Enyinnaya Udo Indicted for Preparing False Tax Returns

Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-442.html 

A federal grand jury in the District of Columbia returned an indictment charging Enyinnaya Udo with 25 counts of aiding and assisting in the preparation of false income tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.

According to the indictment, the defendant operated a tax preparation business called Anic and Associates, located in Washington, D.C. The defendant allegedly aided, advised and prepared false individual income tax returns for the tax years 2005 through 2008 for at least seven taxpayers. These individual income tax returns allegedly claimed fraudulent filing statuses and false deductions.

If convicted, the defendant faces a potential maximum sentence of three years in prison and a maximum fine of $250,000 on each count.

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Jacqueline Slaton Indicted for Tax Fraud Using Stolen Identities

Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-435.html 

A federal grand jury in Montgomery, Ala., returned an indictment charging Jacqueline Slaton for using stolen identities to file false tax returns, the Justice Department, U.S. Attorney George L. Beck Jr. and the Internal Revenue Service (IRS) announced today. The 12-count indictment, which was unsealed following her arrest, charges Slaton with filing false claims, wire fraud, and aggravated identity theft.

According to the indictment, Slaton used stolen identities to file false tax returns which fraudulently claimed refunds. Slaton directed a portion of the proceeds to be deposited onto prepaid debit cards.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, she faces a potential maximum of five years in prison for each false claims count, 20 years in prison for each wire fraud count, and a mandatory two-year sentence for the aggravated identity theft counts. She is also subject to fines and mandatory restitution if convicted.

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Antoinette Djonret Indicted for Using Stolen Identities and Debit Cards to Obtain Tax Refunds

Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-436.html 

A federal grand jury in Montgomery returned an indictment on March 28, 2012, charging Antoinette Djonret for using stolen identities to file false tax returns, the Justice Department, U.S. Attorney George L. Beck Jr. and the Internal Revenue Service (IRS) announced today. The 19-count indictment, which was unsealed today following her arrest, charges Djonret with filing false claims, theft of government funds, access device fraud, aggravated identity theft and possession of unauthorized access devices.

Djonret had earlier been charged with making false claims in a criminal complaint that was filed on February 22, 2012. According to the indictment and other court documents, Djonret used stolen identities to file false tax returns which fraudulently claimed refunds. Djonret had some of the refunds deposited onto a prepaid debit card in her name. Court documents state that nearly 650 tax returns were electronically filed from an IP address assigned to her residence. According to the criminal complaint, on May 22, 2010, Djonret was arrested during a traffic stop and police officers seized from her car several prepaid debit cards in the names of other individuals. The cards were linked to bank accounts that had received federal income tax refunds.

If convicted, she faces a maximum potential sentence of five years in prison for each false claims count and each theft of government funds count, 15 years in prison for the access device fraud count, 10 years in prison for the possession of unauthorized access devices count, and a mandatory two-year sentence for the aggravated identity theft counts. She is also subject to fines and mandatory restitution if convicted.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.

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Steven Kern Arrested on Tax Charges and Failing to File His Individual Tax Returns

Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-416.html 

Steven Kern of Marine City, Mich., was arrested today following his indictment on March 27, 2012, on eight counts of failing to file his individual tax returns and eight counts of filing false corporate tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.

The indictment alleges that Kern failed to file individual tax returns for tax years 2003 to 2010, despite earning more $1.2 million in gross income during that time period. The indictment further alleges that Kern filed false corporate tax returns on the behalf of Kern Chiropractic Center, failing to report cash and check payments diverted from the center by Kern from 2003 to 2010.

According to the indictment, Kern has not submitted a tax return to the IRS since tax year 2002. The indictment alleges that Kern used funds diverted from the Kern Chiropractic Center to pay for his own personal expense.

An indictment is merely a formal charge by the grand jury. Kern is presumed innocent unless and until proven guilty in U.S. District Court. If convicted of all charges, Kern faces a maximum potential sentence of 32 years in prison and maximum fines of up to $2.8 million.

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Wanda Davis Indicted for Tax Fraud Filing False Federal Income Tax Returns

Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-417.html 

A federal grand jury in Montgomery, Ala., returned an indictment on March 28, 2012, charging Wanda Davis with filing false federal income tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. The indictment was unsealed today following Davis’s initial appearance.

Davis is charged with 23 counts of filing false tax returns for clients. According to the indictment, from 2007 to 2011, Davis prepared 23 false tax returns while working at Davis Fast Tax and later her own business, Davis Tax Service. The tax returns claimed false deductions and business, resulting in inflated tax refunds.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Davis faces a maximum of three years in federal prison for each of the 23 false tax return counts. Davis is also subject to fines if convicted.

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William Scott Dion and Catherine Floyd Both Convicted for Promoting and Using Tax Defier Schemes

Source-  http://www.justice.gov/opa/pr/2012/April/12-tax-418.html 

A federal jury in Worcester, Mass., convicted William Scott 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 Justice Department and the Internal Revenue Service (IRS) announced today.

Dion and Floyd were released on electronic monitoring bracelets pending sentencing and Adams was released on call in/voice recognition pending sentencing. Dion’s sentencing is scheduled for June 21, 2012, Floyd’s sentencing is scheduled for June 26, 2012 and Adams’s sentencing is scheduled on June 27, 2012, all before U.S. District Judge F. Dennis Saylor.

Dion, Floyd and Adams were convicted 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 proved 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 multiple counts of tax evasion. All four defendants are awaiting sentencing.

The defendants face up to five years in prison on each count of conspiracy to defraud the United States and tax evasion, together with fines of up to $250,000 or twice the financial gain to the defendant or loss to the IRS, to be followed by three years of supervised release. The charges for obstructing the IRS carry maximum penalties of three years in prison, fines of $250,000 and one year of supervised release.

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Six Arraigned on Tax Conspiracy in a Corporate Bonus Scheme Based in Western New York

Source-  http://www.justice.gov/tax/2012/txdv12398.htm 

WASHINGTON – Six officials of an Upstate New York firm were arraigned yesterday before Magistrate Judge Leslie G. Foschio. On March 21, a federal grand jury in the Western District of New York indicted the six defendants, Philip R. DeLuca, Alfred R. LaGreca, Frank A. Fracassi, Michael A. Elia, Laurence A Elia and Richard A. Elia, on tax charges, including conspiring to defraud the Internal Revenue Service (IRS).

According to the superseding indictment, between the late 1990s and at least April 2007, the defendants were officers of Sevenson Environmental Services Inc., a Subchapter S corporation (a corporation treated like a partnership for tax purposes) located in Niagara Falls, N.Y., that was involved in remediation of sites contaminated with hazardous waste. During that time, the defendants allegedly conspired to defraud the IRS by developing and managing a scheme whereby they and other Sevenson employees received bonus compensation that was not reported to the IRS.

The superseding indictment also alleges that this compensation permitted certain Sevenson employees to obtain goods and services that were paid for by the corporation, but not reported to the IRS. In order to facilitate Sevenson’s payment for these goods and services, it is alleged that the defendants caused documents to be fabricated, invoices to be falsified and false individual income tax returns to be filed. From the late 1990s through at least April 2007, Sevenson awarded at least 23 employees a total of approximately $1 million in unreported, non-cash bonuses.

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Joseph Rivas Allegedly Files Income Tax Returns With Fraudulent Deductions and Expenses

Source-  http://www.justice.gov/tax/2012/txdv12388.htm 

WASHINGTON – The United States has sued tax preparer Joseph Rivas, seeking to bar him from preparing any federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Rivas of DeSoto, Texas, claimed fraudulent deductions and expenses on his customers’ tax returns.

Rivas allegedly claimed fake mortgage interest deductions, illegally deducted social security taxes as state and local taxes and fabricated employee business expenses, among other fraudulent items, on his customers’ returns. According to the complaint, the harm to the United States from Rivas’s misconduct could be $7.8 million or more.

The government is also seeking a court order requiring Rivas to provide a list of all persons for whom he has prepared federal tax returns since Jan. 1, 2010.

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Robert Jensen Allegedly Worked With Tax Lawyer to Help Clients Evade Income Taxes and Illegally Circumvent Pension Plan Rules

Source-  http://www.justice.gov/tax/2012/txdv12400.htm 

WASHINGTON – A federal court has permanently barred Robert Jensen, a certified public accountant from San Diego, from providing tax advice or preparing federal tax returns that illegally attempt to reduce customers’ taxable income, the Justice Department announced today.

The civil injunction order, to which Jensen agreed without admitting the government’s allegations, prevents Jensen from preparing tax returns that improperly deduct the personal expenses of customers or that attempt to reduce a customer’s taxable income through the unlawful use of pension plans, stock ownership plans or retirement plans. The order also bars Jensen from providing tax advice to, or preparing the federal tax returns of, any individual or entity that Jensen knows is a customer of co-defendant Scott Waage.

The government complaint in the case alleged that Jensen worked with Waage, a San Diego tax lawyer, to help clients evade income taxes and illegally circumvent pension plan rules. According to the civil injunction suit, Waage promoted schemes that helped customers evade taxes through the use of bogus deductions, while Jensen prepared the customers’ tax returns claiming the bogus deductions. The government alleged that the IRS audited more than1,000 tax returns as a result of the pair’s alleged tax schemes, and it estimated that the harm to the U.S. Treasury from the schemes exceeded $10.8 million. The civil injunction case against Waage remains pending.

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Willie C. Grant Charged With Tax Fraud and Identity Theft

Source-   http://www.justice.gov/tax/2012/txdv12397.htm 

WASHINGTON – Willie C. Grant, a Bibb County, Ga., tax return preparer who owned and operated “Grant Income Tax Bookkeeping and Check Cash,” was indicted on March 15, 2012, by a federal grand jury with 23 counts of making false claims for tax refunds, four counts of theft of government money and four counts of aggravated identity theft, the Justice Department and Internal Revenue Service (IRS) announced today. The indictment was unsealed yesterday.

According to the indictment, Grant knowingly used the names and Social Security numbers of individuals to steal tax refunds from the IRS without lawful authority. The indictment further alleges that Grant directed the IRS to pay tax refunds intended for other people into his bank account.

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, Grant faces a minimum of two years in federal prison for aggravated identity theft, a potential maximum of five years in federal prison and a $250,000 fine for each false claims count, and a maximum of ten years in federal prison and a $250,000 fine for each theft of government money count.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

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Arthur Lee Ong Sentenced to 51 Months in Prision for Federal Tax Offenses

Source-  http://www.justice.gov/tax/2012/txdv12387.htm 

WASHINGTON – Arthur Lee Ong of Honolulu was sentenced Tuesday to 51 months in prison and ordered to pay $1 million in restitution to the Internal Revenue Service (IRS) by District Court Judge Leslie Kobayashi today, the Justice Department and IRS announced today. On Nov. 7, 2001, a federal jury in Honolulu convicted Ong of conspiracy to defraud the United States and six counts of tax evasion.

According to evidence introduced at trial, Ong, the owner and operator of Thunder Bug Inc., doing business in the state of Hawaii as Magnum Firearms, failed to report to the IRS millions of dollars of income he earned from the sale of firearms and related products to federal, state, county and military agencies, as well as to the general public. Ong, with the assistance of a Hawaiian attorney, created multiple sham trusts in 1990 for the purpose of hiding his income and assets. He stopped filing personal income tax returns beginning in 1994 and also filed false tax returns on behalf of the sham trusts that fraudulently reported to the IRS that the income from his businesses was attributable to these trusts and not to him.

The evidence at trial showed that Ong evaded more than $600,000 in federal income taxes from 2000 to 2006. In sentencing Ong, Judge Kobayashi found that Ong had attempted to evade more than $973,300 in federal and state income taxes from 1994 to 2009.

“There are some responsibilities that come with living in this great country, such as paying the federal income taxes that you legally owe,” said Kenneth J. Hines, the IRS Special Agent in Charge in Hawaii. “With Tax Day right around the corner, this sentence sends a clear warning to anyone contemplating a tax crime.”

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Steve Davidovici, Formerly a Part-Owner and Manager of the Pure Nightclub Located Within the Caesars Palace Hotel and Casino in Las Vegas Pleaded Guilty to Tax Fraud

Source-  http://www.justice.gov/tax/2012/txdv12381.htm 

WASHINGTON – Steve Davidovici, formerly a part-owner and manager of the Pure Nightclub located within the Caesars Palace Hotel and Casino in Las Vegas pleaded guilty in federal court to one count of filing a false federal income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service, Criminal Investigation (IRS-CI) announced today. The Justice Department and IRS-CI also announced that Mikel Hasen, the former head doorman at the Pure Nightclub, likewise pleaded guilty to one count of filing a false federal income tax return for the 2006 tax year. U.S. District Court Judge Kent Dawson presided over both plea hearings.

According to information disclosed at the plea hearings, during the years 2005, 2006 and 2007, in addition to fees charged for admission to the nightclub, some of Pure’s patrons made cash payments to Pure door personnel and “VIP hosts” to bypass the general admissions line and to obtain more desirable seating. This money was collected, pooled and generally distributed on a weekly basis to the door personnel and VIP hosts, as well as to managers of Pure such as Davidovici and Hasen. In Hasen’s case, distributions from this “tip pool” comprised the bulk of his compensation during the time he worked at Pure. Davidovici and Hasen each concealed large amounts of this income from the IRS.

Davidovici’s and Hasen’s sentencings are set for June 27, 2012, at 9 a.m.

“With the April 15 tax deadline looming, it is important for people to have confidence that when they pay their taxes, their neighbors and competitors will do the same,” said Paul Camacho, Special Agent in Charge of the IRS-Criminal Investigation, Las Vegas Field Office.

Two VIP hosts under Davidovici’s supervision, Ali (Sean) Olyaie and Richard Chu, have also pleaded guilty to tax crimes for failing to report income earned at Pure. At their respective plea hearings, Olyaie and Chu likewise admitted filing false federal income tax returns for 2006. Olyaie and Chu are also awaiting sentencing.

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Nacretia Lewis a Witness in Identity Theft and Tax Trial Convicted of Perjury and Lying to a Federal Agent

Source-  http://www.justice.gov/tax/2012/txdv12382.htm 

WASHINGTON – A federal jury in Montgomery, Ala., convicted Nacretia Lewis today of perjury and lying to a federal agent, the Justice Department and the Internal Revenue Service (IRS) announced.

According to the indictment and evidence introduced at trial, Lewis testified falsely in September 2011 in a tax fraud trial in the Middle District of Alabama. The defense in the tax fraud trial presented an alibi defense regarding the whereabouts of the defendant on trial on Jan. 20, 2011. Lewis was convicted of lying about being with Janika Fernae Bates at a place other than NCO Financial Systems Inc., their workplace, at precisely the same time witnesses at trial placed Bates at NCO. The evidence showed that after her testimony, Lewis met with federal agents and again lied about her whereabouts and Bates’ whereabouts on January 20, 2011. After a five-day trial, Bates was convicted of thirteen felony counts and sentenced to 94 months in federal prison.

Lewis faces a potential maximum sentence of ten years in federal prison and a fine of up to $500,000.

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Ronald James Davenport Sentenced to 41 Months in Prison for Filing False Liens Against Government Officials

Source-  http://www.justice.gov/tax/2012/txdv12376.htm 

WASHINGTON – Ronald James Davenport of Chewelah, Wash., was sentenced to 41 months in prison today for filing more than $20 billion in false liens against four federal government officials, the Justice Department and the Treasury Inspector General for Tax Administration (TIGTA) announced today. In addition, Judge Garr M. King, U.S. District Judge for the District of Oregon, sitting by designation, ordered Davenport to serve three years of supervised release.

Davenport’s convictions date from last November when, following a two-day trial, a federal jury in the Eastern District of Washington returned guilty verdicts against Davenport on four counts of filing retaliatory liens against government officials. According to the evidence presented at trial, in December 2009, Davenport filed false liens against the property interests of the U.S. Attorney and the Clerk of Court for the Eastern District of Washington, as well as an Assistant U.S. Attorney and an Internal Revenue Service Revenue officer.

The liens were filed in the county auditor records of Spokane and Whatcom Counties, Wash. Each lien claimed that the victim owed Davenport $5,184,000,000. It also purported to attach all of the victim’s real and personal property as security for this debt. As proved at trial, the defendant chose these four victims because of their involvement in an effort to collect from Davenport more than $250,000 in back taxes.

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Randy Alan Carpenter Indicted for $100 Million Fraud and Making False Statements on Tax Returns

Source-  http://www.fbi.gov/charlotte/press-releases/2012/spruce-pine-man-indicted-for-100-million-fraud

CHARLOTTE, NC—A Spruce Pine man was indicted by a federal grand jury, sitting in Charlotte yesterday, on charges of conspiracy, bank fraud, and making false statements on tax returns, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Joining U.S. Attorney Tompkins in making today’s announcement are Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division (IRS-CI); Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI); and Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation, Office of the Inspector General (FDIC-OIG).

According to the criminal indictment, Randy Alan Carpenter, 54, of Spruce Pine, North Carolina, and his co-conspirators operated a scheme to defraud federally insured banks and individual investors out of over $82 million in residential mortgage loan proceeds through a proposed real estate development near Spruce Pine, known as the Village of Penland. The indictment alleges that the conspiracy lasted from about December 2001 through about May 2007, and that during that time, Carpenter closed over 300 residential real estate loans to individuals secured by Penland lots and valued at approximately $108 million. The indictment further alleges that Carpenter defrauded both investors and banks by failing to provide the legal services indicated and through various false statements made to the banks to obtain the loans. The indictment also alleges that Carpenter was paid approximately $2 million in fees related to the Penland transactions.

The first charge in the indictment alleges conspiracy to make a false statement and application in relation to a loan, conspiracy to commit mail, wire and bank fraud. Counts two through five allege bank fraud, and counts six and seven allege that Carpenter filed false tax returns.

Five other defendants have already pled guilty and have been sentenced so far by U.S. District Court Judge Frank D. Whitney in connection with this case. It should be noted that these defendants had their sentences reduced by the court to reflect their cooperation with the United States in its investigation and prosecution of others.

Anthony Porter, 55, of Flat Rock, North Carolina, pled guilty on August 19, 2008 to conspiracy to defraud the United States, conspiracy to commit money laundering and making false statement on tax return. Porter was sentenced to 10 years’ imprisonment on June 4, 2010.

Frank Amelung, 63, of Boca Raton, Florida, pled guilty on August 21, 2008 to conspiracy to defraud the United States and tax evasion. Amelung was sentenced to 10 years’ imprisonment on July 2, 2010.

John Kevin Foster, 56, of Atlanta, Georgia, pled guilty on August 20, 2008 to conspiracy to defraud the United States. Foster was sentenced to five years’ imprisonment on March 1, 2010.

Michael Yeomans, 60, of University Park, Florida, pled guilty on May 9, 2008 to mortgage fraud. Yoemans was sentenced to three years’ imprisonment on November 1, 2010.

Neil O’Rourke, 44, of Cary, North Carolina, pled guilty on February 6, 2008 to conspiracy to defraud the United States. O’Rourke was sentenced to 39 months in prison on June 3, 2009.

Carpenter’s conspiracy charge carries a maximum sentence of five years, a $250,000 fine, or both. The bank fraud charges carry a maximum sentence of 30 years, $1,000,000 fine, or both; and the false tax return charges carry a maximum sentence of three years in prison, a fine of up to $100,000, or both.

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Federal Court has Permanently Barred Annie P. Williams From Preparing Federal Tax Returns for Others

Source-  http://www.justice.gov/tax/2012/txdv12349.htm 

WASHINGTON – A federal court has permanently barred Annie P. Williams, the former proprietor of PPH Tax & Realty Inc. in Brooklyn, N.Y., from preparing federal tax returns for others and from having any ownership or financial interest in any tax preparation business, the Justice Department announced today. The civil injunction order, to which Williams consented without admitting the allegations against her, was entered by Judge Dora L. Irizarry of the U.S. District Court for the Eastern District of New York.

According to the government complaint in the case, Williams fostered an environment at PPH in which her part-time tax preparers, who had little or no tax experience, were encouraged to prepare fraudulent tax returns. The improper conduct alleged in the complaint included preparing federal tax returns that claimed false expense and charitable contribution deductions, bogus dependents and unallowable child and childcare tax credits.

The complaint also alleged that, during the time that Williams owned PPH, her employees sold other persons’ names and Social Security numbers to customers so that the customers could falsely report that those other persons were their childcare providers for purposes of falsely claiming the childcare tax credit. Employees also allegedly sold fake charitable contribution letters to customers to present to the Internal Revenue Service (IRS) during audits to substantiate false deductions.

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Stewart David Nozette Sentenced to 13-Year Prison Term for Attempted Espionage, Fraud, and Tax Charges

Source-  http://www.fbi.gov/washingtondc/press-releases/2012/noted-scientist-sentenced-to-13-year-prison-term-for-attempted-espionage-fraud-and-tax-charges 

WASHINGTON—Stewart David Nozette, 54, a scientist who once worked for the Department of Energy, the Department of Defense, the National Aeronautics and Space Administration, and the White House’s National Space Council, was sentenced today to 13 years in prison for attempted espionage, conspiracy to defraud the United States, and tax evasion.

The sentence covered charges in two cases. In one, Nozette pleaded guilty in September 2011 to attempted espionage for providing classified information to a person he believed to be an Israeli intelligence officer. In the other, he pleaded guilty in January 2009 to fraud and tax charges stemming from more than $265,000 in false claims he submitted to the government.

The sentencing, which took place this morning in the U.S. District Court for the District of Columbia, was announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Lisa Monaco, Assistant Attorney General for National Security; and Principal Deputy Assistant Attorney General John A. DiCicco of the Tax Division.

Joining in the announcement were James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Paul K. Martin, Inspector General for the National Aeronautics and Space Administration (NASA OIG); Eric Hylton, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); and John Wagner, Special Agent in Charge of the Washington, D.C. Office of the Naval Criminal Investigative Service (NCIS).

In addition to the prison term, the Honorable Paul L. Friedman ordered that Nozette pay more than $217,000 in restitution to the government agencies he defrauded.

Nozette has been in custody since his arrest for attempted espionage on October 19, 2009. At the time, he was awaiting sentencing on the fraud and tax evasion charges. FBI agents arrested Nozette following an undercover operation in which he provided classified materials on three occasions, including one that formed the basis for his guilty plea. He was subsequently indicted by a federal grand jury. The indictment does not allege that the government of Israel or anyone acting on its behalf committed any offense under U.S. laws in this case.

“Stewart Nozette’s greed exceeded his loyalty to our country,” said U.S. Attorney Machen. “He wasted his talent and ruined his reputation by agreeing to sell national secrets to someone he believed was a foreign agent. His time in prison will provide him ample opportunity to reflect on his decision to betray the United States.”

“Stewart Nozette betrayed his country and the trust that was placed in him by attempting to sell some of America’s most closely-guarded secrets for profit. Today, he received the justice he deserves. As this case demonstrates, we remain vigilant in protecting America’s secrets and in bringing to justice those who compromise them,” said Assistant Attorney General Monaco. “I thank the many agents, analysts, and prosecutors who worked on this important case.”

“As this case demonstrates, those who attempt to evade their taxes by abusing the tax-exempt status of non-profit entities will be investigated, prosecuted, and punished,” said Principal Deputy Assistant Attorney General DiCicco.

“Today’s sentencing demonstrates that espionage remains a serious threat to our national security,” said Assistant Director in Charge McJunkin. “The FBI and our partners in the defense and intelligence communities work every day to prevent sensitive information from getting into the wrong hands, and I commend the hard work of the dedicated agents, analysts, and prosecutors who spent a significant amount of time bringing this case to resolution.”

“We are particularly proud that NASA OIG’s fraud investigation of Nozette, which began in 2006, served as the catalyst for further investigation and today’s outcome,” said NASA Inspector General Martin.

“IRS-Criminal Investigation provides financial investigative expertise in our work with our law enforcement partners,” said Acting Special Agent in Charge Hylton. “Pooling the skills of each agency makes a formidable team as we investigate allegations of wrongdoing. Mr. Nozette decided to betray his country to line his own pockets rather than play by the rules. He now is being held accountable for his actions.”

“Federal agents take an oath to protect our nation ‘against all enemies, foreign and domestic.’ That would include ‘insider threats’ like Stewart Nozette,” said Special Agent in Charge Wagner. “NCIS is committed to working with our law enforcement partners and prosecutors to find and hold accountable those like Nozette who put personal gain above national security.”

Nozette received a Ph.D. in planetary sciences from the Massachusetts Institute of Technology. Beginning in at least 1989, he held sensitive and high-profile positions within the U.S. government. He worked in various capacities on behalf of the government in the development of state-of-the-art programs in defense and space. During his career, for example, Nozette worked at the White House on the National Space Council, Executive Office of the President. He also worked as a physicist for the U.S. Department of Energy’s Lawrence Livermore National Laboratory, where he designed highly advanced technology.

Nozette was the president, treasurer, and director of the Alliance for Competitive Technology (ACT), a non-profit organization that he organized in March 1990. Between January 2000 and February 2006, Nozette, through his company, ACT, entered into agreements with several government agencies to develop highly advanced technology. Nozette performed some of this research and development at the U.S. Naval Research Laboratory (NRL) in Washington, D.C.; the Defense Advanced Research Projects Agency (DARPA) in Arlington, Virginia; and NASA’s Goddard Space Flight Center in Greenbelt, Maryland.

In connection with the fraud and tax case, Nozette admitted that, from 2000 through 2006, he used ACT to defraud the NRL, DARPA and NASA by making and presenting more than $265,000 in fraudulent reimbursement claims, most of which were paid. He also admitted that, from 2001 through 2005, he willfully evaded more than $200,000 in federal taxes. In addition, he admitted using ACT, an entity exempt from taxation because of its non-profit status, to receive income and to pay personal expenses, such as mortgages, automobile loans, sedan services, and other items.

The investigation concerning ACT led investigators to suspect that Nozette had misused government information. From 1989 through 2006, Nozette held security clearances as high as top secret and had regular, frequent access to classified information and documents related to the national defense of the United States.

On September 3, 2009, Nozette was contacted via telephone by an individual purporting to be an Israeli intelligence officer from the Mossad, but who was, in fact, an undercover employee of the FBI. That same day, Nozette informed the undercover employee that he had clearances “all the way to top secret/SCI” and that anything “that the U.S. has done in space I’ve seen.” He stated that he would provide classified information for money and a foreign passport to a country without extradition to the United States.

A series of contacts followed over the next several weeks, including meetings and exchanges in which Nozette took $10,000 in cash left by the FBI at prearranged drop-off sites. Nozette provided information classified as secret/SCI and top secret/SCI that related to national defense. Some of this information directly concerned satellites, early warning systems, means of defense or retaliation against large-scale attack, communications intelligence information, and major elements of defense strategy.

Nozette and the undercover employee met for the final time on October 19, 2009 at the Mayflower Hotel. During that meeting, Nozette pushed to receive larger payments for the secrets he was disclosing, declaring that, “I gave you even in this first run some of the most classified information that there is...I’ve sort of crossed the Rubicon.”

Nozette was arrested soon after he made these statements.

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Federal Court Bars Annie P. Williams From Operating Tax Preparation Businesses

Source-  http://www.justice.gov/tax/2012/txdv12349.htm 

WASHINGTON – A federal court has permanently barred Annie P. Williams, the former proprietor of PPH Tax & Realty Inc. in Brooklyn, N.Y., from preparing federal tax returns for others and from having any ownership or financial interest in any tax preparation business, the Justice Department announced today. The civil injunction order, to which Williams consented without admitting the allegations against her, was entered by Judge Dora L. Irizarry of the U.S. District Court for the Eastern District of New York.

According to the government complaint in the case, Williams fostered an environment at PPH in which her part-time tax preparers, who had little or no tax experience, were encouraged to prepare fraudulent tax returns. The improper conduct alleged in the complaint included preparing federal tax returns that claimed false expense and charitable contribution deductions, bogus dependents and unallowable child and childcare tax credits.

The complaint also alleged that, during the time that Williams owned PPH, her employees sold other persons’ names and Social Security numbers to customers so that the customers could falsely report that those other persons were their childcare providers for purposes of falsely claiming the childcare tax credit. Employees also allegedly sold fake charitable contribution letters to customers to present to the Internal Revenue Service (IRS) during audits to substantiate false deductions.

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Cynthia H. Carter Allegedly Claims Fraudulent Deductions and Credits on Customers’ Returns

Source-  http://www.justice.gov/tax/2012/txdv12344.htm 
WASHINGTON – The United States has asked a federal court to bar Cynthia H. Carter from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Carter, who does business as Cynthia’s Tax Service in Columbus, Miss., prepares returns for customers that report false income and expense amounts and falsely claim several tax credits, including the first-time-homebuyer credit.

Congress enacted the first-time-homebuyer credit in 2008 to strengthen the real estate market and help the economy. Persons who had not owned a home in the previous three years could claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. Congress later expanded the program to allow current homeowners to claim the credit for a purchase of a new home, under certain conditions. The credit has since expired.

The government complaint alleges that Carter claimed the first-time-homebuyer credit on her customers’ returns even though the customers had not bought new homes in those tax years and were ineligible for the credit. The complaint also alleges that Carter claimed fabricated deductions for employee business expenses and inflated earned income tax credits on her customers’ returns. According to the complaint, the Internal Revenue Service (IRS) estimates that Carter’s tax return preparation could have resulted in over $4.25 million in lost revenue to the United States.

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Former Pennsylvania State Senator Robert Mellow Charged with Conspiracy to Commit Mail Fraud and to File a False Tax Return

Source-  http://www.fbi.gov/philadelphia/press-releases/2012/former-pennsylvania-state-senator-robert-mellow-charged-with-conspiracy-to-commit-mail-fraud-and-to-file-a-false-tax-return 

The United States Attorney’s Office for the Middle District of Pennsylvania; George Venizelos, Special Agent in Charge, Federal Bureau of Investigation; and Akeia Conner, Acting Special Agent in Charge, Internal Revenue Service–Criminal Investigation Division, jointly announced that a criminal information was filed today in U.S. District Court in Scranton charging former Pennsylvania State Senator Robert J. Mellow, age 70, of Archbald, Pennsylvania, with conspiring with others between 2006 and 2010 to commit mail fraud in connection with a scheme and artifice to defraud the Pennsylvania Senate and to file a false federal income tax return.

According to United States Attorney Peter J. Smith, during the time relevant to the criminal information, Mellow was a member of the Pennsylvania Senate, Senate Democratic Leader, and a member of the Pennsylvania Democratic State Senate Campaign Committee and Caucus. Mellow was also, at various times, responsible for several Senate Democratic administrative offices including offices providing computer services, communications, and research. Mellow also supervised a staff in his Harrisburg Senate office and at two district offices located in Peckville and Mt. Pocono, Pennsylvania.

The information alleges that Mellow, as a public official with the responsibilities described above, owed a duty to refrain from the improper use of Senate resources and staff to perform political fundraising and campaign work and services for Mellow and for political causes and candidates he supported.

The information alleges that Mellow, in his capacity as a state Senator and the Democratic Leader from 2006 through 2010, conspired with others to misuse the staff and resources of the Pennsylvania Senate for political fundraising and campaign purposes.

The information further alleges that as part of the scheme, Mellow caused and knowingly permitted, through willful blindness, the submission to the Chief Clerk of the Senate of false job classification and re-classification forms and memos for Senate staff who performed political fundraising and campaign work while being compensated by the Senate.

The information alleges that Mellow conspired with others to misuse Senate staff and resources to raise hundreds of thousands of dollars for an organization known as the Friends of Bob Mellow and the Democratic State Senate Campaign Committee and to support political candidates and causes throughout Pennsylvania.

It is further alleged that Mellow caused and permitted the U.S. Postal Service to be used in furtherance of the scheme to defraud. The information cites as examples checks mailed by the Senate’s Chief Clerk’s Office to pay for the rental of Mellow’s district offices in Peckville and Mt. Pocono, both of which offices were allegedly used to perform political fundraising and campaign tasks; checks and pay stubs for Senate staffers who allegedly performed fundraising and campaign work; and letters prepared and mailed by Senate staff in connection with Friends of Bob Mellow fund-raisers.

The information also alleges that Mellow conspired with others to file a false individual federal income tax return for the year 2008.

Mellow faces a possible maximum sentence of five years’ imprisonment and a fine of up to $250,000.

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