Up in Michigan; no touching; gone Pro; and other highlights of recent tax cases.
Biloxi, Mississippi: Tax preparer Gena Michelle Hall, 37, has been sentenced to 30 months in prison for making a materially false statement on a return.
Hall worked at the tax prep business Tax Pros, and between 2015 and 2019 prepared federal income tax returns for clients that she knew contained one or more false entries that caused the IRS to issue inflated refunds.
Hall also knowingly filed false income tax returns for herself. In 2017, she received about $49,000 in prep fees. yet reported none of it as income.
She was also ordered to pay $231,636.67 in restitution to the United States.
Agoura Hills, California: Real estate developer Mark Handel has agreed to plead guilty for failing to disclose on a bankruptcy petition that he had earned nearly $2.3 million in income and for failing to report almost $6.9 million in income on his returns.
In 2015, Handel filed a bankruptcy petition on which he knowingly made false statements. He stated that he had no income from 2013 until April 2015, when in fact he’d earned $2,263,221 from DTMM Construction Inc., his West Los Angeles-based real estate development company.
Handel caused DTMM, which, according to court documents, stands for “Don’t Touch My Money,” to be registered in his wife’s name but used DTMM to deposit profits from his own work as a real estate developer and to pay for his and his family’s living expenses. He concealed his income from his creditors by depositing it into DTMM’s accounts. Assets that Handel hid from creditors included his interest in real estate in Livermore, California.
In 2016, he signed and filed a federal income tax return for 2015 that failed to disclose $1,096,175 in additional income. Handel further admitted that for 2010 to 2017 he failed to report $6,886,877 in income on his federal returns.
Handel also falsely reported a net operating loss of $7,259,119 on his 2017 federal income tax return and underreported income on his 2018 return by $1,411,050 and admitted to failing to pay $460,408 in additional tax.
Handel has agreed to forfeit $3,545,712, the proceeds of the sale of area real estate and to pay to the IRS $1,450,070 in tax liabilities, which include fraud penalties. Once he pleads guilty, he will face a maximum of eight years in prison.
Lake Orion, Michigan: Former resident Donald Stanley LaVigne has been convicted of filing false returns and making false statements to both a bankruptcy court and the Department of Justice.
He did not report insurance commissions and other income on federal returns for 2013 through 2019. In letters to the IRS, LaVigne also falsely claimed that these commissions were not income to him.
When he filed for bankruptcy in 2018, he did not list the IRS as a creditor on the schedules attached to his bankruptcy petition, even though he owed federal taxes for 2008 and 2009 and 2013 through 2015. On one document he filed in the bankruptcy case, he understated his income for the years 2016 and 2017.
After he was notified that he was the target of a federal grand jury investigation, LaVigne lied to the DOJ that his bankruptcy attorney had reviewed his 2017 income tax return and advised that it was “correct and complete.” His bankruptcy attorney later testified that he had never advised LaVigne that his 2017 income tax return was accurate.
Sentencing is June 1. LaVigne faces a maximum of three years in prison on each of seven counts of filing false tax returns, five years on each of two counts of making false statements in bankruptcy and five years for making a false statement to the DOJ. He also faces supervised release, restitution and monetary penalties.
New York: Tax preparer Raul Martinez has been sentenced to eight months in jail for violating probation related to previous tax crimes.
In late 2021, Martinez was convicted of multiple felonies including criminal tax fraud, grand larceny and filing fictitious returns. At that time, he admitted to falsely representing his New York City residency, failing to remit withholding tax to the State of New York and failing to report business income from his firm, Apollo Tax, on his personal income tax return.
As part of his plea agreement, he was barred from preparing returns for anyone other than himself, which he ultimately violated numerous times in subsequent months.
Grosse Point Park, Michigan: Property manager Matthew D. Adams has pleaded guilty to money laundering and obstructing the IRS.
From about 2008 through 2017, Adams owned a property management company, MDA Property Services. He sold illegal narcotics to the president of another company, who paid for the drugs using that company’s money; the buyer paid Adams with checks made out to MDA and other entities that Adams owned. From 2013 through 2017, the buyer paid Adams more than $10 million for illegal narcotics.
Adams deposited some of the checks into his personal and business bank accounts and cashed the remainder, totaling some $5.3 million, at a local liquor store.
For 2013 through 2016, Adams caused his tax preparer to prepare false business and individual returns by providing the preparer with records that Adams knew did not reflect all of the illicit proceeds. During an audit in 2017 and 2018, Adams lied to the IRS that all income his business received was deposited into business bank accounts and that 90% of the funds MDA Property Services received through the buyer was for legitimate work; Adams knew that only a small percentage was in fact business-related.
During his fraud, Adams withdrew more than $1 million in cash of his illegal narcotics proceeds from business bank accounts and used funds to acquire real estate. He also spent more than $1.25 million on private flights, golfing, jewelry, gambling, court-ordered child support, vehicles, hotel stays and a firearm.
Sentencing is June 21. He faces a maximum of three years in prison for obstructing the IRS and 10 years for money laundering. He also faces a period of supervised release, restitution and monetary penalties.
Detroit: A federal court has endorsed an agreed preliminary injunction barring tax preparer Annetta Powell and her businesses from preparing federal returns for others until a trial on whether a permanent injunction is warranted.
The preliminary injunction was entered against Powell and her tax prep businesses, known as “The Tax Experts” and registered to do business under various names: Alliance Tax Services; Nationwide Tax Services; Tax Expert Stores; United Tax Services; Top Financial Specialists d.b.a. The Tax Experts; United Financial Team Corporation d.b.a. The Tax Experts; and Speedy Tax Stores Corporation d.b.a. The Tax Experts.
According to the amended complaint filed against the defendants, Powell and her companies had prepared returns that, among other things, reported inflated or fraudulent business losses, claimed false or inflated Earned Income Tax Credits, and claimed improper education credits.
The fraudulent returns that Powell and her business prepared for clients cost the U.S. more than $1.5 million dollars in tax revenue.
Key West, Florida: Oleksandr Morgunov has been sentenced to eight years in prison for conspiring to harbor non-resident aliens and induce them to remain in the country, and for conspiring to defraud the IRS.
From 2016 through 2021, he helped operate labor-staffing companies in Florida. These companies facilitated employment of individuals in hotels, bars and restaurants in Key West and other locations even though the employees were not authorized to work in the United States.
Morgunov and his conspirators defrauded the IRS out of more than $7.9 million in employment taxes that should have been withheld and paid over in connection with the employment of these workers.
He was also ordered to serve three years of supervised release and to pay $7,958,421.50 in restitution to the United States.