Crime Watch: December 13, 2013

Dec 13th 2013
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Long Beach Tax Return Preparer Sentenced to Prison 

Rathana Ung of Orange County, the former director and officer of Lim's Income Tax and Lim's Tax, Inc. in Long Beach, was sentenced to twelve months and a day imprisonment, one year of supervised release, and ordered to pay $103,736 in restitution to the IRS for aiding in the preparation of a false federal income tax return. 

According to court documents, between 2006 and 2010, Ung filed at least sixty false forms 1040 with the IRS. She admitted in court that she filed federal income tax returns for numerous clients claiming false deductions for mileage, meals and entertainment expenses, and other unreimbursed employee business expenses. Some of the tax returns contained false schedules C and at least one return contained a false deduction for tuition and fees.

Read more on the IRS  Criminal Investigation website. 

Leader of Tax Fraud Scheme Ordered to Pay $2.9 Million in Restitution

Concluding sentencing proceedings in which Arturo S. Ruiz was already to serve a fourteen-year prison term, the former leader of the Fontana-based Old Quest Foundation was ordered to pay $2,925,620 in restitution in relation to a tax fraud scheme that resulted in more than 400 fraudulent federal income tax returns being filed with the IRS that cumulatively sought more than $250 million in fraudulent refunds.

The scheme run out of Old Quest was the largest tax refund fraud in history involving misuse of Original Issue Discount tax forms. 

The evidence presented at trial showed that Ruiz fraudulently told Old Quest customers they each could receive hundreds of thousands of dollars in tax refunds by accessing "secret government accounts" through a process that included the filing of IRS forms 1099-OID. Taxpayers who signed up were required to pay Old Quest fees as high as $10,000, and they were required to promise to "donate" to Old Quest 25 percent of any tax refunds they received.

Read more on the Department of Justice website.

Former Washington, DCArea Accountant Sentenced to Prison for Tax Fraud

John T. Hoang of Woodbridge, Virginia, was convicted for willfully aiding and assisting in the preparation of false income tax returns for the 2004 tax year. Hoang was sentenced to serve forty-eight months in prison, twenty-four months of supervised release, and 240 hours of community service. The judge also ordered him to pay $331,896 in restitution to the IRS. Hoang, who was a CPA and an attorney, operated John T. Hoang CPA, a tax return preparation business, and he was one of two partners who owned Tax-Smart Technology Services. 

Despite earning revenue through his businesses of approximately $1 million in 2004, $2 million in 2005, and $3 million in 2006, Hoang failed to file any federal income tax returns or pay any federal income taxes for himself or his businesses during this time.

Hoang admitted that he prepared and caused the preparation of false and fraudulent 2004, 2005, and 2006 income tax returns for his clients. When preparing these false tax returns and related schedules for his clients, Hoang created wholly fictitious business income and expenses for what seemed to be a technology licensing business. 

As part of the plea agreement, Hoang admitted that the total tax loss caused by his criminal conduct is greater than $1.5 million.

Read more on the Department of Justice website.

Owner of New York Sportswear Distribution Business Sentenced for Tax Fraud

Harry Neuhoff, a resident of Brooklyn, New York, was sentenced to serve twelve months and one day in prison and three years' supervised release for tax evasion. Neuhoff was the president and an owner of EVA TEES Inc., a wholesale distributor of sportswear. 

From approximately 2006 to 2008, Neuhoff manipulated EVA TEES accounts through his accounting software program to delete cash sales from the general ledger accounts maintained on the computer accounting system. As a result, Neuhoff caused false corporate tax returns to be filed with the IRS that underreported the company's gross by at least $1.5 million.

Read more on the Department of Justice website.

Utah Resident Pleads Guilty to Filing False Claims for Tax Refunds Totaling $653,884

Stanley J. Wardle of Spanish Fork, Utah, pleaded guilty to nine counts of filing false claims for income tax refunds. According to the indictment, on or about January 22, 2009, Wardle prepared and filed a false tax return for the year 2008, in which he claimed a tax refund of $32,115.

In addition, between December 8, 2008, and May 13, 2009, he caused additional false claims for tax refunds to be made on behalf of others. In total, Wardle was involved in false claims for refunds totaling $653,884.

Wardle faces a statutory maximum sentence of five years in prison and a fine of up to $250,000, or twice the gross gain or loss caused by the defendant for each false claim charge.

Read more on the Department of Justice website.

Court Prohibits South Carolina Tax Preparer from Preparing Returns for Others

Jessica Geddis of Summerville, South Carolina, has been permanently barred from preparing federal income tax returns for others. According to the government's complaint, Geddis prepared federal income tax returns from her home and as a tax preparer at Smith's Tax Service and at MBM Tax and Accounting Services LLC.

Geddis prepared returns that unlawfully overstated tax refunds through a household help scheme. The complaint further alleged that Geddis directed the IRS to deposit all, or a portion of, her customers' overstated refunds into bank accounts that she controlled. The IRS reviewed Geddis' bank records and determined that she received at least 148 tax refunds totaling $281,678 between January 2008 and May 2012.

Read more on the Department of Justice website.

Former Chief Administrative Officer Agrees to Plead Guilty to Conspiracy and Tax Charges in Plot to Avoid Income Taxes

Robert A. Rizzo, who for years was the top administrator in the City of Bell, California, and who became a symbol of municipal corruption, has agreed to plead guilty to federal charges in a scheme that resulted in hundreds of thousands of dollars in unpaid federal income tax.

Sometime in 2002, Rizzo created an S Corporation that he called R.A. Rizzo Incorporated (RARI). Rizzo was assisted in the scheme by coconspirators that included his tax preparer, Robert J. Melcher, who has pleaded guilty to aiding and abetting the filing of a false tax return.

Rizzo used RARI to claim bogus losses in relation to a purported rental property in Auburn, Washington. RARI's corporate tax return fraudulently deducted more than $409,731 in losses for the years 2006 through 2009.

Rizzo also admitted in his plea agreement that he used a RARI account to pay for more than $80,000 in personal expenses in 2009 and $120,000 in construction work on his residence in Huntington Beach in 2010. RARI's tax returns falsely claimed that these expenses were related to rental property.

Rizzo and his coconspirators caused the IRS to suffer losses of more than $300,000 for the 2006 through 2010 years. Once he pleads guilty to the two felony charges, Rizzo will face a maximum statutory sentence of eight years in federal prison.

Melcher, who faces a sentence of up to three years in prison, is scheduled to be sentenced next year.

Read more on the IRS - Criminal Investigation website.

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