Crime Watch: August 9, 2013

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Real Estate Developer Convicted for Tax Evasion in Federal Court 

A former Washington State real estate developer and his long-time girlfriend were convicted August 4 in US District Court in Seattle on twenty-five counts of tax evasion and false statements related to their scheme to avoid paying taxes on more than $23 million in income. Winston Bontrager and Pauline Anderson were indicted in March 2012 and have been in federal custody since June 2012. The jury deliberated about three days following a four-week-long jury trial. Jurors convicted the two on all counts presented by prosecutors. US District Judge Richard A. Jones scheduled sentencing for November 22, 2013.

For Bontrager, it is a second conviction for tax crimes and a third federal criminal conviction. Bontrager was previously convicted in 1983 for bank fraud and in 1994 for defrauding the Oregon Public Employees Retirement System and the IRS of over $687,000. In 1994 he was sentenced to forty months in prison. Some of the convictions returned August 4 were for Bontrager's false statements surrounding his failure to pay more than $687,000 in restitution from his prior conviction.

During the trial, prosecutors detailed how Bontrager and Anderson filed false tax returns from 2004 through 2009, failing to report more than $23 million in income, and failing to pay more than $2.7 million in taxes. Over $10 million was moved into foreign bank accounts in Anderson's name, and virtually all of the couples' assets were put in Anderson's name in order to hide it from the IRS and those seeking to enforce Bontrager's restitution obligation and collect delinquent taxes.

At the same time the couple paid little in income taxes, they purchased a luxury condominium in Bellevue, Washington, and spent approximately $500,000 on an extensive remodel. They owned a $325,000 wine collection, a $1.2 million home in Southern California, a 6.7 carat diamond ring, and a Bentley worth $186,000. They spent over $3.4 million in credit card purchases, including for travel, cosmetic surgery, cosmetic dentistry, restaurants, clothing, and shoes.

Prosecutors told the jury the case was about "fraud, deceit, and evasion", and they urged jurors to "follow the money" to see how Bontrager and Anderson made millions of dollars but refused to pay a single dime for Bontrager's restitution obligation, delinquent taxes, or in income tax. Prosecutors described various development deals in Vancouver, Washington, where Bontrager made millions of dollars, in some instances defrauding business partners as well as the IRS.

The tax crimes of conviction are each punishable by between three to five years in prison, and the false statement convictions are also punishable by up to five years in prison. Bontrager was convicted of nine tax counts and eight counts of making false statements. Anderson was convicted of eleven tax counts.

Source: US Attorney's Office - Washington 


Justice Department Files Suit to Stop San Diego Man from Preparing Tax Returns

The Justice Department announced that the United States has filed a civil injunction suit against Michael I. Turner, of San Diego to stop him from preparing federal tax returns.

The government complaint, filed in the US District Court for the Southern District of California, alleges that Turner, who has prepared returns since at least 2004, has failed to sign or affix a Preparer Tax Identification Number (PTIN) to many of the returns he has prepared.

In addition and according to the government, Turner takes bogus deductions on his customers' returns in order to claim larger refunds for his customers. His customers then recommend Turner as a tax preparer to their friends, which helps Turner to expand his customer base and further increase his own profits.

Specifically, the government alleges that Turner claims inflated or fabricated deductions on the Schedule A of his customers' Form 1040 tax returns, claiming that his customers have large noncash charitable contributions and unreimbursed employee expenses. The complaint also alleges that when Turner's customers are audited, Turner has provided false documents to those customers in an attempt to assist them in substantiating charitable contributions and employee expenses that they did not incur. According to the complaint, however, Turner has instructed his customers not to identify him as their tax return preparer in communications with the IRS.

The government alleges that Turner continues to prepare tax returns. According to the complaint, Turner applied for a PTIN in 2010, and has prepared at least sixty-eight tax returns for the 2012 tax year using that PTIN.

The government seeks, among other things, that the court bar Turner from acting as a tax return preparer or assisting others in preparing or filing federal tax returns or other tax forms or documents. The government also requests that the court bar Turner from appearing as a representative on behalf of any person or entity before the IRS, and from owning, managing, controlling, working for or volunteering for a tax-return preparation business.

Source: US Department of Justice

California Man Sentenced to Thirty Months in Prison for Filing a Fraudulent Tax Return and Mail Fraud

Jose Antonio Sanchez, formerly of Pacoima, California, was sentenced August 5 to thirty months in prison, three years of supervised release, and ordered to pay $1,678,300 in restitution to Federal Insurance Company and for filing a false tax return and mail fraud. 

On March 26, 2013, Sanchez, a former mail clerk for ACCO Engineered Systems (AES) headquarters, pleaded guilty to mail fraud and filing a false federal income tax return in a scheme to defraud money and property from AES. Sanchez was arrested by federal agents following his indictment on April 11, 2011. Sanchez resigned shortly after his scheme was discovered.

According to the court documents, between at least 2004 and 2008, Sanchez used his position to order copier supplies, using an AES "open" purchase order, in the name of AES from Xerox companies and directed Xerox to deliver the copier supplies to other non-AES locations. Xerox mailed invoices to AES to obtain payment for the supplies. As a result of his scheme, AES spent at least $1,678,300 for supplies that it never received and for which it had no use. The loss incurred by AES was eventually reimbursed by its insurer, Federal Insurance Company. 

In furtherance of the scheme, Sanchez told AES' accounts payable and/or purchasing personnel that AES received the supplies and that AES should pay the invoices. AES mailed checks to Xerox to pay the invoices. Without AES' knowledge or consent, Sanchez sold the supplies and used the proceeds of the sales for his own benefit. 

According to the plea agreement, Sanchez caused at least sixteen invoices issued by Xerox and checks totaling over $159,000 issued by AES to be mailed by the US Postal Service. 

According to the plea agreement, Sanchez filed four false federal Individual Income Tax Return Forms 1040 for the 2005, 2006, 2007, and 2008 calendar years by failing to report the proceeds of his scheme. Between 2004 and 2008, A Toner Warehouse paid him $593,360 for the supplies, for which he failed to report any of the proceeds of the sales on his federal income tax returns. As a result of his scheme, Sanchez caused the IRS to incur a tax loss of $136,360.00.

Source: US Attorney's Office - California


North Carolina Man Pleads Guilty to Tax Fraud Charges 

Larry D. Hill Jr., pleaded guilty to one count of conspiring to submit false claims for federal income tax refunds to the IRS and one count of filing a false 2010 federal income tax return.

Between 2010 and 2012, authorities say Hill and his coconspirators filed more than 2,000 federal income tax returns for Hill's Tax Service customers. Hill claimed more than $14 million in tax refunds during that time.

According to the US Department of Justice, Hill personally collected, on average, $1,000 or more from each tax refund. If convicted, Hill faces a maximum of thirteen years in prison, a $500,000 fine, four years of supervised release, and $200 in special assessments.

Source: US Attorney's Office - North Carolina

California Tax Return Preparer Arrested for Filing False Claims for Refunds with the IRS

Gabriela Sandra Ramirez-Quezada, co-owner of La Gabiota Income Tax (LGIT), was arraigned August 2 on charges of filing false claims before US District Judge Alicia G. Rosenberg following her arrest by IRS special agents.

A federal grand jury returned a twenty count indictment charging Ramirez with conspiracy to defraud the United States, filing false claims to the United States, and aiding and abetting.

The indictment alleges that Ramirez conspired to defraud the United States by filing federal income tax returns containing false claims for tax refunds. According to the indictment, Ramirez and her coconspirator created and filed false federal Forms 4852 (Substitute for Form W-2, Wage and Tax Statement) and altered legitimate federal Forms W-2 (Wage and Tax Statement) claiming taxpayer/clients had more federal income taxes withheld from wages than was actually withheld and sometimes also claimed false dependents on the tax returns. As a result of the false information filed, the IRS issued false tax refunds for which the taxpayers were not entitled. Ramirez is alleged to have made more than $100,000 in false claims to the IRS.

In furtherance of her conspiracy, Ramirez and her coconspirator often used their home or business address on the fraudulent tax returns causing the refund checks to be mailed to the same addresses. Sometimes the refund checks were also endorsed by Ramirez and her coconspirator. In addition, Ramirez and her coconspirator failed to report their tax preparation income, fees they received from clients to prepare their federal tax returns, on their own federal income tax returns. 

If convicted of the charges, Ramirez faces a maximum sentence of ten years in federal prison for her role in the conspiracy and five years for each false claim charge. 

Source: US Attorney's Office - California


Nevada Man Pleads Guilty to Filing a False Federal Income Tax Return

Assistant Attorney General for the Justice Department's Tax Division Kathryn Keneally and US Attorney Daniel G. Bogden for the District of Nevada announced August 8 that Arthur Risser Jr. of Las Vegas pleaded guilty to filing a false personal tax return for 2008.

According to the plea agreement, Risser earned over $100,000 each year during 2006 through 2008 while employed as a large engine mechanic from 2006 to 2008, at Aggregate Industries Southern Nevada Paving Inc. and, during 2006 and 2007, at Las Vegas Paving Corporation. Risser intentionally understated his wages and listed inflated amounts for withheld taxes to increase his refund on his individual income tax returns for 2006, 2007, and 2008. According to the indictment, Risser earned over $300,000 from 2006 to 2008 but only reported $54,472 of income on his federal tax returns for those three years.

Risser faces a potential maximum prison term of three years and a maximum fine of $250,000. 

Source: US Department of Justice


Utah Man Convicted of Tax Evasion

The Justice Department and the IRS announced August 7 that Jimmie Duane Ross of Lehi, Utah, formerly of Sevierville, Tennessee, was convicted of five counts of tax evasion following a jury trial in the US District Court for the Eastern District of Tennessee.

According to the indictment and evidence produced at trial, Ross won a monetary award of approximately $840,000 in 1999 after arbitration of an employment dispute with a former employer. Ross thereafter failed to pay the full amount of his income tax due and owing for 1999 and evaded the tax by filing a false mortgage on his residence, filing a false lien on his vehicle, dealing extensively in cash, and directing funds to an offshore account. In addition, from 2004 through 2007, Ross earned commission income for referring clients to a purported Nevis-based investment company and evaded his taxes by using nominees and other means.

On each of the five counts of conviction, Ross faces a maximum sentence of five years in prison and a maximum fine of $250,000.

Source: US Department of Justice



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