Crime Watch: April 19, 2013

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Former IRS Agent Sentenced to Twenty-Four Years in Federal Prison for Murder-for-Hire and Tax Charges

Former IRS agent-turned-tax preparer Steven Martinez was sentenced April 15 by US District Court Judge William Q. Hayes to almost twenty-four years in prison for defrauding clients of more than $11 million and then plotting their murders to prevent them from testifying about the theft.

In addition to a 286-month sentence, the judge ordered Martinez to pay more than $14 million in restitution to the victims, the IRS, and the California Franchise Tax Board. Judge Hayes also entered a preliminary order of forfeiture as to certain real and personal property, including an $11 million money judgment. Following Martinez's service of his sentence, Judge Hayes placed him on five years of supervised release.

In comments at today's hearing, Assistant US Attorney Joseph Orabona argued for a significant sentence in part because Martinez meticulously planned the murders by giving a would-be assassin, who was a cooperating witness for the FBI, detailed instructions and information about each of the four victims contained in "packets." One of the exchanges between Martinez and the cooperating witness was captured on video.

"These victims were surveilled. They were watched. Their habits were documented. It's disturbing", Orabona said. "This was a cool and calculating individual. He knew how the victims lived. He's explaining it to the hitman on the video."

Before imposing a sentence, Judge Hayes noted that the defendant did not make a heat-of-the moment decision to commit a crime. Rather, it was a long-term fraud spanning years and culminating with the carefully planned murder-for-hire plots. 

Martinez pleaded guilty on August 10, 2012, to criminal charges including murder-for-hire, witness tampering involving attempted murder, solicitation of a crime of violence, mail fraud, filing false tax returns, Social Security fraud, aggravated identity theft, and money laundering. Martinez pleaded guilty to twelve counts in a superseding indictment.

As part of his guilty plea, Martinez admitted that in late February 2012, he solicited a third party to murder four witnesses with the intent to prevent their testimony in his pending criminal tax case.

The third party contacted the San Diego division of the FBI on February 28, 2012, to report the murder-for-hire plot by Martinez and agreed to cooperate with the FBI in the investigation. According to the complaint, a subsequent meeting between the FBI's cooperating witness and Martinez was recorded and videotaped by the FBI.

In reference to two of the murder targets, Martinez told the would-be assassin "he could make him rich for the rest of his life, $100,000 cash, if he eliminated the lady in Rancho Santa Fe and the lady in La Jolla", according to court records. The cooperating witness said Martinez "suggested that the former employee use two different pistols for the murders and that he acquire a silencer."

Martinez admitted in court that he tried to prevent the former clients' testimony by offering the FBI's cooperating witness $100,000 to murder them. He admitted he provided the third party with four written packets of detailed information about the former clients, including photos of the soon-to-be murder victims, their homes, and personal information. Martinez admitted that once the murders took place, he would pay the perpetrator $40,000 in cash, followed by the remaining $60,000 in cash within seventy-two hours of the murders.

In addition, Martinez admitted that he filed false tax returns and defrauded his clients by stealing over $11 million in tax payments. Martinez admitted that he presented his clients with completed tax returns indicating that they owed a significant amount of tax. He requested that his clients write checks payable for the amount of taxes due and owing to an alleged client trust account (instead of directly to the IRS or the California Franchise Tax Board).

Martinez also convinced these same clients to write checks during the tax year for estimated tax payments to the same alleged client trust accounts. Rather than deposit these checks into a true trust account, Martinez admitted that he took the checks and deposited them into several nominee bank accounts. In an attempt to conceal his fraud, Martinez admitted that he filed a different set of false tax returns indicating that his clients owed little or no income tax.

Martinez admitted that he converted approximately $11 million in stolen taxpayer funds for his own personal benefit and used them to make home improvements, purchase real estate, purchase a beach home in Mexico, pay for the use of a private airplane, make investments of more than $2 million in other entities, and make payments of more than $2 million for his personal use credit cards and loans.

As part of his fraudulent tax scheme, Martinez admitted that he committed Social Security fraud and aggravated identity theft by using the Social Security numbers of his clients without authorization when he filed the false tax returns with the IRS. Martinez admitted he committed mail fraud by mailing the false tax returns to the IRS. Martinez also admitted that he laundered approximately $2 million through nominee bank accounts for his own business and personal use.

Finally, Martinez admitted that he knowingly and intentionally filed false personal income tax returns for tax years 2004, 2005, 2006, and 2007.


Justice Department Sues to Permanently Enjoin Florida Tax Return Preparer

The Justice Department filed suit April 15 asking the US District Court for the Southern District of Florida to permanently bar Osvaldo J. Diaz from preparing federal tax returns for others. The civil injunction suit alleges that Diaz prepares returns through Professional Accounting Services Inc. in Coral Gables, Florida.    

According to the complaint, Diaz prepares tax returns that fabricate deductions and credits in an attempt to understate his customers' tax liabilities or inflate his customers' refunds.  

The government alleges that Diaz fabricates business and personal expenses and inflates real estate losses for his customers. The IRS has examined 250 returns prepared by Diaz and found that 93 percent resulted in deficiencies. As alleged in the complaint, the IRS projects that the tax loss from the returns prepared by Diaz could be tens of millions of dollars.


Justice Department Sues to Stop South Carolina Tax Return Preparers

The United States has asked a federal court in Charleston, South Carolina, to permanently bar Stacy Middleton of Charleston, and George Jenkins of Blythewood, South Carolina, from preparing federal income tax returns for others, the Justice Department announced April 15. 

According to the government complaint, Middleton and Jenkins have prepared federal income tax returns in Charleston and Columbia, South Carolina, through a business named MBM Tax and Accounting Services LLC. The complaint alleges that they have prepared returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes.

The government complaint alleges that Middleton and Jenkins prepared returns that unlawfully created fictitious deductions and credits as well as overstating and duplicating existing deductions and credits. The complaint also alleges that Middleton created fraudulent forms 1099 on behalf of customers, creating fake income to enable Middleton to claim the Earned Income Tax Credit on behalf of those customers. According to the complaint, the IRS has examined 842 returns prepared by Middleton and Jenkins, and over 93 percent of those examinations resulted in an adjustment to their clients' tax liability. Altogether, the government complaint alleges that Middleton's and Jenkins's activities may have resulted in as much as $55 million of loss to the United States.


Arizona Businessmen and California Attorney Convicted for Hiding Millions in Secret Foreign Bank Accounts

A jury convicted Stephen M. Kerr and Michael Quiel April 11 on federal tax charges stemming from their failure to disclose secret offshore bank accounts in Switzerland, the Justice Department and IRS announced. Kerr and Quiel, prominent Phoenix businessmen, were each convicted of two counts of filing false individual income tax returns for 2007 and 2008. Kerr was also convicted of two counts of failing to file a Report of Foreign Bank and Financial Accounts (FBAR). San Diego attorney Christopher M. Rusch had previously pleaded guilty to conspiracy to defraud the government and failing to file an FBAR on February 6, 2013.

According to the evidence presented at trial, Kerr and Quiel, with the assistance of Rusch and others, including Swiss nationals, established nominee foreign entities and corresponding bank accounts at UBS AG and Pictet & Cie to conceal Kerr and Quiel's ownership and control of stock and income that were deposited into these accounts. Rusch testified at trial, admitting that he and others caused the sale of the shares of stock through the undeclared accounts. Kerr also hired Rusch to facilitate the domestic sale of 11.4 million shares of stock held in the name of a foreign entity controlled by Kerr and to transfer the proceeds from the sale of the stock to an undeclared foreign account at UBS AG to conceal that the money was income to Kerr that should have been reported on his tax returns.

The evidence established that in order to create a further layer of separation between Kerr and Quiel and the income they concealed in the undeclared foreign accounts, they directed Rusch to transfer some of the money in the undeclared accounts back to the United States through Rusch's Interest on Lawyer's Trust Account (IOLTA) before dispersing the money for Kerr and Quiel's benefit. Rusch transferred approximately $2 million through his IOLTA account so that Kerr could purchase a golf course in Erie, Colorado. Additionally, after transferring approximately $955,000 from Quiel's undeclared foreign accounts to his IOLTA account, at Quiel's direction, Rusch wrote checks payable to an Arizona bank account owned and controlled by Quiel.

According to trial evidence, Kerr and Quiel filed false tax returns with the IRS that failed to report the proceeds of stock sales, interest, and dividend income earned through the secret accounts, and further failed to report that they had a financial interest in bank accounts located in Switzerland. Kerr also failed to file FBARs in 2007 and 2008 that reported his offshore accounts to the IRS. Accountants for Kerr and Quiel testified that neither Kerr nor Quiel disclosed the existence of their offshore accounts in Switzerland during the preparation of their tax returns.

Sentencing for Kerr and Quiel is scheduled for June 25, 2013. Sentencing for Rusch is scheduled for July 17, 2013.


California Businesswoman Agrees to Plead Guilty to Conspiracy to Conceal Israeli Bank Accounts

Guity Kashfi of Los Angeles was charged April 12 in the US District Court for the Central District of California with conspiracy to defraud the United States, the Justice Department and IRS - Criminal Investigation announced. A signed plea agreement was filed along with the charging document.

According to court documents, Kashfi, a US citizen, maintained undeclared bank accounts at an international bank headquartered in Tel Aviv, Israel. The accounts were held in the names of nominees in order to keep them secret from the US government. Kashfi used the accounts to obtain "back-to-back" loans from a branch of the bank in Los Angeles. Although the loans were secured or collateralized with certificates of deposit held in Kashfi's undeclared offshore accounts, that fact was concealed to keep Kashfi's offshore accounts secret.

According to the plea agreement, in 2008, Kashfi was told by a banker in Los Angeles that the bank was going to use the funds in her account in Israel to pay off her back-to-back loans in Los Angeles. Rather than pay off the loans, Kashfi transferred approximately $2 million to an account located in Luxembourg at a branch of a second Israeli bank. Kashfi did this to avoid repatriating funds from her first Israeli account back to the United States to pay back her loans in Los Angeles. Kashfi eventually used the funds in Luxembourg to obtain a new back-to-back loan from a branch of the second Israeli bank located in Los Angeles. In 2009, Kashfi went to Luxembourg to close her account. While there, two foreign bankers advised Kashfi that her money was safe in Luxembourg because the bank was a private bank and no one could get information relating to bank accounts located in Luxembourg. In 2011, Kashfi closed all her accounts in Luxembourg by signing paperwork in Los Angeles. She then transferred the funds to banks in the United States.

According to the plea agreement, Kashfi never told her accountant about her undeclared accounts, and she failed to report any income from the accounts on her individual income tax returns that were filed with the IRS. For tax years 2005 through 2011, Kashfi failed to report interest income of approximately $221,306. The highest balance in Kashfi's undeclared accounts was approximately $2,501,469.

Kashfi is the second defendant charged in the US District Court for the Central District of California with failing to report income from undeclared accounts in Israel.

On March 29, 2013, Zvi Sperling of Beverly Hills, California, appearing before US District Judge John F. Walter, pleaded guilty to conspiring to defraud the United States in connection with back-to-back loans obtained in Los Angeles that were secured by funds in undeclared bank accounts in Israel. For tax years 2005 through 2008, Sperling failed to report income of approximately $381,563. The highest balance in Sperling's undeclared accounts was approximately $4 million.

Both Kashfi and Sperling have agreed to pay a civil penalty in the amount of 50 percent of the high balance of their undeclared accounts to resolve their civil liability with the IRS for failing to file FBARs.

Both Kashfi and Sperling face a potential maximum prison term of five years and a maximum fine of $250,000.


Texas Husband and Wife Guilty of Falsifying Client Tax Returns

Marlin Jermaine Beckett and Gia Cooper Beckett have been convicted of tax fraud, United States Attorney Kenneth Magidson announced April 10, along with Lucy Cruz, special agent in charge of IRS - Criminal Investigation.

The Becketts are husband and wife tax return preparers. Both were charged in separate but related cases just last month. According to the factual basis in support of their respective pleas, they each admitted they claimed false business mileage deductions for local clients that fraudulently increased tax refunds by approximately $360,000 for tax years 2006 through 2009.

Just a short time ago, Marlin Beckett entered a guilty plea before US District Judge Nancy F. Atlas, while Gia Beckett pleaded guilty the first week in April. Both are set for sentencing on September 24, 2013, at which time, each faces up to three years in prison and a $250,000 fine. The plea agreement also requires that both defendants make full restitution for all of the fraudulent refunds.


Couple Sentenced for $590,000 Tax Fraud Scheme

A husband and wife from Greer, South Carolina, were sentenced on Thursday, April 11, 2013, for filing false tax returns, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

US District Court Judge Mary G. Lewis sentenced Julie Greene Tucker, of Greer, South Carolina, to thirty-three months in prison to be followed by three years of supervised release. Tucker's husband, James Dean Tucker, also of Greer, was sentenced to eight months of house arrest and five years of probation. The Tuckers were ordered to pay $191,049 restitution to IRS, jointly and severally. Julie Tucker was ordered to pay an additional $590,128 as restitution to her former employer.

In November 2012, James and Julie Tucker pleaded guilty to a criminal bill of information charging them with two counts of filing false tax returns. In addition, Julie Tucker pleaded guilty to one count of wire fraud. According to filed court documents, from in or about 1996 through in or about July 2011, Julie Tucker was employed at Trendset Inc. (Trendset), a freight audit business located in Greenville, South Carolina. Her last position at Trendset was director of administration. Court records show that in that capacity, Julie Tucker had access to Trendset bank accounts and had the authority to write checks and initiate wire transfers from these accounts on behalf of Trendset. From April 1986 through July 2012, James Tucker was employed with the Department of Homeland Security and stationed in Greenville.

According to filed documents and court proceedings, beginning in or about 2010 and continuing until her resignation in July 2011, Julie Tucker embezzled money from Trendset bank accounts. Unbeknownst to Trendset, Julie Tucker used her access to the company's bank accounts to wire money to her name and into accounts held jointly by her and her husband. Court records indicate that Julie Tucker also wired funds and wrote checks from these accounts to make direct payments on several automobile loans and a credit card in the couple's name.

Based on filed court documents and statements made in court, Julie and James Tucker used the embezzled funds to perform major home renovations, purchase a second home, and buy three luxury vehicles for themselves and an additional vehicle for the daughter of a Trendset coworker. Court records indicate that the couple joined a local country club where they hosted a lavish Christmas party for family and friends. The couple also used the embezzled funds to pay for several personal vacation trips. Julie Tucker also spent well over $100,000 in jewelry purchases. The couple failed to include taxable income derived from Julie Tucker's embezzlement scheme in their joint tax 2010 and 2011 tax returns, court records show. 

Court records indicate that James Tucker lied to coworkers when he was asked about the couple's lifestyle improvements and spending. Court records indicate that James Tucker sometimes would say that the couple received the money from James Tucker's father after a profitable sale of Hormel stock. Other times, James Tucker would say his wife had received a big promotion at Trendset and that she was making a lot more money than he was, court records indicate.

Julie Tucker was ordered to self-report to the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.


Long Beach Tax Return Preparer Charged with Aiding in Preparation of False Tax Returns

On April 10, a federal grand jury returned a superseding indictment charging Rathana Ung, former director and officer of Lim's Income Tax, Inc and Lim's Tax, Inc. in Long Beach, California, of aiding in the preparation of false federal income tax returns filed with the IRS.  

Rathana Ung, a resident of Coto De Caza in Orange County, was charged in a thirty-nine count superseding indictment charging her with filing false federal income tax returns with the IRS.

According to the superseding indictment, Ung filed thirty-nine false federal income tax returns, forms 1040 with the IRS containing false deductions and false business losses.  It is alleged that Ung knew that taxpayers for whom the returns were filed were not entitled to claim such deductions.  

Ung is charged with filing false tax returns claiming false Schedule A and Form 2106 (Employee Business Expenses) deductions, false Form 8917 (Tuition and Fees Deduction), and False Schedule C (Profit or Loss from Business).  The false tax returns generated refunds for the years 2006, 2007, 2008, and 2009 for which the taxpayers were not entitled.



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