Crime Watch: March 4, 2013

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Los Angeles Woman Sentenced to Three Years Imprisonment for Federal Crimes

Appearing before US District Judge Margaret M. Morrow, a Los Angeles woman was sentenced February 25 to three years in prison for her role in a scheme whereby she used the identities of others to defraud the federal bankruptcy and tax systems. 

Irina Topilina, fifty-five, pleaded guilty in February of last year to one count each of tax evasion, bankruptcy fraud, and aggravated identity theft as part of a plea agreement which she agreed to the government's forfeiture of her residence. The charge of aggravated identity theft carries a mandatory two-year prison term.

In sentencing Topilina to a thirty-six-month term of imprisonment, Judge Morrow cited the seriousness of the criminal conduct at issue, which included obtaining property and assets belonging to an elderly woman who was suffering from dementia and the use of the identity of foreign nationals to conceal her assets. The court also ordered the defendant and her family to vacate their residence, pursuant to the forfeiture agreement, by April 7, 2013. A restitution hearing is scheduled for May 6, 2013, in order to determine the amount of restitution to be ordered to the victims in this case.

According to documents filed with the court, Topilina's convictions for bankruptcy fraud, income tax evasion, and aggravated identity theft were based on a course of conduct that began as early as 1999, when Topilina placed her residence in the name of a foreign national and used this person's identity to obtain loans secured by the residence, pay expenses for the residence, and ultimately file a homeowner's claim for damages to the residence. 

The bankruptcy fraud and tax evasion convictions are based on Topilina's actions beginning in 2004, in obtaining property and assets belonging to another individual – an elderly woman suffering from dementia – and the defendant's use and concealment of these assets to support her lifestyle and evade her tax-reporting requirements. In October 2005, the defendant and her husband, Eugene Pinchuk, filed a bankruptcy petition, claiming less than $12,000 in assets and $142,000 in liabilities. The petition failed to disclose several assets, including the defendant's residence, a condominium, annuities, and a Volvo that the defendant had acquired through the use of nominees. 

The plea to tax evasion is further based upon Topilina's failure to report approximately $130,000 in funds that the defendant used for her benefit from the cashed annuities and additional payments of approximately $43,000 the defendant received for notary services and referral fees that were deposited into a nominee account.

Topilina is scheduled to surrender herself to the custody of the United States Marshal Service on March 25, 2013.

Source: IRS - Criminal Investigation Los Angeles Field Office


Detroit Preparer Charged with Preparing False Tax Returns

Matthew Bender, a paid preparer of tax returns residing in Detroit, was charged in a superseding indictment with preparing false tax returns and tax obstruction, the Justice Department, IRS, and the Treasury Inspector General for Tax Administration (TIGTA) announced February 27.

Bender had been arrested on a portion of those charges on January 10, 2013. The superseding indictment charges Bender with sixteen counts of assisting in the presentation of false tax returns to the IRS, along with one count of corruptly endeavoring to obstruct the due administration of the Internal Revenue laws.

According to the superseding indictment, between 2004 and 2012, Bender prepared returns for taxpayers that falsely claimed refunds and contained false deductions and tax withholdings. The superseding indictment also alleges that Bender filed false tax returns for himself for 2007 and 2009 and failed to file his own tax returns for 2003, 2004, 2005, 2006, 2008, 2010, and 2011.

If convicted, Bender faces a potential maximum sentence of three years in prison and a $250,000 fine on each count.


Justice Department Prevails in Tax Shelter Case Involving $1 Billion in Tax Deductions

A federal court in Baton Rouge, Louisiana, on February 27 rejected two tax shelter transactions entered into by The Dow Chemical Company that purported to create approximately $1 billion in phony tax deductions. In addition to rejecting the tax benefits from the shelter transactions, Chief Judge Brian A. Jackson also imposed penalties.

As stated in the opinion, the schemes were created by Goldman Sachs and the law firm of King & Spalding, and involved creating a partnership that Dow operated out of its European headquarters in Switzerland. Chief Judge Jackson wrote in his seventy-four-page opinion that the government was correct to reject the artificial tax benefits created by these schemes that were designed to exploit perceived weaknesses in the tax code and not designed for legitimate business reasons. 

Judge Jackson noted that "tax law deals in economic realities, not legal abstractions." He also wrote that penalties were appropriate because any reasonable and prudent person should have known that the artificial tax benefits created by the scheme were "too good to be true." Judge Jackson noted in his opinion that "Dow viewed its tax department as a profit center" and had at its disposal "numerous lawyers and tax professionals."


Federal Court Enjoins Former Los Angeles Instant Tax Service Franchisee

A federal court in Los Angeles permanently barred a Rancho Palos Verdes, California, married couple Henock Teferi and Ruth Berhane and their company, Plover Financial Services LLC, from engaging in certain abusive tax-preparation practices, the Justice Department announced February 26. The defendants are former owners of a Los Angeles–area Instant Tax Service franchise. Instant Tax Service is a national tax-preparation chain based in Dayton, Ohio, and claims to be the fourth-largest tax-preparation firm in the nation.

According to the government complaint in the civil case, the defendants operated Instant Tax Service offices at multiple locations in the Los Angeles area until 2011. During that time, defendants' employees allegedly engaged in a variety of misconduct, including preparing tax forms with unsubstantiated business income, falsely claiming education credits, improperly claiming false filing status, reporting false dependents, selling deceptive loan products, and preparing tax returns based on information from employee paystubs rather than employer-issued W-2 forms.

Judge Michael Fitzgerald of the US District Court for the Central District of California signed the permanent injunction order, barring the defendants from violating the federal tax laws and consumer protection laws, requiring an outside monitor to review a sample of tax returns that the defendants prepare in connection with their current tax preparation business, and reporting to a designated representative of the United States to ensure compliance with the injunction. The order also bars the defendants from marketing abusive loan products, including holiday or instant cash loans or advance loan products offered to customers based on information obtained from customers' paystubs. The defendants consented to the permanent injunction without admitting the allegations against them.

The Justice Department brought five civil injunction suits against Instant Tax Service and some franchisees last year. One of those suits is pending against the nationwide franchisor of Instant Tax Service and its owner, Fesum Ogbazion, in Dayton. The court in that case has entered a preliminary injunction, and trial on the government's request to shut down the Instant Tax Service franchisor permanently is scheduled for May 2013.

Source: US Department of Justice



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