Tax Fraud Blotter: Fallen stars

Accounting

Almost made 100; O Canada; check’s not in the mail; and other highlights of recent tax cases.

Irvington, New Jersey: Tax preparer Nehemie Leon, of Roselle, New Jersey, has pleaded guilty to preparing false returns for clients.

Leon was employed or self-employed as a preparer at a prep business. She admitted that she prepared fraudulent returns for four individuals, including on those returns certain tax credits, itemized deductions, expenses and exemptions that were fabricated and inflated to obtain bigger and undeserved refunds.

For the tax years 2014 through 2017, Leon prepared additional returns for about 27 individuals that likewise contained false and fraudulent information. On those 97 additional individual returns, Leon included certain tax credits, itemized deductions, expenses and exemptions that were fabricated and inflated to generally phony, large refunds.

The loss to the IRS as a result of the returns Leon prepared for the 2014 to 2017 tax years totaled some $479,039.

The count of aiding and assisting in the preparation of a false return carries a maximum of three years in prison and a maximum fine of at least $250,000. Sentencing is April 27.

Elizabeth, New Jersey: Antonio Teixeira, 43, previously a staff member in the New Jersey Senate, has pleaded guilty to his role in a conspiracy to falsely inflate the invoices that a political consultant submitted to various campaigns, political action committees and 501(c)(4) organizations.

From 2014 to 2018, Teixeira conspired with Sean Caddle and Caddle’s political consulting firms to defraud various campaigns, PACs and 501(c)(4)s of $107,800. Teixeira then failed to report this income on federal tax forms. 

Caddle was hired by a former New Jersey state senator to create the PACs and 501(c)(4)s so they could raise money to advocate on various issues, including supporting particular candidates in races around New Jersey. Teixeira served as the senator’s chief of staff and wielded influence over the consultants that the campaigns and organizations hired and the budgets that each of these organizations would receive. 

Teixeira and Caddle conspired to falsely inflate the invoices that Caddle’s consulting firms submitted with phony campaign-related expenditures. Caddle and Teixeira were fraudulently padding the invoices because they agreed to split the difference between Caddle’s actual campaign expenditures and the amount charged to the organizations. Caddle paid a portion of Teixeira’s share to him in cash and funneled the remainder to Teixeira via checks made out to Teixeira’s relatives.

In total, Teixeira received more than $100,000 and never reported it on the federal tax forms he filed during the scheme.

The wire fraud conspiracy charge carries a maximum of 20 years in prison; the tax evasion charge carries a maximum of five years. Both charges are also punishable by a fine of $250,000 or twice the gross gain or loss from the scheme, whichever is greater. Sentencing is March 27.

Atlanta: A federal jury has found Thomas Addaquay guilty of 29 counts of fraud-related offenses in a stolen ID tax refund fraud, including conspiracy to commit wire fraud, wire fraud and money laundering.

From at least 2011 to at least 2016, Addaquay fraudulently obtained the names, Social Security numbers and dates of birth of taxpayers to prepare and file false federal income tax returns. The filing of these fraudulent tax returns resulted in the issuance of thousands of refund checks.

Relying on Addaquay’s misrepresentations, a third-party payment processor processed the refund checks and wired more than $12 million into bank accounts controlled by Addaquay.

Sentencing is Jan. 31. Addaquay’s co-defendants previously pleaded guilty: Sacoya Lyons pleaded guilty to one count of conspiracy to commit wire fraud and will be sentenced on Jan. 5; Nana Addaquay, Addaquay’s brother, pleaded guilty to one count of money laundering conspiracy and will be sentenced on Jan. 17.

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Texarkana, Arkansas: Paving company owner Clarence A. Joles has pleaded guilty to filing a federal return that did not report all of the income he earned from his business.

He owned Rock Hard Paving, an asphalt paving business, which he operated as a sole proprietorship. Joles admitted that he deposited Rock Hard’s gross receipts into some nine bank accounts, then intentionally withheld from his tax preparer records from some of those accounts. Joles caused a false 2015 personal return to be filed with the IRS; he did not report more than $1 million in receipts.

Joles faces a maximum of three years in prison for filing a false return, as well as a period of supervised release, monetary penalties and restitution.

Austin, Texas: Canadian national William Henry Woo has pleaded guilty to making false statements on income tax returns.

Woo earned tax-subject income in the United States from gambling at casinos. Beginning in January 2007 through January 2011, Woo submitted to the IRS fraudulent claims seeking some $5.4 million in refunds by falsely over-reporting the tax withheld by the casinos and by duplicating his refund claims. He fraudulently obtained more than $1 million in federal refunds.

Woo pleaded guilty to two counts of making false statements on income tax returns for tax year 2007; each count carries up to three years in prison, restitution and a $250,000 fine.

Sarasota, Florida: Postal worker Kevin Mark Streeter Jr. has been sentenced to 54 months in prison for conspiracy, receipt of stolen government property and aggravated ID theft.

Streeter, who pleaded guilty in June, was employed by the U.S. Postal Service at a mail processing center. He stole some 40 federal refund checks from the U.S. mail that were on the way to the intended taxpayers. The checks ranged from $4,000 to more than $100,000, with an aggregate value of over $398,000.

San Antonio: Resident Cynthia J. Moak, 67, has been sentenced to 33 months in prison and ordered to pay $124,780 in restitution for her part in a multiyear tax evasion scheme.

She evaded paying taxes for 2009 through 2012 by falsifying her income tax returns. Among other methods, Moak, who previously pleaded guilty, applied for nonprofit status for one of her companies and then solicited charitable donations that she converted to her use.

Mystic, Connecticut: Restaurateur Yi Di Lin, a.k.a. Johnny Lin, has been sentenced to three years of probation and ordered to pay restitution and a $5,500 fine for a federal tax offense.

Lin, who owns and operates Peking Tokyo, a restaurant, regularly paid several employees wholly or partially in cash. In mid-2019, he began using a payroll processing company to issue payroll checks for certain employees, make appropriate tax withholdings, and file 941s.

Lin subsequently failed to inform the payroll company about the existence of the employees he only paid in cash and the amount of cash he paid to employees.  As a result, the payroll company prepared and filed false 941s for four quarters in 2019 and 2020 and appropriate payroll taxes were not remitted to the IRS. The loss to the IRS was $92,093.

Lin, who previously pleaded guilty, has paid the full restitution.

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