Victor E. Cilli Sentenced to Three Years in Prison for Two Fraud Schemes and Tax Evasion

Source- http://www.fbi.gov/newark/press-releases/2012/commodity-pool-operator-sentenced-to-three-years-in-prison-for-two-fraud-schemes-and-tax-evasion

TRENTON—A commodity pool operator and day trader based in Hackensack, New Jersey, was sentenced today to 36 months in prison for directing two schemes to defraud individual investors and a financial institution of approximately $2 million and to evading more than $150,000 in tax payments, U.S. Attorney Paul J. Fishman announced.

Victor E. Cilli, 46, previously pleaded guilty before U.S. District Judge Garrett E. Brown to an information charging him with one count of securities fraud, one count of conspiracy to commit bank fraud, and one count of tax evasion. U.S. District Judge Anne E. Thompson imposed the sentence today in Trenton federal court.

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

Beginning in August 2006, Cilli was the sole owner and president of Progressive Investment Funds LLC (PIF), a commodity pool operator (CPO) engaged in an investment trust that solicited funds for the purpose of trading commodity futures. PIF was registered with the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) and was the CPO of Progressive Managed Futures Fund LP (PMFF), a commodity pool operated for the purpose of trading commodity futures. Cilli had sole trading authority over PMFF, which remained open until approximately February 2009.

Beginning as early as January 2007 and through September 2007, Cilli engaged in a Ponzi scheme to defraud at least four commodity pool participants of approximately $506,000. Although Cilli returned some funds to the investors, the payments were not from actual trading profits but from funds of existing pool participants. Cilli made false and misleading statements to the pool participants claiming he had made money for them when, in fact, most of his trading resulted in losses. Of the $506,000 invested, Cilli traded approximately $263,000, losing approximately $200,168. Cilli never disclosed to the pool participants that he had traded less than half of their money or that most of his trading had resulted in significant losses.

Cilli also misappropriated thousands of dollars in pool funds for personal expenses—including hair salon visits, skin care treatments, payments on his Harley Davidson motorcycle, and other personal entertainment, meals, and travel expenses.

In an unrelated scheme, from 2002 through September 2006, Cilli and 16 others conspired to defraud KeyBank, a financial institution based in Cleveland, Ohio, of more than $1.5 million in student loans by falsely representing to KeyBank that they would use the funds to attend Tab Express International Inc. (“Tab”), a pilot and flight crew training school in DeLand, Florida, and use the proceeds of student loans for educational expenses at Tab.

Based upon prior agreements between Cilli and his co-conspirators, they never intended to enroll at Tab nor repay principal or interest on the student loans to KeyBank. After KeyBank disbursed the loan proceeds to the school, approximately $600,000 of the loan proceeds were deposited into bank accounts solely owned and operated by Cilli. Cilli then made kickback payments totaling approximately $130,000 to his co-conspirators for signing up for the loans. Tab retained approximately $900,000 of the total loan proceeds. KeyBank was never repaid any of the principal or accrued interest on the loans.

To conceal his fraudulent conduct, Cilli maintained bank accounts in the names of Northeast Flight Training Inc., which was not a flight training school, and United Charities of America Inc., which was not a charitable organization. Both accounts were maintained by Cilli solely to perpetuate his frauds and fund his personal expenditures.

For calendar years 2003 and 2004, Cilli also intentionally failed to provide the IRS with any information regarding the proceeds that he received in connection with his conspiracy to commit bank fraud, totaling $547,705, resulting in a tax loss to the United States of approximately $158,674.

In addition to the prison term, Judge Thompson sentenced Cilli to five years’ supervised release, ordered to pay $710,000 in restitution, and ordered to comply with the IRS in filing amended tax returns and pay more than $410,000 in taxes, penalties, and interest.

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Dallen D. Harris Indicted for Evading Taxes by Underreporting $2 Million in Income

Source- http://www.fbi.gov/kansascity/press-releases/2012/wichita-man-indicted-for-evading-taxes-by-underreporting-2-million-in-income

WICHITA—A Wichita man has been indicted on charges of evading more than $800,000 in federal income taxes by failing to report more than $2 million of his income from 2007 to 2010, U.S. Attorney Barry Grissom said today.

Dallen D. Harris, 38, Wichita, Kansas, is charged with four counts of tax evasion. The indictment alleges the following:

In tax year 2007, he underreported his taxable income by $270,772, for which an additional $101,978 was owed.

In tax year 2008, he underreported his taxable income $809,949, for which an additional $295,098 was owed.

In tax year 2009, he underreported his taxable income by $350,204, for which an additional $117,486 was owed.

In tax year 2010, he underreported his taxable income by $881,815, for which an additional $312,654 was owed.

If convicted, he faces a maximum penalty of five years in federal prison and a fine up to $100,000 on each count. The Internal Revenue Service investigated. Assistant U.S. Attorney Alan Metzger is prosecuting.

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Annunziata Germana, Also Known as Annunziata Acquarlo Pleads Guilty to Federal Tax Charges

Source-  http://www.blogger.com/post-create.g?blogID=969208024914575125 

David B. Fein, United States Attorney for the District of Connecticut, announced that ANNUNZIATA GERMANA, also known as Annunziata Acquarlo, 31, of Guilford, pleaded guilty today before United States District Judge Janet Bond Arterton in New Haven to two counts of willfully failing to file a tax return.

According to court documents and statements made in court, GERMANA worked at Shoreline Finance and Marketing Corporation, which was a mortgage brokerage company owned and operated by Domenic Acquarulo, Jr. In 2007 and 2008, GERMANA used corporate credit cards and corporate checks to pay for many of her personal expenses, including rent for her apartment, car lease payments, jewelry, and clothing. She then classified these payments and purchases as business expenses in the bookkeeping records of the business.

GERMANA knew that payment of her personal expenses with Shoreline Finance funds was income to her. By virtue of this and other income she received in 2007 and 2008, GERMANA was required to file U.S. Individual Income Tax Returns, but failed to do so. In 2007 and 2008, GERMANA received approximately $30,835 and $34,382 in gross income, respectively.

Judge Arterton has scheduled sentencing for August 31, 2012, at which time GERMANA faces a maximum term of imprisonment of two years and a fine of up to $200,000. GERMANA also owes back taxes and interest in the total amount of $13,397.70.

On March 13, 2012, Domenic Acquarulo, Jr. pleaded guilty to one count of operating an illegal gambling business, one count of filing a false tax return, and one count of willfully failing to timely file a tax return. He awaits sentencing.

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Michael Todd Crosswhite Pleads Guilty to Wire Fraud, Money Laundering

Source- http://www.fbi.gov/richmond/press-releases/2012/forest-man-pleads-guilty-to-wire-fraud-money-laundering

LYNCHBURG, VA—A former financial advisor from Forest, Virginia pleaded this morning in the United States District Court for the Western District of Virginia in Lynchburg to charges of wire fraud and money laundering.

Michael Todd Crosswhite, 42, waived his right to be indicted and pleaded guilty this morning to a two-count information charging him with one count of wire fraud and one count of money laundering. The defendant also agreed to pay restitution to his victims in the amount of $943,684.

“Mr. Crosswhite stole over $1,000,000 from customers who trusted him with their money,” United States Attorney Timothy J. Heaphy said today. “His long-running Ponzi scheme defrauded his clients of hard-earned and long-saved investment funds, which they had entrusted to him for protection and growth. This United States Attorney’s Office will vigorously pursue those who defraud individuals in any manner.”

This morning in District Court, Crosswhite admitted that while serving in his role as a financial advisor he defrauded several victims of approximately $1,000,000 by liquidating their investment accounts without their knowledge. The liquidated assets were then transferred, again without the consent or knowledge of the victims, to accounts established by the defendant. Those funds were then lost in risky investments, used by Crosswhite and/or kited between accounts of various victims.

At sentencing, Crosswhite faces a maximum possible penalty of up to 20 years in prison and/or a fine of up to $250,000 on the wire fraud charge and a maximum possible penalty of up to 10 years in prison and/or a fine of up to $250,000 on the money laundering charge.

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Hamlet Sardariani Pleads Guilty in $5.4 Million Loan Fraud Case and Tax Evasion

Source-  http://www.fbi.gov/losangeles/press-releases/2012/sylmar-man-pleads-guilty-in-5.4-million-loan-fraud-case 

RIVERSIDE, CA—A Sylmar man has pleaded guilty to federal conspiracy and tax evasion charges, admitting that he plotted with others to fraudulently obtain four loans for more than $5 million by pledging houses that they did not own as collateral, falsely claiming that the houses had enough equity to secure the loans, forging documents, and falsifying notary stamps.

Hamlet Sardariani, 42, pleaded guilty yesterday afternoon in United States District Court. Hamlet Sardariani was scheduled to go on trial next week before United States District Judge Virginia A. Phillips.

Three other members of the conspiracy have previously pleaded guilty. Hamlet Sardariani’s brother—Henrik Sardariani, 44, of Glendale—pleaded guilty in January and is scheduled to be sentenced by Judge Phillips on August 6 (see: http://www.justice.gov/usao/cac/Pressroom/2012/004.html). Wanda Tenney, 66, of South Los Angeles, who was an escrow officer, pleaded guilty on December 5, 2011 and is scheduled to be sentenced on October 15. The fourth co-conspirator, Christopher J. Woods, 53, of Beverly Hills, pleaded guilty on November 8, 2011 and is scheduled to be sentenced on July 16.

According to a plea agreement filed in his case, Hamlet Sardariani admitted that he either knew or reasonably should have known of the numerous false statements and falsified documents used to obtain the four loans involved in this case. For instance, to obtain one of the loans, Henrik Sardariani fraudulently claimed to own a Burbank property and created false records to maintain that pretense. In fact, the Burbank house was not owned by Henrik Sardariani, and, although it had previously been owned by Hamlet Sardariani, he had lost the property through foreclosure months before Henrik Sardariani pledged it to the victim lender. Hamlet Sardariani later promised the same property to one of Henrik Sardariani’s creditors, and, a day later, to another victim lender in this case. The Sardariani brothers pledged other properties in Sherman Oaks and Glendale that they did not own and which did not have the equity Henrik Sardariani claimed they had to obtain the other loans.

Hamlet Sardariani also admitted that many of the fraudulent documents used to influence the lenders to lend money contained forged and fraudulent signatures and stamps of notaries public. Furthermore, Hamlet Sardariani distributed many of the loan proceeds to himself, his family members and friends, and Henrik Sardariani’s creditors. Nearly $2 million from the fraud was wired by co-conspirators to Hong Kong to be used to bet on horse races.

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Silford Warren was Sentenced to 24 Months in Prison for Failure to Pay Over Employment Taxes

Source-  http://www.justice.gov/tax/2012/txdv12745.htm 

WASHINGTON – Silford Warren, a resident of Queens, N.Y., was sentenced today to 24 months in prison for failure to pay over employment taxes in connection with his ownership of Silford Warren, CPA PC., the Justice Department and Internal Revenue Service (IRS) announced today. Judge William F. Kuntz II of the U.S. District Court for the Eastern District of New York also ordered Warren to pay $184,263 in restitution to the IRS.

Warren, a Certified Public Accountant, pleaded guilty on Dec. 9, 2011 to a one-count information charging him with willful failure to pay over employment taxes on behalf of his accounting business. According to the criminal information and court filings, from 2006 through 2008, Warren under-reported his employees’ salaries on tax filings with the IRS. The restitution amount ordered by the court included the employment taxes that he failed to pay over from his employees and his obligation, as an employer, to pay over a matching portion of those employment taxes, as well as the tax loss resulting from his filing false corporate income tax returns for 2005 through 2008.

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Jason W. Leas Pleads Guilty to Federal Excise Tax Crimes and Tax Fraud

Source-  http://www.justice.gov/tax/2012/txdv12740.htm 

WASHINGTON – Jason W. Leas, a resident of Crookston, Minn., and co-founder of Best Used Trucks of Minnesota Inc., pleaded guilty today to one count of failing to pay federal excise taxes, one count of failing to file a federal excise tax return and one count of filing a false individual federal income tax return for tax year 2007, the Justice Department and Internal Revenue Service (IRS) announced. Leas was charged by information filed on May 29, 2012. He entered his plea of guilty before U.S. District Court Senior Judge Richard H. Kyle in Duluth, Minn.

As alleged in the plea agreement, from 2004 through 2007, Best Used Trucks, which is located in Crookston, was a farm truck dealership that bought and sold used trucks, new trailers, new grain boxes and other heavy farm equipment, primarily to farmers throughout the Red River Valley of Minnesota and North Dakota. Beginning in 2004 and continuing through 2007, Leas and Best Used Trucks purchased and imported new end dump trailers, grain boxes, and gravel boxes from a Canadian manufacturer, which subjected the company to federal excise taxes upon selling them afterward. Leas admitted that he knew of his responsibility for paying the 12 percent federal excise tax on the sale of these trailers and related equipment, and his responsibility to file federal excise tax returns. Leas pleaded guilty to failing to file an IRS Form 720, Quarterly Federal Excise Tax Return for the third quarter of 2005, and failing to pay federal excise taxes of $9,636 for the first quarter of 2006. Leas admitted that he failed to pay over at least $80,088 in total federal excise taxes for ten quarters from 2004 through 2006.

Leas also pleaded guilty to willfully filing a false individual federal income tax return for the tax year 2007, which failed to report at least $120,151 in additional income with an additional tax due and owing of at least $36,872. The plea agreement alleged that from 2004 to 2007 Leas controlled two checking accounts in the name of Best Used Trucks of Minnesota. Leas used one of these accounts to both divert corporate receipts from Best Used Trucks, and to buy and sell equipment that was not part of Best Used Trucks’s ordinary business sales. Leas failed to report this income on his personal tax returns for four years, resulting in a total tax loss of at least $73,361.

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David Newmark Sentenced to 54 Months in Prison for Wire Fraud and Tax Evasion

Source-  http://www.fbi.gov/newark/press-releases/2012/former-cfo-of-new-jersey-investment-management-company-sentenced-to-54-months-in-prison-for-wire-fraud-and-tax-evasion 

NEWARK—The former chief financial officer of Columbus Hill Capital Management LP, an investment management firm based in Short Hills, New Jersey, was sentenced today to 54 months in prison for embezzling more than $10.4 million from his employer, U.S. Attorney Paul J. Fishman announced.

David Newmark, 39, of Towaco, New Jersey, previously pleaded guilty before U.S. District Judge William H. Walls to an information charging him with one count of wire fraud and one count of tax evasion. Judge Walls imposed the sentence today in Newark federal court.

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

Between February 2008 and March 2011, Newmark embezzled from his former employer by requesting checks and wire transfers from custodians of the investment management company accounts and diverting the funds to bank accounts he controlled. Newmark deposited the checks and wires—including a single wire transfer of more than $2.4 million in April 2010—into a bank account he set up with a name similar to that of his employer. The majority of the $10.4 million that Newmark embezzled came from the management company rather than investor funds.

For the 2008 tax year, Newmark did not disclose to the IRS more than $2.8 million he received in connection with the fraudulent scheme. That failure resulted in a tax loss to the United States of $1,012,441.

In addition to the prison term, Judge Walls sentenced Newmark to three years of supervised release and ordered him to pay $10,442,379.90 in restitution. On May 18, 2012, Judge Walls entered a preliminary order of forfeiture and to date, the United States has recovered more than $1.6 million.

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Ocala Police Officer Dana Brown Sentenced for Participating in Tax Fraud

Source-  http://www.fbi.gov/tampa/press-releases/2012/former-ocala-police-officer-sentenced-for-participating-in-tax-fraud 

TAMPA, FL—U.S. District Judge Mary S. Scriven sentenced former Ocala Police Officer Dana Brown (37, Ocala) to six years and five months in federal prison for conspiracy to make false claims, aggravated identity theft, and exceeding authorized access to a protected computer with intent to defraud. The court also ordered Brown to pay restitution in the amount of $874,319.35 to the Internal Revenue Service.

Brown pled guilty on December 20, 2011.

According to court documents, in 2010 and 2011, Brown was employed as a patrol officer for the Ocala Police Department. As part of his employment as a law enforcement officer, Brown had access to the Florida Highway Safety and Motor Vehicles Driver and Vehicle Information Database (“DAVID”). DAVID allows law enforcement officers to retrieve driver and vehicle information for official law enforcement purposes.

During the same time period, Brown was acquainted with Riad Sulaiman, owner of Empire Street Wear, a clothing store located in Tampa. Brown was aware that Sulaiman was in possession of fraudulently obtained U.S. Treasury tax refund checks in the names of various individuals. In order to negotiate the U.S. Treasury checks, check cashing businesses and banks typically require personal identification. For that reason, Sulaiman elicited the help of Brown, as Brown had access to personal identifying information by way of his access to DAVID. Brown knowingly and willingly entered into an agreement with Sulaiman and supplied personal identifying information of Florida driver’s license holders for the purpose of negotiating the fraudulently obtained U.S. Treasury checks. Per the agreement, Brown was to be paid five percent of the face value of each U.S. Treasury check.

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Joseph A. Schillace, IV Sentenced for Operating an Illegal Gambling Business and Tax Evasion

Source-  http://www.fbi.gov/neworleans/press-releases/2012/hammond-man-sentenced-for-operating-an-illegal-gambling-business-and-tax-evasion 

NEW ORLEANS—Joseph A. Schillace, IV, age 52, a resident of Hammond, Louisiana, was sentenced today in federal court by U.S. District Judge Nannette Jolivette Brown to 30 months’ imprisonment, announced U.S. Attorney Jim Letten. In addition, Schillace was ordered to pay $464,180 in restitution to the Internal Revenue Service and a fine of $50,000. After imprisonment, Schillace will be placed on a term of supervised release for three years, during which time the defendant will be under federal supervision and risks an additional term of imprisonment should he violate any terms of his supervised release.

According to court documents, from on or about January, 1999 and up to and including April 7, 2011, Schillace did conduct, finance, manage, supervise, direct, and own all or part of an illegal gambling business, to wit: a gambling business involving sports betting. Specifically, Schillace established a “call center” in an apartment in Hammond, Louisiana, that was outfitted with multiple telephone lines and computer access. Gamblers seeking to place monetary bets with Schillace’s operation called in to the center and placed their bets with one of several individuals within Schillace’s organization whose responsibility it was to answer the calls and record the bets. After the sporting event, Schillace or one of his associates would collect the gambling losses from or pay out the gambling winnings to each gambler. Regardless of the result of the bet, Schillace’s gambling operation would keep a percentage or commission of each bet placed, commonly referred to as the “juice.” The gambling operation involved five or more persons who conducted, financed, managed, supervised, directed, or owned all or part of said illegal gambling business, which remained in substantially continuous operation for a period in excess of 30 days and had a gross revenue of at least $2,000 in any single day.

Further, for the calendar years 2004, 2005, 2006, 2007, 2008, 2009, 2010, and 2011, Schillace did willfully attempt to evade and defeat a large part of the income and excise tax due and owing by him to the United States of America by concealing and attempting to conceal from the Internal Revenue Service the nature and extent of his income and gross wagers received by intentionally preparing and causing to be prepared, and by signing and causing to be signed, false and fraudulent Forms 1040, U.S. Individual Income Tax Return, and Forms 730, Monthly Tax Return for Wagers, on his behalf, which were filed with the Internal Revenue Service and which said returns reported amounts of his taxable income, income taxes, and excise taxes due and owing thereon which the defendant then and there well knew and believed were substantially less than his actual taxable income, income taxes, and excise taxes due and owing for the aforementioned months and years.

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William Paul Sentenced to 53 Months in Prison for Tax Evasion

Source-  http://www.justice.gov/opa/pr/2012/June/12-tax-731.html 

William Paul, a self-described “bishop,” was sentenced yesterday to 53 months in federal prison for tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. Paul was convicted on Dec. 1, 2011, after a four-day jury trial, of four counts of evasion of his wife’s 2004 through 2007 individual income taxes and of one count of failing to file a tax return. On Nov. 16, 2011, his wife, Donna Paul, a board-certified physician, pleaded guilty to one count of tax evasion and one count of filing a false individual income tax return. She was also sentenced yesterday to three years of probation, including six months of home confinement and 200 hours of community service. U.S. District Judge Mark E. Fuller also ordered the Pauls to pay $85,396 in restitution to the IRS. Both William Paul and Donna Paul are former residents of Montgomery, Ala.

According to evidence introduced at trial and documents filed with Donna Paul’s plea agreement, Donna and William Paul owned and operated a medical practice in Montgomery, which was registered as a non-profit organization. The Pauls attempted to evade the assessment and payment of Donna Paul’s income by falsely characterizing her income as loans, by making false statements to IRS employees, and by deliberately causing the non-profit organizations to not file tax returns.

Evidence at trial further showed that Donna Paul did not timely file federal individual income tax returns for the years 2004 through 2007. On April 5, 2011, the day special agents from IRS-Criminal Investigation arrested her, Donna Paul filed four false individual income tax returns for tax years 2004 through 2007. She testified at trial that none of these tax returns included money she earned from her medical practice.

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Jude Alcindor, Jr., aka “Junior,” Dwayne Solomon and Ralph ArmandCharged in Tax Refund Fraud Scheme

Source-  http://www.fbi.gov/miami/press-releases/2012/three-individuals-charged-in-tax-refund-fraud-scheme 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CID); Paula Reid, Special Agent in Charge, United States Secret Service (USSS), Miami Field Office; and Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, Miami Division, announced the unsealing of an indictment charging Jude Alcindor, Jr., aka “Junior,” 26, of Miami, Florida; Dwayne Solomon, 35, of Hialeah, Florida; and Ralph Armand, 29 of Miramar, Florida, for their participation in a tax refund scheme. Defendants Alcindor and Armand had their initial appearances today before U.S. Magistrate Judge Barry S. Seltzer and were released on bond. Defendant Solomon remains at large.

More specifically, the defendants are charged with one count of conspiracy to defraud the government by filing a false claim, in violation of Title 18, U.S.C. §286; one count of knowingly using another person’s identification to obtain a federal income tax refund, in violation of Title 18, U.S.C. §1028(a)(7), (b)(2)(A), (c)(3)(A), and 2; and one count of stealing a federal income tax refund check, in violation of Title 18 U.S.C §641 and 2. If convicted, the defendants face a maximum statutory sentence of up to 10 years in prison on the conspiracy count, up to five years in prison on the identity theft count, and up to 10 years on the theft of government property count.

The defendants are alleged to have conspired to present a false claim to the IRS for a federal income tax refund in the amount of $226,930. According to the allegations in the indictment, on April 13, 2011, defendants Alcindor and Armand met with a cooperating individual (CI) and showed the CI a color photocopy of a federal income tax refund check obtained through identity fraud. On April 15, 2011, defendant Solomon, in order to have the check converted to cash, gave the CI the actual income tax refund check in the name of B.S. B.S. was a deceased individual whose identity had been stolen. In addition, Solomon told the CI that he had more tax refund checks available once this check cleared. Solomon offered to pay the CI 40 percent of the refund check amount(s) to have the check(s) cashed. On April 28, 2011, defendants Alcindor and Armand traveled to Miramar to receive the proceeds of the cashed refund check but were arrested by federal law enforcement authorities.

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Former Texas Attorney General Employee Eloisa Garcia Casso and Others Head to Prison in Half-Million-Dollar Tax Scheme

Source-  http://www.fbi.gov/sanantonio/press-releases/2012/former-texas-attorney-general-employee-and-others-head-to-prison-in-half-million-dollar-tax-scheme 

LAREDO, TX—A former employee of the Texas Attorney General’s (AG) Child Support Division has been sentenced to federal prison for her role in a sophisticated tax fraud that unfolded over the course of several years, United States Attorney Kenneth Magidson announced today along with Lucy Cruz, special agent in charge of Internal Revenue Service-Criminal Investigations (IRS-CI). Two others involved in the scheme were sentenced last week.

Eloisa Garcia Casso pleaded guilty before U.S. District Judge Diana Saldana February 25, 2011, for concocting and executing a scheme to steal individual taxpayers’ identities and use the information to submit false Form 1040s and Schedule Cs in order to claim tax refunds. Jacqueline Velasquez and Rosa Herrera pleaded guilty to similar charges on December 7, 2010, and February 17, 2011, respectively.

“IRS-CI has made investigating refund fraud and identity theft a top priority,” said Cruz. “Identity theft is a despicable crime that victimizes honest taxpayers and causes immense hardship to those whose identities were stolen. IRS-CI, along with our law enforcement partners, remain vigilant in identifying, investigating, and prosecuting those individuals who seek to willfully defraud the United States Treasury and have a blatant disregard for the victims of their schemes. This sentencing should serve as a strong warning to those considering similar conduct.”

Today, U.S. District Judge George P. Kazen handed Casso, who was deemed a manager/supervisor in the scheme, a 30-month sentence, to be followed by three years of supervised release. In handing down the sentence, Judge Kazen noted the vulnerable state of the victims and the highly sophisticated nature of the conspiracy.

Casso was an employee of the Texas AG’s Child Support Division, while Herrera worked for the Laredo Housing Authority. They used their positions to steal the identities of agency clients, all of whom were vulnerable, low-income residents of Webb County. This information was passed to Velasquez, who falsified tax return documents, which she submitted to the IRS. Eventually, Casso also created and submitted falsified documents. The refunds from the IRS would then be deposited into borrowed bank accounts of friends and associates of the conspirators or the defendants would apply to a bank for refund anticipation loans.

Routine audit processes of the IRS in Austin discovered a number of suspicious returns. At the same time, at least one victim taxpayer, attempting to file a proper tax return, discovered the fraud. At the time of her guilty plea, Casso admitted to receiving or attempting to receive up to $200,000 during the course of the conspiracy, which spanned from January 2001 through March 2005. According to the Office of the Attorney General, Casso left her post in 2002.

Last week, Judge Kazen found Velasquez to be a leader/organizer and sentenced her to 40 months in federal prison. Herrera will serve four years on probation, during which time she will serve eight months of home confinement. She was also ordered to pay a $1,200 fine.

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Richard David Miranda Sentenced to 27 Months in Prison for Wire Fraud and Tax Evasion Related to the Misuse of More Than $140,000 in Charity Funds

Source-  http://www.justice.gov/opa/pr/2012/June/12-crm-712.html

WASHINGTON – Former Arizona State Representative Richard David Miranda was sentenced today to 27 months in prison for defrauding a charity of more than $140,000 and evading income tax related to those unlawfully obtained funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Special Agent in Charge James L. Turgal of the FBI’s Phoenix Field Office; and Special Agent in Charge Dawn Mertz of the Internal Revenue Service-Criminal Investigation (IRS-CI) Phoenix office.

Miranda, 55, of Tolleson, Ariz., served as a member of the Arizona House of Representatives for the 13th District from 2011 until his resignation, effective Feb. 20, 2012. Miranda previously served as a member of the Arizona State Senate from 2002 until 2011, and the Arizona House of Representatives from 1999 until 2002. Since July 2002, Miranda also served as executive director of Centro Adelante Campesino Inc., a non-profit charitable organization that provided food, clothing and educational assistance to persons in need, including migrant farm workers, in and around Maricopa County, Ariz.

On March 14, 2012, Miranda pleaded guilty to a two-count information charging him with defrauding Centro of more than $140,000 and evading income tax related to those unlawfully obtained funds. As part of his plea agreement, Miranda agreed to resign from office. Miranda was also ordered to pay a total of $230,342 in restitution ($212,220 for funds he unlawfully obtained from Centro, along with an additional $18,122 he unlawfully obtained from the Arizona Latino Caucus Foundation).

During his plea, Miranda admitted that, in May 2005, he initiated a scheme to wind down Centro, sell Centro’s sole remaining asset (a building), and use the proceeds of the sale for personal expenses. To do so, Miranda removed the charity’s longstanding volunteer accountant as an authorized signer on the charity’s bank and credit union accounts, and assumed sole control of the charity’s accounts and financial records. He also told the volunteer accountant that the proceeds of the sale would be used to fund scholarships. In March 2007, the building was sold for $250,000, and on March 7, 2007, a significant portion of the profits of that sale, $144,576, were wired across state lines into Centro’s credit union account.

Miranda also admitted that within one week of the wire transfer, he began to withdraw the proceeds from Centro’s credit union account without the authorization or knowledge of Centro’s board of directors. For example, Miranda obtained two checks payable to himself totaling $37,000 and paid off personal credit card debts totaling more than $60,000. By Dec. 31, 2007, Miranda had withdrawn the remaining proceeds (approximately $46,836) using checks, withdrawals and electronic funds transfers, and used the funds to pay off additional personal debts and make numerous purchases for personal travel, services, clothing, food and household items. Miranda also failed to report the proceeds of the sale as income on his IRS Form 1040 for calendar year 2007.

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Richard Stewart Sentenced for Failing to Pay Employment Taxes

Source-  http://www.justice.gov/tax/2012/txdv12705.htm 

WASHINGTON – Richard Stewart, a resident of Mitchellville, Md., was sentenced to 24 months in prison and ordered to pay $5,414,647 in restitution to the Internal Revenue Service (IRS) by U.S. District Judge Roger W. Titus for failing to pay over employment taxes in connection with his ownership of Montgomery Mechanical Services, the Justice Department and IRS announced today.

According to the plea agreement and criminal information, from at least 2003 through 2008, Stewart owned and operated Montgomery Mechanical Services, a company that installed plumbing, heating, and air condition in commercial buildings and that had offices in Baltimore and Capitol Heights, Md. From 2003 through at least 2008, Stewart did not collect, truthfully account for and pay over employment taxes of approximately $3,969,337 from his employees’ wages.

“It is wrong for any business owner to get an unfair competitive advantage by committing tax crimes,” said Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division. “The sentence handed down today shows that those who willfully violate their employment tax obligations will not only be prosecuted, but risk severe punishment for their crimes, and they will still be held responsible for the taxes due, together with interest and civil penalties.”

“Business owners have an inescapable obligation to withhold income taxes for employees and remit those taxes to the Internal Revenue Service,” said Richard Weber, Chief, IRS Criminal Investigation. “IRS Criminal Investigation is committed to vigorously pursuing those who violate employment tax laws.”

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Five Sentenced for Their Roles in Stolen Identity Refund Fraud Scheme

Source-  http://www.justice.gov/tax/2012/txdv12704.htm 

WASHINGTON – Fahim Suleiman and Muuad Salem were sentenced to prison today by U.S. District Court Judge James S. Gwin in connection with their roles as co-conspirators in a scheme to defraud the United States by obtaining false and fraudulent U.S. Treasury tax refund checks, the Justice Department and Internal Revenue Service (IRS) announced. According to documents filed with the court, the two participated in a conspiracy with others to file false United States income tax returns using personal identifying information, including names and Social Security numbers, of deceased taxpayers in order to obtain false tax refund checks that were subsequently sold and negotiated. Suleiman was sentenced to 64 months in prison, including a 24 month mandatory minimum sentence for aggravated identity theft. Salem was sentenced to 27 months in prison.

Judge Gwin had previously sentenced three co-conspirators. On May 29, 2012, Najeh Widdi was sentenced to 36 months in prison. Hanan Widdi and Hazem Woodi were sentenced on May 30, 2012, to prison terms of 21 months and 18 months, respectively. Judge Gwin ordered all five defendants to pay, jointly and severally, $177,744 in restitution to the IRS as part of their sentences.

Each of the defendants previously entered guilty pleas on March 13, 2012. Salem, Najeh Widdi and Woodi pleaded guilty to conspiracy to defraud the United States, conspiracy to commit mail fraud and one count of mail fraud; Hanan Widdi pleaded guilty to conspiracy to defraud the United States and conspiracy to commit mail fraud; and Suleiman pleaded guilty to conspiracy to defraud the United States, conspiracy to commit mail fraud, three counts of mail fraud and one count of aggravated identity theft.

Daxesj Patel also pleaded guilty on March 13, 2012 to two counts of submitting false claims for refund and one count of false statements. Patel is scheduled to be sentenced on June 8, 2012 by Judge Gwin.

“The Justice Department is working closely with the IRS to investigate and prosecute stolen identity refund fraud crimes,” said Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division. “The sentences handed down in this and other cases show that identity thieves will pay a high price for their crimes.”

“The theft of anyone’s identity is a serious offense, but stealing the identities of the recently departed to defraud all the other taxpayers is particularly egregious,” said Steven M. Dettelbach, the U.S. Attorney for the Northern District of Ohio. “These sentences should cause anyone who would engage in this conduct to reconsider.”

“Individuals who commit refund fraud and identity theft of this magnitude deserve to be punished to the fullest extent of the law,” stated Richard Weber, Chief, IRS Criminal Investigation. “We, along with our law enforcement partners and the U.S. Attorney's Office, continue to do our part in protecting the sanctity and integrity of the tax system and those individuals whose identities were stolen, as well as a monetary loss against the U.S. Treasury.”

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Charles Alan Pflueger the Owner of Hawaii Car Dealerships and Randall Kurata the Chief Financial Officer Plead Guilty to Tax Crimes

Source-  http://www.justice.gov/opa/pr/2012/May/12-tax-680.html 

Charles Alan Pflueger, owner of Pflueger Inc., Randall Kurata, the company’s chief financial officer, and Julie Kam, Pflueger’s executive assistant, pleaded guilty to filing false federal income tax returns before U.S. District Court Judge Leslie E. Kobayashi in Honolulu, the Justice Department and the Internal Revenue Service (IRS) announced today.

According to the indictment and other documents filed in Honolulu federal court, Charles Alan Pflueger, Randall Kurata, Julie Kam and others caused Pflueger Inc. to pay the personal expenses of Charles Alan Pflueger and others. The three defendants then caused Pflueger Inc. to improperly deduct the personal expenses as business expenses on Pflueger Inc.’s corporate tax returns. Pflueger caused another of his companies, Pacific Auto Distributors LLC, to pay additional personal expenses, and he did not report those payments as income on his personal tax returns.

Pflueger pleaded guilty to one count of filing a false individual federal income tax return for tax year 2005. Kam also pleaded guilty to one count of filing a false individual federal income tax return for tax year 2005 because she failed to report as income personal expenses that Pacific Auto Distributors LLC paid on her behalf.

Kurata pleaded guilty to one count of filing a false corporate federal income tax return for Pflueger Inc. for tax year 2003. Kurata admitted that from 2003 through at least 2005, he knew that Pflueger Inc. was paying for various individuals’ personal expenses, including Pflueger’s. Kurata further admitted that during 2003 he personally signed checks from Pflueger Inc. that paid individuals’ personal expenses. Kurata filed Pflueger Inc.’s corporate tax return for 2003 knowing that it was false in that it improperly deducted as business expenses significant personal expenses of Pflueger.

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Nasheba Necia Hunte Convicted of Tax Fraud Conspiracy in South Florida Sentenced to 51 Months in Prison

Source-  http://www.justice.gov/opa/pr/2012/May/12-tax-700.html 

Nasheba Necia Hunte was sentenced today to 51 months in prison for her role in a conspiracy to defraud the Internal Revenue Service (IRS) and for filing false tax returns, the Justice Department and IRS announced. Hunte was also ordered to pay $229,305 in restitution to the IRS.

On March 16, 2012, Hunte and another individual, Elmo Antonio George, were convicted by a jury sitting in Ft. Lauderdale, Fla., for a conspiracy to defraud the IRS that spanned from as early as January 2003 through at least April 2007. Hunte and George were also each convicted of two counts of filing false 2005 and 2006 individual income tax returns, on which they claimed false tax refunds for themselves. George is scheduled to be sentenced on June 29, 2012.

“People who cheat on their taxes are cheating their friends and neighbors and all other law-abiding taxpayers,” said Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division. “They are committing a crime and, as the sentence today shows, risking serious jail time. And, in the end, they will still owe the taxes, together with interest and possible civil penalties.”

“The use of shell companies, false claims and aliases to perpetuate a fraudulent tax scheme isn't tax planning, it’s criminal activity,” said Richard Weber, Chief, IRS Criminal Investigation. “There is no secret formula that can eliminate a person’s tax obligations. Today’s sentence reinforces our commitment to every American taxpayer that we will identify and prosecute those who evade the payment of taxes.”

The indictment alleged that in February 2005, George incorporated Winco Holdings Inc. (Winco) in Florida. George and Hunte were the only officers of Winco and despite having no employees and paying no wages, the defendants filed employment tax returns on behalf of Winco for quarters in 2005, 2006 and 2007, that falsely claimed substantial quarterly employment tax withholdings for Winco employees. None of the withholding amounts were paid over to the IRS. In February 2007, a fraudulent check for $1,676,991.16 was written from Winco’s bank account to the U.S. Treasury for Winco’s employment tax obligations. The check was signed “contact maker for authority to pay.”

The indictment also alleged that the defendants filed corporate tax returns for Winco for tax years 2005 and 2006 that reported fictitious partnership losses. These fictitious losses then “passed through” to the defendants’ individual income tax returns along with the false Winco wage and withholding amounts. These withholding amounts generated false refunds for both defendants for tax years 2005 and 2006.

The evidence at trial established that the IRS remitted refunds to George and Hunte totaling approximately $241,807 for tax year 2005. George’s refund was deposited into a joint bank account of another entity, Dikingdom Inc. With the false refund, the defendants bought a home for $145,500 for cash in Villa Rica, Ga. To conceal the purchase of this property and the proceeds of the fraud, George deeded the property to an alias named the Overseer of Dikingdom. George also falsely claimed that a church owned the property. According to evidence presented in court, the total intended tax loss was over $1 million.

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