Tax Fraud Blotter: Bunch of suckers

Accounting

Mortgaged to the hilt; pocketing the difference; prison schmison; and other highlights of recent tax cases.

Pemberton, New Jersey: Mortgage underwriter John Barry Jr. has been sentenced to 12 years in prison for helping others file false returns claiming large refunds from the IRS, for obstructing the IRS’s efforts to recover those refunds and for failing to file a return.

In 2015 and 2016, Barry conspired with individuals in Georgia, North Carolina, Virginia and New York to promote a “mortgage recovery” tax fraud in which he and his conspirators obtained refunds for their clients based on fraudulent returns. Barry and his conspirators told clients they could extinguish their outstanding mortgage debts by filing forms with the IRS claiming a large amount of taxes had been withheld. Those withholding claims, which Barry and his conspirators knew were false, caused the IRS to issue more than $4 million in refunds.

Barry typically charged each client a fee of 20% to 35% of the refund and split those fees with some of his conspirators.

In addition to his role in the fraud, Barry did not file his own 2016 return despite earning income in excess of the filing threshold, and he did not report or pay taxes on the income generated from the scheme in that tax year.

When the IRS discovered the fraud and attempted to recover the wrongfully paid refunds, Barry provided clients with fraudulent documents to send to the IRS, directing clients to conceal his role in filing their false returns and advising a client to remove funds from his bank account to prevent collection efforts.

He was also ordered to serve three years of supervised release and pay some $4,240,733 in restitution to the United States.

In a similar case, Yomarie Febres of Covington, Georgia, pleaded guilty in a Florida federal court to conspiring to defraud the U.S. by also promoting a nationwide tax fraud and preparing false returns for the scheme’s participants.

Febres prepared 77 false income tax returns that collectively sought more than $23.8 million in federal refunds.

Between 2014 and 2016, her conspirators held seminars throughout the country where they promoted the scheme and recruited clients to file false federal returns by convincing them that their mortgages and other debts entitled them to refunds. Information was then collected from clients and provided to Febres for use in the preparation of false returns. The returns claimed that banks and other financial institutions had withheld large amounts of income taxes from the clients, which entitled the clients to refunds. In fact, the financial institutions had not paid any income to or withheld any taxes from the clients.

The returns Febres prepared caused the IRS to pay out more than $15 million in fraudulent refunds to scheme participants. She concealed her role in the scheme by falsely reporting that all the returns were “self-prepared.”

Febres admitted that her conspirators charged clients some $10,000 to $15,000 in fees. A portion of the fee — typically $500 per client — was paid to Febres for each return she prepared. She further admitted that she did not report on her 2014 and 2015 income tax returns the income she received; she also admitted to claiming false business losses on her personal returns.

She faces a maximum of five years in prison for conspiring to defraud the U.S. and three years for aiding and assisting in the preparation of false returns. She also faces a period of supervised release, restitution and monetary penalties.

Albuquerque, New Mexico: Tax preparer Solomon Gbara, 47, has pleaded guilty to aiding and assisting in the preparation and presentation of false and fraudulent income tax returns.

From February 2015 through May 2020, Gbara, who owned and operated Express Tax SG, assisted in the preparation and presentation of 1040s that included claims Gbara knew were false. These misrepresentations included claims for dependents and Schedule C businesses to which the taxpayers were not entitled. Gbara also admitted to showing clients returns with certain expected refunds, then filing returns with higher refunds and pocketing the difference.

The fraudulent returns filed by Gbara represented a total loss of more than $90,000 in tax revenues. Gbara faces up to three years in prison for each count.

Gary, Indiana: Tax preparer Dorian L. Hall, 47, has been sentenced to 39 months in prison for aiding and assisting in the preparation of a false tax return and filing a false tax return.

Hall operated a tax prep business from 2014 to 2016 and prepared returns for clients in which he fabricated income numbers to maximize the Earned Income Tax Credit and provided false information to obtain a refundable education credit; his clients also received undeserved refunds. Hall typically charged about $1,000 for preparing each return.

From 2014 to 2016, he filed more than 300 fraudulent returns, including his own. He received hundreds of thousands of dollars in fees for the returns he filed and did not declare that income to the IRS.

His scheme cost more than $1 million in tax loss.

Hall had previously pleaded guilty to criminal tax charges in November 2015 and was sentenced in April 2016. After learning that he was under investigation by the IRS, he opened 15 new bank accounts to support his tax prep activities while claiming to have ceased his operations. After he was sent to prison, the IRS uncovered his additional tax prep activities, resulting in the new charges and the new sentence.

Hall was also sentenced to a year of supervised release and ordered to pay $1,053,549.95 in restitution to the IRS.

Reno, Nevada: Saud Alessa and Jeffrey Bowen have been convicted for conspiring to defraud the IRS.

A third conspirator, Jackie Hayes, previously pleaded guilty to the same charge. Alessa was also convicted of tax evasion and filing false returns.

From 2010 through about March 2014, Alessa, Bowen and Hayes conspired to defraud the IRS relating to more than $500,000 in tax liabilities that Alessa owed for 1998 to 2007. Hayes entered into a payment arrangement with Bowen, the owner of a vacuum cleaner distributor, J&L Distributing Inc., where commissions earned by Alessa were falsely recorded in J&L’s books as commissions earned by Hayes. Hayes and Bowen then submitted tax forms and filings to the IRS that falsely reported Hayes had earned the income. This scheme allowed Alessa to evade IRS collection efforts and payment of his outstanding federal tax debt.

Alessa also filed false 2012 and 2013 individual tax returns and in February 2013 filed a bankruptcy petition falsely reporting no income.

Bowen and Alessa will be sentenced on Feb. 22; Hayes will be sentenced on Jan. 18. All three face a maximum of five years in prison for conspiracy. Alessa also faces a maximum of five years in prison for tax evasion and three years in prison for each count of filing a false return.

St. Louis: Tax preparer Robyn T. Roberts has pleaded guilty to multiple counts of aggravated identity theft, wire fraud and preparing and submitting false returns.

Roberts, a preparer at Roberts Tax Professionals, is responsible for causing the overpayment of more than $400,000 in refunds by preparing fraudulent returns. She used stolen Social Security numbers and fraudulently claimed dependents, education expenses and business losses on behalf of both herself and other taxpayers.

Sentencing is March 3.

Berryton, Kansas: Businessman Randall Brammell has pleaded guilty to one count of making and subscribing a false return.

He owned and operated Brammell Construction Company and Lawn Mowing and pleaded guilty to submitting a false 2016 federal income tax return.

Brammell failed to inform his tax preparer about a substantial number of business checks made out to him personally that he cashed instead of depositing into his business bank account. The gross income of his business that year was underreported by $139,918.

Brammell, scheduled to be sentenced Feb. 16, and faces a maximum of three years in prison.

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