Nov 9th 2012
Tax Preparer Sentenced to 18 Months for Filing False Tax Returns and Theft of Refund Checks from the IRS
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Mark Joseph Jensen, a professional tax preparer throughout the Central District of California, was sentenced to eighteen months in prison and three years of supervised release by US District Judge Andrew J. Guilford. A court hearing to determine the amount of restitution that Jensen owes the United States and his victims will be held January 7, 2012.
Jensen previously pleaded guilty on October 20, 2011, to filing a false tax return and receiving a stolen refund check from IRS. According to the plea agreement, Jensen, admitted he prepared and filed at least twenty-four tax returns falsely claiming the First-Time Homebuyer Credit. Jensen knew that his clients did not qualify for the credit because the taxpayers had not purchased a home in 2008. Jensen also did not tell his clients that he was fraudulently claiming the First-Time Homebuyer Credit on their tax returns. Jensen also admitted that he diverted fraudulently claimed credits to himself and directed the portions of his clients’ refunds be deposited into bank accounts that he controlled.
According to court documents, the amount of false credits claimed ranged from $1,612 to $8,000 per tax return. As a result of the false credit claims, the IRS issued false credits totaling over $173,000 to various clients’ tax accounts, which Jensen diverted to his own bank account.
In a second scheme, Jensen also stole some of his clients’ legitimate tax refunds by representing to his clients that they would not be receiving a refund or were receiving a refund less than their true refund. In furtherance of this scheme, Jensen used his address on his clients’ tax returns and provided his bank account number as the account number to receive the refunds. He also concealed his fraud by not providing clients with copies of their tax returns. In total, Jensen diverted more than $13,000 in clients’ legitimate tax refunds to his bank account.
After Jensen’s scheme was uncovered by the IRS, Jensen contacted one of his victim-clients and told the victim he had mistakenly overcharged the victim when, in fact, he had intentionally stolen part of the refund and diverted it into his own bank account. Jensen also told the victim if contacted by the IRS, to tell the IRS the money was an authorized loan.
Because the taxpayers authorized the tax returns, albeit unaware their returns contained fraud, the IRS held the clients financially responsible for the false credit claims. The victim-clients were assessed the money Jensen collected through falsely claimed credits as well as penalties. Other victims lost their legitimate tax refunds and have not been repaid.
Barbados National Sentenced to Prison for Using Stolen Identities to Obtain Tax Refunds
Andrew J. Watts, a Barbados national, was sentenced in Chicago by US District Judge Joan Gottschall to 114 months in prison and ordered to pay restitution of just under $1.7 million for devising and executing a stolen identity federal income tax refund fraud scheme, the Justice Department and the IRS announced.
According to court documents, between 2007 and 2011, Watts filed false federal income tax returns in the names of deceased taxpayers seeking fraudulent refunds. Watts either signed the name of the deceased taxpayer to the tax return, or he would falsely list himself as the deceased taxpayer’s representative. As part of the scheme, Watts filed over 470 false federal income tax returns, claiming fraudulent refunds in excess of $120 million, and the IRS issued refunds in excess of $10 million. Watts directed the IRS to either mail the refund checks to an address he controlled or to electronically deposit the refund into a bank account under his control.
On July 10, 2012, Watts pleaded guilty to one count of mail fraud and one count of aggravated identity theft.
Owner of Tax Preparation Firm Pleads Guilty to Fraud and Filing False Returns – Nine Defendants Convicted for Crimes Committed at Premier Tax
Bruce King, the owner and operator of Premier Tax, pleaded guilty in federal court to charges of conspiring to defraud the United States and filing false tax returns, the Justice Department and the IRS announced. Additionally, Vonecia Orum, a return preparer who worked at Premier Tax, pleaded guilty to delivering false tax returns to the IRS.
With the guilty pleas of King and Orum, a total of nine people associated with Premier Tax have now been convicted of crimes. Six were named in a twenty-eight-count indictment that was returned on March 28, 2012. These six were King and Orum as well as Antoinette Djonret, Nakesha Donaldson, Angela Smith, and Jenika Williams, all of whom had previously pleaded guilty. In July and August of 2011, three other defendants – Tonja Toney, Kimberly Womack, and Kina Lane – pleaded guilty to criminal informations charging them with filing false tax returns.
According to court documents, Premier Tax was a tax preparation business operated by King that had several locations in Alabama and in Georgia. King held training sessions in which he taught preparers how to falsify tax returns in order to fraudulently increase clients’ tax refunds. Those he taught went on to work at Premier Tax and filed numerous false tax returns. According to court documents, the tax loss caused by these fraudulent returns exceeded $1 million.
Court records also indicated that in addition to falsifying tax returns, some preparers working at Premier Tax also used false dependents on tax returns – they would use people’s personal identifying information, without their consent, as dependents on clients’ tax returns. Four of the defendants – Djonret, Donaldson, Smith, and Williams – were involved in this aspect of Premier Tax, and they pleaded guilty to charges of aggravated identity theft in addition to charges of conspiracy to defraud the United States or filing false tax returns.
Federal Court in Ohio Issues Preliminary Injunction against Instant Tax Service Franchiser and Its CEO
A federal court has preliminarily enjoined ITS Financial LLC (ITS), the parent company that owns the Instant Tax Service tax preparation franchise operation, the Justice Department announced. Dayton, Ohio–based ITS claims to be the fourth largest tax preparation firm in the nation, according to the government complaint in the civil lawsuit. Judge Timothy Black of the US District Court for the Southern District of Ohio signed the order, which also applies to the company’s CEO, Fesum Ogbazion. The defendants consented to the preliminary injunction.
The preliminary injunction will remain in force pending the court’s decision following trial in the case. Trial on the government’s suit seeking to shut down the defendants with a permanent injunction is scheduled to begin on May 20, 2013, in Dayton.
According to the government complaint in the case, ITS franchisees routinely prepare and file fraudulent federal tax returns, fabricate deductions, and invent phony businesses. The suit further alleges that ITS franchisees file tax returns without customer authorization and without proper employer-issued W-2 wage statements, and they charge customers exorbitant and bogus fees. Defendants and their franchisees allegedly lure mostly low-income customers into ITS stores by offering deceptive and misleading loans, such as “instant cash” or “holiday” loans, often before the tax return filing season begins. Defendants have denied the allegations in the complaint.
Under the terms of the preliminary injunction, defendants are barred from encouraging or preparing false or fraudulent tax returns, from filing tax returns without customer authorization, from charging customers exorbitant and bogus fees, from deceiving their customers and the government, and from otherwise violating the tax laws.
In addition, defendants are barred from offering any instant cash loan or similar loan product that relies on a customer’s paystub (rather than an employer-issued IRS W-2 year-end wage statement), and from offering any loan product that violates any federal or state law. Defendants may offer only genuine loan products provided by independent, third-party lenders. The preliminary injunction also requires defendants, at their own expense, to hire third-party monitors who will review and audit tax returns prepared by all ITS franchisees. In addition, defendants must hire a neutral company to conduct “secret shopper” visits to ITS franchisees to test their compliance with the law.
The preliminary injunction order notes that the United States ultimately seeks to permanently bar ITS and Ogbazion from further operating a tax preparation business.
Ohio Attorney Sentenced to Eighty-Five Months in Prison for Tax Fraud
The Justice Department and IRS announced that attorney Aristotle R. Matsa (Rick Matsa), of Worthington, Ohio, was sentenced to eighty-five months in prison by Judge Edmund A. Sargus Jr. of the US District Court for the Southern District of Ohio. Judge Sargus also ordered Matsa to pay a criminal fine of $265,000, make restitution to the IRS in the amount of $388,000, and pay restitution to a client from whom Matsa embezzled funds in the amount of $24,069.
After a five-week trial in Columbus, Ohio, a jury convicted Matsa of numerous tax fraud and obstruction of justice–related offenses, including witness tampering and making a false statement. Matsa’s mother and codefendant, Loula Z. Matsa, was sentenced today to three years of probation and ordered to pay a $150,000 criminal fine for her role in the conspiracy with her son to obstruct justice, commit perjury, and make false statements.
Matsa individually was convicted of one count of a corrupt endeavor to obstruct and impede the IRS; fifteen counts of aiding and assisting in the preparation of false and fraudulent tax returns that related to five different trusts; one count of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR); one count of conspiracy to obstruct justice, commit perjury, and make false statements; two counts of witness tampering; one count of submitting a false statement; and one count of obstruction of justice.
According to the indictment, which was returned on June 23, 2010, and the evidence admitted at trial, Matsa, who in addition to being an attorney was also an architect, a real estate broker, and a licensed minister in Ohio, created and operated several nominee entities in order to disguise and conceal his income and assets from the IRS. The false trust return charges relate to filings for at least five separate trust entities during the tax years 2003 to 2005. In fact, the evidence at trial showed that he had been filing similarly false returns for the trusts dating back to 1990. Each of the trusts reported receiving significant amounts of interest income each year, yet no income tax was ever reported as due because the trust tax returns fraudulently claimed deductions for distributions purportedly paid annually to a foreign beneficiary.
The evidence at trial established, however, that Matsa used funds from these trusts to purchase a 150-acre farm in Hocking County as well as a home in Worthington, both of which he used as personal residences. In addition, the trusts’ purported foreign beneficiary was located in the Netherlands and testified that she was not the beneficiary of the trusts.
The evidence at trial also showed that Matsa violated FBAR requirements by failing to disclose his ownership and control over a foreign bank account held in the Netherlands during calendar year 2003, where an account was maintained by Matsa with funds in excess of $300,000 from at least August 2003 to November 2003.
The evidence at trial further showed that after learning of the federal grand jury investigation into his business activities in May of 2006, Matsa, together with his mother and others, conspired to obstruct justice by concealing evidence from the grand jury, making false statements to the grand jury, creating false documents, tampering with witnesses, and lying to federal investigators.
George Pappas, formerly an attorney in Urbana, Ohio, who previously pleaded guilty to making false statements to federal agents during the grand jury investigation, testified at trial. Pappas testified that he falsely claimed ownership of Matsa’s law firm, located in the Short North area of Columbus, in their efforts to withhold records from the grand jury. Pappas was sentenced to two years’ probation and a home confinement term earlier this year.
Matsa’s tenant, P. Maria Galloway, the owner of an art gallery located next door to Matsa’s law firm, also testified after pleading guilty to conspiracy to obstruct justice. Galloway testified that she signed numerous documents at Matsa’s direction, including federal income tax returns for Matsa’s law firm and a number of his nominee entities, which Matsa used as part of his scheme to obstruct the IRS, and that she made false statements to agents and the grand jury during the investigation. Galloway also was sentenced to a two-year term of probation earlier this year with some home confinement.
Source: US Department of Justice