Crime Watch: December 6, 2013
by Terri Eyden on
California Businessman Sentenced to Prison for Conspiring to Defraud the IRS
Gary Mach of Palm Desert, California, was sentenced to sixteen months in prison, two months of house arrest, and eighteen months of probation and ordered to pay $270,725 in restitution to the IRS after previously pleading guilty to conspiracy to defraud the United States.
Beginning around January 2002 and continuing through December 2010, Mach failed to report substantial income he earned from CSPS, a pool-servicing business he operated. Mach and others established fictitious trusts they used to receive income and hold assets in an attempt to conceal the assets and income from the IRS.
Mach admitted that his total unreported income for the tax years 2002 through 2010 was $1,410,430, on which the total tax due and owed to the IRS is $270,275.
Justice Department Sues to Stop New Jersey Man from Preparing Tax Returns
The United States filed a lawsuit to bar Eric Majette of Somerville, New Jersey, from preparing federal tax returns. According to the complaint, Majette, who owned and operated a tax preparation business named Berrisford Group, prepared and filed tax returns that contained false or inflated itemized deductions for such items as medical and dental expenses, gifts, and business expenses that resulted in his customers receiving larger tax refunds than they were entitled.
The IRS examined 428 of the 1,853 tax returns Majette prepared between 2009 and 2012 and determined that they understated the customers' correct tax liability by a total of $838,837, an average of $1,960 per return. The complaint estimates that the total harm caused by the 1,723 tax refunds claiming returns could be as much as $3 million.
Massachusetts Man Pleads Guilty to Tax and Mail Fraud
Michael Edwards pleaded guilty to one count of corruptly endeavoring to obstruct the IRS and one count of mail fraud. Both charges arise from Edwards' operation of his tax return preparation business Boston Financial Associates (BFA) and Edwards' misappropriation of income tax refunds from two of his clients in 2009.
Edwards admitted that he misled an IRS auditor reviewing one of his client's 2007 and 2008 income tax returns by giving her false documentation that claimed to support the false entries on the returns. Edwards misappropriated federal income tax refunds of $573,518 from one client and $202,143 from a second client.
Justice Department Files Lawsuit to Stop Tennessee Woman from Preparing Tax Returns
A civil lawsuit has been filed in a federal court in Memphis to stop Stephanie Edmond and her businesses, the Tax Factory and Tax Factory Enterprise Inc., from preparing federal income tax returns. Edmond and her businesses have prepared more than 9,000 tax returns since 2011.
According to the complaint, Edmond understates her customers' federal tax liabilities by creating fake businesses, then listing those phony businesses on returns and fabricating expenses for them. Edmond also improperly claims the earned income tax credit on the income tax returns that she prepares for her customers.
In one case, two returns prepared for a customer claimed bogus business losses of approximately $30,000 for each of the two years, and as a result, the customer improperly received tax refunds of approximately $7,000 both years. In total, the complaint alleges that Edmond's activities over the last three years have cost the Treasury $9.7 million or more in lost income tax revenue.
Alabama Man Sentenced to Prison for Stolen Identity Tax Refund Fraud Scheme
Clarence Hicks of Montgomery, Alabama, was sentenced to serve fifty-seven months in federal prison and three years of supervised release and ordered to pay $210,555.62 in restitution for his role in a stolen identity refund fraud scheme. Hicks had previously pleaded guilty to filing a false claim for a federal tax refund and to aggravated identity theft.
According to court documents, Hicks had access to an IRS Electronic Filing Identification Number (EFIN) assigned to another person and used that number to file false federal income tax returns in the names of stolen identities. The court found that Hicks intended to steal more than $300,000 from the IRS, which paid out $210,555.62 in false claims based on fraudulent returns Hicks filed.
Federal Court Shuts Down Two Tax Return Preparers for Fraud
A federal district judge in St. Louis has permanently barred Joseph Burns, Joseph Thomas, and International Tax Service Inc. from preparing federal tax returns for others.
The complaint alleged that from 2005 until late 2011, the defendants repeatedly fabricated expenses and deductions on customers' returns and falsely claimed head of household status for customers who were married in order to illegally understate their customers' federal tax liabilities and to obtain fraudulent tax refunds.
The defendants also falsely claimed that some of their customers earned income from businesses that the defendants fabricated, or they increased the amount of business income their customers earned in order to illegally claim the maximum Earned Income Tax Credit on customers' returns. The IRS estimates that the annual tax loss from the returns prepared by the defendants could be as much as $6 million.