Crime Watch: March 15, 2013

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Federal Court Permanently Bars Michigan Woman from Preparing Tax Returns Claiming Earned Income Tax Credit

A federal court has permanently barred Crystal Ireland of Detroit, who does business as Master Mind Preparation, from preparing federal tax returns that claim the earned income tax credit, the Justice Department announced March 14. The civil injunction order, to which Ireland consented, was signed by Judge Bernard Friedman of the US District Court for the Eastern District of Michigan.

The complaint in the case alleged that Ireland failed to comply with due diligence requirements imposed by federal law on tax preparers who claim the earned income credit on customers' returns. According to the complaint, Ireland fabricated businesses and reported fake business income on her customers' tax returns in order to claim the maximum credit for them.

The complaint alleged that the IRS penalized Ireland in 2010 for failing to comply with federal law due diligence requirements, yet a 2011 follow-up investigation revealed ongoing failures and fraudulent claims. According to the complaint, Ireland prepared at least 2,300 returns from 2008 through 2011, with unusually high refund rates ranging from 97 to 99 percent for those years.

The permanent injunction order also bars Ireland from preparing forms Schedule C on which she knowingly fabricates income or expenses, preparing tax returns on which she knowingly claims a dependent that does not actually qualify as a dependent of the taxpayer, and preparing tax returns on which she fails to identify herself as the paid preparer or falsely identifies someone else as the paid preparer.

Source: US Department of Justice


Owner of Tax Preparation Business Sentenced in Alabama to Federal Prison

Bruce King, the founder and operator of Premier Tax, was sentenced March 13 in Montgomery, Alabama, to seventy months in prison and ordered to pay $781,305 in restitution to the IRS for orchestrating a tax fraud scheme at his business, the Justice Department and the IRS announced. King had previously pleaded guilty to charges of conspiring to defraud the United States and filing false tax returns.

According to court documents, Premier Tax was a tax preparation business operated by King that had several locations in Alabama and Georgia. King held training sessions in which he taught preparers how to falsify tax returns in order to fraudulently increase clients' tax refunds. Those he taught went on to work at Premier Tax and filed numerous false tax returns.

According to court documents, the tax loss caused by these fraudulent returns exceeded $1 million. To date, seven return preparers trained by King have also pleaded guilty and been sentenced.

Source: US Department of Justice


Court Bars South Florida Tax Return Preparers from Preparing Returns for Others

A federal district judge in Miami permanently barred Marlen Monzon, her son Yanko Rodriguez, and their Miami business, Tri Stars Multiservices Corporation, from preparing federal income tax returns for others, the Justice Department announced March 13.

According to the government's complaint, Monzon and Rodriguez prepared federal income tax returns in Miami through Tri Stars Multiservices, Corporation. As alleged, the returns prepared by Monzon and Rodriguez included fabricated claims for business expenses on customers' returns even when the customers did not own or operate a business.

The complaint further alleged that these fabricated expenses offset the customer's wage income and improperly lowered the customer's reported taxable income. These fabricated expenses generated (or increased) customers' refunds, and often qualified customers for credits to which they were not entitled. The complaint alleged that nearly every one of the 498 returns the IRS examined for tax years 2008 through 2011 claimed that the customer operated a business and reported a business loss. According to the complaint, the IRS has determined that the US Treasury lost more than $3.4 million in revenue as a result of Monzon and Rodriguez's misconduct. 

Source: US Department of Justice


Justice Department Shuts Down Maryland Return Preparer

A federal court has granted the United States' request to permanently bar James M. Unterreiner II from preparing tax returns, the Justice Department announced March 12. According to the government complaint, from 2002 until 2003, Unterreiner worked for Tax Resolutions Inc., where he assisted owner Irvin H. Catlett Jr. and others in marketing a tax evasion scheme in which Tax Resolutions' clients made investments in various sham companies and reported bogus tax losses. 

As the Justice Department previously announced, testimony heard at Catlett's nine-day criminal trial in 2010 showed that Tax Resolutions prepared fraudulent tax returns for its clients that included fictitious business losses which Tax Resolutions falsely claimed resulted from automobile leasing and sales. The fake losses reduced the amount of taxable income and total tax reported by Tax Resolutions' clients. As a result, the clients falsely claimed refunds from the IRS.

Testimony at that trial also showed that Unterreiner assisted Catlett and helped perpetuate the scheme by preparing client tax returns by first determining each client's tax and then adding to the return a fictitious loss from a tax shelter entity large enough to reduce the client's tax due to zero. Unterreiner continued the scheme even after Catlett was imprisoned on other charges.

As a result of the scheme, approximately 275 tax returns were filed with the IRS which reported bogus losses, resulting in a tax loss to the United States in excess of $3 million.

In addition to barring Unterreiner from preparing tax returns for life, the injunction also bars Unterreiner from representing others before the IRS as well as the advising, assisting, counseling, or instruction of anyone about the preparation of any federal income tax return.

Source: US Department of Justice


Court Bars Florida Tax Return Preparer from Preparing Returns for Others

A federal district judge in Jacksonville, Florida, permanently barred Thomas G. Bandzul from preparing federal income tax returns for others, the Justice Department announced March 11.

According to the government complaint, Bandzul repeatedly prepared federal tax returns that unlawfully understated customers' federal tax liabilities. The suit alleged that the defendant concocted bogus losses, expenses, education credits, business expenses, and charitable contributions, which he falsely reported on his customers' federal income tax returns.

The suit alleged that the IRS has examined over 250 tax returns prepared by Bandzul and found that over 90 percent of tax returns understated the taxpayer's liability. According to the complaint, the total harm to the US Treasury caused by Bandzul's misconduct could exceed $17 million.

In addition, Bandzul allegedly filed returns that claimed a refund larger than what Bandzul had disclosed to the taxpayer. Once the refund was paid, the suit alleged, Bandzul retained the additional amount without the taxpayer's knowledge. 

Source: US Department of Justice


IRS Worker Convicted in Tax Refund Scheme

A federal jury in Philadelphia on March 13 convicted former IRS employee Patricia Fountain of masterminding a scheme to collect fraudulent tax refunds while working at the IRS, often using straw filers.

Aware that the IRS didn't check telephone tax credit requests from filers owed less than $1,500 or ask for evidence from those seeking first-time homebuyer credits of up to $8,000, Fountain, a customer service representative, recruited drug addicts, welfare recipients, and ex-cons to make bogus filings and split the proceeds from refund checks totaling $400 to $3,000, the government said.

If participants reneged on the promised refund check split, Fountain allegedly used her position within the IRS to target them for tax agency collections. However, her lawyer, Michael Engle, suggested to the jury that Fountain's name was used without her knowledge to lend credibility to the refund scheme.

Fountain could get as many as twelve years in prison when she is sentenced in June. Two codefendants, including her boyfriend, were convicted on similar charges.

Source: ABA Journal


Former Web Producer Indicted in California for Conspiring with "Anonymous" Members to Attack Internet News Site

A former web producer for a Tribune Company-owned television station in Sacramento, California, was charged March 14 in an indictment for allegedly conspiring with members of the hacker group "Anonymous" to hack into and alter a Tribune Company website, the Justice Department announced.

Matthew Keys, twenty-six, of Secaucus, New Jersey, was charged in the Eastern District of California with one count each of conspiracy to transmit information to damage a protected computer, transmitting information to damage a protected computer, and attempted transmission of information to damage a protected computer.  

Keys was employed by Sacramento-based television station KTXL FOX 40 as its web producer but was terminated in late October 2010.

The three-count indictment alleges that in December 2010 Keys provided members of the hacker group Anonymous with log-in credentials for a computer server belonging to KTXL FOX 40's corporate parent, the Tribune Company.  According to the indictment, Keys identified himself on an Internet chat forum as a former Tribune Company employee and provided members of Anonymous with a log-in and password to the Tribune Company server.  After providing log-in credentials, Keys allegedly encouraged the Anonymous members to disrupt the website.  According to the indictment, at least one of the computer hackers used the credentials provided by Keys to log into the Tribune Company server, and ultimately, that hacker made changes to the web version of a Los Angeles Times news feature.

The indictment further alleges that Keys had a conversation with the hacker who claimed credit for the defacement of the Los Angeles Times website.  The hacker allegedly told Keys that Tribune Company system administrators had thwarted his efforts and locked him out.  Keys allegedly attempted to regain access for that hacker, and when he learned that the hacker had made changes to a Los Angeles Times page, Keys responded",nice."

Each of the two substantive counts carry a maximum penalty of ten years in prison, three years of supervised release, and a fine of $250,000.  The conspiracy count carries a maximum penalty of five years in prison, three years of supervised release, and a fine of $250,000.

Source: US Department of Justice



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