E. Burrell, Jr. to three years and eight months in prison in connection with her role in a scheme to divert more than $20 million from Sacramento County as well as two other businesses, SanDisk Corporation and The Stanley Works and Stanley Solutions Inc. As part of the sentence, she was ordered to pay $19,141,618 in restitution. Seaman pleaded guilty to wire fraud on November 19, 2010.

Kerry Seaman was the comptroller for Ingentra HR Services Inc. (Ingentra), a payroll services corporation in Hauppauge, New York. Co-defendant Albert Cipoletti 64, of Northport, New York, was the chief executive officer. Cipoletti pleaded guilty to one count of wire fraud on October 29, 2010, and was sentenced on May 11, 2011, to five-and-a-half years in prison and ordered to pay $19,141,618 in restitution. Seaman cooperated with federal authorities in the course of the investigation.

This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. The county of Sacramento reported the offense to federal law enforcement and has assisted with the investigation. Assistant United States Attorney S. Robert Tice-Raskin prosecuted the case.

U.S. Attorney Wagner stated, “Over a long period of time, Seaman was a key player in a scheme that caused millions of dollars in losses to the IRS, Sacramento County, and other clients. She was entrusted with public funds and had a responsibility to preserve and protect those funds. As this prison sentence makes clear, persons who cheat the public will be held accountable.”

“Payroll companies who are hired to handle various financial affairs for employers, but who intentionally fail to remit withheld employment taxes are not only enriching themselves, they are creating financial problems for the employees,” stated IRS-Criminal Investigation Special Agent in Charge José M. Martínez. “The defendant in this case wrongfully diverted over $20 million in tax withholding, which should have been remitted to the IRS on behalf of the clients’ employees. Today’s sentence should be a warning that IRS-Criminal Investigation will always be there to pursue those individuals who play fast and loose with other people’s money for their own personal gain.”

According to court documents, Ingentra, then known as Humanic Solutions Inc., was hired by Sacramento County in late 2004 to process the payrolls for Sacramento County’s Special Districts (including the Sacramento Metropolitan Fire District, the cemetery district, the parks and recreation district, independent contractors, and various elected officials). As part of the payroll services, Ingentra calculated the tax payments for the clients and the clients’ employees and then transmitted the payments to the state and federal tax authorities. Ingentra was responsible for paying the IRS the income tax withholdings to the IRS and to file the Employer’s Quarterly Federal Tax Form (Form 941) with the IRS on behalf of the clients. (Form 941 includes totals for number of employees, total pay for the period being reported, and amounts withheld from the pay of the employees.)

As stated in Seaman’s plea agreement, from 2005 until April 2010, she and Cipoletti devised a scheme to defraud the county of Sacramento-Special Districts, SanDisk, and Stanley of the tax withholdings intended to be paid to the IRS by collecting the correct amount from the clients but underreporting to the IRS the amount owed and diverting the difference to Ingentra’s operating account for Ingentra’s own use.

According to court documents, Cipoletti and Seaman sent funding letters to the clients that correctly calculated payroll and federal tax withholdings for the clients’ employees, and the clients wire transferred funds to Ingentra to pay both the payroll and taxes. Cipoletti and Seaman then filed false 941s to the IRS, understating the true employee tax withholdings for these clients. Cipoletti and Seaman wrongfully diverted in excess of $20 million in tax withholdings from clients Stanley, SanDisk, and Sacramento County that should have been remitted to the IRS on behalf of these clients and these clients’ employees.



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Saturday, April 20, 2013

Marcus Buckley and Kimberly Jones Charged with $1.5 Million Insurance Fraud


Source- http://www.fbi.gov/sacramento/press-releases/2013/former-new-york-giants-player-and-west-sacramento-claims-adjuster-charged-with-1.5-million-insurance-fraud

SACRAMENTO, CA—Marcus Buckley, 42, of Weatherford, Texas, and Kimberly Jones, 47, of Wichita, Kansas, formerly of West Sacramento, California, were charged by a federal grand jury in Sacramento with wire fraud and money laundering associated with a $1.5 million scheme to defraud a Sacramento business, United States Attorney Benjamin B. Wagner announced.

Both defendants were charged with five counts of wire fraud, and Buckley was charged with six counts of money laundering.

This case is the product of an investigation by the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation. Assistant United States Attorney S. Robert Tice-Raskin is prosecuting the case.

According to the indictment, Buckley played professional football in the National Football League between 1993 and 2000 for seven seasons with the New York Giants. During this time period, the Giants had workers’ compensation insurance coverage through Pennsylvania Manufacturers’ Association Insurance Group (PMA).

From September 2001 through August 2011, Jones was employed as a senior claims representative, or claims adjuster, at Gallagher Bassett Services Inc. in its Sacramento office. Gallagher Bassett was a third-party administrator that managed, among other things, workers’ compensation claims in California on behalf of PMA.

According to the indictment, between September 2010 and June 2011, Buckley and Jones devised and participated in a scheme to defraud Gallagher Bassett of more than $1.5 million in connection with disability-related insurance payments. In 2006, Buckley filed a worker’s compensation claim against the Giants for cumulative stress injuries sustained while playing football, in part, in California. During the first week of November 2010, Buckley, the Giants, and PMA settled the Buckley claim for $300,000. After his claims had been settled, however, between late 2010 and June 2011, Buckley prepared false and fictitious invoices and statements from medical providers for medical services purportedly provided to him from 1999 through 2003. He also prepared false and fictitious credit collection notices from collection agencies purportedly seeking payment for past due medical bills, with services dates from 1999 through 2010. Buckley sent the false and fictitious invoices, statements, and credit collection letters to Jones, who had Gallagher Bassett checks made payable to Buckley. In total, Buckley received more than $1,588,000 to which he was not entitled and used it for various personal expenses.

Jones made her initial appearance in Wichita in the United States District Court for Kansas and was released on a $25,000 bond. She was ordered to appear for arraignment in Sacramento on May 3, 2013, before U.S. Magistrate Judge Kendall J. Newman.

Buckley is expected to make his initial appearance in the United States District Court for the Northern District of Texas within the next two weeks.

If convicted, the defendants face a maximum statutory penalty for each count of mail fraud of 20 years in prison and a fine of twice the gain or loss, or approximately $3 million. The maximum statutory penalty for each count of money laundering is 10 years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

The charges are only allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.



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Friday, April 19, 2013

Andrey and Vitaliy Andreyev Plead Guilty in Mortgage Fraud Scheme


Source- http://www.fbi.gov/sacramento/press-releases/2013/two-sacramento-area-defendants-plead-guilty-in-mortgage-fraud-scheme

SACRAMENTO, CA—Andrey Andreyev, 37, of Sacramento, and Vitaliy Andreyev, 30, of Antelope, pleaded guilty today to wire fraud arising out of a mortgage fraud scheme, United States Attorney Benjamin B. Wagner announced.

According to court documents, brothers Andrey Andreyev and Vitaliy Andreyev were recruited by Vera Kuzmenko, the owner of VK Tax Services, a tax preparation business, to purchase properties they could not afford. Andrey Andreyev purchased a property for $850,000 and Vitaliy Andreyev purchased a property for $1.2 million. Kuzmenko promised the Andreyev brothers money in exchange for purchasing the properties and prepared the loan applications for the brothers to sign. The loan applications for the properties contained numerous material false statements, concerning the Andreyevs’ income, assets, and intention to occupy the properties as primary residences.

According to court documents, Kuzmenko knew the statements on the Andreyev brothers’ applications were false because she prepared their taxes. Kuzmenko is charged in two separate indictments with wire fraud, mail fraud, money laundering, and witness tampering in connection with this mortgage fraud scheme. The charges against her are merely allegations, and she is presumed innocent until and unless proven guilty beyond a reasonable doubt.



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Thursday, April 18, 2013

Brandon Barber Charges of Fraud and Money Laundering


Source-http://www.fbi.gov/littlerock/press-releases/2013/former-northwest-arkansas-real-estate-developer-brandon-barber-and-four-co-defendants-arraigned-for-charges-of-fraud-and-money-laundering 

FAYETTEVILLE, AR—Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that Brandon Barber, age 37, of New York, and his four co-defendants appeared in United States District Court today for arraignment on various charges of bank fraud, bankruptcy fraud, wire fraud, and money laundering stemming from schemes to defraud involving several Northwest Arkansas real estate transactions and Barber’s bankruptcy case. They appeared before United States Magistrate Judge Erin L. Setser in Fayetteville, Arkansas, and pleaded not guilty to all charges. Barber and co-defendants K. Vaughn Knight, age 46, of Fayetteville; James Van Doren, age 37, of New York; Jeff Whorton, age 45, of Johnson, Arkansas; and Brandon Rains, age 32, of Springdale, Arkansas, were indicted on January 16, 2013 and March 6, 2013, in two separate indictments. The defendants are scheduled for trial on June 17, 2013, before Chief United States District Judge P.K. Holmes, III.

The defendants have been released on bond pursuant to standard pre-trial conditions of release subject to a special condition prohibiting them from incurring any new financial debt. In addition, Barber is confined to home detention and subject to GPS monitoring.

The indictments allege several schemes to defraud banks, creditors, and the Federal Bankruptcy Court beginning in 2005 to 2009. Those schemes include: (1) Barber provided false and fraudulent financial information and statements to Legacy National Bank of Springdale in connection with loans to finance the Legacy Condominium building and project in Fayetteville; (2) Barber provided false and fraudulent financial information and statements to Metropolitan National Bank of Little Rock and Enterprise Bank of St. Louis, Missouri, in connection with loans to finance the Bellafont project in Fayetteville; (3) Barber, Van Doren, and Knight concealed assets and income from creditors and the bankruptcy court by transferring Barber’s funds to Van Doren and Knight or accounts controlled by them and using those funds for Barber’s personal benefit and expenses; and (4) Barber, Whorton, and Rains falsely and fraudulently represented purchase prices for real estate to First Federal Bank of Harrison, Arkansas, to obtain loan amounts exceeding the actual purchase prices and thereby generating excess cash without the Bank’s knowledge or approval.



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Wednesday, April 17, 2013

Third Adams Produce Official Pleads Guilty in Federal Court


Source- http://www.fbi.gov/birmingham/press-releases/2013/third-adams-produce-official-pleads-guilty-in-federal-court

BIRMINGHAM—Former Adams Produce Chief Executive Officer Scott David Grinstead pleaded guilty today in federal court to fraud against the company, failure to report a felony against the government, and failure to file federal income tax returns, announced U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Richard D. Schwein, Jr., and IRS-Criminal Investigation Division Special Agent in Charge Veronica Hyman-Pillot.

Grinstead, 45, of Birmingham, entered his plea before U.S. District Judge Karon O. Bowdre. His sentencing is scheduled August 21.

Federal prosecutors charged Grinstead in January, and he entered a plea agreement with the government at that time. As part of that agreement, Grinstead must pay $450,000 in restitution to the bankruptcy estate of Adams Produce for the benefit of the company’s employees who were not fully paid because of Adams’ abrupt closing and its filing for bankruptcy last year.

Grinstead is the third Adams Produce official to plead guilty to federal charges in connection with fraud at the Birmingham-based company that had been a leading distributor of fresh fruits and vegetables across the Southeast for many years.

David Andrew Kirkland, 44, formerly of Birmingham and now living in Texas, pleaded guilty in March before U.S. District Judge Abdul Kallon to conspiracy to defraud the federal government of several hundred thousand dollars through a scheme to create false invoices and purchase orders. Kirkland is scheduled for sentencing June 27.

Kirkland, director of purchasing for Adams Produce, was charged in the same purchasing fraud scheme as Christopher Alan Pfahl, a purchasing program specialist for Adams. Kirkland was Pfahl’s supervisor. Pfahl, 41, of Birmingham, pleaded guilty in January to conspiracy to defraud the government of $481,000 on produce contracts.

Pfahl and Kirkland engaged in a scheme to create false records that reflected a higher purchasing cost for fruits and vegetables than the company actually paid. The inflated costs were then presented to the U.S. government, which had agreed to pay a certain amount over Adams’ cost for produce.

The federal government, through the Defense Supply Center Philadelphia, was one of Adams’ customers. The supply center contracted with Adams Produce to provide fresh fruits and vegetables to military bases, public school systems, junior colleges, and universities. Adams Produce entered into contracts with the government worth millions of dollars, according to court records.

Grinstead pleaded guilty to misprision of a felony for knowing of the fraud Pfahl and Kirkland were engaged in and allowing it to continue and end slowly, so as to avoid raising red flags with the government, rather than stopping it immediately and reporting it to authorities.

Grinstead also pleaded guilty to wire fraud for wiring hundreds of thousands of dollars from an Adams Produce account to American Express to pay for clothing, jewelry, personal travel for himself and his family, lawn care at his home, and items for a house on Lake Martin. He pleaded guilty to two counts of failure to file a federal tax return, one for 2009 and one for 2010. According to court records, Grinstead had a gross income of about $748,801 for the 2009 calendar year and willfully failed to file an income tax return with the Internal Revenue Service. In 2010, he received about $1,878,700 in gross income and willfully did not file a return with the IRS.



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Tuesday, April 16, 2013

Justice Department Sues to Stop Stacy Middleton and George Jenkins From Preparing Federal Income Tax


Source- http://www.justice.gov/tax/2013/txdv13428.htm       

WASHINGTON – The United States has asked a federal court in Charleston, S.C., to permanently bar Stacy Middleton of Charleston, and George Jenkins of Blythewood, S.C., from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Middleton and Jenkins have prepared federal income tax returns in Charleston and Columbia, S.C., through a business named MBM Tax and Accounting Services LLC. 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 Middleton and Jenkins prepared returns that unlawfully created fictitious deductions and credits as well as overstating and duplicating existing deductions and credits. The complaint also alleges that Middleton created fraudulent Forms 1099 on behalf of customers, creating fake income to enable Middleton to claim the Earned Income Tax Credit on behalf of those customers. According to the complaint, the Internal Revenue Service has examined 842 returns prepared by Middleton and Jenkins, and over 93 percent of those examinations resulted in an adjustment to their client’s tax liability. Altogether, the government complaint alleges that Middleton’s and Jenkins’s activities may have resulted in as much as $55 million of loss to the United States.



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Monday, April 15, 2013

Justice Department Sues to Permanently Enjoin Florida Tax Return Preparer


Source- http://www.justice.gov/tax/2013/txdv13427.htm

Florida Tax Return Preparer Allegedly Fabricates Deductions and Credits to Fraudulently Reduce His Customers’ Tax Liabilities or Inflate Their Refunds

WASHINGTON – The Justice Department filed suit today asking the United States District Court for the Southern District of Florida to permanently bar Osvaldo J. Diaz from preparing federal tax returns for others. The civil injunction suit alleges that Diaz prepares returns through Professional Accounting Services Inc. in Coral Gables, Fla.

According to the complaint, Diaz prepares tax returns that fabricate deductions and credits in an attempt to understate his customers’ tax liabilities or inflate his customers’ refunds. The government alleges that Diaz fabricates business and personal expenses and inflates real estate losses for his customers. The Internal Revenue Service has examined 250 returns prepared by Diaz and found that 93 percent resulted in deficiencies. As alleged in the complaint, the IRS projects that the tax loss from the returns prepared by Diaz could be tens of millions of dollars.



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Sunday, April 14, 2013

Kashfi of Los Angeles Charged with Conspiring with Bankers to Hide Secret Israeli Bank Accounts


Source- http://www.justice.gov/tax/2013/txdv13426.htm

WASHINGTON – Guity Kashfi, of Los Angeles, was charged today in the U.S. District Court for the Central District of California with conspiracy to defraud the United States, the Justice Department and Internal Revenue Service, Criminal Investigation (IRS-CI) announced. A signed plea agreement was filed along with the charging document.

According to court documents, Kashfi, a U.S. citizen, maintained undeclared bank accounts at an international bank headquartered in Tel Aviv, Israel. The accounts were held in the names of nominees in order to keep them secret from the United States government. Kashfi used the accounts to obtain "back-to-back" loans from a branch of the bank in Los Angeles. Although the loans were secured or collateralized with certificates of deposit held in Kashfi's undeclared offshore accounts, that fact was concealed to keep Kashfi's offshore accounts secret.

According to the plea agreement, in 2008, Kashfi was told by a banker in Los Angeles that the bank was going to use the funds in her account in Israel to pay off her back-to-back loans in Los Angeles. Rather than pay off the loans, Kashfi transferred approximately $2 million to an account located in Luxembourg at a branch of a second Israeli bank. Kashfi did this to avoid repatriating funds from her first Israeli account back to the United States to pay back her loans in Los Angeles. Kashfi eventually used the funds in Luxembourg to obtain a new back-to-back loan from a branch of the second Israeli bank located in Los Angeles. In 2009, Kashfi went to Luxembourg to close her account. While there, two foreign bankers advised Kashfi that her money was safe in Luxembourg because the bank was a private bank and no one could get information relating to bank accounts located in Luxembourg. In 2011, Kashfi closed all her accounts in Luxembourg by signing paperwork in Los Angeles. She then transferred the funds to banks in the United States.

According to the plea agreement, Kashfi never told her accountant about her undeclared accounts, and failed to report any income from the accounts on her individual income tax returns that were filed with the IRS. For tax years 2005 through 2011, Kashfi failed to report interest income of approximately $221,306. The highest balance in Kashfi's undeclared accounts was approximately $2,501,469.

Kashfi is the second defendant charged in the U.S. District Court for the Central District of California with failing to report income from undeclared accounts in Israel.

On March 29, 2013, Zvi Sperling of Beverly Hills, Calif., appearing before United States District Judge John F. Walter, pleaded guilty to conspiring to defraud the United States in connection with back-to-back loans obtained in Los Angeles that were secured by funds in undeclared bank accounts in Israel. For tax years 2005 through 2008, Sperling failed to report income of approximately $381,563. The highest balance in Sperling's undeclared accounts was approximately $4 million.

"Today's guilty plea is a stark reminder that those who attempt to hide their income and assets from the United States are running out of places to hide," said Assistant Attorney General for the Justice Department's Tax Division Kathryn Keneally. "The Internal Revenue Service will find the hiding places and the Department of Justice will criminally prosecute the tax cheats. And in the end, they will still owe and be required to pay the taxes due."

"We will continue to work aggressively to uncover and prosecute those who hide unreported income in secret offshore bank accounts as well as the employees of financial institutions and the financial institutions themselves who facilitate such crimes," said U.S. Attorney for the Central District of California André Birotte Jr.

"Most individuals file truthful tax returns voluntarily and pay their share of taxes," said Richard Weber, Chief, IRS-CI. "As these two defendants have learned, hiding income and assets offshore is not tax planning, it's tax fraud. The IRS is vigorously pursuing unreported income in hidden offshore accounts, as well as the banks and bankers who assist them."

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 a Report of Foreign Bank and Financial Reports (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.

Both Kashfi and Sperling have agreed to pay a civil penalty in the amount of 50 percent of the high balance of their undeclared accounts to resolve their civil liability with the IRS for failing to file FBARs.

Both Kashfi and Sperling face a potential maximum prison term of five years and a maximum fine of $250,000.



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Saturday, April 13, 2013

Stephen M. Kerr and Michael Quiel Convicted for Hiring Millions in Secret foreign Bank Accounts at UBS AG and PICTET & CIE


Source- http://www.justice.gov/tax/2013/txdv13424.htm

WASHINGTON – A jury convicted Stephen M. Kerr and Michael Quiel yesterday on federal tax charges stemming from their failure to disclose secret offshore bank accounts in Switzerland, the Justice Department and Internal Revenue Service (IRS) announced. Kerr and Quiel, prominent Phoenix businessmen, were each convicted of two counts of filing false individual income tax returns for 2007 and 2008. Kerr was also convicted of two counts of failing to file a Report of Foreign Bank and Financial Accounts (FBAR). San Diego attorney Christopher M. Rusch had previously pleaded guilty to conspiracy to defraud the government and failing to file an FBAR on Feb. 6, 2013.

According to the evidence presented at trial, Kerr and Quiel, with the assistance of Rusch and others, including Swiss nationals, established nominee foreign entities and corresponding bank accounts at UBS AG and Pictet & Cie to conceal Kerr and Quiel's ownership and control of stock and income that were deposited into these accounts. Rusch testified at trial, admitting that he and others caused the sale of the shares of stock through the undeclared accounts. Kerr also hired Rusch to facilitate the domestic sale of 11.4 million shares of stock held in the name of a foreign entity controlled by Kerr and to transfer the proceeds from the sale of the stock to an undeclared foreign account at UBS AG to conceal that the money was income to Kerr that should have been reported on his tax returns.

The evidence established that in order to create a further layer of separation between Kerr and Quiel and the income they concealed in the undeclared foreign accounts, they directed Rusch to transfer some of the money in the undeclared accounts back to the United States through Rusch's Interest on Lawyer's Trust Account (IOLTA) before dispersing the money for Kerr and Quiel's benefit. Rusch transferred approximately $2,000,000 through his IOLTA account so that Kerr could purchase a golf course in Erie, Colo. Additionally, after transferring approximately $955,000 from Quiel's undeclared foreign accounts to his IOLTA account, at Quiel's direction, Rusch wrote checks payable to an Arizona bank account owned and controlled by Quiel.

According to trial evidence, Kerr and Quiel filed false tax returns with the IRS that failed to report the proceeds of stock sales, interest and dividend income earned through the secret accounts, and further failed to report that they had a financial interest in bank accounts located in Switzerland. Kerr also failed to file FBARs in 2007 and 2008 that reported his offshore accounts to the IRS. Accountants for Kerr and Quiel testified that neither Kerr nor Quiel disclosed the existence of their offshore accounts in Switzerland during the preparation of their tax returns.

"Many investigations are underway and focusing upon an ever wider circle of banks worldwide, their clients and others who would help the clients try to hide income and assets offshore," said Assistant Attorney General for the Justice Department's Tax Division Kathryn Keneally. "The lesson of today's guilty verdicts is that no hiding place will prove safe enough."

"This prosecution serves notice that the Department of Justice will not tolerate fraudulent activity designed to undermine the integrity of our income tax system," said U.S. Attorney for the District of Arizona John S. Leonardo.

"Clients, as well as promoters, of international tax fraud are under the watchful scrutiny of the IRS." said Richard Weber, Chief, IRS-Criminal Investigation. "Mr. Kerr and Mr. Quiel disregarded their legal responsibility to file true and accurate tax returns reporting all their income and interest. They now face substantial monetary penalties and the risk of incarceration."

U.S. citizens 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 accounts on Schedule B, Part III, of their individual income tax returns. Additionally, U.S. citizens 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 for Kerr and Quiel is scheduled for June 25, 2013. Sentencing for Rusch is scheduled for July 17, 2013.



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Friday, April 12, 2013

Federal Court Shuts Down Louisiana Tax Return Preparer


Source: http://www.justice.gov/tax/2013/txdv13414.htm

WASHINGTON – A federal court in Baton Rouge, La., permanently barred Ann Williams and her tax preparation firm, Ann's Tax Service, from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Williams and Ann's Tax Service agreed without admitting the allegations against them, was signed by Judge James J. Brady of the U.S. District Court for the Middle District of Louisiana.

The government complaint alleged that Williams and her business had repeatedly prepared false federal income tax returns that understated customers' tax liabilities. According to the complaint, Williams inflated or fabricated business expenses, reported fictitious business income, and fraudulently claimed the earned-income credit on customers' tax returns. The government suit alleges that Williams's fraudulent practices may have resulted in as much as $2.2 million in lost tax revenue. The U.S. Attorney's Office of the Middle District of Louisiana assisted in the filing of this lawsuit by acting as local counsel.



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Thursday, April 11, 2013

Hassan-Gouda Convicted of Preparing False Tax Return


Source- http://www.justice.gov/tax/2013/txdv13419.htm

WASHINGTON – Ashraf Hassan-Gouda, a former resident of Mays Landing, N.J., pleaded guilty to one count of assisting in the preparation of a false federal individual income tax return, the Justice Department and Internal Revenue Service (IRS) announced today. Hassan-Gouda was charged by a federal indictment returned on March 27, 2007.

According to court documents, during 2003, Hassan-Gouda was the owner of Tax World, a tax preparation business located in Atlantic City, N.J. Hassan-Gouda prepared the false tax return for a client at his business.

The matter had been scheduled for trial beginning May 6, 2013 before U.S. District Court Chief Judge Jerome B. Simandle in Camden, N.J. Sentencing is scheduled for June 17, 2013. Hassan-Gouda faces a maximum potential sentence of three years imprisonment and a fine of up to $250,000.



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Wednesday, April 10, 2013

Justice Department Seeks to Shut Down Mo'Money Taxes Return-Preparation Fir and Its Owners



WASHINGTON – The United States has filed a civil injunction lawsuit seeking to shut down Mo' Money Taxes, a Memphis, Tenn., based tax-preparation chain that at one time operated as many as 300 offices in 18 states, the Justice Department announced today. The United States accuses Mo' Money Taxes and its owners, Markey Granberry and Derrick Robinson, and store manager Eumora Reese of creating and maintaining a business environment that encourages the preparation of fraudulent federal income tax returns.

The government suit alleges that the defendants promote a culture that favors volume and profits over accuracy and integrity, and creates an environment where fraudulent return preparation and tax-law violations flourish. According to the complaint, Mo' Money Taxes' managers, licensees and employees prepare fraudulent returns that cause their customers to incorrectly report their federal tax liabilities and underpay their taxes and charge customers bogus and unconscionably high fees.

The complaint alleges that the defendants style themselves as savvy marketers and promoters of the Mo' Money Taxes brand and image – as evidenced by their commercials – and that Granberry and Robinson decided to change the business's name following bad publicity in 2012 surrounding customer allegations that Mo' Money Taxes failed to provide tax refunds to customers in a reasonable amount of time, if at all. According to the complaint, Granberry and Robinson now do business under the name Marquis Taxes and, along with Reese, under the name Southern King Taxes.

According to the complaint, the defendants encourage Mo' Money preparers to:
Falsely claim the earned-income credit;
Claim improper filing status;
Claim bogus education credits;
Improperly prepare returns using paystubs rather than employer-issued
W-2 forms;
Fabricate bogus W-2 forms;
File tax returns without customers’ consent;
Sell false and deceptive loan products; and
Charge deceptive and unconscionable fees.

The complaint cites alleged examples of Mo' Money Taxes customers in Memphis; Atlanta; Richmond, Va.; Jackson, Miss.; and Nashville, Tenn., whose returns had such fraudulent claims. The complaint also refers to several state-government actions related to Mo' Money Taxes' sale of refund-anticipation loans and charging of undisclosed or improper fees.

The complaint alleges that the estimated tax loss from fraudulent tax return preparation at Mo' Money Taxes offices in Memphis, Atlanta, Richmond and Jackson in 2011 exceeds $9 million.

Return preparer fraud, claiming false income or expenses to secure larger refundable credits such as the earned-income credit, and identity theft are among the IRS's "Dirty Dozen" Tax Scams for 2013.

"The nation's tax system relies on the integrity of tax preparers," said Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division. "Most tax preparers are honest. We owe it to them and to all American taxpayers to use appropriate law enforcement tools to stop those who prepare fraudulent tax returns or who lure customers with deceptive loan products."

"Americans understand that the timely and equitable collection of tax revenues is essential to ensuring the financial security of our citizens and nation as a whole," said Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee. "Those who abuse the tax filing process by fraudulently diverting public revenues into their own pockets are essentially stealing from every American and should expect to be held accountable to the fullest extent of the law."



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