Crime Watch: June 3, 2013

Jun 3rd 2013
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Maine Man Sentenced on Conspiracy, Embezzlement, and Tax Charges

Thomas Nelson, formerly the CEO of York County Community Action Corporation (YCCAC), was sentenced May 21 in US District Court by Judge Nancy Torresen to thirty months in prison and thirty-six months of supervised release for conspiracy, embezzlement from a federally funded program, tax evasion, and signing false tax returns. Nelson was also ordered to pay $1,345,793 in restitution. Nelson pled guilty to the charges on July 31, 2012.

YCCAC provides social service, health, and educational programs to York County individuals and families living in poverty. From 2006 to 2010, YCCAC received in excess of $30,000,000 in federal funds to be used for those purposes. Court records reveal that from 2005 to 2010, Nelson diverted $413,000 in YCCAC funds to a consulting company that had only submitted one invoice for $8,700. In exchange for the fraudulent payments, the consulting company paid more than $20,000 of Nelson's personal expenses, including his home mortgage, and also kicked cash back to Nelson. 

From 2004 to 2009, Nelson also diverted more than $400,000 in YCCAC funds to a defunct nonprofit entity, New England Community Action Agency (NECAA) and recorded those payments as donations or consulting expenses. When NECAA was operating, Nelson was its treasurer. After transferring these funds to NECAA, Nelson used these funds to pay personal credit card and home mortgage bills and to gamble. In all, Nelson admitted embezzling approximately $900,000 from YCCAC between 2004 and 2010.

From 2005 to 2010, Nelson also failed to report to the IRS over $400,000 in embezzled income. Finally, in 2006 and 2007, Nelson prepared and signed NECAA tax returns which suggested the agency had revenue and assets, when, in fact, it did not.

Source: US Attorney's Office - Maine


Former Hospital Staff Member Sentenced for Tax Fraud and Aggravated Identity Theft

Tanya Cullens was sentenced May 17 to three years and three months in federal prison for conspiracy to commit tax fraud and aggravated identity theft. As part of the sentence, the court also entered a forfeiture money judgment in the amount of $44,080.00, which constitutes the proceeds of the tax fraud conspiracy. In addition, the court ordered Cullens to pay $85,055.00 in restitution to the IRS and Jabil Circuit, Inc. for a separate fraud offense. Cullens pleaded guilty on February 12, 2013.

According to court documents, in 2012, Cullens was a member of the cleaning staff at University Community Hospital. On January 17, 2012, she stole a patient list from the hospital. This list contained forty-eight patient names, dates of birth, and Social Security numbers of persons treated at University Community Hospital on that same date.

Shortly after stealing the patient list from the hospital, Cullens provided the list to her friend and coconspirator, Alesia Spivey, who used the list to file fraudulent tax returns with the IRS. None of the individuals whose names, dates of birth, and Social Security numbers appeared on these fraudulent tax returns knew that the conspirators were filing tax returns on their behalf.

In total, ten fraudulent tax returns filed by the conspirators claimed approximately $79,204.00 in false tax refunds. Ultimately, the IRS paid out $44,080.00 in refunds to the conspirators.

Alesia Spivey pleaded guilty to her role in the conspiracy in December 2012. She is scheduled to be sentenced on June 19, 2013.

Source: US Attorney's Office - Florida 


Colorado Man Sentenced for Defrauding the IRS of $1.8 Million

Thomas William Quintin, formerly of Denver, Colorado, was sentenced in May to serve sixty-three months in federal prison for conspiracy to defraud the United States. Following his prison sentence, Quintin was ordered to spend three years on supervised release. The judge also ordered the defendant to pay $626,451.62 in restitution to the IRS.

Quintin was indicted by a federal grand jury in Denver on February 8, 2012. Quintin pled guilty on January 3, 2013, and was sentenced May 8.

According to the stipulated facts contained in the plea agreement, starting in July 2009, Quintin participated in a conspiracy during the period of July 2009 through October 2009 to submit to the IRS thousands of false federal individual income tax returns claiming a total of $1,834,011 in refunds in the names of deceased individuals. As part of the scheme, the conspirators established, controlled, and operated a Colorado entity known as Total Tax Services and/or Total Tax and Accounting (TTS), which maintained an office location in Englewood, Colorado.

According to court records, Quintin and his coconspirator obtained from an online database the names, dates of birth, Social Security numbers, and other identifying information of deceased individuals which they then used to prepare and file tax returns in their names. They hired at least one individual whose job was to create e-mail accounts for those deceased individuals. Establishing e-mail accounts in the names of the deceased individuals was necessary in order to file the tax returns online.

They also obtained employer identification numbers (EINs) for various businesses, which they used to claim falsely on tax returns that the deceased individuals had worked at those businesses during the year 2008, earned income, and had taxes withheld from that income; all to allow Quintin to claim false refunds based on that false income tax withholding.

Source: US Attorney's Office - Colorado


Alabama Man Pleads Guilty to His Role in Cashing Fraudulently Obtained Tax Refund Checks

Rodriquez Thomas, of Montgomery County, Alabama, pleaded guilty May 23 in the US District Court for the Middle District of Alabama to conspiring to cash fraudulently obtained federal tax refund checks, the Justice Department and the IRS announced.

According to court documents, Thomas, along with his coconspirators, Jesse Johnson and Quanesha Johnson, obtained US Treasury tax refund checks that were issued as a result of the filing of fraudulent tax returns. Thomas and the Johnsons and others cashed approximately seventy-seven fraudulently obtained tax refund checks that totaled approximately $137,016 by bringing them to a bank teller, Debora Gray, who worked for a bank in Wetumpka, Alabama, and who participated in the scheme.

Jesse and Quanesha Johnson and Debora Gray have all previously pleaded guilty to their involvement and are awaiting sentencing. Thomas faces a maximum sentence of five years in prison for the conspiracy. He is also subject to fines, mandatory restitution, and forfeiture.

Source: US Department of Justice


Alabama Woman Pleads Guilty for Her Involvement in a Large-Scale Stolen Identity Refund Fraud Scheme

Tracey Montgomery of Montgomery County, Alabama, pleaded guilty May 23 in the US District Court for the Middle District of Alabama to her role in a large-scale stolen identity refund fraud scheme, the Justice Department and the IRS announced.

On April 17, 2013, a federal grand jury in Montgomery, Alabama, indicted Montgomery on conspiracy and theft of government money charges. According to court documents, Montgomery opened two bank accounts that were used to receive deposits of fraudulent tax refunds.

Between August 2009 and February 2011, at least six false federal income tax refunds totaling approximately $49,221 were directed to Montgomery's bank accounts. 

Montgomery was able to withdraw the false tax refund money before the IRS caught her. The overall scheme Montgomery participated in is alleged to have involved over $500,000 in false refunds. As a result of her plea, Montgomery faces a maximum potential sentence of ten years in prison.

Source: US Department of Justice


Two California Promoters of Tax Fraud Scheme Who Sought Millions in Fraudulent Tax Refunds Sentenced to Years in Prison

Arturo Villarreal-Alba of Whittier was sentenced May 31 to ninety-six months imprisonment and three years of supervised release following imprisonment for conspiracy to defraud the United States and mail fraud. Restitution will be determined at a hearing on August 30, 2013, before US District Judge Josephine Staton Tucker. 

On October 2, 2012, Villarreal-Alba pleaded guilty to conspiracy to defraud the United States in a fraudulent federal income tax return filing scheme, which claimed false federal income tax refunds, and he pleaded guilty to mail fraud in a vehicle registration "title washing" scheme. 

According to court documents, beginning around March 2009, illarreal-Alba, an undocumented alien, began to participate, acting as a promoter, with others in a fraudulent Original Issue Discount (OID) scheme that filed false federal income tax returns with the IRS claiming hundreds of thousands, sometimes millions, in false tax refunds. 

The OID schemes conducted by Villarreal-Alba were conducted through two companies -  Old Quest Foundation, Inc. in Fontana and De La Fuente Ramirez and Associates (DLFRA) in Rancho Cucamonga - both of which became a subject of investigation conducted by special agents with IRS Criminal Investigation known as "Operation Stolen Treasures." The investigation led to fifty-five people being indicted by a federal grand jury in the fall of 2011. 

According to his plea agreement, Villarreal-Alba admitted that he referred various customers to the OID scheme. Villarreal-Alba also admitted he caused at least two false 2009 OID-based federal income tax returns to be prepared and filed. On March 17, 2010, he caused the filing of a fraudulent tax return using fictitious federal income tax withholding in the amount of $668,000, which claimed a false tax refund of $452,572. He also caused a 2009 OID-based tax return claiming a $535,898 refund in 2010.  

Villarreal-Alba also admitted that between 2009 and 2011, he participated in a vehicle "title-washing" scheme in which he falsely told victims that there was a "special program" wherein vehicles could be paid off and victims would end up owning one or more of the vehicles free and clear. Many victims purchased several vehicles by using their good credit to obtain loans from the car dealers. Rather than having the car loans paid, the victim's signatures on DMV documents were forged to obtain clear title from the DMV, and then he and his co-schemers would either re-sell the vehicles to unsuspecting victims or obtain title liens on the vehicles from vehicle title loan companies. 

Villarreal-Alba used the US mail system in the scheme by fraudulently receiving the "cleaned" pink slips from the DMV by mail. He admitted that he failed to file tax returns and report to the IRS thousands of dollars in income he made in 2009 and 2010 from the tax and vehicle title washing scheme.

On May 17, 2013, Osman Norales of Rancho Cucamonga, the owner and founder of DLFRA, was sentenced by US District Judge Josephine Staton Tucker to eighty-seven months in prison, three years of supervised release following imprisonment, and ordered to pay restitution to the IRS in the amount of $512,471.

On February 22, 2013, after a two-week jury trial, Norales and his fellow defendant, Genaro De La Fuente, were convicted of orchestrating a tax fraud scheme that illegally sought millions of dollars in fraudulent tax refunds. The case against Norales and De La Fuente also stems from the Operation Stolen Treasures investigation.

The evidence at trial further showed that Norales fraudulently told clients they each could receive tax refunds of hundreds of thousands of dollars by accessing "secret government accounts" through a process that included the filing of IRS Forms 1099 OID. In exchange for the payments, he prepared and filed false income tax returns, which routinely sought hundreds of thousands of dollars - and sometimes millions of dollars - in income tax refunds. 

The evidence presented during trial established that Osman Norales was involved with every facet of the fraudulent scheme, including recruiting customers and transmitting millions of dollars by filing false Forms 1099 OID to the IRS, including one tax refund in the amount of $815,000 and one in the amount of $760,000. Norales also charged clients up-front fees of approximately $2,500 and a portion of the false refund received by the client.

In addition to preparing and filing false tax returns for customers, Norales filed two false OID-based income tax returns for himself and his wife. On March 11, 2009, he filed a false 2008 OID-based income tax return for himself, which falsely reported $597,631 in federal income tax withheld and fraudulently claimed a $403,648 refund. Norales was notified by the IRS in a letter dated May 8, 2009 that his OID based tax return was frivolous.

In May 2009, Norales filed a false 2007 OID-based income tax return for himself, which falsely reported $109,984 in federal income tax withheld, fraudulently claiming a $100,916 refund. The evidence at trial showed that Norales mailed the 2007 OID based income tax return after he received the IRS notification. 

On September 30, 2009, IRS special agents executed a search warrant at his business, at which time Norales was interviewed by IRS special agents. While being interviewed, Norales lied when he told the agents that customers do not pay for his services and that he never gave or attended seminars. Evidence at trial established that Norales and other members of the conspiracy made presentations across the Southland and promoted the secret account theory and other frivolous arguments. Norales also attempted to thwart the investigation by responding to the IRS for customers with arguments that had no basis in the law. Norales also sent three threatening letters to the investigating special agents demanding payment of $20,000,000, then $25,000,000 and $35,000,000 to him in attempts to intimidate them. To thwart the investigation, he also instructed witnesses to lie to the grand jury during the grand jury investigation. 

Norales further obstructed justice by fleeing to Texas after indictment and attempted to mislead the US Magistrate Court during a detention hearing in May 2012 by providing materially false information during testimony. 

To date, the Operation Stolen Treasures investigation has resulted in twenty-six defendants pleading guilty to charges filed against them (seven defendants have been sentenced and the remaining nineteen are awaiting sentencing); twenty-five defendants are currently scheduled for trial beginning in June; and three defendants have been convicted at trial.

US Attorney's Office - California


Alabama Resident Pleads Guilty in Stolen Identity Refund Fraud Scheme

On May 29, Bridgette Rivers, a resident of Montgomery, Alabama, pleaded guilty to her involvement in a conspiracy to use stolen identities to file fraudulent tax returns, the Justice Department and the IRS announced. 

According to the court documents, Rivers provided identity information to her coconspirators, Barbara Murry, Veronica Temple, and Yolanda Moses. Those coconspirators used these stolen identities and others to file false tax returns that fraudulently requested tax refunds from the IRS. Rivers also recruited another individual to provide her bank account information to the conspiracy. The fraudulently obtained tax refunds went into that individual's bank account and the individual would then withdraw the money to give to Rivers.

Source: US Department of Justice


Georgia Return Preparer Allegedly Overstated Refunds through Fabricated and Inflated Deductions and Credits

The United States yesterday filed a complaint asking a federal court in Atlanta, Georgia, to stop Matthew Adegbite and his companies MAS & Associates CPA, LLC and Mathew A. Adegbite CPA, PC, from preparing federal income tax returns for others, the Justice Department announced May 30.

The complaint alleges that since at least 2008, Adegbite, who operates out of Tucker, Georgia, a suburb of Atlanta, has prepared more than 1,000 returns. The complaint alleges that Adebgite unlawfully understated income tax liabilities and overstated refunds by fabricating and/or exaggerating deductions and tax credits his clients are not eligible to take.

Adegbite's practices include fabricating Schedule C losses for nonexistent businesses, and falsely claiming the First-Time Homebuyer Credit for taxpayers who did not actually purchase a home. Altogether, the government complaint alleges that the loss to the US Treasury from Adegbite's activities may be in the millions of dollars.

Source: US Department of Justice


Florida Accountant Sentenced to Federal Prison for Two Fraud Schemes

Joseph Rizzuti, of Stuart, Florida, was sentenced to serve eighty months in federal prison for conspiracy to commit wire fraud and for corruptly endeavoring to obstruct the IRS, the Justice Department and the IRS announced May 30.

According to court documents, Rizzuti, an accountant and the owner of Beacon Accounting Services in Palm City, Florida, interfered with the IRS's ability to collect taxes owed by two clients by stealing payments from those clients intended for the IRS and making misrepresentations to the clients, as well as the IRS, to conceal his scheme.

Rizzuti also admitted to engaging in a criminal conspiracy to commit wire fraud by making material misrepresentations to individuals throughout the United States who believed the money they were investing with Rizzuti and his coconspirators was funding Nigerian-related oil and Bahamian construction projects; but instead, Rizzuti and his coconspirators used the investors' money for their own personal expenses. In total, Rizzuti and his coconspirators stole approximately $3 million.

In addition to prison time, US District Judge Donald L. Graham sentenced Rizzuti to serve three years of supervised release and to pay restitution to victims of his schemes, including the IRS. Judge Graham ordered a restitution of almost $300,000 at the sentencing hearing, and additional restitution will be determined within ninety days.

Source: US Department of Justice


North Carolina Businessman Pleads Guilty to Tax Fraud

William Robert Hupman Jr. pleaded guilty to corruptly endeavoring to obstruct or impede the due administration of the internal revenue laws, the Justice Department and the IRS announced May 31. 

According to court documents, Hupman managed and controlled Security Concepts LLC, a security alarm company based in Mebane, North Carolina. Instead of receiving a salary from Security Concepts, Hupman received income by using a Security Concepts debit card to pay his expenses. Despite receiving over $770,000 in such fees between 2007 and 2011, Hupman has not filed an individual income tax return since tax year 2006. 

In addition to his failure to comply with his personal income tax responsibilities, Hupman also failed to comply with his employment tax responsibilities at Security Concepts. As the person who managed and controlled Security Concepts, Hupman was responsible for withholding employment taxes and paying them over to the IRS on a periodic basis. Despite the fact that employment taxes were withheld from the wages of Security Concepts employees, Security Concepts has not paid employment taxes and filed the required tax form since the third quarter of 2009. Hupman neither paid over employment taxes nor filed the required tax form for the fourth quarter of 2009 and each of the quarters in 2010 and 2011. He also has not paid the federal unemployment taxes owed or filed the required tax form for years 2009, 2010, or 2011. 

Hupman faces a maximum of three years in prision, one year of supervised release, and a maximum fine of $250,000. Sentencing is scheduled for August 29, 2013.

Source: US Department of Justice

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