WASHINGTON - Patrick Merrill Brody was sentenced on May 6, 2011, to 10 months of prison, 12 months of supervised release and ordered to pay the costs of prosecution for willfully failing to file a federal income tax return for 2001, the Justice Department and Internal Revenue Service (IRS) announced today.
Brody’s sentencing by U.S. District Court Judge Clark Waddoups followed a week-long trial in October 2010. According to the evidence at trial, Brody’s obligation to file a tax return for 2001 arose from the income he received for work in connection with his tax planning firm, Merrill Scott & Associates. The business was shut down and placed into receivership by the Securities and Exchange Commission (SEC) in early 2002 for alleged securities fraud. The civil suit resulted in a judgment against Brody for more than $16 million. Brody earned more than $500,000 in income from Merrill Scott & Associates during 2001, but deliberately failed to report the income and its tax liability on a federal income tax return.
Wednesday, May 11, 2011
Patrick Merrill Brody Sentenced in Salt Lake City For Tax Offense
Tuesday, May 10, 2011
John M. Volpentesta Sentenced to 11 Years in Prison on Federal Fraud and Tax Charges
Late yesterday afternoon, in Rockford federal court, United States District Judge Frederick J. Kapala sentenced JOHN M. VOLPENTESTA, 54, formerly of Marengo, Illinois, to 133 months in federal prison without parole on his federal fraud and tax convictions.
On July 19, 2010, after a four-week trial, a federal jury in Rockford returned guilty verdicts against Volpentesta, convicting him of two counts of mail fraud, two counts of wire fraud, 11 counts of failing to pay over to the IRS taxes he withheld from the wages of his employees, three counts of failing to file unemployment tax returns, and three counts of failing to file personal income tax returns. The jury acquitted Volpentesta of two remaining mail fraud counts.
The fraud charges arose from Volpentesta’s operation of a residential construction business located in Marengo, known as Volpentesta Construction, Inc. (also known as “VCI”). The indictment alleged that Volpentesta defrauded at least four families with whom VCI contracted to build homes. Specifically, the indictment charged Volpentesta with obtaining large sums of money from these families by: (1) falsely stating that VCI had performed work on their homes that was actually performed by subcontractors; (2) fraudulently billing his customers for work performed by subcontractors and materials suppliers, and then failing to pay those subcontractors and suppliers; (3) billing customers for materials he used on other projects, including a strip mall he owned; and (4) charging additional “fees” to which VCI was not entitled under its contracts with the families.
The indictment also alleged that Volpentesta defrauded certain individuals who invested money in, or loaned money to, VCI by making false promises about the security of their investments and when their money would be returned. According to the indictment, Volpentesta defrauded his construction customers and investors out of a total of more than $1 million.
The indictment also charged Volpentesta with 17 federal tax charges. Eleven of those counts charged that from the second quarter of 2003, through the fourth quarter of 2005, Volpentesta collected federal income tax, Medicare, and Social Security taxes from the wages of VCI’s employees, but then failed to pay those monies to the IRS. According to the indictment, the amount of taxes Volpentesta collected from his employees and failed to pay to the IRS was $164,999. Three of the tax counts charged Volpentesta with failing to file Form 940 Federal Unemployment Tax returns on behalf of VCI for the years 2003, 2004, and 2005. The remaining three counts charged Volpentesta with failure to file Form 1040 federal income tax returns on behalf of himself and his wife for the years 2003, 2004, and 2005. According to these three counts, Volpentesta received gross income in the following amounts during those years: (1) 2003—$375,853.01; (2) 2004—$156,844.95; and (3) 2005—$193,833.53.
Monday, May 9, 2011
Troy A. Beam Convicted of Tax Fraud
HARRISBURG, Pa - Troy A. Beam was convicted today in the Middle District of Pennsylvania before U.S. District Judge Christopher C. Conner. Beam, a resident of Shippensburg, Pa., was convicted of tax evasion, obstructing and impeding the due administration of the Internal Revenue laws and willful failure to file federal income tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.
According to the indictment and evidence at trial, Beam, a former certified public accountant and state auditor in the Pennsylvania Auditor General’s Office, earned substantial sums of income from 1992 to the date of the indictment while operating a home construction business known as “Sunbeam Builders,” as well as owning and operating two real estate businesses known as “Latrobe Leasing” and “Goldstar Property Management” that purchased, rented and sold real estate. Despite earning substantial income from these businesses, as well as other activities, Beam failed to file any federal income tax returns since April 1996, when he filed his 1995 tax return reporting a loss. In April 1996, Beam also filed false amended federal income tax returns for 1992, 1993 and 1994, seeking tax refunds for taxes he previously had paid for those years.
The indictment alleged and the evidence at trial proved that Beam obstructed the IRS in its attempt to calculate and collect his taxes by using numerous sham trusts and other entities, including North Star Investment Holdings Ltd. to hide his income and assets. Beam used North Star to set up a bank account in the Cayman Islands into which he deposited nearly $3 million of income derived from his construction business.
Beam faces up to 12 years of in prison, $900,000 in fines and full restitution to the IRS for all back taxes due and owing. Sentencing is scheduled for Aug. 12, 2011.
Sunday, May 8, 2011
Dorthea Alexander Allegedly Prepared False Tax Returns for Customers
WASHINGTON - The United States has sued Dorthea Alexander of Leola, Pa., seeking to bar her from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Alexander claimed false tax deductions, credits and exemptions on customer tax returns during her employment as tax supervisor at Pawn Plus Inc. in Lancaster, Pa.
According to the government complaint in the case, Alexander allegedly fabricated deductions for charitable donations, business expenses, medical expenses and other miscellaneous expenses to reduce her customers’ reported tax liabilities. The complaint states that she also used the names and social security numbers of unrelated individuals to claim improper dependent exemptions for her customers, sometimes charging customers extra for doing so.
In one instance cited in the complaint, Alexander allegedly told a customer that he “could use some dependents,” which would give him a larger tax refund. She allegedly then listed as dependents on his tax return the names and social security numbers of people whom the customer did not know, and charged the customer a fee for claiming those dependents equal to half of the resulting inflated tax refund.
According to the complaint, the total harm to the government from Alexander’s misconduct for the 2004 through 2007 tax years could be as high as $10.8 million.
Friday, May 6, 2011
Federal Court Bars Andrew DeDominicis From Promoting Alleged Tax Fraud Scheme
WASHINGTON - A federal court has permanently barred a North Carolina man from selling an alleged tax fraud scheme, the Justice Department announced today. According to the government complaint, Andrew DeDominicis (formerly known as Andrew Brown) of Dallas, N.C., promoted the formation and use of a “corporation sole” to help his customers improperly avoid paying federal income taxes. The civil injunction order, to which DeDominicis consented, was entered by Judge Martin Reidinger of the U.S. District Court for the Western District of North Carolina.
According to the complaint, some states authorize an entity known as a corporation sole to enable religious leaders to hold property and conduct business for the benefit of a legitimate religious entity. The complaint states that DeDominicis falsely informed his customers that their corporations sole would be treated as churches and will not need to file federal income tax returns.
The court also required DeDominicis to give a copy of the injunction order to each customer who bought a corporation sole from him and to remove from his websites any material promoting the use of corporations sole.
Thursday, May 5, 2011
John Walter Kaber Pleads Guilty to Tax Evasion
WASHINGTON - John Walter Kaber, a resident of Bloomfield, Mich., pleaded guilty to tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. The Honorable U.S. District Court Judge Victoria A. Roberts set sentencing for Sept. 20, 2011.
According to the plea agreement, Kaber was the owner of Merchant Processing, a business that installed credit card processing systems. Despite earning substantial income from Merchant Processing and incurring a tax liability on that income, Kaber failed to file timely U.S. Individual Income Tax Returns (IRS Forms 1040) for the 1991 and 2005 tax years. Kaber filed Forms 1040 for the 1992-1996 and 2000-2004 tax years that reflected a tax due and owing, but failed to pay the taxes due. Kaber also failed to pay a portion of the employment taxes for Merchant Processing that were due to the IRS during the 2000-2003 tax years. The defendant’s total tax due and owing to the United States for the 1991-1996 and 2000-2005 tax years, including both income taxes and employment taxes, is more than $868,000.
According to the plea agreement, in order to carry out his tax evasion scheme and to conceal his assets from the IRS, the defendant, among other things, used his wife’s name to purchase and refinance two parcels of real property and to purchase a boat, boat slip and vehicle. Kaber also sought to prevent the IRS from collecting unpaid taxes from his bank accounts by, among other things, cashing checks rather than depositing them in the bank, depositing business receipts into his wife’s checking account, and removing his name from a joint bank account after it became subject to an IRS levy.
On Nov. 6, 2007, the U.S. District Court for the Eastern District of Michigan entered a judgment against the defendant for his unpaid 1991-1996 taxes.
Wednesday, May 4, 2011
Robert Anthony Warren Found Guilty in Manhattan Federal Court of Multi-Million-Dollar Tax Refund and Theft of Mail Scheme
PREET BHARARA, the United States Attorney for the Southern District of New York, announced today that ROBERT ANTHONY WARREN was found guilty following a one-week jury trial in Manhattan federal court for his role in a scheme to fraudulently generate millions of dollars in federal tax refund checks and to steal the checks from the U.S. mail. U.S. Circuit Judge DENNY CHIN presided over the trial.
According to the evidence presented at trial and other documents filed in the case:
WARREN was charged as part of an investigation into a massive tax and mail theft scheme. As part of the scheme, coconspirators operating out of the Dominican Republic electronically filed thousands of fraudulent federal tax returns, seeking tens of millions of dollars in tax refund checks. The fraudulent returns were filed using Social Security numbers and other identifying information stolen from residents of the Commonwealth of Puerto Rico. Participants in the scheme targeted Social Security numbers assigned to residents of Puerto Rico because they are generally not required to file federal tax returns with the Internal Revenue Service (IRS), so long as their income derives solely from Puerto Rican sources. In this way, the fraudsters minimized the risk that legitimate federal tax returns were already filed by the owners of the Social Security numbers they were using in the scheme.
Each of the tax returns at issue falsely represented that the taxpayer on the return resided at an address in the Bronx, where the refund check requested in the return would be sent. The checks were then collected by mail carriers assigned to the mail routes where the checks were sent. The mail carriers participating in the scheme were paid a kickback for each check they collected. The carriers passed the checks on to other coconspirators, who cashed them at various banks and check-cashing businesses located in the United States and the Dominican Republic.
Since 1993, WARREN has been a mail carrier employed by the U.S. Postal Service at Tremont Post Office in the Bronx. He was recruited into the tax scheme in 2007. From July 2007 until May 2008, WARREN collected at least 256 fraudulent refund checks that were sent to his mail route as part of the scheme. He was paid a $100 kickback for each check that he stole. Each check was worth, on average, close to $10,000. In all, WARREN helped steal over $2.5 million worth of fraudulent tax refund checks. He made at least $25,000 in kickbacks from the scheme.
WARREN, 46, of the Bronx, New York, is scheduled to be sentenced by Judge CHIN on September 13, 2011, at 10 a.m. He faces a maximum term of 20 years in prison.
Tuesday, May 3, 2011
Justin Glynn French Sentenced to 16 Years for Orchestrating Multi-Million Dollar Rehabilitation Tax Credit Scheme
RICHMOND, VA—Justin Glynn French, 40, of Richmond, Va., was sentenced today to 196 months, followed by three years of supervised release, for stealing millions from federal and state tax credit programs intended to rehabilitate historic buildings.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Ken Cuccinelli, Attorney General of Virginia; Michael F.A. Morehart, Special Agent in Charge of the FBI's Richmond Field Office; Rebecca Sparkman, Special Agent in Charge of the Internal Revenue Service Criminal Investigation's Washington, D.C., Field Office; and Colonel W. Steven Flaherty, Superintendent of Virginia State Police, made the announcement after sentencing by United States District Judge John A. Gibney, Jr.
"Justin French lined his pockets with millions in stolen tax dollars and defrauded more than 100 investors," said U.S. Attorney MacBride. "Mr. French exploited the rich history of the Commonwealth to cheat taxpayers and investors out more than $11 million intended to preserve historic homes in Virginia. While Mr. French spent lavishly on a beach house, a personal jet and trips to Las Vegas, more than 100 investors lost their retirement funds, their medical care accounts, and their kids' college funds."
"Justin French violated the trust of investors and defrauded the state and federal governments out of millions of dollars," said Attorney General Cuccinelli. "Today's sentence sends a message not only to French that his tax-credit scheme was reprehensible, but also to anyone else attempting to cheat taxpayers out of their hard-earned money. Unfortunately, the repercussions of French's crimes will be felt for years to come by those who unwittingly invested in his tax-credits and by honest people who are currently rehabilitating properties in the Commonwealth."
On Jan. 24, 2011, French pled guilty to wire fraud and engaging in unlawful monetary transactions through a criminal information for his role in orchestrating a multi-million dollar rehabilitation tax credit scheme and defrauding more than 110 investors who purchased tax credits from French for their own use.
According to the statement of facts filed with the plea agreement, Justin French was the owner and operator of French Consulting Company, a Richmond-based real estate development company. He actively sought state and federal historic tax credits as his company worked to rehabilitate a number of historic properties throughout the Richmond area.
At the state level, the Virginia Department of Historic Resources (VDHR) administered the Virginia Historic Rehabilitation Tax Credit program. That program allowed the property owner to receive a state income tax credit equal to 25 percent of the amount spent on eligible rehabilitation expenses. At the the federal level, the U.S. Department of the Interior National Park Service (DOI-NPS) administered the Federal Historic Preservation Tax Incentives program. This program encouraged private sector rehabilitation of historic buildings through tax credit equal to 20 percent of the amount spent on eligible rehabilitation expenses.
Through court documents, French admitted that since 2005, he has initiated the historic rehabilitation tax credit application process on at least 36 properties in Richmond; 14 were approved by state authorities and 20 were approved by federal authorities. Upon receiving the approved credits, and sometimes before receiving final approval, French would sell the credits to private investors who would use those credits on their own tax returns.
As an example of this fraud, French purchased a property on March 7, 2008, located at 1509 Belleville Street in Richmond. In correspondence with the bank that funded a loan for the project, French stated that he had purchased the property for $700,000 and expected the rehabilitation costs to be approximately $200,000.
In November 2008, French began the application process seeking federal and state rehabilitation tax credits for this property. On March 20, 2009, he submitted the final tax credit applications and required CPA cost certification for 1509 Belleville Street to the VDHR. In those applications, he represented the rehabilitation costs as $1,571,503. On March 26, 2009, the VDHR approved French's state application and awarded him $392,875.75 in state tax credits. On April 17, 2009, the DOI-NPS approved French's federal application authorizing him $314,300.60 in federal tax credits for this project.
In connection with his plea hearing, French agreed that the requested tax credits for the 1509 Belleville Street, LLC project were grossly inflated. According to the United States, the actual authorized expenses for the purpose of obtaining state and federal historic rehabilitation tax credits should have been approximately $403,200 (including the 20% developer fee and an additional 20% allowance for allowable expenses), as opposed to the $1,571,503 represented to state and federal authorities. If the actual amounts consistent with the bank loan file had been submitted to the state and federal authorities, French would have received approximately $100,800 in Virginia tax credits (as opposed to $392,875.75 in Virginia tax credits) and $80,640 in federal tax credits (as opposed to $314,300.60 in federal tax credits). The combined total of federal and state tax credits French illegally obtained by inflating the rehabilitation expenses for 1509 Belleville Street was approximately $525,737.
French's subsequent transactions with a number of private investors who purchased these tax credits resulted in his pleading to engaging in unlawful monetary transactions. As part of the investment process, French caused the mailing of subscription agreements via United States mail to the individual investors. Those investors, in turn, executed the subscription agreements and returned those documents along with their investment funds to the defendant. In February 2009, those individual investors provided the defendant with approximately $228,800 in exchange for purchasing the state tax credits related to 1509 Belleville Street. These investor funds were deposited into a First Market Bank business checking account for the 1509 Belleville Street project. French subsequently transferred $218,000 of those funds to his personal money market savings account at First Market Bank.
Overall, French agreed in his plea agreement that the intended and actual tax credit losses connected to the 1509 Belleville Street and other rehabilitation projects was between $7 million and $20 million. The defendant also agreed to pay full restitution for the losses he caused in connection with the ongoing rehabilitation tax credit scheme, which will be determined as the victims and loss amounts are identified in the ongoing investigation. The final restitution amount will be determined at a restitution hearing to be scheduled at a later date, following the completion of the investigation.
To date, the total losses for the scheme have been calculated as $11,266,622. French has agreed to an order of forfeiture imposing a monetary judgment of $7 million, representing the proceeds he received from the fraudulent scheme. At this time, he has agreed to forfeit the assets listed in the First Consent Order of Forfeiture entered at his plea hearing. The investigation to identify additional assets remains ongoing.
Monday, May 2, 2011
Federal Court Bars George Thomas Gaines From Preparing Federal Tax Returns
WASHINGTON - A federal court has permanently barred George Thomas Gaines of Aurora, Colo., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Gaines consented, was signed by Judge Robert E. Blackburn of the U.S. District Court for the District of Colorado.
The government complaint in the case alleged that Gaines and his companies, G&G Tax Service and American Benefits, prepared federal income tax returns for customers that used fictitious businesses to claim false tax deductions and improper earned income tax credits. According to the complaint, more than 96 percent of the audited tax returns prepared by Gaines between 2004 and 2007 understated his customers’ tax liabilities.
Sunday, May 1, 2011
Loretta and Tracey Fergerson Indicted for Tax Fraud and Identity Theft
MONTGOMERY, Ala. – Loretta and Tracey Fergerson were indicted by a federal grand jury in the Middle District of Alabama on a variety of charges stemming from an identity theft and tax fraud conspiracy, the Justice Department and the Internal Revenue Service (IRS) announced today. The sisters were charged in a 22-count indictment that was returned on March 23, 2011, and unsealed Tuesday.
The Fergerson sisters were charged with conspiring to defraud the United States, filing false claims, wire fraud and aggravated identity theft. According to the indictment, Loretta Fergerson operated Fast Tax Cash, a tax return preparation business in Montgomery, Ala., from January 2005 to February 2008. The defendants’ conspiracy spanned over one year and involved using stolen identities to file tax returns claiming fraudulent refunds.
The indictment alleges that Tracey Fergerson unlawfully obtained the names and Social Security numbers of individuals. Loretta Fergerson would then electronically file false tax returns using the names and Social Security numbers Tracey provided. Loretta was then able to apply for and obtain refund anticipation loans from banks based on the false tax returns.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Loretta and Tracey Fergerson each face a maximum of 129 years in prison.
Friday, April 29, 2011
Mohammad Jafar Nikbakht Pleads Guilty to Tax Evasion
WASHINGTON – Mohammad Jafar Nikbakht, aka Freydoon Nikbakht, pleaded guilty to tax evasion before U.S. District Court Judge John A. Houston in San Diego, the Justice Department and Internal Revenue Service (IRS) announced today. According to the indictment and other documents filed with the court, Nikbakht ran a series of lucrative auto dealerships in the greater San Diego area. Between 1998 and 2007, Nikbakht significantly under-reported income earned from these businesses. The government claims that Nikbakht defrauded the U.S. Treasury of more than $400,000 in income tax revenue through the course of these years.
According to indictment and other documents filed with the court, Nikbakht pleaded guilty to tax evasion for the year 2007. Nikbakht admitted that during that year he earned income through auto dealership operations, including through a dealership called Southern California Car Exchange. Nikbakht further admitted that he willfully failed to file his personal tax return and pay his taxes, and that he engaged in various acts to conceal income from the IRS. For example, Nikbakht admitted that he ran an auto wholesale operation under another dealer’s license and that he instructed the other dealer to write his income payment checks to the order of a third-party or to “cash”.
The government contends that even at his plea hearing, Nikbakht only admitted to a fraction of his misconduct. Additional evidence concerning Nikbakht’s 2007 tax evasion and his alleged tax crimes for prior years as well as allegations that Nikbakht obstructed justice in the tax investigation, will be presented before Judge Houston at a preliminary sentencing hearing scheduled for April 12, 2011.
Nikbakht faces up to five years in prison. In addition, the government is seeking a fine of at least $250,000 and an order requiring Nikbakht to pay full restitution to the IRS as well as the costs of his prosecution.
Alchico Grant and Melinda Clayton Indicted of Charges Stemming From an Identity Rheft and Tax Fraud Scheme
WASHINGTON - Alchico Grant and Melinda Clayton were indicted by a federal grand jury in the Middle District of Alabama on a variety of charges stemming from an identity theft and tax fraud scheme, the Department of Justice, U.S. Attorney Leura G. Canary and the Internal Revenue Service (IRS) announced today. The 21-count indictment charges the two with filing false claims against the United States, wire fraud and aggravated identity theft.
Clayton had previously been arrested on a criminal complaint on April 8, 2011, following the execution of a search warrant at her house that same day. Grant had been indicted, along with several co-conspirators, in December 2010, for his involvement in an earlier conspiracy to obtain tax refunds using stolen identities. Grant was on pretrial release when indicted on the new charges. At a hearing on April 28, 2011, Grant’s pretrial release was revoked and he was ordered detained.
According to the new indictment, Clayton and Grant fraudulently obtained tax refunds using stolen identities. The two would illegally obtain identity information, file false tax returns claiming fraudulent refunds using the stolen identities and have the proceeds deposited into bank accounts and stored value card accounts they controlled. Grant would purchase stored value cards that were used to receive proceeds from some of the false returns.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Clayton and Grant both face a maximum of 189 years in prison and a mandatory minimum sentence of 2 years. If convicted, they will also face forfeiture of the proceeds of their crimes and mandatory restitution.
Thursday, April 28, 2011
Cynthia Peters Sentenced to Prision for Aiding in Preparation of False Tax Returns
WASHINGTON - Cynthia Peters was sentenced to 27 months in prison based on her plea of guilty to one count of wilfully aiding and assisting in the preparation and filing of a false income tax return, the Justice Department and Internal Revenue Service (IRS) announced today. The court also ordered Peters to serve a one-year term of supervised release following her prison term and to pay restitution to the IRS in the amount of $76,908. The case arises out of a March 31, 2010, indictment filed in the Middle District of Louisiana.
According to her plea agreement, Peters, who worked at Jasmine and Melissa’s Tax Service in Baton Rouge, prepared fraudulent tax returns for 23 clients that reported falsely inflated telephone excise tax refund (TETR) credits in the total amount of $92,932. The TETR credit was a one-time credit available to taxpayers for the 2006 year. The sentencing court found that the tax loss, including all relevant conduct, was approximately $501,376.
Wednesday, April 27, 2011
Thomas Robert Turne Pleads Guilty to Corruptly Endeavoring to Impede the Internal Revenue Service
WASHINGTON - Thomas Robert Turner, a resident of Prince George’s County, Md., pleaded guilty to corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws, the Justice Department and Internal Revenue Service (IRS) announced today. Sentencing is scheduled for Aug. 12, 2011.
According to the plea agreement and statement of facts, Turner worked as a bus driver for D & B Tours Inc., a tour bus company. He, along with at least two other people, devised a plan to file false corporate income tax returns for 2001, 2002 and 2003 for D & B Tours with the IRS in order to get money from the government to which they were not entitled. These corporate returns claimed false refunds of more than $177,000 based upon fraudulently inflated federal fuel tax credits. Turner received $70,000 as his share of the fraudulent refunds.
According to the court documents, Turner also admitted that he was aware that false individual tax returns for 2002 through 2005 were filed in his name. Although he never saw the tax returns, he was aware that, just as he had been in the case with the false D & B Tours corporate tax returns, his personal tax returns would report false information relating to fuel expenses to support false claims for tax refunds. Turner received two refund checks from the IRS -- one for more than $20,000 and a second for more than $19,000. He retained a portion of these refund checks. Turner also admitted that in January 2009 he made false statements to a criminal investigator of the IRS who had questions about the tax refunds related to the false D & B Tours corporate tax returns.
Tuesday, April 26, 2011
Richard Rosaire Routhier Pleads Guilty to Tax Fraud Conspiracy
WASHINGTON - Richard Rosaire Routhier of Lake Worth, Fla., pleaded guilty to a one-count information charging him with conspiring to defraud the Internal Revenue Service (IRS), the Justice Department and the IRS announced today. According to the information, Routhier and others conspired to defraud the United States and unlawfully enrich themselves by paying employees in cash and not withholding and paying over employment taxes to the U.S. Treasury.
According to court documents, Routhier owned and operated Drymension Inc., a custom drywall installation and framing contracting company in Lake Worth. From 2002 through 2008, the defendant caused Drymension checks to be issued to several shell corporations. These entities, while purporting to be legitimate subcontractors, existed only on paper and did not do any work for Drymension. The checks written to shell corporations totaled approximately $9,132,516. The checks were cashed at local check cashing stores that were aware of the scheme and Routhier used the cash to pay Drymension employees. Routhier neither withheld from the cash wages nor paid over to the IRS the employment and income taxes as required by law.
The court scheduled sentencing for June 2, 1011. The defendant faces a maximum of 5 years in prison and a fine of $250,000.
Monday, April 25, 2011
Eric Bernard Caldwell Pleads Guilty to Role in Tax Fraud Conspiracy
WASHINGTON - Eric Bernard Caldwell, a resident of Montgomery County, Ala., pleaded guilty to conspiring to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. The guilty plea took place before U.S. Magistrate Judge Charles S. Coody in the U.S. District Court in Montgomery, Ala.
According to the indictment and other court documents, Caldwell was part of a conspiracy to file false federal tax returns using stolen identities. Caldwell would provide identity information to co-conspirator Ora Mae Adamson, who would file the returns, in exchange for a portion of the illicit refunds generated by the false tax returns. In all, the conspiracy defrauded the United States of $621,738.
Adamson pleaded guilty to conspiracy and identity theft charges and was sentenced to 46 months in prison on March 10, 2011. Another co-conspirator, Jeffrey Leon Ceaser, also pleaded guilty to conspiracy and identity theft charges and was sentenced to 36 months in prison on March 2, 2011.
Sunday, April 24, 2011
Dennis Giroud and His Business, Refunds R Us, Allegedly Claimed More Than $20 Million in Fraudulent Tax Refunds
WASHINGTON - The United States has asked a federal court to bar Dennis Giroud of Victorville, Calif., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Giroud and his business, Refunds R Us, prepare fraudulent tax returns for their customers that claim large tax refunds based on a frivolous theory called “redemption” or “commercial redemption,” which has been rejected by numerous courts.
According to the government complaint, Giroud prepares tax returns that claim fraudulent refunds based on fabricated income tax withholding reported on false forms submitted with the returns. The complaint alleges that the Internal Revenue Service (IRS) catches most of the frivolous refund requests before refunds are issued, but that Giroud’s scheme has caused the IRS to issue at least $1.2 million in erroneous refunds to his customers. Giroud has allegedly sought more than $19 million in fraudulent refunds for more than 100 customers using returns based on the frivolous “redemption” theory and has also allegedly requested more than $1.3 million in bogus refunds for himself.
Saturday, April 23, 2011
Joseph A. Pingaro and his wife Christine Scola Pleads Guilty to Tax Evasion and Illegal Structuring Conspiracies
BOSTON—JOSEPH A. PINGARO, JR. and his wife, CHRISTINE SCOLA, both of Middleton, pleaded guilty today of conspiring to defraud the United States by filing false income tax returns and illegally structuring cash transactions to evade reporting requirements.
PINGARO, 55, and SCOLA, 52, each pleaded guilty to one count of tax conspiracy and one count of structuring conspiracy, both running from at least 2001 to 2006. U.S. District Judge Patti B. Saris scheduled sentencing for July 19, 2011. Each defendant faces a maximum penalty of five years in prison on each count, to be followed by three years of supervised release and a fine of $250,000 or twice the gross gain/loss, whichever is greater. Each defendant also faces restitution (including back taxes, penalties, and interest) on the tax conspiracy count, and criminal forfeiture under the structuring conspiracy count. PINGARO is the sole owner and operator of J&J Metals, a scrap metal yard in Roxbury.
Each of the defendants admitted that they transferred large amounts of money, totaling millions of dollars, from the J&J business bank account into their personal bank account. SCOLA then withdrew cash from the personal account in a series of withdrawals, each just under $10,000, over consecutive days. PINGARO and SCOLA then used substantial amounts of the cash to make large personal expenditures, both directly and indirectly. The indirect personal cash expenditures were accomplished by both using cash to purchase money orders and bank checks that were then used for personal expenditures and paying third parties to purchase money orders and bank checks which were then used for the defendants’ personal expenditures. PINGARO then falsely claimed on his income taxes that almost all of the cash withdrawn was used for legitimate deductible business expenses for J&J Metals.
PINGARO and SCOLA’s scheme was designed to conceal the actual profits of J&J Metals and evade federal income tax. SCOLA’s banking activity was designed to further this evasion by avoiding the requirement that financial institutions must file a Currency Transaction Report with the government for any cash transactions exceeding $10,000. Similarly, PINGARO and SCOLA conspired to avoid U.S. Postal reporting requirements for purchase of $3,000 or more in money orders from any one location in a single day, by conducting a series of transactions over consecutive business days and in various locations.
Friday, April 22, 2011
Federal Court Permanently Bars Eddie Madrigal from Preparing Tax Returns
WASHINGTON – A federal court has barred Eddie Madrigal of San Antonio and his business, Madrigal Tax Express Inc., from preparing federal tax returns for others, the Justice Department announced today. The permanent injunction order, to which Madrigal consented, was entered by Chief Judge Fred Biery of the U.S. District Court for the Western District of Texas.
The government complaint alleged that Madrigal and his firm prepared tax returns for their customers that claimed false and exaggerated business deductions, false earned income tax credits and improper miscellaneous itemized deductions. According to the complaint, Madrigal and his business, which has three locations in San Antonio, prepared approximately 28,000 returns from 2005 to 2007. The government further alleged that Madrigal Tax Express prepared approximately 9,000 returns in 2007 and that, of the returns that were audited by the Internal Revenue Service for that year, more than 93 percent understated the customers’ tax liabilities.
Thursday, April 21, 2011
Joseph A. Pingaro, JR and his Wife Christine Scola Pleads Guilty to Tax Evasion and Illegal Structuring Conspiracies
BOSTON—JOSEPH A. PINGARO, JR. and his wife, CHRISTINE SCOLA, both of Middleton, pleaded guilty today of conspiring to defraud the United States by filing false income tax returns and illegally structuring cash transactions to evade reporting requirements.
PINGARO, 55, and SCOLA, 52, each pleaded guilty to one count of tax conspiracy and one count of structuring conspiracy, both running from at least 2001 to 2006. U.S. District Judge Patti B. Saris scheduled sentencing for July 19, 2011. Each defendant faces a maximum penalty of five years in prison on each count, to be followed by three years of supervised release and a fine of $250,000 or twice the gross gain/loss, whichever is greater. Each defendant also faces restitution (including back taxes, penalties, and interest) on the tax conspiracy count, and criminal forfeiture under the structuring conspiracy count. PINGARO is the sole owner and operator of J&J Metals, a scrap metal yard in Roxbury.
Each of the defendants admitted that they transferred large amounts of money, totaling millions of dollars, from the J&J business bank account into their personal bank account. SCOLA then withdrew cash from the personal account in a series of withdrawals, each just under $10,000, over consecutive days. PINGARO and SCOLA then used substantial amounts of the cash to make large personal expenditures, both directly and indirectly. The indirect personal cash expenditures were accomplished by both using cash to purchase money orders and bank checks that were then used for personal expenditures and paying third parties to purchase money orders and bank checks which were then used for the defendants’ personal expenditures. PINGARO then falsely claimed on his income taxes that almost all of the cash withdrawn was used for legitimate deductible business expenses for J&J Metals.
PINGARO and SCOLA’s scheme was designed to conceal the actual profits of J&J Metals and evade federal income tax. SCOLA’s banking activity was designed to further this evasion by avoiding the requirement that financial institutions must file a Currency Transaction Report with the government for any cash transactions exceeding $10,000. Similarly, PINGARO and SCOLA conspired to avoid U.S. Postal reporting requirements for purchase of $3,000 or more in money orders from any one location in a single day, by conducting a series of transactions over consecutive business days and in various locations.
