Crime Watch

Tax Fraud Promoter's Customers Allegedly Filed More Than $67 Million in False Refund Claims

The United States has sued Charles Sewell of Bristol, Virginia, to bar him from promoting an alleged scheme involving fraudulent tax refund claims, the Justice Department announced November 9.
 
According to the government's amended complaint, Sewell creates fraudulent types of IRS Forms 1099 for other taxpayers and files them with the IRS. The fraudulent types of forms are allegedly designed to help Sewell's customers request large tax refunds to which they are not entitled, based on false claims of income earned and federal tax withheld.
 
The complaint alleges that Sewell's scheme is based on the "commercial redemption" theory, in which individuals make refund claims based on the bogus theory that the federal government maintains secret accounts for US citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS. The lawsuit alleges that Sewell's customers sought $67 million in bogus refunds as a result of Sewell's conduct.
 
Source: US Department of Justice
 
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Ohio Man Allegedly Promotes Several Tax Fraud Schemes
 
The Justice Department announced November 9 that it has asked a federal court in Columbus, Ohio, to permanently bar John Allen from promoting tax fraud schemes and preparing federal tax returns. The civil injunction lawsuit alleges that Allen, who does business as Allen & Associates, promotes several schemes involving the preparation of fraudulent federal income tax returns based on the false premise that his customers do not receive "wages" as defined by law.
 
The complaint alleges that Allen has promoted at least three tax fraud schemes, moving from scheme to scheme when the IRS identifies the bogus nature of the tax returns that are filed as part of Allen's arrangement. The complaint alleges that, as part of the promotion, Allen prepares his customers' tax returns, but does not sign the returns as the preparer.
 
According to the complaint, Allen prepares frivolous letters addressed to the Secretary of the Treasury and the commissioner of the IRS on behalf of customers, and also aided a customer in an attempt to file a frivolous lien against the United States by preparing a bogus lien document and directing his customer to file it.
 
Allen allegedly solicits up-front fees of $250 from customers to prepare their returns and handle any correspondence with the IRS, and asks for a "donation" of 10 percent of any refund issued to his customers by the IRS.
 
The complaint further alleges that Allen falsely holds himself out as an attorney to his customers and to third parties, including the IRS, despite being enjoined from the unauthorized practice of law by the Supreme Court of Ohio.
 
Source: US Department of Justice
 
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Former Owner of Physical Therapy Businesses Sentenced for Failing to Pay Employment Taxes
 
Tony Thanh Ngo, forty-one, of Houston, Virginia, was sentenced to eighteen months in prison, followed by three years of supervised release, for failing to pay employment taxes to the IRS, the Justice Department announced. Ngo was also ordered to pay $304,604.28 in restitution.
 
In a statement of facts filed with his plea agreement, from 2003 to 2007, Ngo owned and operated the Center for Physical Therapy and Wellness and Core Physical Therapy, two physical therapy businesses in Northern Virginia.
 
Ngo admitted to failing to account for and pay over to the IRS in excess of $300,000 in employment taxes due in connection with the wages paid to employees of his physical therapy businesses.
 
Over $200,000 of this amount was withheld from his employees' pay but not paid over to the IRS as required. Rather than paying the employment taxes due and owing, Ngo admitted to using available funds for personal mortgage payments, golf club memberships, and travel.
 
Ngo also admitted to filing false quarterly employment tax returns for Core Physical Therapy and a false individual income tax return for himself and his spouse.
 
Source: US Department of Justice
 
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Mortgage Company Executive Pleads Guilty to Tax Fraud
 
A former account executive working at mortgage companies in Orange County, California, pleaded guilty November 16 to tax fraud resulting in a tax loss to the government of over $350,000.
 
Brian Fox, thirty-six, of Corona, pleaded guilty before US District Judge Josephine Stanton Tucker to one count of tax evasion for the 2006 tax year.
 
According to the plea agreement, while working as an account executive at mortgage companies in Orange County, Fox failed to report income he earned for the years 2005, 2006, and 2007. Fox failed to report at least $122,350 in income on his 2005 tax return. Fox did not file tax returns for the 2006 and 2007 tax years, admitting in the plea agreement that he had taxable income of $712,133 for 2006 and $516,504 for 2007. In total, Fox failed to report to the IRS over $1,350,000 in income, resulting in a tax loss of over $350,000.
 
Fox faces a statutory maximum sentence of five years in federal prison and a fine of at least $100,000 when he is sentenced on February 15, 2013, by Judge Tucker.
 
Source: IRS Criminal Investigation Los Angeles Field Office Press Release
 
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Woman Convicted for Her Role in a Multimillion-Dollar Tax Fraud Scheme
 
Denise Browning, formerly a resident of Huntington Beach, California, was found guilty of two counts of aiding and assisting in the preparation of false payroll tax returns, following a three-day trial before US District Judge Philip S. Gutierrez.  
 
Browning, forty-seven, was previously charged with two counts of aiding and assisting in the preparation of false payroll returns in an eight count indictment filed on August 26, 2011. 
 
According to the indictment, Michael P. Harvey, fifty-three, formerly of Anaheim Hills, and Jason M. Harvey, thirty-two, formerly of Yorba Linda, and owner of Advanced Business Payroll Inc., Global Business Outsource Solutions Inc., and Global Consulting Inc., were arraigned for attempting to evade the payment of over $15 million in payroll taxes and interest due to the IRS. Browning was alleged to have aided and assisted in the preparation of the false payroll tax returns, Forms 941, for Advance Business Payroll Inc. and Global Payroll Services Inc. 
 
On January 6, 2012, Michael Harvey pleaded guilty to evading the payment of payroll taxes and interest assessed against him by IRS. On July 31, 2012, Jason Harvey also pleaded guilty to evading the payment of payroll taxes and interest assessed against him by IRS.  
 
According to court documents, beginning around September 18, 2006, and continuing through at least December 29, 2006, Michael Harvey and Jason Harvey attempted to evade the payment of a tax liability of more than $15 million assessed against Michael Harvey for his failure to pay to the IRS taxes withheld from the wages of employees. 
 
According to court documents, around September 18, 2006, an agent of the IRS served wage levies directed to Advanced Business Payroll Inc., Global Business Outsource Solutions Inc., and Global Consulting Inc., companies which were owned and operated by Jason M. Harvey. The levies required those companies to pay to the IRS amounts that became due and owing by the companies to Michael Harvey. Both Michael Harvey and Jason Harvey acknowledged service of the levies in writing around September 27, 2006. Michael Harvey admitted that he caused the companies to not honor the levies and aided Jason Harvey to cause those companies to not honor the IRS levies.
 
According to court documents, before the service of the levies, Advanced Business Payroll Inc., Global Business Outsource Solutions Inc., and Global Consulting Inc. issued more than forty-five checks made payable to Michael Harvey which totaled more than $230,000. However, after service of the levies, the companies instead made cash payments to Michael Harvey of at least $62,700, and also paid Michael Harvey at least six checks made payable to "cash" totaling $22,800, without paying such amounts to the IRS in accordance with the levies. Also, in December 2006, Jason Harvey and Michael Harvey caused Global Consulting Inc. to issue two checks totaling $100,000 for the credit of Michael Harvey, which were used to make payments on a personal judgment against Michael Harvey.  
 
At time of sentencing, Denise Browning faces a maximum sentence of six years imprisonment; a one-year period of supervised release; a fine of $250,000 or twice the gross gain or loss resulting from the offense, whichever is greater; and a mandatory special assessment of $200. Sentencing is scheduled for February 13, 2013, before US District Judge Philip S. Gutierrez.
 
At time of sentencing, Jason Harvey and Michael Harvey each face a maximum sentence of five years imprisonment; a three-year period of supervised release; a fine of $250,000 or twice the gross gain or loss resulting from the offense, whichever is greater; and a mandatory special assessment of $100. Sentencing is scheduled for Jason Harvey and Michael P. Harvey January 28, 2013, before US District Judge George H. King.
 
Source: IRS Criminal Investigation Los Angeles Field Office Press Release
 
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Bronx Tax Preparer Charged in Scheme Involving $7 Million in Fraudulent Deductions
 
Mark Goldberg, a Bronx tax preparer, was indicted for his participation in a multiyear tax fraud scheme during which he prepared for clients thousands of tax returns that contained millions of dollars in fraudulent, itemized deductions and tax credits. Goldberg surrendered to the IRS on November 20 and appeared before Chief US District Judge Loretta A. Preska November 20 for arraignment.
 
According to the allegations in the Indictment returned in Manhattan federal court and other documents in the public record:
 
Goldberg was in the business of preparing US Individual Income Tax Returns and New York State Income Tax Returns for his clients in exchange for fees. He carried out his tax preparation business principally through various Bronx, New York, business entities he owned and controlled, including E & M Multi Services, Inc. and MG Business Group, Inc. As part of the scheme, Goldberg typically filed his clients' tax returns electronically, using Electronic Filing Identification Numbers (EFINs) and a Preparer Tax Identification Number (PTIN) obtained from the IRS in the names of other people, including his father - who had no involvement in Goldberg's tax preparation activities - in an effort to avoid having his own name associated with the client tax returns he prepared. After he procured the EFINs and PTIN in other people's names, Goldberg prepared thousands of false and fraudulent income tax returns to be filed with the IRS and the New York State Department of Taxation and Finance.
 
Between 2005 and April 2012, the tax returns Goldberg prepared and filed for his clients contained numerous fabricated and fraudulently inflated items, including: (1) higher education, or "tuition" credits; (2) tuition expenses; (3) un-reimbursed employee business expenses; (4) medical and dental expenses; (5) gifts to charity; (6) business income and losses; (7) rental real estate losses; and (8) earned income tax credits. Goldberg also prepared and filed tax returns for himself that fraudulently claimed: (1) that he had received significant amounts of wage income from which taxes had been withheld; (2) that he had paid significant amounts of state and local taxes; (3) tuition credits; and (4) significant refunds.
 
Because Goldberg included fabricated and inflated items on the clients' federal and New York State tax returns, the clients' tax liabilities were incorrectly reduced, and they received IRS and New York State refunds to which they were not entitled. In addition, in return for preparing the aforementioned tax returns, Goldberg received over $400,000 in fees from clients. In total, Goldberg filed tax returns with the IRS and New York State that contained over $7 million in fraudulent deductions, expenses, and credits, thereby allowing his clients to receive over $2.5 million in refunds to which they were not entitled.
 
In order to prevent Goldberg from receiving the proceeds of his tax preparation scheme, investigators seized approximately $402,000 that had been contained in a bank account that Goldberg utilized to hold the fees he was paid by clients. A civil complaint was filed in Manhattan federal court seeking to forfeit these funds, as well as the contents of a bank account containing refunds distributed to clients of Goldberg's tax preparation business using prepaid cards. The civil forfeiture action has been assigned to Judge Andrew L. Carter, Jr.
 
Goldberg was previously charged with personal tax offenses in Bronx Supreme Court after an investigation was undertaken by DTF and the Bronx District Attorney's Office. The investigation and prosecution of Goldberg's tax preparation fraud was taken over by federal authorities pursuant to an agreement reached between Manhattan Federal prosecutors, the Bronx District Attorney's Office, and DTF.
 
Goldberg, thirty-nine, of Bronx, New York, is charged with forty counts of aiding and assisting the preparation of false and fraudulent tax returns for his clients; four counts of signing and filing fraudulent tax returns for himself, one count of obstructing the IRS, and one count of engaging in a wire fraud scheme to defraud the IRS and DTF. Each of the forty-four false return counts carries a maximum sentence of three years in prison, as does the IRS obstruction count. The wire fraud count carries a maximum sentence of twenty years in prison. In total, Goldberg faces a maximum jail term of 155 years.
 
Source: US Attorney's Office for the Southern District of New York Press Release
 

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