return preparer investigatgions

Examples of Abusive Return Preparer Investigations - Fiscal Year 2010

The following examples of Abusive Return Preparer investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.

San Diego Tax Return Preparer Sentenced to Prison for Tax Fraud
On March 1, 2010, in San Diego, Calif., Fe S. Garrett, a resident of National City, Calif., was sentenced to 65 months in prison and ordered to pay $377,468 in restitution. In August 2009, Garrett was convicted of filing false individual tax returns, failure to pay taxes, and multiple counts of aiding and assisting in the preparation of false tax returns following a nine-day trial. According to the evidence presented at trial, for tax years 2001 and 2002, Garrett prepared at least 18 federal income tax returns for her clients that were false as to material matters in that the tax returns claimed fraudulent itemized deductions, child care expenses and Schedule E real estate rental expenses in amounts that she knew her clients were not entitled to claim. Additionally, according to the documents filed in the case and evidence presented at trial, Garrett was a licensed tax return preparer and licensed real estate broker who operated a tax return preparation and bookkeeping business and a real estate financing business. These businesses operated under multiple names, including Fe's Tax Service, Garrett's Tax Service and Garrett's Realty and Mortgage. Garrett failed to report over $300,000 of her business gross receipts from those businesses on her federal income tax returns for tax years 2001, 2002, 2004 and 2005. Additionally, the evidence at trial showed that Garrett willfully failed to pay approximately $279,000 in federal income taxes that she owed for tax years 2001 through 2006. Despite filing tax returns for 2001 and 2006 on which she admitted owing tax each year, Garrett spent hundreds of thousands of dollars at local casinos, wired over $100,000 to the Philippines, and did not respond to numerous attempts by the IRS to contact her. According to the evidence presented at trial, Garrett prepared a false tax return for an undercover IRS agent that included false items similar to those on her client’s returns. In a recording presented at trial, Garrett was heard describing her "style" of preparing tax returns using "loopholes" for claiming deductions on income tax returns.

California Tax Return Preparer Sentenced to Six Years; Helped Clients Evade $2.7 Million in Taxes
On February 22, 2010, in Los Angeles, Calif., James Otis Swift, a Gardena, California tax return preparer, was sentenced to 72 months in federal prison in a scheme that cost the government more than $2.7 million. According to court documents, Swift falsely told clients that he had been employed by the Internal Revenue Service. In September 2009, Swift pleaded guilty to tax charges and admitted that he prepared hundreds of false income tax returns for the tax years 2002 through 2007. The tax returns were fraudulent because they contained inflated deductions for charitable contributions, business expenses, personal property taxes, and home mortgage interest payments. In his plea agreement, Swift specifically admitted that he inflated deductions for home mortgage interest, which his clients claimed on their tax returns, by more than $12.5 million. As a result of the false returns, Swift caused the federal government to incur a loss of more than $2 million, excluding interest and penalties. When some of Swift's clients received audit notices from the IRS, Swift assisted his clients in evading the payment of their tax liability and in obstructing the audits by fabricating false charitable contribution letters and Forms 1098, which detailed mortgage interest paid.

Inmate Sentenced for Filing False Tax Returns
On February 11, 2010, in Phoenix, Ariz., Veronica Romero De Valencia was sentenced to 16 months in prison, to be followed by one year of supervised release, and ordered to pay $41,005 in restitution to the Internal Revenue Service (IRS). On August 8, 2009, De Valencia pleaded guilty to submitting false claims to the U.S. Government. According to the plea agreement, while in prison, De Valencia filed and/or caused to be prepared four income tax returns on her behalf for tax years 2002 through 2006. The returns reported income that she never earned and claimed dependents that she never supported in order to be able to claim the Earned Income Tax Credit.

Wisconsin Man Sentenced to Two Years for Wire Fraud and Filing False Tax Return
On February 3, 2010, in Madison, Wis, Terry Stewart was sentenced to 24 months in prison for wire fraud and filing a false tax return. According to court documents, Stewart claimed he was a self-employed tax return preparer doing business as Madison Urban Tax Service. Stewart inflated the returns of 19 customers by falsely claiming that the customers were entitled to make certain deductions, had dependants or were entitled to the "earned income credit." Stewart filed the returns electronically and his clients were unaware of the false statements. Stewart also directed that the return proceeds be sent to him and he stole all or part of his customers' tax refunds. When Stewart pleaded guilty on October 9, 2009, he agreed to make restitution to his former clients to include any fines, penalties, or interest assessed against the clients as a result of the fraudulent tax returns.

Mississippi Resident Sentenced on Income Tax Fraud Charges
On January 20, 2010, in Oxford, Miss., Vatesta Washington, of Leland, Mississippi, was sentenced to 12 months and one day in prison, to be followed by three years of supervised release, and ordered to pay $134,850 in restitution. As an additional condition of her sentencing, Washington is prohibited from future preparation of tax returns other than her own. In March 2009, Washington pleaded guilty to one count of conspiring to defraud the United States by obtaining and aiding to obtain the payment of false, fictitious and fraudulent tax returns. According to court documents, Washington, along with others, submitted false claims to the IRS through her employers, Fast and Easy Tax Service and Fast Tax Service, owned and operated by Frainzonia Alexander. Alexander was sentenced to 50 months in prison for his participation in the fraudulent scheme on February 26, 2009.

Two Miami Residents Sentenced on Tax Preparation Conspiracy Charges
On January 11, 2010, in Miami, Fla., Allen K. Smith, and co-defendant Mark Thomas were each sentenced to 21 months in prison, to be followed by three years of supervised release. Both Smith and Thomas pleaded guilty to conspiring to defraud the United States for the purpose of impeding the Internal Revenue Service (IRS). As part of their plea agreements, each defendant agreed to pay $380,057 in restitution to the IRS. According to court documents, from approximately 2001 to 2005, Smith and Thomas conspired to defraud the U.S. by preparing fraudulent tax returns that contained fictitious or inflated deductions, often for medical expenses. The individuals for whom Smith and/or Thomas prepared false returns had legitimate Forms W-2, 1099, 1098 or other documents evidencing income and legitimate deductions. On virtually every return Smith and/or Thomas prepared, the taxpayer claimed a refund that was exactly equal to the withheld amount. Smith and Thomas often represented to their clients that the clients could receive refunds equal to the amount of taxes withheld.

Tax Preparer Sentenced to Nearly Seven Years in Federal Prison
On January 7, 2010, in Dallas, Texas, Teddy Gatamba was sentenced to 81 months in prison for conspiring to defraud the government with respect to claims, wire fraud, and aggravated identity theft. According to court documents, Gatamba obtained the names and social security numbers of numerous individuals and used that personal information to prepare false income tax returns, without the knowledge or consent of the individuals. He prepared the returns using bogus employer names and making bogus claims of overpayment of taxes, and then filed the returns electronically. Refund Anticipation Loans, in the form of checks and Refund Anticipation Value Cards, were issued, based on the false income tax returns, in the names of the individuals on the bogus tax returns. Gatamba and others then cashed the checks and withdrew funds from ATMs using the Refund Anticipation Value Cards. Evidence presented at trial showed that there was an intended loss to the government of more than $2 million.

Bronx Man Sentenced to 78 Months in Prison for Multi-Million Dollar Tax Fraud Scheme
On January 7, 2010, in Manhattan, N.Y. Jose Franklin Duarte was sentenced to 78 months in prison and was ordered to pay $807,000 in restitution to the Internal Revenue Service (IRS). According to court documents, Duarte was charged as part of a two-year investigation by law enforcement into a scheme to use stolen Social Security numbers and other identity information to submit fraudulent state and federal tax returns. In 2008, Duarte recruited a letter carrier employed by the U.S. Postal Service who delivered mail in the Bronx, to participate in the scheme and to give Duarte addresses to which fraudulently obtained tax refund checks could be addressed. From August 2008 to February 2009, the conspirators in this scheme filed over 9,000 U.S. Individual Income Tax Returns for tax years 2007 and 2008. These returns contained information connected to stolen Social Security numbers of Puerto Rican residents. These returns were filed electronically from the Dominican Republic. The false returns sought refunds totaling over $91 million dollars to be sent in the form of U.S. Treasury checks via U.S. mail. The checks were to be sent to addresses on the letter carrier's route. Throughout the later part of 2008, Duarte and/or co-conspirators paid the letter carrier cash in exchange for the mail containing the fraudulently-obtained U.S. Treasury checks.

Tax Preparer Sentenced to 30 Months in Prison for Preparing False Tax Returns
On January 5, 2010, in Greenbelt, Md., Joseph D. Edwards was sentenced to 30 months in prison followed by three years of supervised release, for aiding and assisting in the preparation of false tax returns. Edwards pleaded guilty on March 11, 2009, after six days of trial. According to court documents, Edwards was the owner and sole proprietor of JD Tax and Accounting Services, a tax preparation business located in Oxon Hill, Maryland. During tax years 2001 to 2004, Edwards admitted that he prepared false individual tax returns, claiming deductions to which the taxpayers were not entitled, including: medical and dental expenses that were not incurred; employment expenses, such as mileage and uniform expenses, that were not incurred; gifts to charities that were never made; understated income and inflated expenses for businesses, including for businesses that did not exist; and understated income and inflated expenses for rental property, including property that the taxpayers did not own.

Georgia Tax Preparer Sentenced to Over Eight Years in Prison for Filing False Tax Returns
On December 14, 2009, in Atlanta, Ga., Onessimus M. Govereh, of College Park, Georgia and Zimbabwe, Africa, was sentenced to 100 months in prison, to be followed by three years of supervised release, and ordered to pay approximately $62,000 in restitution. After a 7-day trial, on January 16, 2008, Govereh was convicted of 14 counts of filing false claims for payment from the United. According to court documents and other information presented in court, Govereh operated “Icon Tax Service” in Norcross for six weeks in January and February 2007. During that time, the IRS received 107 personal federal income tax returns from Govereh’s business claiming enormous refunds, usually based on fabricated income, expense, and excise tax figures. Govereh obtained half or more of his clients’ refunds by charging preparation and other fees. The IRS later rejected all 107 returns because they all contained false and fraudulent claims for excise tax expenses.

Houston Return Preparer Sentenced for Falsifying Tax Returns
On December 10, 2009, in Houston, Texas, Nathalene Rice Pickens was sentenced to 27 months in prison for preparing false income tax returns. According to court documents, Pickens admitted that she prepared false tax returns for clients that inflated their refunds by $234,167; the court ordered her to pay restitution in that amount as part of her sentence. Following her prison term, Pickens is required to serve a one-year-term of supervised release during which she is prohibited from any involvement in preparing business tax returns. At her pre-arraignment hearing in August 2009, Pickens stipulated that in an effort to build a reputation for generating large federal income tax refunds for her clients, she knowingly prepared, caused to be prepared and filed a number of false federal income tax returns that generated excessive refunds for clients.

Tax Advisor Sentenced to More Than Six Years for Preparing Fraudulent Tax Returns
On December 9, 2009, in Kansas City, Kan., Daniel Joel Gleason, former tax director of Topeka-based Renaissance, The Tax People, Inc., was sentenced to 78 months in prison for tax fraud. He also was ordered to pay more than $3 million in restitution and barred from preparing tax returns. Gleason pleaded guilty to one count of conspiracy to defraud the Internal Revenue Service (IRS) and to defraud Renaissance members through mail and wire fraud, and one count of preparing a fraudulent federal income tax return. According to court documents, Gleason admitted that in March 1998 he signed a contract to work with Renaissance to provide tax advice to the company’s members and to represent them before the IRS in defending their tax returns. He admitted to assisting in the preparation of 56 false income tax returns that either falsely inflated or falsely created business deductions for personal living expenses.

Former Director on Redstone Arsenal Sentenced for $1.6 Million Procurement Fraud and Bribery Scheme
On December 9, 2009, in Birmingham, Ala., Michael L. Cantrell, a former high-level government employee with the U.S. Army Space and Missile Defense Command in Huntsville, was sentenced to 60 months in prison and ordered to pay $2.5 million in restitution to the government. He was also ordered to file amended tax returns for tax years 2001 through 2005 and to pay $352,145 in back taxes to the Internal Revenue Service (IRS). In addition, Cantrell has forfeited his Huntsville home, valued at $960,000 and a $685,060 forfeiture judgment has been filed against Cantrell for the government to recover the remaining value of the property. Cantrell pleaded guilty in 2008 to conspiracy to commit bribery, bribery, and tax evasion arising out of the procurement fraud scheme involving contracts with the Space and Missile Defense Command. As director of the Joint Center for Technology Integration (JCTI) and Integrated Capabilities Management Directorate (ICMD), Cantrell had decision-making authority over certain projects, including the ability to place funding on specific contracts. In his plea agreement, Cantrell admitted receiving about $1.6 million in bribes over six years. According to court documents, Cantrell received kickbacks in exchange for: recommending approval of contracts to certain contractors, applying and designating funding to those contracts, and causing payments to be made on contracts that produced nothing for the government. Cantrell filed a false tax return stating that his joint taxable income was $156,785, when the actual income was $514,838, due to bribes received in 2002.

New Jersey Tax Preparer Sentenced for Preparing False Tax Returns
On December 4, 2009, in Camden, N.J. Janet Ramirez, a tax preparer, was sentenced to 12 months in prison, to be followed by one year of supervised release. Ramirez pleaded guilty in August 2009 to one count of aiding and assisting in the preparation of false and fraudulent tax returns. At her plea hearing, Ramirez stated that from 2004 through 2008, she owned and operated a tax preparation business named Primetax Associates in Vineland. Ramirez admitted that for tax years 2003 through 2007, she operated a scheme to defraud the Internal Revenue Service (IRS) of income tax revenues owed in connection with 18 taxpayers. She admitted submitting false itemized deductions on Schedule A and fraudulent employee business expenses on Form 2106 of her clients’ personal income tax returns to reduce the clients’ tax liabilities. The reduction of tax liability resulted in the clients receiving inflated tax refunds to which they were not entitled. In fact, Ramirez admitted that she prepared and caused to be filed approximately 50 tax returns for the 18 clients for tax years 2003 through 2007 that contained false and fraudulent information and resulted in a total tax loss of more than $121,000.

Former IRS Revenue Officer Sentenced on Charges of Making a False Statement and Obstruction of Justice
On November 30, 2009, in Fort Myers, Fla., Carlton Bryan was sentenced to 12 months and one day in prison, to be followed by two years of supervised release, and ordered to pay a $6,000 fine. Bryan was indicted in May 2009 on one count of making a false statement and two counts of obstruction of justice. According to court documents, Bryan was employed by the Internal Revenue Service (IRS) as a Revenue Officer for eight years beginning in 1982. After leaving the IRS, Bryan began a tax consulting service, Bryan Enterprises, Inc., where he represented individuals before the IRS as an enrolled agent. According to the indictment, on April 25, 2007, Bryan made false statements to IRS agents concerning his case narrative notes. He also knowingly altered and concealed his original case file documents that had been subpoenaed by a federal grand jury.

Michigan Mother and Son Jailed on Tax Charges
On December 1, 2009, in Grand Rapids, Mich., Joyce Stone and her son, Charles Freed, were each sentenced to 37 months imprisonment to be followed by two years of supervised release as the result of their June 2009 guilty pleas to conspiring to defraud the IRS. The pair was also ordered not to prepare any tax returns for other individuals while under court supervision. According to court records, during the mid 1990's through August 2006, Stone and Freed operated an income tax preparation service, known as Stone and Associates, from their home. They prepared false and fraudulent income tax returns, where certain clients received a larger tax refund by significantly lowering the amount of taxable income, by falsely increasing or fraudulently creating itemized deductions reported by their clients, and claiming that ordinary daily activities were businesses that generated little income but incurred deductible expenses. Both Stone and Freed reassured their clients that should there be an audit, they would have an ample supply of receipts they could use to substantiate their false deductions and expenses.

Georgia Tax Preparer Sentenced for Preparing False Tax Returns
On November 30, 2009, in Atlanta, Ga., Tera Nicole Dixon, of Stone Mountain, Georgia, was sentenced to 30 months in prison, to be followed by one year of supervised release, and ordered to pay $103,523 in restitution. Dixon pleaded guilty in September 2009 to one count of preparing and filing false tax returns. According to court documents, between 2006 and 2008, Dixon was a tax preparer for different services in the Atlanta area, including “Icon Tax Service,” “Taxes Done Right,” and “NuWay Taxes.” She filed approximately two dozen tax returns for individuals claiming deductions for which the taxpayer did not qualify, and many were accompanied by false and fraudulent supporting documents. The false returns also claimed exaggerated withholdings, and about half of the returns contained a false Schedule C, which reported “losses” for non-existent companies.

Florida Tax Return Preparer Sentenced for Preparing False Income Tax Returns
On November 30, 2009, in Miami, Fla., Zully M. Cordoba, of Hialeah, Fla., was sentenced to 24 months in prison, to be followed by one year of supervised release and ordered to pay restitution to the Internal Revenue Service (IRS). Cordoba pleaded guilty in September 2009 to one court of aiding in the preparation of a false federal income tax return. According to court documents and the written factual proffer filed with the Court during her plea, Cordoba admitted to preparing a false federal income tax return for a married couple by falsely claiming that $11,900 in unreimbursed employee business expenses and $3,900 in charitable contributions during tax year 2000. In fact, no such expenses had been incurred. In her factual proffer, Cordoba admitted that she aided in the preparation of numerous false federal income tax returns for numerous other clients claiming a variety of purported unreimbursed employee business expenses, including falsely claimed overnight business travel costs, costs associated with the non-commuting use of their personally owned cars for purported business purposes, and so-called business lunches and other job-related expenditures. Cordoba ran a tax return preparation business from her residence in Hialeah from January 2001 to April 2003. Thereafter, through April 2005, Cordoba continued her tax preparation business under the name “Cordoba Tax Services” from storefront offices located in a mall in Hialeah. Cordoba charged a $10 fee to “review” her clients’ original income tax returns, which they had prepared for themselves or had been prepared by other tax return preparers. Upon completing her “review” of her client’s returns, Cordoba prepared false Form 1040X amended returns, charging her clients 10 percent of their expected tax refund based upon various alleged “overlooked” deductions. In addition, Cordoba admitted to filing false personal tax returns that substantially understated her income from the tax preparation business during the years 2002 - 2004. As revealed in Court during her sentencing hearing, Cordoba avoided approximately $114,000 in personal income taxes through these false returns and received more than $26,154 in tax refunds, income credits and government-subsidized contributions to her own social security account.

California CPA sentenced to 24 months in prison
On November 16, 2009, in Los Angeles, Calif., Ronald Irving Anson was sentenced to 24 months imprisonment, followed by three years supervised release, and ordered to pay restitution totaling $1,853,282 after pleading guilty to conspiracy to defraud the United States. According to the Information, Anson, a licensed CPA in California, conspired with others to defraud the United States by impeding the IRS in the ascertainment, assessment and collection of taxes. From December 1998 to at least December 2002, Anson sold partnership interests in hotels to clients with large amounts of active income by promising a tax loss equal to five times the amount of money they made payable to the partnership. Anson knew that he and his accounting firm would prepare the clients' federal income tax returns falsely claiming that the clients were material participants in the partnership. At the time he sold the hotel partnership interests to his clients, Anson knew they did not qualify as material participants. Anson’s actions resulted in a tax loss of approximately $9 million.

Miami Tax Return Preparer Sentenced for Filing False Returns and Identity Theft
On November 23, 2009, in Miami, Fla., Gary Bart Rosenfeld was sentenced to 36 months in prison, to be followed by one year of supervised release, and ordered to pay $200,843 in restitution. Rosenfeld also faces the forfeiture of assets accumulated from his illegal activities. Rosenfeld pleaded guilty in July 2009 to aiding in the filing of a false tax return and aggravated identity theft. According to court documents, Rosenfeld operated a tax return preparation business, Taxing Solutions, Inc., in Miami, Florida from 2004 to 2007. In 2005, Rosenfeld began filing fraudulent income tax returns for others, in which he misrepresented wages, income and withholding amounts, and fabricated tuition payments, education credits and childcare expenses on his clients’ tax returns. Court documents stated that for tax year 2006, Rosenfeld filed numerous tax returns for his clients where he directed the tax refunds to be paid to the taxpayer by refund anticipation loans on access device cards, without the taxpayer’s knowledge and consent. Rosenfeld provided his clients with tax returns showing that the refunds would be deposited into a bank account of their choice via direct deposit, but subsequently altered the tax returns to request refund anticipation loans prior to filing the tax returns with the IRS. Rosenfeld then withdrew the refund anticipation loan funds from automatic teller machines. In addition, Rosenfeld prepared and filed tax returns on behalf of other individuals without their permission.

Arkansas Tax Preparer Sentenced for Preparing False Return
On November 20, 2009, in Fort Smith, Ark., Hilda Jarrell was sentenced to 37 months in prison, followed by one year of supervised release. Jarrell was also ordered to pay a $1,000 fine and $6,716 in restitution to the Internal Revenue Service (IRS). Jarrell pleaded guilty in June 2009 to fourteen counts of aiding and assisting in the preparation of false federal income tax returns for tax years 2003 through 2006. Jarrell worked as a tax preparer for H & R Block in Fort Smith. According to court documents, between March 12, 2004, and March 12, 2007, she prepared returns for others that claimed deductions for false or inflated Schedule A Itemized Deductions, false exemptions, fraudulent Earned Income Tax Credits, and/or false Child Tax Credits.

Maryland Accountant Sentenced for Preparation of False Tax Returns
On November 20, 2009, in Baltimore, Md., Joseph Poole, of Grasonville, Maryland, was sentenced to 24 months in prison, followed by one year of supervised release to be served in home detention with electronic monitoring. Poole was also ordered to pay a $10,000 fine and to pay half the cost for the government’s expert witness, $13,603. After a seven day bench trial, Poole was convicted on July 24, 2009, of preparing false tax returns in connection with a scheme to underreport the income earned and tax owed by a Baltimore City business owner. According to trial testimony, between 1998 and 2003, Stilianos (Stan) Mavroulis, the President and 100 percent owner of Fidelity Home Mortgage Corporation (FHMC), diverted more than $1,100,000 of FHMC’s funds to pay for personal family expenses. Poole then prepared FHMC’s corporate returns to reflect that the personal expenses were legitimate business deductions. The evidence also showed that between 1998 and 2003 Stan Mavroulis withdrew approximately $700,000 from FHMC as shareholder draws that should have been reported as capital gains on his personal tax returns. Poole, who prepared all of FHMC’s corporate tax returns and Stan Mavroulis’ personal tax returns, willfully prepared false personal tax returns for Stan Mavroulis for tax years 2000 through 2003, failing to report a total of more than $1,438,000 in income for Mavroulis in those years. For 2000 and 2001, Stan Mavroulis’ personal tax returns, as prepared by Poole, claimed the Earned Income Credit, despite the fact that Stan Mavroulis did not qualify for such credit. In addition, the evidence showed that Poole knew that Stan Mavroulis’ children were working at FHMC but were not on FHMC’s payroll and therefore were not reporting their income to the IRS; instead, the payments to the Mavroulis children were disguised within the approximately $700,000 in shareholder draws that were not reported on Stan Mavroulis’ tax returns. Stan Mavroulis and his son, Kirk Mavroulis, pleaded guilty to related charges. Stan Mavroulis was sentenced to 12 months and a day in prison and ordered to pay a $18,000 fine. Kirk Mavroulis, who was the head of FHMC’s accounting department, was sentenced to probation and ordered to pay a $9,000 fine.

Alabama Return Preparer Sentenced for Submitting False Claims for Refunds
On November 19, 2009, in Birmingham, Ala., Charlotte Thompson-Jones was sentenced to 12 months and one day in prison, to be followed by three years of supervised releases, and ordered to pay $43,094 in restitution to the Internal Revenue Service (IRS). Thompson-Jones pleaded guilty in March 2009 to fourteen counts of submitting false claims. According to court documents, during the filing seasons pertaining to tax years 2003 through 2005, Thompson-Jones prepared and filed false tax returns on behalf of ten individuals which contained false information on Forms W-2 and Schedule C’s. Additionally, Thompson-Jones filed a false return in her name which generated a false claim for refund.

Alabama Return Preparer Sentenced for Filing False Returns
On November 12, 2009, in Montgomery, Ala., Equanator Cornelius Thomas was sentenced to 36 months in prison and ordered to pay $50,176 in restitution. Thomas pleaded guilty on August 12, 2009, to charges of aiding and assisting in the filing of false tax returns. According to court documents, Thomas operated a tax preparation business in Auburn, Alabama under the name CK Tax Service. From January 2008 through April 2008, Thomas prepared fraudulent claims for federal income tax refunds. The returns were submitted electronically to the Internal Revenue Service (IRS) under the name of CK Tax Service. Thomas would manipulate the taxpayer’s income by adding a false Schedule C that falsely contained business losses or income not actually incurred by the taxpayer, in order to render the taxpayer eligible for the earned income tax credit or to entitle the taxpayer to a larger refund.

Maryland Tax Preparer Sentenced for Filing False Tax Returns; Defrauded IRS of Over $500,000 in Taxes Due
On November 12, 2009, in Greenbelt, Md., Lugard A. Edokpayi, of Mitchellville, Maryland, was sentenced to 30 months in prison followed by one year of supervised release. Edokpayi pleaded guilty in August 2009 to filing false federal individual tax returns and preparing and presenting false federal tax returns for his clients. According to the plea agreement, from 1990 to 2006, Edokpayi owned and operated a tax preparation business known as New Century Tax Services located in Hyattsville, Maryland. From 2003 to 2007, Edokpayi filed individual income tax returns on behalf of his clients falsely reporting deductions for education credits, charitable contributions, child and dependent care expenses and unreimbursed business expenses. Additionally, for tax years 2003 through 2006, Edokpayi filed false personal income tax returns understating his gross income. The total tax loss resulting from Edokpayi’s conduct is over $500,000.

Former Owner of Triad Business Services Sentenced for Tax Fraud Conspiracy
On November 2, 2009, in Washington, D.C., Henderson Joseph, the former owner of Triad Business Services, was sentenced to 36 months in prison, followed by three years of supervised release, and ordered to pay a $50,000 fine. Joseph pleaded guilty in January 2009, in connection with a massive tax fraud conspiracy in which Triad Business Services sought over $500,000 in fraudulent tax refunds for its clients. Triad Business Services, a local tax preparation service, had offices in the District of Columbia, Richmond, Va., and Baltimore, Md. According to court documents, Joseph masterminded a scheme to file fraudulent refunds for hundreds of clients by falsifying itemized deductions and credits on the clients’ individual tax returns. The fraudulent income tax returns contained inflated or fabricated itemized deductions, such as charitable contributions, job expenses, and other miscellaneous expenses. False credits were also claimed for education and child care. As part of the scheme, Joseph instructed other Triad managers to file fraudulent client tax returns; thereby increasing the refunds the clients would receive, increasing Triad’s fees, and increasing repeat customers who would return in successive years. All of the tax returns prepared at the Triad offices were reviewed by Joseph and then electronically transmitted to the Internal Revenue Service (IRS). Triad office managers, Marcelle L. Stephens, Draphet Moody and Nicole Williams, have all pleaded guilty. The IRS has proceeded civilly against the taxpayers whose returns were falsified, seeking repayment of the unlawful refunds, plus interest and penalties.

Virginia Beach Tax Preparer Sentenced for Filing False Tax Returns
On October 23, 2009, in Norfolk, Va., Hinton Huff, Jr. was sentenced to 15 months in prison for filing false and fraudulent federal income tax returns. According to court records and evidence at trial, Huff owned and operated H & H Tax on Wheels, a mobile tax return preparation business located in Virginia Beach, Va. He prepared federal individual income tax returns for his customers and charged a flat rate which typically was $250 to $300 per return. Huff was convicted of preparing 29 false and fraudulent federal individual income tax returns for the tax years 2002 to 2006 on behalf of his customers. The materially false and fraudulent items in the returns Huff prepared included false Schedule C businesses, false earned income credits, false education credits, false dependents, false job expenses, false gifts and false child tax credits.

Former Tax Preparer Sentenced for $1 Million Tax Fraud
On October 16, 2009, in Kansas City, Mo., Donald Bushnell, a former tax preparer, was sentenced to 36 months in prison for fraudulently preparing nearly 300 tax returns that falsely claimed more than $1 million in business losses for his clients. Bushnell was the owner of Bushnell Contract and Labor Service, a sole proprietorship that prepared individual federal income tax returns. On April 14, 2009, Bushnell pleaded guilty to preparing false income tax returns. Bushnell claimed business losses for his clients on forms submitted to the IRS, thereby reducing their taxable income. In reality, Bushnell’s clients did not maintain businesses and did not incur any business losses. Bushnell did not inform his clients of those misrepresentations, nor did he have authority from his clients to engage in those misrepresentations. Bushnell prepared 272 false and fraudulent federal tax returns from January 9, 2001, to June 6, 2005, for a total tax loss of approximately $1,088,720. Bushnell’s criminal conduct caused dozens of taxpayers to incur substantial costs, ranging between $200 and $400 per return, for interest and penalties.

California CPA Sentenced for Filing False Income Tax Return
On October 9, 2009, in Los Angles, Calif., Arnold C. Libman, a licensed CPA who prepared tax returns in Rosemead, California, was sentenced to 18 months in prison, followed by one year supervised release, and ordered to pay a $250,000 fine. Libman was also ordered to pay $100,000 in restitution to the Internal Revenue Service (IRS). In addition, Libman was ordered to no longer prepare tax returns. Libman pleaded guilty to aiding and assisting in the preparation of false income tax returns. According to Libman’s plea agreement, from 2002 through 2005, he prepared at least 54 false federal and state income tax returns for at least 20 clients for tax years 2001 through 2004. The returns included inflated amounts for charitable contributions, medical expenses, and unreimbursed employee and business expenses, and various other deductible items. These 20 returns Libman prepared, understated his clients’ tax liability by approximately $173,346.

Former Jackson Hewitt Return Preparer Sentenced For Tax Preparation Fraud Scheme
On October 9, 2009, in Miami, Fla., Aracelis Llanos, aka Sally, aka Yvonne Rodriguez, was sentenced to 18 months in prison, to be followed by three years of supervised release, and ordered to pay $55,137 in restitution to the Internal Revenue Service (IRS). Llanos pleaded guilty on June 18, 2009, to making and filing fraudulent tax refund claims against the IRS. According to court documents and testimony, Llanos was hired at Jackson Hewitt in Miramar, Fla., to prepare tax returns for clients. While working at Jackson Hewitt, Llanos prepared and submitted tax returns to the IRS for herself and her clients, claiming approximately $136,881 in fraudulent tax refunds. Specifically, Llanos submitted tax returns and Forms W-2 s containing false employer information and false income amounts in order to generate fraudulent tax refunds. Some of the clients stated that they gave Llanos a portion of their refund checks upon cashing.

Alabama Woman Sentenced to 46 Months for Preparing False Tax Returns
On October 5, 2009, in Mobile, Ala., Stacy Levette Parker was sentenced to 46 months in prison, to be followed by three years of supervised release, and ordered to pay $220,957 in restitution to the Internal Revenue Service (IRS). Parker pleaded guilty in June 2009 to charges of conspiracy to submit false claims against the Government and identity theft. According to court documents, from 2005 through 2007, Parker prepared and filed approximately 36 fraudulent tax returns with the IRS. Those tax returns involved the theft of the identity of others. Parker admitted that she submitted a fraudulent return in a client name, using his social security number, and depositing the refund into a bank account that Parker controlled. The tax return contained false employment and dependant information. The refund was used by Parker for her personal use.

Maryland Tax Preparer Sentenced to 70 Months for Preparing False Tax Returns
On October 13, 2009, in Greenbelt, Md., Marcel J. Toto-Ngosso of Silver Spring, Md., was sentenced to 70 months in prison and ordered to pay $238,788 in restitution for his role in a scheme to generate fraudulent tax refunds for his clients. In June 2009, Toto-Ngosso was convicted of 17 counts of aiding and assisting in the preparation and filing of false tax returns. According to the indictment and evidence introduced during trial, Toto-Ngosso ran a tax preparation business from his home. From at least 1998 through 2007, Toto-Ngosso prepared false tax returns claiming fraudulent deductions and adjustments, including false dependents, inflated charitable contributions, and false unreimbursed employee expenses, such as vehicle expenses, which he knew his clients were not entitled to claim. Toto-Ngosso obtained the names and social security numbers of individuals, which he later sold to his clients as dependents and qualifying persons for $500 to $800 each. Toto-Ngosso then used these names and social security numbers on his clients’ tax returns to secure larger refunds. According to evidence introduced at trial, after Toto-Ngosso learned he was under investigation by the IRS, he attempted to obstruct the investigation by telling his clients to lie about the information that he reported on their tax returns. Two associates of Toto-Ngosso, Maude H. Veney and Francois B. Zame, testified for the government at trial were sentenced in September 2009. Veney was sentenced to 18 months probation and Zame was sentenced to five months in prison.

Daughters of California Return Preparer Each Sentenced to 72 Months in Federal Prison
On October 5, 2009, in Riverside, Calif., Karen Denise Berry, of San Bernardino, California, and Carla Denine Berry, of Rialto, California, the daughters of a patriarch of an income tax preparation business, were each sentenced to serve 72 months in federal prison and three years of supervised release. They were also ordered to pay $14,000,000 in restitution to the IRS. Their father, Matthew Carl Berry, a Rialto tax return preparer, was previously sentenced to serve 108 months in federal prison, 36 months on supervised release, and ordered to pay over $15 million in restitution to the IRS, after having been previously convicted at trial on charges that he conspired with others to defraud the Internal Revenue Service and filed false personal income tax returns for the years 2001, 2002, and 2004. Karen Denise Berry and Carla Denine Berry, along with their father, Matthew Berry, were found guilty of conspiring with Ivan Taylor Johnson, of San Bernardino, California, and Valerie Madel Dixon, of Rialto to impede and obstruct the lawful functions of the Internal Revenue Service. Karen Berry and Carla Berry pleaded guilty before trial to various charges including conspiracy to defraud the IRS, aiding and assisting in the preparation of false tax returns, and subscribing to a false tax return. According to court papers, the false returns Berry prepared for clients, in conjunction with the returns prepared by Karen Berry, Carla Berry, Johnson and Dixon, caused losses of more than $45,000,000 in tax revenue to the IRS. Johnson and Dixon previously pleaded guilty to charges contained in the indictment. Johnson was sentenced to 35 months imprisonment followed by three years of supervised release and ordered to pay restitution to the IRS in the amount of $19,034,901. Dixon was sentenced to five years probation, including 10 months home detention, and ordered to pay restitution to the IRS of $19,034,901.

Fort Worth Tax Preparer Sentenced To 18 Years in Federal Prison Without Parole
On October 2, 2009, in Fort Worth, Texas, Joyce M. Simmons, who did business as Diamond Notary and Tax Service, was sentenced to 216 months (18 years) in federal prison. In addition, the judge ordered Simmons to pay $28,261,295 in restitution to the Internal Revenue Service (IRS). In June 2009, Simmons pleaded guilty to six counts of preparing and presenting a materially false tax return to the IRS. Simmons admitted that six of the returns she submitted were false and fraudulent as to material matters, in that each tax return represented that the taxpayers were entitled, under the provisions of the IRS laws, to claim exemptions, deductions, credits, or refunds, to which she well knew they were not entitled. During the sentencing hearing, the judge concluded that Simmons had also obstructed justice by lying under oath on a number of occasions and by fraudulently transferring over $1 million worth of property after she became aware that the IRS was investigating her.

Tax Preparer Sentenced To 42 Months For Defrauding The IRS
On October 1, 2009 in Philadelphia, PA, Eugene DiNatale of Trumbauersville, PA was sentenced to 42 months in prison and ordered to pay a fine of $3,000 and restitution of $4.3 million for conspiring to defraud the government and filing false tax returns on behalf of clients. According to court documents, DiNatale, owner of DiNatale & Associates, Ltd provided bookkeeping, accounting and tax return preparation services. DiNatale promoted a massive tax fraud scheme where numerous, profitable businesses were able to avoid payment of millions of dollars of employment taxes and corporate income taxes. His co-defendant, Chakawarn Sirirathasuk, Senior Accountant at D&A provided tax preparation services to clients. Sirirathasuk pleaded guilty and is awaiting sentencing. The schemes resulted in estimated tax losses to the IRS of more than $4.3 million in unpaid employment taxes and more than $75,000 in unpaid corporate income taxes. Between 2001 and 2004, DiNatale and Sirirathasuk filed Quarterly Federal Tax Returns, Form 941, for labor leasing agency clients of D&A that overstated the amount of business expenses and under reported the amount of taxable income earned by the clients.

---------------------------------

It is important to contact a tax attorney if and IRS investigation has begin.

Alvin S. Brown, esq.
tax attorney
888 712-7690 ex 111