Examples of Abusive Return Preparer Investigations FY2008

The following examples of abusive return preparer fraud investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.

Tennessee Return Preparer Sentenced to 36 Months in Prison
On May 14, 2008, in Memphis, Tenn., James Holman, of Hernando, Mississippi, was sentenced to 36 months in prison, followed by one year of supervised release, and ordered to pay $911,825 in restitution to the Internal Revenue Service (IRS). As part of his sentence, Holman is prohibited from preparing or assisting in the preparing of income tax returns for other individuals. According to the indictment, Holman operated tax preparation services in Memphis, Tennessee and Cincinnati, Ohio, with Xadimul Samba. The indictment charges that Holman prepared returns for individuals that claimed deductions for items that he well knew the taxpayers were not entitled to claim. Holman pleaded guilty in August 2006, to six counts of aiding and assisting in the preparation of a false federal income tax return. Specifically, Holman admitted that he prepared tax returns for others that claimed false Itemized Deductions (Schedule A) and/or false business deductions (Schedule C) for calendar years 2001 and 2002. Samba pleaded guilty in March 2008 and is awaiting sentencing.

New Jersey Man Who Prepared Hundreds of Fraudulent Tax Returns Sentenced to Six Years
On May 14, 2008, in Newark, N.J., Romanus Okorie was sentenced to 72 months in prison for filing fraudulent tax returns on behalf of numerous New Jersey residents resulting in a loss to the government in excess of $2.5 million. Okorie was also ordered to pay a $100,000 fine and was prohibited from working as a tax preparer for three years following his release from prison. On January 22, 2008, a jury convicted Okorie of 10 counts of willfully preparing materially false tax returns. Evidence presented at trial demonstrated that the tax returns followed a distinct pattern, including the filing of false and inflated entries on Schedule C, relating to sole proprietorship businesses which Okorie repeatedly claimed were losing tens of thousands of dollars year after year. For his services, Okorie charged up to $7,500 for the preparation of one tax return that consisted solely of the 1040, Schedule A and Schedule C. One of the returns Okorie prepared contained Schedule A deductions and Schedule C expenses which in total were greater than the gross income of the taxpayer, begging the question of how the person paid for the deductions and expenses. More than 100 clients were audited and the total tax loss based on the audited returns exceeded $1 million. The government presented further evidence that in 2003 Okorie prepared approximately 250 tax returns, all but one generating a refund. For 2004 he prepared close to 300 tax returns, all generating a refund. The government estimated the actual tax loss for the returns prepared by Okorie – more than 600 – exceeded $4 million. Okorie's own tax return was audited in 2003 and tax returns of his clients were audited over the years and yet he continued to file false tax returns.

Bronx Tax Preparer Sentenced to 30 Months in Prison
On April 25, 2008, in Manhattan, N.Y., Robert M. Quinones was sentenced to 30 months in prison, to be followed by three years of supervised release, and ordered to pay $27,107 in restitution to the Internal Revenue Service (IRS). Quinones pleaded guilty on December 21, 2007, to 25 counts of aiding and assisting in the preparation of false tax returns and two counts of filing false claims for refund through his tax preparation business in the Bronx, New York. According to the Indictment and statements made in court, from 2001 through 2005, Quinones included false items on over 200 tax returns he prepared for the clients, including non-existent medical expenses, unreimbursed business expenses, and gifts to charity. Quinones also admitted that he caused the filing of false claims for refunds in connection with two of his own individual income tax returns. These false claims caused Quinones to receive refunds to which he was not entitled, in the aggregate amount of approximately $20,000.

President of Maryland Tax Preparation Business Sentenced to Four Years in Prison; Collected Over $600,000 in Fees from Taxpayers’ Refund Anticipation Loans
On April 21, 2008, in Greenbelt, Md., Jiten D. Mehta, a certified accountant, was sentenced to 48 months in prison to be followed by three years of supervised release. Mehta was convicted in September 2007, on 16 counts of preparation of false tax returns and nine counts of wire fraud, in connection with a scheme to generate fraudulent tax refunds for taxpayer-clients. According to evidence presented at trial, Mehta was president of JDM World Financial Services, Ltd. (JDM), a tax preparation business located in Takoma Park, Maryland. From January 26, 2001 to April 16, 2003, Mehta prepared and caused the preparation of false IRS individual income tax returns using false information as to the clients’ filing status, profit or loss from business, exemptions, and other matters. Mehta and JDM generally did not have taxpayers review their completed tax returns to determine their accuracy prior to filing the returns with the IRS. Specifically, Mehta prepared the tax returns with fraudulently inflated Schedule A deductions intended to generate large refunds for taxpayers and fraudulently listed expenses on employee business expense forms to justify the deductions listed on the Schedule A. JDM filed clients’ tax returns electronically with the IRS and participated in the Refund Anticipation Loans (“RAL”) program offered by BankOne in Columbus, Ohio.

Virginia Tax Return Preparer Sentenced on Charges of Preparing False Tax Returns and Identity Theft
On April 10, 2008, in Newport News, Va., Barbara Moore, of Atlanta, Ga., was sentenced to 54 months in prison, to be followed by one year of supervised release, and ordered to pay $5,715 in restitution to the Internal Revenue Service (IRS). Moore pleaded guilty on January 8, 2008, to one count of aiding and assisting in the preparation of false tax returns and one count of aggravated identity theft. According to court documents, during the 2004 and 2005 tax preparation seasons, Moore operated J&B Tax and Accounting, Inc., and Henry8 Tax and Accounting in Hampton, Virginia. Through these businesses, Moore falsely portrayed herself as a certified public accountant and prepared approximately 92 tax returns for the 2004 tax year and approximately 69 tax returns for the 2005 tax year. For a number of tax returns, Moore falsely claimed unauthorized deductions, not provided by the clients, reducing the tax owed by her clients and, in some cases, causing her clients to receive inflated refunds. Moore also falsely claimed that certain taxpayers had business losses, based on nonexistent businesses, which further reduced the tax owed by the taxpayers. In the course of preparing returns for clients, Moore used a Social Security Number that belonged to another individual without the individual’s knowledge or approval.

Tax Return Preparer Sentenced to 24 Months in Prison
On April 14, 2008, in Cleveland, Ohio, Louis H. Perkins was sentenced to 24 months in prison to be followed by two years of supervised release and ordered to cooperate with the Internal Revenue Service in the collection of his back taxes. Perkins pleaded guilty on January 22, 2008, to one count of willfully filing a false tax return and one count of willfully assisting and aiding others in the filing of false tax returns. According to court documents, Perkins ran a tax preparation business under the name L.H. Perkins and Associates in East Cleveland, Ohio. He aided and assisted in the preparation of tax returns for clients during tax years 2000 - 2006, by falsely claiming deductions for their personal residences as though the property was rental property or claiming improper itemized deductions. Perkins also prepared false returns claiming individuals had self-employment income, in order to allow them to claim the Earned Income Tax Credit, even though the taxpayer had no real income and was not entitled to the credit. As a result of Perkins’s conduct, taxpayers received thousands of dollars in refunds they were not entitled to receive. Perkins also failed to report over $110,000 in gross receipts from his tax preparation business for tax years 2000 through 2002 on his own income tax returns. Additionally, after his guilty plea on January 22, Perkins was permitted to remain free on bond, with the condition that he cease his tax preparation business. However, it was discovered that he prepared approximately 150 returns after his guilty plea. His bond was revoked on February 15, and he has remained in custody since that time.

Indiana Tax Preparer Sentenced to 21 Months
On March 24, 2008, in South Bend, Ind., Chevella M. Bennett was sentenced to 21 months in prison, followed by one year of supervised release and ordered to pay $35,450 in restitution to the Internal Revenue Service for filing false tax returns. Bennett worked as a tax return preparer at the Jackson Hewitt Tax Service. An anonymous tip to the IRS sent an undercover agent to pose as one of Bennett's clients. Bennett provided the undercover IRS agent with the names and social security numbers of two false dependents to use on the tax return in order to get a larger refund with the understanding that the client would share the refund money with her. In this case Bennett arranged to get half of the fraudulently claimed refund of $4,658. Without adding the false dependants, the refund would have been $295. Bennett was indicted in March 2007 and she pleaded guilty in November 2007.

Michigan Certified Public Accountant Goes to Jail for Filing False Tax Returns
On February 28, 2008, in Detroit, Mich., Certified Public Accountant Abraham Nicola Nunu, of Dearborn Heights, was sentenced to a year and a day imprisonment and ordered to pay a $3,000 fine and restitution to the Internal Revenue Service (IRS) for filing false tax returns. According to court records, Nunu filed false 2000 and 2001 personal income tax returns with the IRS that reflected taxable income of approximately $99,000, when his actual taxable income for those tax years was approximately $337,000. Nunu pleaded guilty on October 31, 2007.

North Carolina Professional Tax Return Preparer Sentenced to 70 Months
On February 28, 2008, in Charlotte, N.C., Lloyd Anthony Bastfield, a professional tax return preparer for approximately 18 years, was sentenced to 70 months in prison and ordered to pay $6 million in restitution. Bastfield pleaded guilty in April 2007 to conspiring to defraud the United States by filing false tax returns claiming nearly $6 million in false claims for refunds for individuals between 2001 and 2005, and evading over $171,000 in personal income taxes owed by him for the years 2000 through 2004. According to a Bill of Information, Bastfield operated a tax-preparation business called Tony’s Tax Service. Bastfield admitted that between 2001 and 2005 he prepared and electronically filed over 10,000 fraudulent income tax returns for individual clients which claimed false and fictitious education income tax credits. Nearly 99 percent of all returns filed by Bastfield claimed a refund and almost all of those claims were based on the improper use of the education credits. The total amount of false claims for refund submitted by Bastfield during this time period was in excess of $5.9 million. In addition to the false returns prepared by Bastfield for individual clients, he filed false personal tax returns for himself for the calendar years 2000 through 2004 in which he understated his taxable income and his tax liability. Bastfield evaded more than $171,000 in personal taxes for those years.

Maryland Tax Preparer Sentenced to Over Three Years for Filing False Tax Returns
On February 11, 2008, in Greenbelt, Md., Marvin L. Binion was sentenced to 38 months in prison, followed by three years of supervised release, and ordered to pay a $60,000 fine. Binion pleaded guilty in August 2007 to 13 counts of aiding and assisting in the filing of false income tax returns. According to his plea agreement, from 1997 to about 2001, Binion owned and operated Universal Tax Services, a tax return preparation business located in Hyattsville, Md. He reduced clients' tax liabilities by fabricating or inflating expenses claimed on their tax returns, including: charitable contributions, employee business expenses, and miscellaneous expenses such as tax advice, investment counseling and job search expenses. Binion also identified numerous clients on tax forms as being self-employed when the clients were not self-employed and never claimed to be. Under this scheme, Binion caused the preparation of federal tax returns which contained over $387,000 in tax deductions which he knew the taxpayers were not entitled to claim. These false deductions and expenses resulted in his clients receiving substantially larger refunds than the clients were entitled to receive.

Miami Tax Preparer Sentenced for Tax Fraud Related to Workers’ Compensation Insurance Scheme
On February 4, 2008, in Miami, Fla., Enrique Guevara, a Broward County tax preparer, was sentenced to 13 months in prison to be followed by three years of supervised release. Guevara pleaded guilty on August 17, 2007, to tax fraud conspiracy and in aiding in the filing of a false tax return. His co-defendants, Alexandra Cordero and Erick Brandon, were charged with a mail fraud conspiracy to fraudulently obtain workers’ compensation insurance coverage in order to provide hundreds of workers for public and private construction jobs in Florida. Cordero was sentenced on December 11, 2007, and Brandon remains a fugitive. The indictment alleged that an unindicted co-conspirator and Guevara, Brandon, and Cordero participated in a conspiracy in which Sandi Construction fraudulently represented to general contractors in the construction industry that Sandi Construction workers were insured, as required under Florida law. However, only some workers were insured. Specifically, the defendants obtained legitimate workers' compensation insurance policies for six workers, with premiums on the policies based on a declared annual payroll of $93,000. Through this scheme, between June 2005 and June 2006, Sandi Construction supplied workers to approximately 186 general contractors in 12 Florida counties and received approximately $11,725,275 in payments from these contractors; and from June 2006 to the date of indictment, they supplied workers to 125 general contractors and received payments totaling approximately $9,202,067. In addition, Sandi Construction's actual payroll was much greater than the $93,000 that Sandi had initially declared to the insurance companies to obtain coverage for six employees. Consequently, Sandi Construction avoided paying approximately $4 million in insurance premiums. Guevara, the owner and operator of A/Z Accounting Corp., a Broward County accounting and bookkeeping business, created fictitious Internal Revenue Service reporting documents, including Wage and Tax Statements (Form W-2a) and Form 1099s, and prepared and filed false corporate tax returns for Sandi Construction.

Virginia Tax Preparer Sentenced to Prison for Preparing False Tax Returns
On January 31, 2008, in Roanoke, Va., Katrina Stine-Hanson a former Winchester, Va. tax preparer was sentenced to 15 months and one year supervised release. Stine-Hanson was indicted in March 2007 on 13 counts of aiding and assisting the preparation of fraudulent income tax returns. The indictment alleged that Stine-Hanson was able to get fraudulent tax refunds for her clients by falsifying itemized deductions on their U.S. Individual Income Tax Returns, Forms 1040. The fraudulent income tax returns contained inflated or fabricated itemized deductions such as charitable contributions, job expenses and other miscellaneous expenses to which the taxpayers were not entitled to claim as deductions. On September 5, 2007, Stine-Hanson entered a guilty plea to two counts preparing fraudulent tax returns.

Tax Return Preparer Receives 20 Month Sentence
On January 30, 2008, in Chicago, Ill., Luba T. Robinson, a former H&R Block tax preparer, was sentenced to 20 months imprisonment and ordered to pay $41,816 in restitution to the Internal Revenue Service. Robinson pleaded guilty August 17, 2007, to preparing a total of 41 tax returns for calendar year 2003, including her own, that contained false amounts for wages earned, federal taxes withheld and amount of refund due. The refunds claimed were falsely inflated by a total of $92,050. The IRS paid approximately $41,816 before Robinson's scheme was detected. She was ordered to pay restitution to the IRS for the refunds which were released.

East St. Louis Preparer Sentenced for Tax Fraud
On January 28, 2008, in East St. Louis, Ill., Mary L. Powell was sentenced to 12 months and one day in prison and ordered to pay restitution to the IRS for aiding and assisting in the preparation of a false return and for making and subscribing a false return. Powell operated as a tax return preparer under the business name of M.P. Enterprises during 2003 through 2005 when she prepared tax returns using false information. Powell admitted to causing a loss to the IRS of $304,513.

Memphis Man Sentenced for Tax Fraud
On December 20, 2007, in Memphis, Tenn., Rodney F. Harris was sentenced to 15 months in prison, to be followed by one year of supervised release, and ordered to pay $14,479 in restitution to the Internal Revenue Service. Harris was charged in November 2006, with 20 counts of aiding and assisting in the preparation of false income tax returns. According to the indictment, Harris prepared 20 federal income tax returns for various individuals in 2002, 2003, and 2004, that contained partially fraudulent Schedule A Itemized Deductions that those taxpayers were not entitled to claim. Harris pleaded guilty to three of those counts on September 10, 2007.

Former Michigan H&R Block Tax Preparer Goes To Jail
On December 11, 2007, in Detroit, Mich., Thomas Mercer, a former H&R Block tax preparer from Romulus, Mich., was sentenced to 86 months in prison and ordered to pay $331,478 in restitution to the U.S. Treasury. Mercer pleaded guilty in September 2007 to 30 counts of filing false federal income tax returns and obstructing the IRS’s investigation. According to court documents, Mercer prepared and filed federal income tax returns that claimed false deductions for expenses and tax credits in order to give taxpayers large refunds. Most of the tax returns showed losses from fictitious janitorial businesses, as well as false tuition, charitable contributions and child tax credits. Mercer obstructed the administration of the Internal Revenue laws by instructing clients on what to tell investigators and by providing his clients with documents purporting to justify some of the expense deductions.

Mother who Conspired with Daughter to File False Tax Returns Sentenced to Federal Prison
On November 30, 2007, in Los Angeles, Calif., Inez Garcia, a tax return preparer, was sentenced to 18 months in prison, to be followed by three years of supervised release, ordered to stop preparing tax returns, and ordered to pay $192,000 in restitution to the United States. Inez Garcia, Diane Garcia, her daughter, and Jose Gonzalez each pleaded guilty earlier this year to conspiring to defraud the United States. The three worked together, using information that Inez Garcia collected as a tax preparer, to file tax returns that sought refunds from the government. In September 2007, Diane Garcia, a former member of the California Army National Guard who was brought home from Iraq to face the charges in this case, was sentenced to three years of probation, which included six months of home detention for her role in the scheme. Jose Gonzalez was sentenced in September to 10 months in prison and was ordered to pay $192,380 in restitution. Gonzalez worked at a liquor store in La Habra and cashed the United States Treasury checks that the Garcias fraudulently obtained. In return, the Garcias paid Gonzalez a commission.

Michigan Accounting Firm Vice-President Goes to Jail for Tax Fraud
On November 20, 2007, in Detroit, Mich., Tanisha Summers, a vice-president of an accounting firm, was sentenced to 25 months imprisonment and ordered to pay $286,983 in restitution. Summers was convicted in June 2007, on charges of preparing false tax returns and with conspiring to defraud the Internal Revenue Service (IRS). A co-defendant, Camelia Peatross, of Detroit, a private investigator, was also convicted in June 2007 of conspiring to defraud the IRS and falsely impersonating an IRS agent. On November 1, 2007, Peatross was sentenced to one day in custody with credit for time served, three years supervised release and ordered to serve one year of home confinement and to pay restitution of $86,873. Summers and tax services business owner Shawn Gibson asked potential clients to complete a client intake sheet. They used information from the client intake sheet to file tax returns on the potential client’s behalf, whether the clients agreed to use their services or not. Summers and Gibson added false dependents, businesses deductions, losses, charitable contributions, and tax credits, in order to increase the tax refund due. The fraudulent tax refunds totaled over $318,149. Refunds were electronically transferred into bank accounts controlled by Gibson, Summers and Peatross. The clients then received a check in an amount substantially less than that which was refunded by the IRS. In one case, the defendants received a fraudulent refund of over $17,000, but provided the taxpayer with approximately $3,500 of an anticipated refund, keeping the difference. Gibson, Summers, and Peatross concealed their theft of government funds by providing clients with copies of their non-filed income tax returns, which more accurately reflected their true tax refund or liability. Gibson had previously pled guilty to his charges and is currently serving a 34 month sentence and ordered to pay $286,983 in restitution.

Virginia Man Sentenced for Fraudulent Income Tax Preparation
On November 14, 2007, in Richmond, Va., Wayne Orlando Price was sentenced to 12 months and 1 day imprisonment and ordered to pay $37,293 in restitution to the Internal Revenue Service for aiding and assisting in the preparation of false income tax returns. According to court records, Price owned and operated Neighborhood Accounting & Taxes, located in Petersburg, Va. Price prepared a United States Income Tax Returns (Form 1040) which falsely claimed deductions on Schedule A for unreimbursed business expenses in the amount of $3,447 and an incorrect depreciation amount on Schedule E for rental expenses in the amount of $16,077. Price admitted that he knew and believed that the taxpayers for which the return was filed were not entitled to claim the unreimbursed business expenses and rental depreciation amount.

San Jose Tax Preparer Sentenced for Preparing False Tax Returns; Banned for Life from Working as a Tax Consultant
On November 1, 2007, in San Jose, Calif., Jonathan Wendy was sentenced to 12 months and one day a year in prison to be followed by one year of supervised release. In addition, the judge imposed two special supervised release conditions that Wendy agreed to in the plea agreement: one is a lifetime ban on working as a tax consultant and the other is to file complete and accurate federal tax returns for the tax years 1998 through 2005. Wendy pleaded guilty on November 1, 2006, to one count of aiding or inducing another to file a false tax return. According to his plea agreement, Wendy, who was a tax preparer for over twenty years, admitted that on July 27, 1999, he prepared a federal income tax return for the 1998 tax year which falsely listed taxable income as $94,347, when he knew the correct amount was approximately $104,929. Wendy also admitted that he intentionally reduced the tax liability by creating numerous false or grossly inflated deductions for investment interest, professional dues, employee business expenses and amortization expenses on Schedule A of the return, and false stock sales on Schedule D of the return. In addition to the specific count to which he pleaded guilty, Wendy also admitted preparing seventeen other individual tax returns and falsely listing the taxable amount claimed on each return. As a result of his conduct, the amount of tax owing to the government by those taxpayers was more than $70,000.

Tax Preparer Sentenced for $441,000 Tax Fraud
On October 19, 2007, in Tulsa, Okla., Gregory S. Yuill was sentenced to 30 months in prison to be followed by one year of supervised release. He pleaded guilty in June 2007 to one count of subscribing to fraudulent tax returns and one count of aiding and assisting in the preparation and presentation of false tax returns. In his plea agreement, Yuill admitted that from early 2001 through 2004, he willfully prepared 89 fraudulent federal tax returns. Yuill admitted that he created fictitious medical and charitable donations on his clients’ tax returns because those items could not be easily verified through a third party. His motivation in doing this was to increase the tax refund for the client thereby increasing his fee for preparing the tax return. This caused a tax loss of $413,839. According to court documents, Yuill admitted that he had prepared four false tax returns for himself for the years 2000 through 2003 by overstating his Schedule A Itemized deductions and not reporting all of his income from his tax preparation business, causing a tax loss of $27,195.

St. Louis Area Tax Return Preparer Sentenced
On October 16, 2007, in St. Louis, Mo., Yolanda White was sentenced to 18 months in prison on charges of falsifying information on a client’s tax return. Additionally, White was ordered to pay $1,217 in restitution to her clients to reimburse them for interest that they were required to pay to the IRS as a result of the understatement of income on their tax returns. According to court documents, during 2004 and 2005, in her capacity as a tax return preparer, White overstated her clients’ deductions and tax credits, and misstated her clients’ filing statuses in order to generate larger refunds. The false information included itemized deductions, business losses, education credits, child and dependent care credits and taxpayer filing status. White pleaded guilty in June to one count of making false statements on a tax return.

Western Tax Service Return Preparers Sentenced for Filing False Tax Returns
On October 15, 2007, in Santa Ana, Calif., Kelly Agbonmoba David, aka David Kelly, was sentenced to 46 months in prison. David’s co-defendant, Anthony Todd Stefani, was sentenced to 27 months in prison. Both men had been found guilty at trial on charges of conspiracy to defraud the United States and of aiding and assisting in the filing of false tax returns with the Internal Revenue Service (IRS). According to the indictment, David was hired in 1999 to assist in the preparation of income tax returns for DeAngelo Tax Service and, later, Western Tax Service. Co-defendant Stefani was employed by Western Tax Service to prepare income tax returns in 2001. The indictment further states that tax preparers were trained on how to make false, misleading, and inaccurate statements on Forms 1040, including the falsifying and inflation of Schedule A deductions for charitable contributions, employee business expenses, and depreciation. In an effort to avoid detection by the IRS, David and Stefani would typically attempt to keep Schedule A itemized deductions from exceeding 50% of the wages that were reported on their clients’ income tax returns. Generally, David and Stefani and their co-conspirators would not inform the clients of the amounts entered on their tax returns. The preparers at DeAngelo Tax Service and Western Tax Service prepared and filed over 11,000 income tax returns for years 1998 through 2001. Other individuals sentenced for their role in the conspiracy were Samuel DeAngelo sentenced on September 24, 2007 to 51 months in prison; Douglas Shields sentenced on August 6, 2007 to 15 months in prison; Jeffrey Russell Wright sentenced on September 17, 2007 to six months in prison followed by 6 months home detention; and Erin Cordes sentenced on September 24, 2007 to one year of probation which includes six months of home detention.

Tax Return Preparer Sentenced on Federal Tax Fraud Charges
On October 15, 2007, in Monroe, La., Bettye Tramble was sentenced to 21 months in prison and ordered to pay $30,488 in restitution to the Internal Revenue Service (IRS). Tramble was indicted in October 2006 and charged with 31 counts of aiding and assisting in the preparation of false income tax returns. She pleaded guilty in May 2007 to one count of the indictment. Evidence at the guilty plea hearing revealed that while working as a tax return preparer for Ellis Tax Service, Tramble prepared false Schedule C forms for the tax year 2002 for individual taxpayers, which resulted in refunds to the taxpayers that they were not entitled to receive.

Tax Preparer Convicted of Perjury Sentenced to 13 Months in Prison
On October 9, 2007, in Dallas, Texas, Etienne Konan, a Dallas tax preparer, was sentenced to 13 months in prison. Konan pleaded guilty in July to one count of perjury before a Grand Jury. According to documents filed in the case, Konan was an employee of DSL Tax Services, LLC, a tax preparation business operating in several locations in the DFW Metroplex area. On November 9, 2006, Konan, pursuant to a subpoena, appeared before a federal Grand Jury in Dallas and answered questions relating to an ongoing investigation into criminal tax violations of the preparation of false and fraudulent tax returns. The factual resume filed in the case states that the Grand Jury was taking testimony from several former employees of DSL as to how the personal income tax forms for clients were being handled. Employees questioned about the claiming of nonexistent education expenses in order to claim false and fraudulent education credits, as well as nonexistent Schedule C business expenses in order to decrease taxable income. In his testimony to the Grand Jury, Konan repeatedly denied participating in the scheme to inflate taxpayer refunds. However, as part of his guilty plea to the perjury charges, Konan admitted that he knew his responses to questions posed by the federal prosecutor before the Grand Jury were false and that, in fact, he had been inputting false education credits and Schedule C expenses to get the taxpayer clients higher refunds when he knew that the taxpayer clients were not eligible for the credits and expenses.

Seattle Tax Preparer Overstated Deductions and Claimed Fictitious Business Losses Resulting in the Preparation of False Tax Returns
On October 5, 2007, in Seattle, WA, Ronald M. Paul was sentenced to 12 months and one day in prison, to be followed by one year of supervised release for aiding or assisting in the preparation or presentation of materially false personal income tax returns. Paul operated “The Tax Clinic,” a tax preparation business out of his Seattle home. According to his plea agreement, Paul met with 32 clients in early 2003 to prepare their 2002 federal tax returns. Each of the taxpayers provided Paul with their personal financial information to assist in preparing the returns. In each case, Paul ignored the offered information and overstated charitable donations and business expenses by thousands of dollars. In addition, Paul claimed fraudulent business losses on many of the returns. The clients had never invested in the businesses and, in some cases, had never even heard of the businesses. The overstated contributions and expenses, together with the falsified business losses, led to Paul’s clients receiving refunds they would not have otherwise been entitled to. The preparation fee Paul charged to his clients was based on the refund amount generated using his overstated deductions and falsified business losses. Paul agreed to pay the government restitution of $472,344 (less any amounts already paid by the liable tax payers) for false tax returns he prepared on behalf of clients for tax years 1999 through 2003.

Five Sentenced in Prison in Tax Fraud Scheme
On October 2, 2007, in Birmingham, Ala., Al Morton, Jr. was sentenced to 72 months in prison for his role in an elaborate scheme to file false income tax returns. Morton, along with five others, were charged in February 2007 with conspiracy, filing false claims, bank fraud, and witness tampering. In addition to the prison term, the court entered a forfeiture order for $694,447. Also involved in the scheme with Morton and each sentenced to 30 months in prison were: Cheryl Harrell, Queshawandra Randolph, and Alteago Hobson. Pearline Bloxom received probation for her part in the tax fraud scheme. Katisha Brown awaits sentencing by the court. According to evidence introduced at trial, Morton purchased and operated a Taxx Enterprises franchise in Birmingham. From January 2002 until May 2002, the listed defendants caused the preparation and filing of false, fictitious and fraudulent tax returns in their own names and in the names of others they recruited. The false tax returns were then filed with the Internal Revenue Service, and submitted to Bank One, a federally insured financial institution, for the purpose of acquiring Refund Anticipation Loans. The defendants then obtained the proceeds of these Refund Anticipation Loans, giving a small portion to the individuals they recruited to file the fraudulent returns, and dividing the remainder among themselves.

Phony Tax Return Preparer Posed as CPA and Prepared Fraudulent Returns
On October 2, 2007, in Atlanta, Ga., Larry Vonzell Black was sentenced to 15 months in prison, to be followed by three years of supervised release. Black pleaded guilty to charges of filing false claims with the Internal Revenue Service (IRS) on July 16, 2007. According to information presented in court, Black falsely told members of the public, as well as friends and acquaintances, that he was a Certified Public Accountant trained to prepare tax returns. He advertised his tax preparation services at a booth set up in a check-cashing store in metropolitan Atlanta. Under the guise of preparing legitimate tax returns, he obtained personal information, including social security numbers and W-2 forms, from taxpayers. He then used the taxpayers’ information to submit false claims by forging a signature on each taxpayer’s tax return, directing the payment of refunds to himself and distributing only a small portion of the fraudulent refunds to his victims. In all, Black submitted false claims for over $46,000.