The following examples of Abusive Return Preparer Fraud investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Tax Preparer Sentenced for Tax Fraud and Worker’s Compensation Fraud
On September 20, 2004, in Greenbelt, MD, John A. Williams was sentenced to 40 months in prison, followed by three years of supervised release and ordered to pay $144,443 in restitution after a jury convicted him for worker’s compensation fraud and aiding and assisting in the preparation of false tax returns. From about 1998 until 2002, Williams falsely certified to the Office of Worker’s Compensation Program and to the IRS that he was not working, when, in fact, he was running a tax preparation business. Through this business Williams was preparing false and fraudulent tax returns, by creating fictitious deductions, expenses and other information on Schedule A’s and Schedule C’s.
Memphis Return Preparer Jailed for Preparing False Tax Returns
On August 31, 2004, in Memphis, TN, Tenika Shevette Finnie was sentenced to 18 months in prison for preparing false income tax returns. Finnie pled guilty on May 28, 2004 to preparing tax returns on which she reported inflated wages and tax withholdings and false itemized deductions, for tax years 1999, 2000 and 2001. She prepared returns at a different location each year for her clients, in return for a share of the resulting false refunds that totaled $119,243. Finnie was instructed to serve three years of supervised release and ordered to pay $13,681.00 restitution to the bank that issued the refund anticipation loans based upon the false returns.
Tuskegee Woman Receives Over Three years in Federal Prison for Preparing Bogus Tax Returns and Stealing Client’s Identity
On August 31, 2004, in Montgomery, AL, Erma Weaver Lawrence pled guilty and was immediately sentenced to 37 months imprison, followed by three years supervised release and ordered to pay $67,695 in restitution to her victims. Lawrence entered a guilty plea to four felony charges and one misdemeanor charge relating to her preparation of false tax returns, forgery of two rapid refund checks, misuse of a tax client’s social security number to apply for a credit card, and fraudulent claim for a tax refund. Lawrence admitted to preparing returns claiming false dependents, bogus deductions, nonexistent income, and incorrect taxpayer statuses.
Covington Return Preparer Sentenced
On August 18, 2004, in Covington, TN, Barry Gray, a tax return preparer was sentenced to 24 months in prison followed by 1 year of supervised release. Gray was also ordered to pay a special assessment of $1,000.00 and restitution of $11,124.00 to the IRS. Gray was indicted on November 25, 2003, charged with 21 counts of filing false claims against the United States. According to the indictment, Gray knowingly assisted in the preparation of 21 Amended U.S. Individual Income Tax Returns (Forms 1040X) that included an Education Tax Credit (Hope and Lifetime Learning Credit) that Gray knew to be false and fraudulent and caused them to be sent to the Internal Revenue Service. These fraudulent credits ranged from $300 to $1,500. As part of Gray's plea agreement Gray admitted that the tax loss for sentencing guidelines purposes is $376,395.
Illinois Man Sentenced for Tax Fraud
On August 12, 2004, in Chicago, IL, MacArthur Cooper was sentenced to 3½ years in federal prison, followed by three years supervised release and ordered to pay more than $32,000 in restitution to the Internal Revenue Service. Cooper was indicted in April 2003 by a grand jury, accused of claiming hundreds of thousands of dollars in false tax deductions. Between 1999 and 2000, Cooper prepared approximately 230 amended returns for tax years 1996 and 1997 falsely claiming millions of dollars of casualty losses from two floods that struck the area in 1996 and 1997. Cooper was paid between $50 and $400 for each amended return he prepared. The amended returns prepared by Cooper resulted in false and fraudulent refund claims of approximately $658,000. Cooper was originally charged with two counts of mail fraud and 21 counts of preparing false tax returns. In the plea deal, Cooper pleaded guilty to one count of mail fraud and a single count of preparing a false return.
South Florida Auto Sales Owner Sentenced to 57 Months in Prison
On July 16, 2004, in Ft. Lauderdale FL, Bruce Stelzenmuller, a/k/a Bruce Muller, was sentenced to 57 months imprisonment and three years supervised release after having pled guilty to a thirteen (13) count indictment that charged him with conspiracy, false statements, bank fraud and tax evasion. Stelzenmuller was also ordered to pay restitution to the FDIC, First Union Bank, and Ford Motor Credit in the amount of $2,475,206.90 and to pay back taxes as determined by the IRS. From 1992 and continuing through 1999, Stelzenmuller employed co-conspirator Irwin Millstein to perform bookkeeping services and prepare false and fraudulent individual and corporate tax returns, called "specials". Stelzenmuller, in turn, provided the "specials" to the FDIC in order to settle a $2.4 million outstanding judgment for less than full value. Stelzenmuller owed the $2.4 million judgment as a result of loans obtained from the First Commercial Bank of Florida, which was taken over by the FDIC in December 1990. Millstein was sentenced in 2001 to 27 months in federal prison after pleading guilty to filing false tax returns for himself and his clients.
Owner of Return Preparation Company Sentenced to 27 Months
On June 23, 2004, in New Orleans, LA, Joyce D. Gaines was sentenced to 27 months in federal prison followed by three years supervised release and ordered to pay restitution in the amount of $121,591. Gaines pled guilty on March 18, 2004, to willfully aiding in the preparation of false federal income tax returns and conspiracy to prepare false federal income tax returns. Gaines was the owner and operator of One Day Tax and Bookkeeping Services, a tax preparation service and provided tax return preparation services to customers for a fee. Gaines would advise the taxpayers that a substantially larger tax refund could be obtained if the taxpayer falsely claimed dependent children on the return. Tamicka Davis, the daughter of Gaines was an employee of One Day Tax and Bookkeeping Services and maintained a listing of children and their corresponding social security numbers in a spiral bound notebook. Davis is scheduled to be sentenced on July 14, 2004.
Hyannis Man Sentenced to Prison for Immigration and Tax Fraud
On May 25, 2004, in Boston, MA, Joarez Reis, pleaded guilty to all fifty-four counts of an indictment charging him with mail fraud, making false statements to a federal agency, and presenting false claims against the United States. Immediately after accepting the guilty plea, Reis was sentenced to 30 months in prison, followed by 3 years of supervised release, fined $6,000 and ordered to pay restitution totaling approximately $43,000. From 1994 until June 2001, Reis held himself out as a provider of tax preparation and immigration application services, catering to Brazilian clients, many of whom spoke little or no English. Reis charged individuals a fee for helping them obtain permission to reside in this country. In actuality and unbeknownst to his clients, Reis submitted forged marriage certificates to the Immigration and Naturalization Service ("INS") in order to obtain temporary work permits. Reis also submitted change of address notices, so that the clients' paperwork would be sent to post office boxes that REIS controlled, thus lulling the clients into believing that Reis had performed the services they had paid for. In a separate scheme to defraud the IRS and the Massachusetts Department of Revenue, Reis used clients' names and social security numbers, without the clients' knowledge, to submit phony tax returns seeking refunds. By using his own post office boxes as the mailing addresses on the returns, Reis was able to pocket the refund checks, while keeping the clients from learning what he was doing.
Detroit Woman Sentenced for Preparing False Tax Returns
On May 11, 2004, in Detroit, MI, Maquilla Yvonne Squire was sentenced to 27 months in prison as a result of a guilty plea to two counts of aiding and assisting in the preparation of false and fraudulent tax returns. Squire prepared returns reflecting that clients made substantial gifts to charity, knowing that no such gifts were ever made. Other returns prepared included fictitious child care credits and other employment deduction. The total loss created by these false deductions totaled over $730,000. Squire was also ordered to not prepare any future tax returns.
Tax Preparer Sentenced to 18 Months in Prison for Preparing False Income Tax Returns
On April 15, 2004, in Washington, D.C., Deidre F. Roy was sentenced to 18 months in prison, followed by one year supervised release, ordered to complete 150 hours of community service and pay restitution to the IRS for the amounts she owed as a result of filing her own false income tax returns. In June 2003, Roy pled guilty to preparing hundreds of false income tax returns. Depending on the client’s economic status, Roy employed several schemes to get the client a refund. For lower income individuals, Roy would add dependency exemptions which allowed her to give clients tax credits such as earned income, child and dependant care, which they were not entitled to. For higher income individuals Roy would prepare Schedule A’s with false itemized deductions. Roy also admitted that she filed false income tax returns for herself for the tax years 1997 through 2001 by claiming refunds to which she was not entitled. The total tax loss resulting from Roy’s criminal conduct was approximately $434,287.
D.C Tax Preparer Sentenced to 20 Months in Prison for Preparing False Tax Returns
On April 14, 2004, in Washington, D.C., Duke Amir, who formerly operated the tax preparation service known as the D.C. Tax Center, was sentenced to 20 months in prison to be followed by one year of supervised release in connection with his scheme to defraud the United States and the Internal Revenue Service of more than $204,000 by preparing false income tax returns. Amir was also ordered to pay restitution in the amount of $117,326 to the IRS. Amir primarily employed two schemes fraudulently to reduce his client’s tax liability and to obtain refunds for clients to which they were not entitled. First, Amir prepared Schedule A’s with false itemized deductions which had the effect of reducing the adjusted gross income. Secondly, Amir prepared Schedule C Forms for client returns with false business expenses and gross receipts which netted out to business losses that had the effect of fraudulently reducing the total income and ultimately total tax for clients.
Tennessee Man Sentenced to 3 Years in Prison for Preparing False Returns.
On March 18, 2004, in Nashville, TN, James Leon Wray, was sentenced to 36 months incarceration and one year of supervised release. He was further order to not be involved in the preparation of taxes during his incarceration and probation period. Wray pled guilty to one count of aiding or assisting in the preparation of a false income tax return. Wray marketed himself as a tax recovery specialist and overstated his expertise by claiming to have formerly worked for the IRS. Wray orchestrated a scheme to place false information on tax returns to inflate the amount of his clients' refunds. The potential tax loss to the government for years 1996 through 2000 from Wray's scheme was $561,998.
California Man Sentenced for Filing False Returns.
On March 15, 2004, in Oakland, CA, Troy Holland was sentenced to serve five years in prison for his conviction on 27 counts of aiding and abetting in the preparation of false returns. Holland was convicted in a jury trial last year that included evidence that Holland used his business, TMG Financial, to prepare false Schedule C’s for clients containing substantial bogus losses to offset their taxable income. Holland was paid 50 percent of any tax refund. The Judge also ordered restitution of $292,878 and ordered Holland never to prepare tax returns again for others. The court also ruled that the defendant attempted to obstruct the investigation and perjured himself at trial.
Owners of Ledesma Fast Filing Sentenced for Preparing False Income Tax Returns.
On March 9, 2004, in Brownsville, TX, Gustavo Ledesma and Francisco Ledesma, brothers who operated Ledesma Fast Filing were sentenced to prison terms for conspiring to assist in the preparation of false income tax returns. Gustavo and Francisco Ledesma were convicted of the federal offense in September 2003 after pleading guilty to the charge. Gustavo and Francisco Ledesma were sentenced to 37 and 46 months in prison, respectively, to be followed by a three-year term of supervised release. Both men were also ordered to pay restitution to the Internal Revenue Service in the amount of $581,685. During the years 1997 through 1999, Gustavo and Francisco Ledesma operated Ledesma Fast Filing, an income tax return preparation service from about January 16, 1997, until March 16, 1999, the Ledesma brothers prepared and electronically filed false federal income tax returns for their clients through Ledesma Fast Filing. The Ledesma brothers falsified their clients' income tax returns in order to maximize their clients' earned income credit (EIC), which fraudulently decreased their clients' tax liability and increased their clients' tax refunds. The Ledesma brothers omitted dependents from some clients' income tax returns so that the same dependents could be claimed on other clients' income tax returns who needed an additional child to receive the maximum EIC. In many instances, the Ledesma's kept a portion of their clients' tax refund without their clients' knowledge or consent.
West Hartford Man Pleads Guilty to Tax Fraud.
On March 9, 2004, in New Haven, CT, Marc C. Abrahms pleaded guilty to a two-count Information charging him with tax fraud. Abrahms, the president and sole-shareholder of Abrahms Group Benefits Inc. and Abrahms Life Services, Inc, admitted that for years 1997 through 2000, he filed materially false corporate income tax returns in which he improperly claimed deductions for approximately $729,000 worth of non-business-related expenses, including payments for domestic help, household services, personal travel and other expenses for the defendant's personal benefit. Abrahms also admitted that the individual income tax returns he filed between 1997 and 2000 materially understated the amount of income he earned during those years by failing to include as income the value of the personal expenditures paid for by Abrahms Group Benefits Inc. and Abrahms Life Services Inc. Abrahms acknowledged that he owes the Internal Revenue Service approximately $297,525 in back taxes, exclusive of penalties and interest, as a result of his willful failure to file accurate personal and corporate income tax returns.
Return Preparer is Sentenced to Prison for 63 Months
On January 30, 2004, in Oxford, MS, Craig Allen Pruitt was sentenced to 63 months in prison followed by 12 months supervised release and fined $6,000. Pruitt was found guilty by jury on 17 of 25 counts of aiding and assisting in the preparation of false amended income tax returns. Pruitt established an accounting office known as TAC Accounting and for several months prepared a high volume of amended U.S. Individual Income Tax Returns containing false deductions for business loss or bad debt loss. Pruitt charged an average of $100 per return. All of the taxpayers for whom Pruitt prepared the amended returns listed in the indictment were audited, and the refunds based on the false deductions were denied.
Michigan Man Sentenced on Tax Charges
On January 12, 2004, in Detroit, MI, Char Lee Frazier was sentenced to 18 months in prison followed by one year of supervised release as a result of his guilty plea to obstructing the IRS. From 1995 to the present, Frazier did business as “Frazier’s Accounting and Investment Services.” Frazier also trained and raced harness horses. Frazier prepared false tax returns for six of his clients who were also involved in his harness horse business, by claiming over $165,000 in excessive racing business expenses that they did not pay. Frazier prepared false monthly invoices and other records showing monthly cash payments, prepared and filed false Forms 1099-MISC reporting purported payments of income from his racing business and admitted that he lied to IRS special agents about these expenses and his client’s involvement in the racing business and attendant expenses.
Las Vegas Tax Return Preparer Receives Federal Prison Sentence
On January 8, 2004, in Las Vegas, NV, Paul M. Vance was sentenced to 18 months in prison followed by one year of supervised release and ordered to pay $120,224 in restitution after pleading guilty to one count of aiding or assisting in the preparation of false income tax return. During the period of his supervised release Vance is prohibited from engaging in employment consulting and from associating with any tax business. Between 1996 and 1998, Vance admitted to preparing individual income tax returns that falsely stated credits and deductions including filing status and EITC.
San Diego Return Preparer Sentenced
On December 8, 2003, in San Diego, CA, Roosevelt Kyle was sentenced to 12 months in custody. A jury convicted Kyle for failing to file his personal income tax returns for the years 1995 through 1998. Evidence at trial showed Kyle earned over $300,000 and prepared over 3,000 tax returns, but failed to file his own personal income tax returns. According to evidence presented in court, Kyle promoted tax avoidance seminars, at which he advised clients that they could permanently stop paying income taxes. Kyle also promoted the book entitled, "Vultures in Eagles Clothing" which claims the income tax laws are not applicable to U.S. citizens. This book was written by Lynne Meredith, who is under criminal indictment in the Central District of California for various tax crimes.
Father, Daughter Sentenced for Filing False Reparation Claims
On October 23, 2003, in Richmond, VA, Robert Lee Foster and Crystal Demetria Foster were sentenced after being convicted in July 2003 of conspiracy to defraud the United States with respect to claims and of filing false, fictitious and fraudulent claims. Robert Foster was sentenced to 13 years in prison and Crystal Foster was sentenced to three years and one months in prison. Beginning in July 2001, Robert Foster assisted numerous persons, including Crystal Foster, in filing false individual federal income tax returns in which they fraudulently claimed refunds ranging from $8,000 to $500,000. Robert Foster also filed his own false individual federal income tax returns in which he fraudulently claimed a refund of $500,000. The refund requests were based on alleged reparations for slavery, a claim which has no basis in the tax laws.
Pasadena Bowling Alley Tax Preparer Sentenced
On October 2, 2003, in Los Angeles, CA, Robert Oberholtzer was sentenced to 15 months in prison and ordered to pay a fine of $10,000 after being convicted on 15 counts of preparing false income tax returns. Evidence at trial showed Oberholtzer overstated itemized deductions on his clients's returns. Many of Oberholtzers clients were young waiters and waitresses that learned of Oberholtzer through word of mouth and from workshops that Oberholtzer conducted.
Source: Internal Revenue Service