Gary J. Permanently Barred from Promoting Tax-Fraud Schemes

Source- http://www.justice.gov/tax/2013/txdv131199.htm

WASHINGTON – A federal court has permanently barred Gary J. Stern from promoting tax fraud schemes and from preparing related tax returns, the Justice Department announced today. The civil injunction order, to which Stern consented without admitting the allegations against him, was entered by Judge Robert Gettleman of the U.S. District Court for the Northern District of Illinois. The order permanently bars Stern from preparing various types of tax returns for individuals, estates and trusts, partnerships or corporations (IRS Forms 1040, 1041, 1065, and 1120), among others. The United States alleged that Stern used those returns to facilitate the unlawful schemes identified in the complaint.

According to the complaint, Stern designed at least three tax-fraud schemes that helped hundreds of customers falsely claim over $16 million in improper tax credits and avoid paying income tax on at least $3.4 million. Stern allegedly promoted the schemes to customers, colleagues, and business associates. The complaint alleges that his customers included lawyers, entrepreneurs and professional football players, and some of the latter, including NFL quarterback Kyle Orton, have sued Stern in connection with the tax scheme, alleging fraud, breach of fiduciary duty and professional malpractice.

Federal law allows an income tax credit with respect to certain sales of fuel from non-conventional sources (FNS), including methane produced from landfills. According to the complaint, beginning in the early 2000's Stern created a web of partnerships, companies and other entities to serve as a conduit for sham transactions designed to funnel false FNS credits to his customers. Stern allegedly funneled over $11.4 million of these bogus FNS credits to customers and used a bogus trust arrangement to fraudulently distribute an additional $5.34 million in FNS credits to his customers.

Finally, according to the complaint, Stern promoted an abusive income-shifting technique to help his wealthiest customers illegally avoid taxes. Stern and his business associates allegedly kept most of the money that customers contributed to this scheme. The court has barred Stern from using any entity to assist others in illegally shifting income for the purpose of avoiding tax.

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Tommy Edward Clack Pleads Guilty to Tax Fraud

Source- http://www.justice.gov/tax/2013/txdv131198.htm

WASHINGTON – Tommy Edward Clack pleaded guilty in federal court in Greensboro, N.C., to one count of willfully filing a false federal income tax return and one count of knowingly making a false statement to a federally-insured bank in order to obtain a mortgage loan, the Justice Department and the Internal Revenue Service (IRS) announced today.

According to filings with the court, for approximately the past 10 years Clack has been an itinerant, self-employed paving contractor doing business in North Carolina, South Carolina, Maryland, and Florida. Clack operated under several different business names, and he changed the names of his paving business frequently in order to avoid scrutiny by state and federal law enforcement agencies. As a result of his business practices, over the years Clack was charged with multiple state criminal violations in Maryland, North Carolina, South Carolina and Florida. Since June 2010, Clack has been under an injunction banning him from operating as a driveway paving contractor in North Carolina. He is also subject to a cease-and-desist order in Maryland banning him from various fraudulent practices.

According to court documents, Clack significantly underreported the income from his paving business on his tax returns. From 2004 to 2007, Clack earned gross income of over $5.7 million, but reported only a fraction of it to the IRS. Clack underreported his income by approximately $294,829 in 2004; $1,178,822 in 2005; $1,868,556 in 2006 and $2,428,710 in 2007. Clack's returns were prepared by an accountant, but Clack knowingly provided her with false information upon which to base Clack's returns, and signed his returns knowing that they significantly understated his income. Altogether, as a result of these false returns Clack underpaid his taxes during this period by approximately $1,350,597. To conceal his tax fraud, Clack employed a number of strategies: he did not maintain books and records, dealt extensively in cash, paid his employees in cash and structured currency transactions with his bank in amounts designed to evade the bank’s requirement to file Currency Transaction Reports with the IRS.

Court documents state that in 2003, Clack submitted a mortgage loan application in the name of his then-wife to a bank in Greensboro. The application sought a $640,000 loan to finance the purchase of a $1.2 million home. As part of the loan application, Clack provided the bank with a 2002 tax return in his wife's name, which reported adjusted gross income of $372,748 and claimed total tax liability of $127,745. Clack represented that this tax return had been filed with the IRS, when in fact it had not been. In fact, Clack and his then-wife had filed a 2002 joint federal income tax return which claimed that the couple had adjusted gross income of $17,656 and total tax liability of $2,685. Had the bank known of the discrepancy, they would not have issued the loan. Clack ultimately defaulted on the loan, and the bank suffered a loss after foreclosing the collateral.

For the false tax return charge, Clack faces a maximum of three years in prison, one year of supervised release and a maximum fine of $250,000. Clack faces a maximum of 30 years in prison, five years of supervised release and a maximum fine of $1,000,000 for the bank fraud count. Sentencing is scheduled for March 7, 2014.

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Jeffrey Paper Pleads Guilty to Filling False Tax Return

Source- http://www.justice.gov/tax/2013/txdv131193.htm

WASHINGTON – Jeffrey Paper of Potomac, Md., pleaded guilty yesterday to willfully filing a false tax return in the U.S. District Court in Greenbelt, Md., the Justice Department and the Internal Revenue Service (IRS) announced today.

According to court documents, Paper owned and operated a dental practice located in Lanham, Md., between 2008 and 2010. For the 2009 and 2010 tax years, Paper underreported the total gross receipts from his dental practice and overstated his business expenses on his individual income tax returns. As a result of his conduct, the total tax loss to the government was $215,711.

Paper faces a maximum sentence of three years in prison, one year of supervised release and a $250,000 fine. Sentencing is scheduled for March 10, 2014.

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Mary Young and Christian Young Plead Guilty to Identity Theft Scheme

Source- http://www.justice.gov/tax/2013/txdv131182.htm

WASHINGTON – Mary Young and Christian Young each pleaded guilty yesterday to one count of conspiracy to defraud the United States and one count of aggravated identity theft for their role in a stolen identity refund fraud (SIRF) scheme, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney for the Middle District of Alabama George L. Beck Jr.

According to court documents, between January 2010 and June 2012, Mary Young, Christian Young, Octavious Reeves and others obtained stolen identities from individuals and used those stolen identities to file false tax returns. The false tax returns were filed from the Youngs' residence and the conspirators directed the false tax refunds to prepaid debit cards in the names of the identity theft victims. The Youngs and others used the prepaid debit cards to withdraw the fraudulent proceeds, which allegedly totaled over $400,000.

Sentencing has not yet been scheduled. The Youngs each face a minimum sentence of two years imprisonment with a maximum of twelve years, as well as three years of supervised release, restitution and a maximum fine of $250,000, or twice the loss caused by the offense. Reeves previously pleaded guilty and will be sentenced on Feb. 19, 2013.

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David Raminfard Pleads Guilty For Tax Scheme

Source- http://www.justice.gov/tax/2013/txdv131178.htm

WASHINGTON – David Raminfard of Los Angeles pleaded guilty today in the U.S. District Court for the Central District of California to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service-Criminal Investigation (IRS-CI) announced.

According to court documents, Raminfard, a U.S. citizen, maintained undeclared bank accounts at an international bank headquartered in Tel Aviv, Israel, identified in court documents as Bank A. The accounts were held in the names of nominees in order to keep them secret from the U.S. government. One of the accounts was held in the name of Westrose Limited, a nominee entity formed in the Turks and Caicos Islands. To further ensure that his undeclared accounts remained secret, Raminfard placed a mail hold on his accounts. Rather than having his account statements mailed to him, Raminfard would receive them from an international accounts manager with Bank A in Israel, who brought the statements to Los Angeles and reviewed them with Raminfard during meetings at a hotel.

In or about 2000, Raminfard began secretly using the funds in his undeclared accounts as collateral for back-to-back loans obtained from the Los Angeles branch of Bank A. Raminfard used one of the loans to purchase commercial real estate in Los Angeles. By using back-to-back loans, Raminfard was able to access his funds in Israel without the U.S. Government finding out about his undeclared accounts. These loans also enabled Raminfard to claim the interest paid on the loans as a business expense on his companies' business tax returns, while not reporting the interest earned in Israel as income on his individual income tax returns filed with the IRS. For tax years 2005 through 2010, Raminfard failed to report approximately $521,000 in income. The highest balance in Raminfard's undeclared accounts was approximately $3 million.

Raminfard is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with conspiring to defraud the United States in connection with using undeclared bank accounts in Israel to obtain back-to-back loans in the United States.

U.S. 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.

Raminfard faces a potential maximum prison term of five years and a maximum fine of $250,000. In addition, Raminfard has agreed to pay a civil penalty to the IRS in the amount of 50 percent of the high balance of his undeclared accounts for failing to file FBARs.

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Quentin Collick and Deatrice Williams Sent to Prison For Identity Theft Tax Scheme

Source- http://www.justice.gov/tax/2013/txdv131177.htm

WASHINGTON – Quentin Collick of Montgomery, Ala., and Deatrice Williams of Duluth, Ga., were sentenced Nov. 1, 2013, to serve 85 and 51 months in prison, respectively, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney for the Middle District of Alabama George L. Beck Jr. Collick and Williams were previously found guilty by a jury in the Middle District of Alabama of conspiring to file false claims, wire fraud, and aggravated identity theft. Collick was also convicted of three counts of theft of public funds. Corey Thompson, a co-conspirator, previously pleaded guilty and was sentenced to serve 30 months in jail.

Based on evidence introduced at trial and court filings, Williams worked for a debt collection company located in Norcross, Ga. As an employee, Williams had access to a database that stored names, social security numbers and dates of birth of individuals who owed medical debts. Williams stole the identities of a number of these individuals and provided the stolen information to Collick, her son-in-law.

Collick and Thompson used stolen identities to file false tax returns and fraudulently claim tax refunds. In 2011 and 2012, Thompson worked as an independent contractor for a cable company installing cable and internet access for customers. To conceal the filing of the false tax returns, Thompson used his specialized knowledge and equipment to shut down and hijack his customers' internet service, and along with Collick, filed false tax returns using the customers' internet access, making it appear as if the false tax returns were being filed by the customers. Thompson and Collick then directed the tax refunds to be placed on pre-paid debit cards, which were mailed to Montgomery, Ala. However, those cards were intercepted by the U.S. Postal Service. Several tax refund checks were also mailed by the IRS, based upon the fraudulent returns, which Collick retrieved and cashed.

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Justice Department Sues to Stop Lakesia Michelle Mills Tax Return Preparer

Source- http://www.justice.gov/tax/2013/txdv131170.htm

Return Preparer Allegedly Overstated Refunds Through False First-Time Homebuyer Credits

WASHINGTON – The United States filed a complaint today asking a federal court in the Statesboro Division of the Southern District of Georgia, to enjoin Lakesia Michelle Mills, who does business as Willis Tax Service, from preparing federal income tax returns for others, the Justice Department announced.

The complaint alleges that since January 2011, Mills, who resides in and operates her business in Adrian, Ga., has prepared over 455 amended federal income tax returns. According to the complaint, Mills understated her customers' tax liabilities and overstated their refunds by preparing amended tax returns that improperly claimed the maximum First-Time Homebuyer Credit of $8,000. Along with preparing the amended return, Mills provided customers a false settlement statement and proof of insurance to support the credit. Mills prepared the amended returns without signing the returns or including her tax preparer identification number as is required. Altogether, the government’s complaint alleges that the bogus credits claimed on the amended returns exceeded $3.6 million.

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Justice Department Seeks to Shut Down Sergio Fernando Sosa and his Company Sergio Centro Latino

Source- http://www.justice.gov/tax/2013/txdv131168.htm

WASHINGTON – The Justice Department announced that on Nov. 1, 2013, it asked a federal court to bar Sergio Fernando Sosa and his company, Sergio Centro Latino, from preparing tax returns for others. The civil injunction suit, filed in the U.S. District Court for the District of Utah, alleges that Sosa, who has been preparing returns in Orem, Utah since at least 1994, routinely prepares federal tax returns for individuals and corporations that improperly claim deductions and result in understated federal tax liabilities for his customers.

The complaint also alleges that Sosa prepares federal tax returns for his customers that falsely claim unqualified individuals as dependents, and that include false claims or inflated claims related to the Earned Income Tax Credit, false claims or inflated claims related to the Additional Child Tax Credit, false inclusion of expenses and deductions related to fictitious business entities, underreported income and inflated expenses of legitimate business entities, and failure to calculate or incorrect calculation of self-employment tax liabilities. According to the complaint, Sosa has continued to engage in this conduct despite the fact that numerous penalties have been assessed against him for similar violations of the tax code.

The complaint alleges that Sosa’s actions have resulted in an estimated loss of as much as $416 million to the United States for tax returns prepared since 2008.

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