Crime Watch: August 30, 2013: Page 2 of 4 | AccountingWEB

Crime Watch: August 30, 2013

Alabama State Employee Sentenced to Prison for Stolen Identity Refund Fraud
Chequlia Motley of Montgomery, Alabama, was sentenced August 13, 2013, to serve thirty-six months in prison for conspiracy and aggravated identity theft, the Justice Department and the US Attorney for the Middle District of Alabama announced. Motley pleaded guilty to those charges in May 2013.
According to Motley's plea agreement, she was a former state employee who stole identities from state databases and sold them to coconspirators. As evidence presented at the sentencing hearing showed, Motley had previously worked for the Alabama State Employees' Insurance Board and stole the personal information of over a hundred state workers and their family members from the databases maintained by the board.
She provided this information to Veronica Temple, Yolanda Moses, and Barbara Murry, who used the stolen identities to file false tax returns that fraudulently requested tax refunds from the IRS. Temple, Moses, and Murry were previously convicted and each sentenced in February to fifty-seven months in prison.
In addition to the prison sentence, Motley was ordered to pay $179,946 in restitution to the IRS.
Source: US Department of Justice
Federal Court Permanently Bars Indiana Instant Tax Service Franchisee from Tax Preparation
A federal court in Indianapolis permanently barred David Franklin and his company, Instant Refund Tax Service (IRTS), from preparing tax returns and from operating a tax-preparation business, the Justice Department announced August 19. The government alleged that IRTS, which Franklin wholly owns, operated as a franchisee of Instant Tax Service, a large national tax-preparation franchisor operated by ITS Financial LLC, based in Dayton, Ohio.
The order follows an earlier preliminary injunction against the defendants. In a separate case, a federal court in Ohio preliminarily enjoined the Dayton-based franchisor last November. The defendants in both cases consented to entry of the preliminary injunctions without admitting the allegations against them.
The Indiana permanent injunction order was signed by Judge Sarah Evans Barker of the US District Court for the Southern District of Indiana. The government complaint in the case alleged that Franklin owned and operated twenty-two Instant Tax Service locations that prepared and filed false and fraudulent income tax returns for customers, fabricated income for phony businesses to obtain larger tax credits, forged W-2 forms, filed returns improperly based on paycheck stubs rather than W-2 forms, claimed false education tax credits, and reported false filing statuses for customers. The government also accused Franklin's offices of filing tax returns without customers' authorization and selling false and deceptive loan products to customers.
The case is one of five similar civil actions that the Justice Department brought against Instant Tax Service franchises and the corporate franchisor, ITS Financial, which claims to be the fourth-largest tax-preparation firm in the nation. The court recently conducted a two-week trial in the Ohio case in connection with the government's request to permanently enjoin the Instant Tax Service franchisor. A decision has not yet been issued.
Source: US Department of Justice
Alabama Tax Return Preparers and Nineteen Foreign Nationals Charged with Conspiring to Defraud the United States, Identity Theft, and Money Laundering
The Justice Department announced August 20 that a fourteen-count superseding indictment was unsealed, charging JB Tax Professional Services Inc., Jacqueline J. Arias, and Jose Bayron Estrada, of Spruce Pine, Alabama, along with nineteen foreign nationals, many of whom resided in the New Orleans area, with conspiracy to defraud the United States and conspiracy to commit mail and wire fraud by filing fraudulent income tax returns. The indictment also charges certain defendants with aggravated identity theft and conspiracy to commit money laundering. Most of the defendants were previously indicted in May 2013 and arrested in June 2013.
According to the indictment, members of the conspiracy obtained Forms W-2, often by purchasing them for cash, for the purposes of filing fraudulent income tax returns. Conspirators further obtained individual taxpayer identification numbers (ITINs) for use in filing fraudulent tax returns, in some cases using false applications filed with the assistance of Arias and JB Tax Professional Services. An ITIN is a tax processing number issued by the IRS to individuals who do not have, and are not eligible to obtain, a Social Security number. Both Arias and the business were designated by the IRS as certified acceptance agents, which are entrusted by the IRS with the responsibility of reviewing the documentation of an ITIN applicant's identity and alien status for authenticity, completeness and accuracy before submitting their application to the IRS.
The charging documents allege that the defendants used the Social Security numbers of real persons to conduct mail and wire fraud. The defendants also allegedly disguised and concealed the proceeds of their fraud by agreeing to conduct certain types of financial transactions.
Each defendant faces a maximum potential sentence of five years in prison for the conspiracy charge. Each aggravated identity theft charge carries a mandatory two-year prison sentence, and the defendants charged in the money laundering conspiracy count face a possible maximum sentence of twenty years in prison. The defendants will also be subject to fines, mandatory restitution, and forfeiture if convicted.
Source: US Department of Justice
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