James Timothy Turner, also known as Tim Turner was Charged With Conspiracy to Defraud the United States, Attempting to Pay Taxes With Fictitious Financial Instruments

Source- http://www.justice.gov/tax/2012/txdv121126.htm

WASHINGTON – A federal grand jury in Montgomery, Ala., charged James Timothy Turner, also known as Tim Turner, with conspiracy to defraud the United States, attempting to pay taxes with fictitious financial instruments, attempting to obstruct and impede the Internal Revenue Service (IRS), failing to file a 2009 federal income tax return and falsely testifying under oath in a bankruptcy proceeding, the Justice Department, the IRS, and the FBI announced today.

According to the indictment, Turner, the self-proclaimed “President” of the sovereign citizen group “Republic for the united States of America,” conducted seminars at which he taught attendees how to file retaliatory liens against government officials and to defraud the IRS by preparing and submitting fictitious bonds to the United States government in payment of federal taxes. Turner is alleged to have attempted to pay his own taxes with a fictitious $300 million bond and to have assisted others in attempting to pay their taxes with fictitious bonds purporting to be worth amounts ranging from $10 million to $100 billion.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Turner faces a maximum of 164 years in federal prison, a maximum fine of $2,350,000 and mandatory restitution.

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Mary Nolan was Charged with Tax Evasion and Unlawfully Intercepting Communications

Source- http://www.fbi.gov/sanfrancisco/press-releases/2012/san-ramon-attorney-charged-with-tax-evasion-and-unlawfully-intercepting-communications

OAKLAND, CA—A six-count indictment was unsealed today charging San Ramon attorney Mary Nolan with tax evasion and unlawfully intercepting communications, United States Attorney Melinda Haag announced. Nolan, 60, was arrested today in her home in Oakland, prior to making her initial appearance in federal court.

The indictment, which was returned September 6, 2012, alleges that Nolan, the owner of The Law Offices of Mary Nolan in San Ramon, California, willfully attempted to evade and defeat a large part of her income tax due and owing by causing false tax returns to be filed with the Internal Revenue Service from 2005 through 2008. For the tax years 2005, 2006, 2007, and 2008, Nolan reported taxable income of -$21,395, -$12,472, -$53,934, and -$48,146, respectively, when in fact she knew her taxable income was $306,543, $410,581, $574,769 and $414,319. The unreported taxable income totaled $1,842,159, resulting in additional tax due of approximately $593,916.

The indictment further alleges that, between approximately August 9, 2007, and at least September 9, 2007, Nolan conspired to and procured another person to unlawfully intercept wire, oral, and electronic communications. Specifically, the indictment alleges that Nolan referred clients to private investigator Christopher Butler for Butler to install concealed listening devices in the clients’ spouses or significant others’ cars. The indictment also alleges that on numerous occasions, Nolan and her staff, acting on Nolan’s instructions, accessed the listening devices to eavesdrop on conversations by Nolan’s clients’ spouses and significant others with the intent to use the intercepted information to assist Nolan’s client’s legal proceedings.

The maximum statutory penalty for tax evasion, in violation of 26 U.S.C. § 7201, is five years in prison and a $250,000 fine. The maximum statutory penalty for conspiracy to unlawfully intercept communications, in violation 18 U.S.C. § 371 is five years in prison and a $250,000 fine. The maximum statutory penalty for unlawful interception of communications, in violation 18 U.S.C. § 2511(1)(a) and (4)(a) is five years in prison and a $250,000 fine. 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.

Upon posting $50,000, Nolan will be released on a bond that includes $250,000 of security in the form of a deed that must be posted within two weeks. She is next scheduled to appear in federal court in Oakland on Sept. 25, 2012, for arraignment before Magistrate Judge Donna M. Ryu. The case is assigned to U.S. District Court Judge Phyllis J. Hamilton.

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Federak Court Bars Deron O. Joe, Edmund G. Dassin and James M. Tokpawhiea From Preparing Tax Returns

Source- http://www.justice.gov/tax/2012/txdv121122.htm

WASHINGTON – A federal court in Philadelphia has permanently barred Deron O. Joe of Darby, Pa.; Edmund G. Dassin of Lansdowne, Pa.; and James M. Tokpawhiea of Philadelphia from preparing federal tax returns for others, the Justice Department announced today. The three men consented to the civil injunction order without admitting the allegations against them. Judge Paul S. Diamond of the U.S. District Court for the Eastern District of Pennsylvania signed the injunction.

According to the government complaint in the case, the defendants operated a tax preparation business called Edron Tax Professionals in Philadelphia until August 2011, when they changed the name to Urban Tax Professionals and moved the office to Collingdale, Pa. The complaint alleged that the defendants, three Liberian nationals who prepared tax returns for primarily Liberian clientele, repeatedly prepared fraudulent federal income tax returns that intentionally understated customers’ tax liabilities. Their methods allegedly included claiming bogus first-time-homebuyer credits and earned-income credits in order to claim large tax refunds. According to the complaint, Joe and Dassin told one employee to claim the first-time-homebuyer credit on every return he prepared.

The court required the defendants to send a copy of the order to all persons for whom they have prepared a federal tax return since 2009, and to give the government a list of those customers.

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Crystal Sayles Sentenced to 64 Months in Prison for Stolen Identity Refund Fraud

Source- http://www.justice.gov/tax/2012/txdv121119.htm

WASHINGTON – Crystal Sayles, of Montgomery County, Ala., was sentenced today to 64 months in prison for filing false claims, access device fraud and aggravated identity theft. Sayles had pleaded guilty to those charges on May 17, 2012. She was also ordered to pay over $1 million in restitution and will serve three years on supervised release following her release from federal prison. In addition to the sentence imposed today, Sayles had also agreed to the forfeiture of a Mercedes Benz as part of her plea agreement.

According to her plea agreement, between January 2010 and July 2011, Sayles and others were involved with the filing of at least 482 fraudulent tax returns using stolen identities. These returns sought over $2 million in tax refunds. All of the returns had been filed through a tax preparation business called Simmons Financial, which Sayles opened in the name of another individual in order to conceal her own involvement. The indictment alleged that the refunds were often directed to prepaid debit cards and in the plea agreement, Sayles admitted to using a debit card loaded with a fraudulently obtained refund to receive cash.

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Mendy Gorodetsky and Shalom Rabkin Both Pleaded Guilty to Tax Evasion

Source- http://www.justice.gov/tax/2012/txdv121118.htm

WASHINGTON – Mendy Gorodetsky and Shalom Rabkin, both residents of Brooklyn, N.Y., pleaded guilty today in U.S. District Court in the Eastern District of New York to tax evasion, the Justice Department and Internal Revenue Service (IRS) announced.

According to court records and admissions made by the defendants, Gorodetsky and Rabkin co-owned Asbestways Services Corp., an asbestos abatement and lead testing company located in Brooklyn. Gorodetsky and Rabkin attempted to evade their income taxes by not reporting the income they earned from Asbestways. In addition, Gorodetsky and Rabkin spent Asbestways corporate funds for personal use by charging personal expenses on an Asbestways corporate credit card. They cashed Asbestways gross receipts checks at a check cashing company and used the unreported cash proceeds for personal expenses. When Gorodetsky and Rabkin filed their 2006 individual income tax returns, they each falsely reported earning no income from Asbestways.

Gorodetsky admitted that he underreported his income by at least $709,134 and that his criminal conduct between 2006 and 2008 caused a tax loss to the IRS of at least $188,757. Rabkin admitted that he underreported his income by at least $598,491 and that his criminal conduct between 2006 and 2008 caused a tax loss to the IRS of at least $148,999.

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John Leonard Camilo was Sentenced to Serve 18 Months in Custody For Falsifying 283 Tax Returns

Source- http://www.justice.gov/usao/cas/press/2012/cas12-0912-CamiloPR.pdf

United States Attorney Laura E. Duffy announced today that John Leonard Camilo was sentenced to serve 18 months in custody by United States District Judge Larry A. Burns. 

According to court records, in early 2004, Camilo began preparing and filing United States Federal Income Tax Returns for his friends, associates and acquaintances (the "taxpayers"). When filing these returns, Camilo falsified a variety of pertinent information on the returns in order to reduce the taxpayers' liability, create and/or increase the amount refunded to the taxpayers. Between 2004 and 2010, Camilo assisted at least 91 different taxpayers in filing at least 283 different returns. The total amount of loss to the government (as some individuals may have been entitled to a portion of the refunds they received) was at least $400,000.

In order to obtain B or maximize B refunds for the taxpayers, Camilo created fictitious businesses that were allegedly being operated by the taxpayers. Camilo would then create false business expenses (entirely out of "whole cloth") which indicated that the fictitious businesses were being operated at significant losses. These losses would then be reported on a "Schedule C" and resulted in the taxpayers evading the payment of taxes and getting refunds to which they were not entitled. 

As detailed in the plea agreement, other methods utilized by Camilo to willfully aid and assist in the preparation of false income tax returns were: (1) the creation of false educational expenses utilized to claim educational tax credits; (2) the improper claiming of individuals as dependents who B although they were real people B were not, in fact, dependents of the taxpayers on whose return they were claimed; and (3) the creation and inflation of "Schedule A" itemized deductions (such as medical expenses) that had no basis in reality. 

Camilo prepared the false returns as a favor to the taxpayers, who he did not charge any money. Occasionally, Camilo would receive a gift in exchange for preparing the false return. Over the years, Camilo's friends and associates began recommending other individuals to Camilo so that he eventually assisted scores of taxpayers with Astealing@ money from the government by filing false returns. 

As noted in court earlier today, Camilo devised a scheme to obtain money from 14 (of the 91) taxpayers by providing them with different returns than the ones that he filed with the government. 

Defendant gave these 14 taxpayers returns that indicated that they were not due a refund from the government. He then knowingly and willfully falsely represented to these individuals that he would file these returns. 

Rather than file these returns, however, Camilo prepared 21 different returns (or amended returns) that falsely indicated that the 14 taxpayers were due a refund from the government. These 21 false returns resulted in the government paying out $120,107.37. In order to conceal his actions from these 14 taxpayers, Camilo used two different mailing addresses which he controlled, rather than the correct mailing address of the taxpayers. 

After the $120,107.39 in refunds were sent to the two mailing addresses controlled by Camilo, he forged the taxpayers signature on the checks and deposited them into bank accounts that he had opened in 3 the taxpayers' name. Although Camilo did give $45,289.95 of the funds to the taxpayers, he kept $74,817.42 for his own benefit and enjoyment. 

United States Attorney Duffy praised the enforcement work by the IRS who diligently pieced together the full scope of the tax fraud.

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Jillian Hanson-Cox Pleds Guilty to Charges of Mail Fraud and Filing a False Income Tax Return

Source- http://www.justice.gov/usao/cas/press/2012/cas12-0914-Hanson-CoxPR.pdf

Jillian Hanson-Cox pled guilty today in federal court to charges of mail fraud and filing a false income tax return stemming from her employment at Century Design Inc. (CDI), in San Diego, California, announced United States Attorney Laura E. Duffy. Appearing before Magistrate Judge William V. Gallo, Hanson-Cox pled guilty to a two-count felony information alleging that she stole approximately $3.5 million from CDI and failed to report the income on her tax returns.

According to court records, Hanson-Cox worked as CDI’s Controller for most of the period between 2004 and 2008. She abused this position by writing unauthorized checks from CDI’s business account to pay for her personal expenses (including her credit cards), and to pay for services and items related to her community activities. To conceal the fact that she had signed unauthorized CDI checks to pay businesses and vendors for her personal benefit, Hanson-Cox made false entries in CDI’s books and records that reflected a different payee rather than the actual payee on the check. In total, she embezzled approximately $3.5 million from April 2004 to October 2008.

Hanson-Cox admitted today that, after embezzling these funds from CDI, she failed to report them on her individual income tax returns for the years 2005, 2006, 2007 and 2008. As a result, the IRS lost more than $1.2 million in revenue.

United States Attorney Duffy emphasized that investigating and prosecuting misconduct by public officials will remain one of the highest obligations of her Office, “I am dedicated to pursuing officials who engage in illegal activity, whether it is connected to their public office or private employment. While embezzling millions of dollars from CDI, former councilwoman Hanson-Cox not only traded on her reputation as a public official, but also betrayed every citizen who expected her to act honestly in both her private and public affairs.”

FBI Special Agent in Charge, Daphne Hearn, commented, "Ms. Hanson violated the trust of her employer and the people she served in the community. She unjustly enriched herself at the expense of those who trusted her the most. The FBI is committed to pursuing those individuals who hide behind a facade of honesty and integrity and use their position of trust to unlawfully enrich themselves."

Leslie P. DeMarco, Special Agent in Charge of IRS-Criminal Investigation (IRS-CI) Los Angeles Field Office commented, “Elected officials are subject to the same tax laws as the rest of America. It is simply unacceptable for elected officials to break our tax laws. IRS-CI works to ensure that everyone pays their fair share of taxes and ensure that those who don’t are held accountable. Status as an elected official will not protect you from prosecution.”

During the events described above, Hanson-Cox also served part-time on the El Cajon City Council.

She was elected to the City Council in 2004 and resigned on March 5, 2012, after FBI and IRS agents executed a search warrant at her home and office.

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Charles A. Davis was Sentenced in North Carolina to 10 Years in Prison for Tax Fraud

Source-  http://www.justice.gov/tax/2012/txdv121091.htm 

WASHINGTON – Charles A. Davis, 63, formerly of Mooresville, N.C. was sentenced today in U.S. District Court to 120 months in prison for committing tax fraud, the Justice Department and Internal Revenue Service (IRS) announced. U.S. Judge Richard L. Voorhees in the Western District of North Carolina also ordered Davis to serve twelve months of supervised release after his prison term and pay $538,569 as restitution to the IRS.

Following a three-day trial in March 2012, a federal jury convicted Davis of 10 counts of filing false tax returns and one count of obstructing the IRS. According to evidence presented at trial and court records, from 1983 through 2011 Davis was employed as a commercial airline pilot for US Airways. From 1996 through 2007, Davis failed to file timely income tax returns despite receiving wages ranging from $129,950 to $190,510. For years 1997 through 2005, Davis’s employer withheld little or no federal income tax from his wages because Davis previously had falsely represented that he was exempt from income tax withholding.

Trial evidence established that in April 2006, Davis filed five fraudulent amended income tax returns for 1996 through 2000, falsely claiming that he earned little or no adjusted gross income in each of those years. And from April 2008 to February 2009, Davis filed five fraudulent individual income tax returns for 2004 through 2008, reporting false amounts of federal income tax withheld for each of those years and requesting fraudulent refunds from the IRS in amounts up to approximately $1.5 million. The evidence also established that during the time he failed to pay his taxes, the defendant drove a Ferrari and a Mercedes, and lived in a lakefront home on Lake Norman, N.C.

According to trial records and today’s sentencing hearing, during the IRS’s efforts to collect Davis’s tax debt, Davis obstructed and impeded the IRS by submitting fraudulent payment documentation to the IRS and concealing his assets and income in a nominee bank account. Davis also used a fraudulent address in Texas to avoid paying state income taxes, and currently owes the North Carolina Department of Revenue in excess of $150,000.

In handing down the sentence, Judge Voorhees emphasized the egregious nature of Davis’s conduct and Davis’s lack of regret and remorse.

According to filed documents and today’s sentencing hearing, Davis also took various steps to avoid IRS levies on his US Airways payroll account and his bank accounts, including filing for bankruptcy and diverting funds to his 401(k) account.

“Those who flout the tax laws by filing fraudulent tax returns, hiding assets, and obstructing the IRS risk criminal prosecution resulting in conviction and imprisonment, as well as being required to pay the taxes owed, with interest and penalties,” said Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division. “The Tax Division remains committed to prosecuting tax defier conduct throughout the United States.”

“Today’s lengthy sentence of longtime tax scofflaw Davis should send a message to those to seek to evade taxes,” said U.S. Attorney for the Western District of North Carolina Anne Tompkins. “Our office aggressively investigates and prosecutes those who attempt to cheat our tax system.”

“Davis used a foundation of fraud and deceit in order to cheat the government,” said Richard Weber, Chief, IRS - Criminal Investigation. Those who engage in tax schemes to evade payment of taxes will be prosecuted no matter how they try to hide the truth.”

Davis has been in local federal custody since his conviction in March 2012. Upon designation of a federal facility he will be transferred to the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

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Stephen Thomas Pleads Guilty Today in U.S. District Court for the District of Columbia to Tax Evasion

Source-  http://www.justice.gov/tax/2012/txdv121098.htm 

WASHINGTON – Stephen Thomas of York, Pa., pleaded guilty today in U.S. District Court for the District of Columbia to tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today.

According to court records, between 2002 and 2004, in the District of Columbia, Thomas formed multiple entities whose names contained the acronym ECG, which stood for ESOP Capital Group. ECG purported to provide financial, business and other management services to companies that were interested in creating ESOPs, which are employee stock ownership plans. In or about 2005 and 2006, Thomas, through ECG, contracted to provide such services to two companies in Maine.

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

Thomas faces a potential maximum sentence of five years in prison and a fine of up to $250,000. U.S. District Judge Amy Berman Jackson, who is presiding over the matter, set a sentencing date of Dec. 3, 2012.

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Natacia Webster Pleads Guilty to Stolen Identity Refund Fraud

Source-  http://www.justice.gov/tax/2012/txdv121100.htm 

WASHINGTON – Natacia Webster, an employee of the state of Alabama, pleaded guilty today to charges of conspiring to defraud the United States by filing false claims, wire fraud and aggravated identity theft, the Justice Department and the Internal Revenue Service (IRS) announced.

According to the indictment and other court documents, in 2011, Webster obtained identity information during her employment with the state of Alabama and provided that information to co-conspirator Melinda Clayton. Webster received money from Melinda Clayton in exchange for the stolen prisoner identities. Clayton used the stolen identities to file false tax returns that claimed fraudulent tax refunds. The refunds were directed to bank accounts and debit cards controlled by the conspirators. Clayton and several others were indicted in April 2011. Clayton pleaded guilty and was sentenced to 61 months in prison.

Sentencing has not yet been scheduled. Webster faces a minimum of two years in prison, a maximum of 32 years in prison, three years of supervised release, restitution and a maximum fine of $750,000, or twice the loss caused by the offense.

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James Farnell Pleaded Guilty to One Count of Income Tax Evasion

Source-  http://www.justice.gov/tax/2012/txdv121099.htm 

WASHINGTON – James Farnell, a resident of Boca Raton, Fla., pleaded guilty to one count of income tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. Farnell was previously indicted on April 19, 2012.

In January 2004, after being sued by the U.S. Securities and Exchange Commission (SEC) for securities violations at another company, Farnell began selling shares of a company that were held in a nominee name to the investing public. These stock sales, which occurred between 2004 and 2006, violated an injunction against Farnell in a previously filed lawsuit filed by the SEC. According to information provided at the plea hearing, the proceeds from the stock sales from 2004-2006 were not properly reported on Farnell’s income tax returns.

Prosecutors informed the court that Farnell failed to file his individual income tax return for 2005 and failed to pay federal income tax on over $480,000 in unreported capital gains from these stock sales. As a result, Farnell evaded at least $200,000 in federal income tax on his unreported income.

Farnell faces a potential maximum sentence of five years in prison, a fine of up to $250,000, full restitution to the IRS and a term of supervised release. U.S. District Judge William P. Dimitrouleas, who is presiding over the matter, set a sentencing date of January 10, 2013.

On Aug. 10, 2012, James Farnell’s co-defendant and brother, Michael Farnell, pleaded guilty to tax evasion for similar conduct. His sentencing is scheduled for Jan. 3, 2013.

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Anthony Buttitta and Dominic Buttitta, both Operators of Elgin Adult Entertainment Club and Internet Gambling Business Sentenced to Prison Terms for Concealing More Than $4.6 Million of Income from the IRS

Source- http://www.fbi.gov/chicago/press-releases/2012/father-and-son-operators-of-elgin-adult-entertainment-club-and-internet-gambling-business-sentenced-to-prison-terms-for-concealing-more-than-4.6-million-of-income-from-the-irs

CHICAGO—The father and son operators of an adult entertainment club in Elgin were sentenced today to serve federal prison terms for conspiracy to impede the Internal Revenue Service in the collection of federal taxes, as well as separately operating an illegal Internet gambling business, in connection with diverting more than $4.6 million in unreported income to themselves from the two businesses. The cash diversion caused a federal tax loss of more than $1.3 million. One defendant, Anthony Buttitta, was sentenced to 30 months in prison; and his father, Dominic Buttitta, was sentenced to 18 months prison. Both men pleaded guilty last February to two felony counts filed against them in U.S. District Court.

Anthony Buttitta, 43, of St. Charles, and Dominic Buttitta, 69, of South Barrington, who operate Blackjacks Gentlemen’s Club in Elgin, were also ordered to pay $1,306,187 in restitution to the IRS and forfeit an additional $400,000 to the United States. Both men were ordered to begin serving their sentences on January 8, 2013, by U.S. District Judge Milton Shadur.

The sentences were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; Thomas Jankowski, Acting Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division in Chicago; and William C. Monroe, Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

According to court documents, the Buttittas operate and manage Blackjacks through Elgin Entertainment Enterprises Inc. Between 2005 and 2009, they also ran an Internet gambling business, including the websites Skybook.com, Largejoe.com, Theredhotel.com, and others based in Costa Rica.

According to their guilty pleas, both Buttittas filed false federal corporate tax returns for calendar years 2002 through 2009, and false federal individual income tax returns for calendar years 2002 through 2008 that under-reported by $4,664,959 the total income they received from the operation of Blackjacks and the gambling business. They concealed the diverted funds from their tax preparers and the IRS and used the unreported income to acquire personal property and to pay personal expenses. The diversion resulted in a federal tax loss of more than $1.3 million.

The defendants admitted that they skimmed approximately $3,704,959 in cash from the operation of Blackjacks and later destroyed records of the cash they diverted from the business. They also placed agents of their Internet gambling business on the payroll of another company to provide the employees with the appearance of a legitimate source of income and benefits. In return, they solicited and received kickbacks in the form of cash from the agents and concealed the payments from their tax preparers, bookkeepers, and the IRS.

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William Brown was Sentenced to 66 Months in Prison for $40.8 Million Mortgage Fraud Scheme

Source- http://www.fbi.gov/newark/press-releases/2012/newark-man-sentenced-to-66-months-in-prison-for-40.8-million-mortgage-fraud-scheme

CAMDEN, NJ—A Newark, New Jersey man was sentenced today to 66 months in prison for his role in a $40.8 million mortgage fraud conspiracy, recruiting “straw buyers” to purchase real estate properties in New Jersey, South Carolina, and Georgia, and causing lenders to release more than $18 million based on fraudulent mortgage loan applications, U.S. Attorney Paul J. Fishman announced.

William Brown, 60, previously pleaded guilty before U.S. District Judge Joseph E. Irenas to an information charging him with conspiracy to commit wire fraud and conspiracy to commit money laundering. Judge Irenas imposed the sentence today in Camden federal court.

According to documents filed in this case and statements made in court:

Brown recruited “straw buyers” for his co-conspirators to purchase oceanfront condominiums overbuilt by financially distressed developers in Wildwood Crest, New Jersey, premier real estate in vacation destinations in Georgia and South Carolina, and properties in New Jersey owned by financially distressed homeowners facing foreclosure. Brown’s co-conspirators caused fraudulent mortgage loan applications and supporting documents to be submitted to mortgage lenders in the straw buyers’ names, attributing to them inflated income and assets in order to induce the mortgage lenders to approve the loans. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with the real estate closings on the properties, Brown’s co-conspirators took a portion of the proceeds from the fraudulent mortgage loans. Brown also admitted that he and his co-conspirators laundered the proceeds of the mortgage fraud by having some of those proceeds transferred to the recruiters and straw buyers. Brown received $96,000 for his role.

In addition to the prison term, Judge Irenas sentenced Brown to three years of supervised release and ordered him to pay $9.3 million in restitution and forfeit $96,000.

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Phillip E. Narum was Sentenced to 48 Months in Federal Prison for Wire Fraud and Tax Offenses

Source- http://www.fbi.gov/phoenix/press-releases/2012/former-marana-resident-sentenced-to-48-months-in-federal-prison-for-wire-fraud-and-tax-offenses

TUCSON, AZ—On September 5, 2012, Phillip E. Narum, 47, formerly of Marana, Arizona, was sentenced by U.S. District Judge David C. Bury to 48 months in federal prison for wire fraud and filing false tax returns. Narum was found guilty at trial on the wire fraud charges. He previously pleaded guilty to the tax charges.

According to evidence presented at trial, Narum was hired in 2004 as an independent contractor at Young and Sons Contracting Inc., a family owned and operated construction firm in Tucson. Between 2005 and 2008, Narum defrauded Young and Sons of approximately $573,000, which he used to make credit card and mortgage payments and to purchase personal items such as a motorhome, multiple dragsters, and dragster parts.

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Bruce Gregory Harrison III was Sentenced to 12 Years in Prison for Payroll Tax Fraud

Source- http://www.justice.gov/opa/pr/2012/September/12-tax-1079.html

Bruce Gregory Harrison III of Greensboro, N.C., was sentenced today to 144 months in prison following his December 2011 conviction for payroll tax fraud and other crimes, announced Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division; Ripley Rand, U.S. Attorney for the Middle District of North Carolina; and Richard Weber, Chief of Internal Revenue Service (IRS) - Criminal Investigation.

Harrison was convicted on a 63-count indictment alleging large-scale payroll tax fraud and failure to file individual income tax returns. The evidence at trial and at sentencing showed that Harrison failed to pay over more than $40 million dollars in federal taxes withheld from the pay of his thousands of employees in the years 2004-2006 and 2009.

“The integrity of our Social Security and Medicare system depends on payroll deductions from honest, hard-working taxpayers being properly paid over,” said Assistant Attorney General Keneally. “The sentence handed down today demonstrates that those who steal the taxes paid by their employees risk lengthy prison sentences, and in the end, will still owe the taxes together with civil penalties.”

“Greg Harrison used a foundation of fraud and deceit to build his reputation as a successful businessman and prominent local citizen,” commented U.S. Attorney Rand, “but appearances, no matter how polished, cannot overwhelm the truth. The substantial sentence handed down today shatters the Harrison myth and represents justice appropriate to his shameless thievery.”

“Mr. Harrison is being held accountable today because he defrauded his employees and attempted to conceal his fraud by lying to the IRS” said Chief Richard Weber, IRS - Criminal Investigation. “He used employee taxes for personal gain which resulted in the significant loss of tax revenue to the United States government and the potential loss of future Social Security or Medicare benefits for the employees. IRS - Criminal Investigation is committed to vigorously pursuing those who violate employment tax laws.”

According to the trial evidence and other documents filed in the case, Harrison did business under various corporate names including U.S.A. Staffing and Compensation Management Inc. He owned or controlled temporary staffing companies operating in at least nine states. Harrison’s staffing companies were headquartered in Guilford County, N.C., and contracted with client businesses to provide temporary workers. Harrison’s companies promised to assume full responsibility for the payment of wages and the withholding and transmitting of taxes to the IRS for those employees. Instead, Harrison failed to account for and pay over in excess of $40 million in federal payroll taxes for the employees of those companies. The evidence at trial showed that Harrison caused false bank statements to be presented to auditors to conceal the nonpayment of the payroll taxes.

Harrison was also convicted of corruptly endeavoring to obstruct the IRS by means of false statements to IRS revenue officers. Evidence established he had used company funds to purchase personal residences, to buy a yacht and to finance commercial motion pictures, including National Lampoon’s Pucked andHome of the Giants. Harrison was also convicted of failing to timely file his own income tax returns for 2004, 2005 and 2006.

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William Scott Dion was Sentenced to Prison for Conspiracy to Obstruct and Impede the IRS

Source- http://www.justice.gov/opa/pr/2012/September/12-tax-1086.html

A federal judge in Worcester, Mass., sentenced William Scott Dion today to 84 months in prison for conspiring to defraud the United States, and for obstructing the Internal Revenue Service (IRS), the Justice Department and IRS announced. U.S. District Judge F. Dennis Saylor also ordered Dion to pay restitution in the amount of $3 million.

On April 2, 2012, a federal jury convicted Dion and Catherine Floyd, both of Sanbornville, N.H., and Charles Adams, of Norwood, Mass., for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes. The jury convicted all three of conspiracy to defraud the IRS by promoting an “under the table” payroll scheme. Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal customer income and assets from the IRS. Floyd and Dion were also convicted separately for corruptly endeavoring to obstruct the IRS’s ability to determine their own income. Adams was separately convicted of tax evasion.

According to the evidence presented at trial, Dion, Floyd and Adams ran a payroll tax scheme in order to pay employees “under the table” without properly accounting for, withholding, and paying over to the IRS the payroll taxes required by law. The three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. The three ran the payroll scheme under three different names: Contract America, Talent Management and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme and in excess of $2.5 million in unreported wages and compensation were paid through the system.

The evidence at trial also established that Dion and Floyd conspired to defraud the United States by promoting and operating an “underground warehouse banking” scheme which helped subscribers conceal income and assets from the IRS. According to the evidence, the warehouse scheme operated under three different names: Your Virtual Office, Office Services and Calico Management. As part of the warehouse banking scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds. According to evidence presented at trial, more than $28 million in deposits were made into the various bank accounts used in the scheme.

In August 2009, the three defendants were indicted with four other individuals relating to the promotion and use of these schemes. On Dec. 9, 2011, prior to trial, Gail and Myron Thorick of West Warwick, R.I., pleaded guilty to conspiring to defraud the United States by helping operate the “warehouse banking” scheme, and for filing false tax returns. On that same date, Gary Alcock pleaded guilty to conspiracy by using the payroll scheme, as well as to tax evasion and willful failure to file tax returns. On Jan. 24, 2012, Kenneth Scott Alcock pleaded guilty to conspiracy relating to the payroll scheme and to one count of tax evasion. All four defendants are awaiting sentencing.

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Scott A. Waage Allegedly Worked With CPA To Help Clients Evade Income Taxes and Circumvent Pension-Plan Rules

Source- http://www.justice.gov/tax/2012/txdv121054.htm

WASHINGTON – A federal court in San Diego has permanently barred a tax lawyer and his law firm from providing tax advice and from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order against Scott A. Waage, of San Diego, was signed by Judge William Q. Hayes of the U.S. District Court for the Southern District of California. Waage agreed to the injunction without admitting the allegations against him.

The government complaint in the case alleged that Waage, a self-proclaimed “visionary tax attorney,” promoted tax fraud schemes that helped customers evade income taxes through a concept he called “Strategic Integrated Planning.” According to the complaint, one of Waage’s schemes involved creating and using sham consulting corporations (purportedly headquartered in customers’ homes) that did not perform consulting services. Customers funneled funds to the sham companies to pay for and improperly deduct the customers’ personal expenses, the complaint alleged.

Waage also unlawfully used employee-benefit plans to pay customers’ personal expenses and used pension plans to illegally increase and accelerate deductions and avoid income taxes on plan payouts (illegally structured and funded by life insurance contracts), according to the allegations in the complaint. Robert O. Jensen, a certified public accountant, allegedly prepared the customers’ tax returns claiming the bogus deductions generated by Waage’s schemes. Last March the court enjoined Jensen from preparing tax returns that understate income.

The government complaint alleges that the harm to the Treasury as a result of Waage’s schemes exceeded $10.8 million.

The injunction order requires Waage to give the government a list of all clients who used his tax planning or tax preparation services since 2001. Waage also must send his former clients notice of the injunction order.

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Russell Pike was Convicted of Tax Evasion for 2006; Evaded Taxes Due on Over $7.9 Million of Income

Source- http://www.justice.gov/tax/2012/txdv121051.htm

WASHINGTON “ Russell Pike, 50, of Las Vegas, the former CEO of a Nevada sports energy drink company, Xyience Inc., was sentenced today by U.S. District Judge James C. Mahan to 52 months in prison for his April 2012 conviction for tax evasion, Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division and U.S. Attorney for the District of Nevada Daniel G. Bogden announced today.

On April 2, 2012, following a bench trial, Pike was convicted of one count of tax evasion for 2006 in which he evaded taxes due on over $7.9 million of income. According to evidence presented at trial, Pike founded Xyience Inc., which manufactured, marketed and sold sports energy drinks, most notably, Xenergy, which was sold in over 45,000 stores throughout the United States. Upon the inception of Xyience in 2004, Pike received at least 12 million shares of Xyience stock. During 2006, Pike sold over 4.4 million shares of his Xyience stock for approximately $7.9 million, which included a sale in November 2006 of over three million shares to an investor for $5 million. In early 2007, Pike requested that the investor change the date of the stock purchase agreement from 2006 to 2007, so that Pike could avoid paying taxes for 2006.

The evidence also established that during 2006, Pike expended millions of dollars to sustain his lavish lifestyle, drive luxury cars and bet millions of dollars at local sports books. Furthermore, Pike made payments on a 2005 Lexus SUV and 2005 Land Rover that were held in the name of a nominee. Also in 2006, Pike used a nominee to purchase a 2007 Mercedes Benz SL55 AMG for $151,614.

In addition to 52 months of prison, Judge Mahan sentenced Pike to three years of supervised release with a special condition that he pay $1,189,773 in restitution to the Internal Revenue Service (IRS).

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Arvind Ahuja Was Convicted of Filing False Tax Return and Failing to File Report of Foreign Bank Accounts

Source- http://www.justice.gov/tax/2012/txdv121043.htm

WASHINGTON – A jury convicted Arvind Ahuja yesterday on federal tax charges stemming from his failure to disclose offshore bank accounts maintained in India and the Bailiwick of Jersey, the Justice Department and Internal Revenue Service (IRS) announced. Trial began on Aug. 15, 2012 before U.S. District Judge Charles N. Clevert, Jr., in Milwaukee. Ahuja, a prominent neurosurgeon in Milwaukee, was convicted of one count of filing a false 2009 individual income tax return and one count of failing to file a Report of Foreign Bank and Financial Accounts (FBAR).

According to the evidence presented at trial, Ahuja transferred millions of dollars from bank accounts in the United States to undeclared bank accounts located in India at HSBC bank. Ahuja invested the funds in these accounts in certificates of deposit, which earned more than $2.7 million in interest income during the years 2005 through 2009. Ahuja also maintained an HSBC bank account in the Bailiwick of Jersey, a British Crown dependency located in the Channel Islands off the coast of Normandy, France. Ahuja used credit and debit cards linked to this account to pay personal expenses while on trips to London. Ahuja managed his offshore accounts with the assistance of bankers who worked at an HSBC India representative office in New York.

The evidence established that for tax year 2009, Ahuja filed a false tax return with the IRS that failed to report the interest income earned on his certificates of deposit at HSBC India, and failed to report he had signature authority over bank accounts located in India and Jersey. Ahuja also failed to file an FBAR for 2009 to report his offshore accounts to the IRS. Ahuja’s accountant testified that Ahuja never disclosed the existence of his offshore accounts during the preparation of his tax returns.

United States citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns. Additionally, U.S. citizens and residents must file an FBAR with the United States 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 is scheduled for Jan. 18, 2013.

“This prosecution reflects the continuing commitment of the United States Department of Justice, including my office and the Tax Division, to identify, investigate and prosecute individuals who fail to abide by well-established obligations to report and pay on their tax indebtedness,” said James L. Santelle, U.S. Attorney for the Eastern District for Wisconsin. “In combination with the Internal Revenue Service, we are committed to enforcing the tax laws fairly and even-handedly, and the jury’s verdict in this case appropriately reflects the understanding of all law-abiding citizens that underreporting income and failing to report foreign bank accounts will not be tolerated.”

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Henrik Sardariani was Sentenced to 10 Years in Federal Prison for Committing Multi-Million-Dollar Real Estate and Loan Fraud

Source- http://www.fbi.gov/losangeles/press-releases/2012/glendale-man-sentenced-to-10-years-in-federal-prison-for-committing-multi-million-dollar-real-estate-and-loan-fraud

RIVERSIDE, CA—A Glendale man has been sentenced to 10 years in federal prison for orchestrating a loan fraud scheme that netted him and his associates well over $5 million in less than eight months.

Henrik Sardariani, 44, was sentenced yesterday by United States District Judge Virginia A. Phillips, who also ordered the defendant to pay $5.422 million in restitution to his victims and a $100,000 criminal fine.

Sardariani previously admitted that he had defrauded private money lenders by falsely assuring them that the loans they were making were safe when, in fact, he had no intention of paying the loans back and did not own the properties he had pledged as collateral.

In determining the sentence, Judge Phillips noted the complexity of Sardariani’s criminal conduct, which included creating false real estate documents with cut-and-paste notarizations and falsifying government records to hide problems in Sardariani’s background that would have raised red flags for the lenders. A victim who spoke at yesterday’s sentencing hearing summed up Sardariani’s crimes as robberies with fake documents instead of a gun.

Henrik Sardariani has been in custody since December 21, 2010, when he and his brother, Hamlet Sardariani, 42, were arrested by special agents with the Federal Bureau of Investigation and IRS-Criminal Investigation. Hamlet Sardariani pleaded guilty in June (see: http://www.justice.gov/usao/cac/Pressroom/2012/078.html).

Henrik Sardariani pleaded guilty in January to conspiracy, wire fraud, and engaging in unlawful monetary transactions, admitting that he falsified numerous documents to obtain more than $5 million in loans. To obtain one of the loans, Sardariani fraudulently claimed to be the president of the company that actually owned a property used as collateral, and he created false corporate records to maintain that pretense. Sardariani also admitted that he had created fraudulent property records to make it appear to the lenders that prior loans secured by the properties had been paid off and that, therefore, the new loans being made by the victim lenders were fully secured. The fraudulent reconveyances bore forged and fraudulent signatures of notaries public and fraudulent stamps of the notaries public.

Sardariani also admitted that in relation to another loan, he falsely told the lender that the loan was needed only briefly to extend a pre-existing escrow related to the purchase of a hospital and would be returned to the victim-lender at the close of the pre-existing escrow less than one month later. In fact, as Sardariani admitted, he did not intend to use the loan proceeds in connection with the purchase of a hospital, nor did he intend to leave the money untouched in the escrow account. Sardariani used the loan proceeds to place bets on horse races. After the lender wired $2.5 million to the escrow account that Sardariani had designated, Sardariani instructed the escrow officer to wire the funds to a Hong Kong bank account to fund the gambling. The escrow officer, Wanda Tenney, who was also charged in the case, pleaded guilty to conspiracy on November 30, 2011. Sardariani’s gambling partner, Christopher Woods, who was charged with money laundering in a related case, has also pleaded guilty.

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