FOREIGN NATIONAL INDICTED RELATED TO IDENTITY THEFT OF UNIVERSITY OF PITTSBURGH MEDICAL CENTER EMPLOYEES

FROM:  U.S. JUSTICE DEPARTMENT
Friday, June 26, 2015
Indictment In UPMC Stolen Identity Scheme

On Wednesday, a federal grand jury in Pittsburgh returned a multi-count indictment against Yoandy Perez Llanes, a foreign national residing outside of the United States.  Llanes was charged in a 21-count indictment with a scheme to defraud the Internal Revenue Service (IRS), and the U.S. Treasury, using the stolen identities of employees of the University of Pittsburgh Medical Center (UPMC) to file false federal income tax returns in order to obtain unlawful tax refunds.  Llanes and unnamed conspirators converted the unlawful tax refunds to Amazon.com gift cards, which were used to buy merchandise which was shipped internationally.  All of these acts occurred generally between January and April 2014.  Llanes is charged with conspiracy to defraud the United States, wire fraud, money laundering and aggravated identity theft.

Early in 2014, thousands of employees of UPMC had their personal information compromised by hackers, who intruded into a UPMC computerized database stealing names, social security numbers, dates of birth and other personal identifying information.  This data was then used to file false 2013 federal tax returns.  Investigators learned that names and other identifiers were used by Llanes and other conspirators to file 935 false tax returns in which unlawful refunds were requested in the form of Amazon.com gift cards.  Quick action by the IRS, UPMC and Amazon.com frustrated the efforts of the fraudsters to file additional false returns and obtain further fraudulent proceeds.  While the perpetrators sought approximately $2.2 million in fraudulent refunds, only $1.4 million was actually disbursed as refunds.  Stolen Identity Refund Fraud, such as that alleged to have been perpetrated by Llanes, costs United States taxpayers billions of dollars.

This criminal scheme was complex and crossed national borders.  Llanes and the conspirators used anonymous and encrypted email to disguise their identities and proxy computers to file returns.  Using the fraudulently obtained Amazon.com gift cards, Llanes purchased hundreds of thousands of dollars in electronic merchandise for shipment through reshipping services in Miami, Florida, with instructions for delivery to “drop” locations outside the United States.  Llanes and others then retrieved the merchandise and advertised it for sale on online auction websites overseas.

Though Llanes and the conspirators attempted to conceal their whereabouts and their identities through the use of encrypted email and proxy services, investigators were able to uncover the sophisticated plot and identify Llanes.

The law provides for a sentence of imprisonment, a fine of $5.5 million or both.  Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.

Assistant U.S. Attorney Gregory C. Melucci is prosecuting this case on behalf of the government.

The IRS-CI, the U.S. Secret Service and the U.S. Postal Inspection Service, conducted the investigation leading to the indictment in this case.

An indictment is an accusation.  A defendant is presumed innocent unless and until proven guilty.

DOJ SEEKS TO SHUT DOWN TAX PREPARATION BUSINESS ACCUSED OF PREPARING FRAUDULENT TAX RETURNS

FROM:  U.S. JUSTICE DEPARTMENT
Tuesday, May 5, 2015
Justice Department Seeks to Shut Down Florida Tax Return Preparer and Owner of Tax Preparation Business

The United States filed a civil injunction suit seeking to bar a Tampa, Florida, man from owning, operating or franchising a tax return preparation business and from preparing tax returns for others, the Justice Department announced today.  The complaint also requests that the court order the defendant to disgorge the fees that he obtained through alleged fraudulent tax return preparation.

The suit, which was filed in the U.S. District Court for the Middle District of Florida, alleges that Milot Odne owns and operates Rapid Tax 1, a tax return preparation business in the Tampa area.  According to the complaint, Odne was previously a franchisee of LBS Tax Services.

The suit alleges that Odne targets primarily low-income customers with deceptive and misleading advertisements, prepares and files fraudulent tax returns to fraudulently increase his customers’ refunds, and profits through unconscionable and exorbitant fees — all at the expense of his customers and the U.S. Treasury.

According to the suit, there is a “culture of greed” at Odne’s tax return preparation stores “that expressly promotes and encourages the preparation of false and fraudulent federal tax returns in order to maximize corporate and individual profits.”  The complaint alleges that Odne’s stores engage in fraudulent activity, including:

            •           Falsely claiming the Earned Income Tax Credit;

            •           Claiming improper filing status (i.e., head of household);

            •           Fabricating businesses and related business income and expenses;

            •           Fabricating itemized deductions on a Schedule A, including for unreimbursed employee business expenses, automobile expenses and charitable contributions;

            •           Falsely claiming education credits to which customers are not entitled;

            •           Improperly preparing returns based on paystubs rather than Forms W-2; and

            •           Failing to provide customers with a copy of a competed tax return, as required.

According to the complaint, the Internal Revenue Service (IRS) estimates that the tax loss resulting from these activities for the 2012, 2013 and 2014 tax years could be up to $35.5 million or more.

This lawsuit is one of several filed against former LBS Tax Services-related individuals, including Walner Gachette, Douglas Mesadieu, Jean Demesmin, Kerny Pierre-Louis, Demetrius Scott, Jason Stinson, Wilfrid Antoine, Tonya Chambers, Jehoakim Victor and Lauri Rodriguez.  In February 2015, a court barred Victor and Rodriquez from preparing tax returns for others and from owning or operating a tax return preparation business.

U.S.P.S. EMPLOYEE CHARGED WITH FRAUD RELATED TO INCOME TAX FILINGS

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, February 25, 2014
United States Postal Service Employee Charged in Scheme to Fraudulently Extinguish Debts and to Obtain Fraudulent Tax Refunds

Aaron H. Kelly, a United States Postal Service employee, was indicted yesterday in the U.S. District Court for the District of Maryland for four counts of mail fraud, two counts of bank fraud, one count of corruptly endeavoring to obstruct and impede the Internal Revenue Service (IRS) and two counts of aiding and assisting in the preparation of false tax returns, the Justice Department and IRS announced today following the unsealing of the indictment.

According to the indictment, Kelly, a resident of Maryland, engaged in a scheme to defraud the IRS, the Thrift Saving Plan and the Educational Systems Federal Credit Union by sending fictitious financial instruments to fraudulently extinguish the taxes he owed to the United States as well as the debts he owed to the Thrift Savings Plan and the Federal Credit Union.  In addition, Kelly submitted two false tax returns to the IRS that requested millions of dollars in fraudulent refunds.

An indictment is merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Kelly faces a statutory maximum potential sentence of 20 years in prison for each mail fraud count, 30 years in prison for each bank fraud count and three years in prison for each of the tax-related counts.

This case was investigated by the Treasury Inspector General for Tax Administration and special agents of IRS - Criminal Investigation.  Trial Attorneys Ken Vert and Yael T. Epstein of the department’s Tax Division are prosecuting the case.

ALABAMA TAX PREPARER INDICTED FOR FILING FRAUDULENT TAX RETURNS

FROM:  JUSTICE DEPARTMENT 
Thursday, January 16, 2014

Alabama Tax Preparer Indicted for Preparing False Returns for Clients
Russell Burroughs, a resident of Montgomery, Ala., was indicted on 33 counts of filing false tax returns, Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama announced today following the unsealing of the indictment yesterday.

According to the indictment, Burroughs owned and operated Computer Services, a tax return business located in Montgomery, Ala.  Burroughs allegedly prepared and filed 33 false tax returns.  The indictment alleges that the false items on the tax returns included false energy and education credits, false deductions and other false information.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Burroughs faces a statutory maximum potential sentence of three years in prison for each count of filing a false return.

The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation.  Trial Attorneys Charles Edgar Jr., Katherine Reinhart and Michael Boteler of the Tax Division are prosecuting the case with the assistance of Assistant U.S. Attorney Todd Brown and the U.S. Attorney’s Office for the Middle District of Alabama.

ARIZONA MAN GETS NINE YEARS IN PRISON FOR TAX CRIMES

FROM: U.S. DEPARTMENT OF JUSTICE
Friday, August 10, 2012
Arizona Tax Defier Sentenced to Nine Years in Prison for Fraud and Tax Conspiracy

Richard Kellogg Armstrong, 77, of Prescott, Ariz., was sentenced today by U.S. District Court Judge Robert E. Blackburn to 108 months in prison followed by three years of supervised release. Judge Blackburn ordered the sentence to run consecutively to the 660 day prison term and $1,021,500 of fines cumulatively imposed upon Armstrong as punitive sanctions for 10 acts of contempt of court. He also ordered Armstrong to pay restitution to the Internal Revenue Service (IRS) in the amount of $1,678,834 and to forfeit two residences and a personal aircraft. The sentence was announced by the Justice Department’s Tax Division, the U.S. Attorney’s Office for the District of Colorado and the IRS Criminal Investigation Denver Field Office. Codefendant Curtis L. Morris, age 43, of Elizabeth, Colo., is scheduled to be sentenced on Nov. 6, 2012.

Armstrong was found guilty on April 30, 2012, after a three week jury trial, of one count of mail fraud, eight counts of filing false claims against the United States, three counts of engaging in monetary transactions in property derived from mail fraud, and one count of conspiracy to defraud the United States. According to the testimony at trial, Armstrong, Morris and others conspired to file false tax returns claiming large tax refunds based upon fictitious federal income tax withholdings taken from bogus IRS Forms 1099-OID for themselves and others. Armstrong personally received over $1.6 million in fraudulent tax refunds and, according to the testimony at trial, quickly moved most of this money into accounts in the names of shell entities and offshore bank accounts.

"The sentence in this case demonstrates that those who defy the tax laws by preparing or filing false and frivolous tax returns will be prosecuted and punished for their conduct," said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. "The Tax Division remains committed to prosecuting conduct that attempts to defy our nation’s tax laws."

"The intent of this refund fraud scheme was to swindle the government and the taxpaying public" said Richard Weber, Chief, IRS-Criminal Investigation. "Today's sentencing of Mr. Armstrong again emphasizes that the Internal Revenue Service and Department of Justice will continue their aggressive pursuit of those who would attempt to defraud America's tax system."

Assistant Attorney General Keneally commended the efforts of IRS-Criminal Investigation special agents, who investigated the case, and Assistant U.S. Attorney Kenneth Harmon and Special Assistant U.S. Attorney Kevin F. Sweeney, who prosecuted the case. Kevin Sweeney is a trial attorney from the Tax Division, currently on detail to the U.S. Attorney’s Office.

FORMER OCEANS BANK EXECUTIVE SENTENCED FOR BRIBERY AND FALSE TAX RETURNS

FROM U.S. DEPARTMENT OF JUSTICE
Wednesday, April 4, 2012
Former Executive of Miami-Based Ocean Bank Sentenced to Serve 37 Months in Prison for Participating in Bribery Scheme and Filing False Tax Returns
WASHINGTON – A former executive of Ocean Bank, a financial institution headquartered in Miami, was sentenced today for participating in a scheme to accept bribes and for failing to report income on federal income tax returns, the Department of Justice announced.

Danilo P. Perez, a former vice president of Ocean Bank, was sentenced today in the U.S. District Court in Miami by District Judge Donald L. Graham to serve 37 months in prison followed by one year of supervised release.

On Jan. 25, 2012, Perez pleaded guilty to one count of conspiracy to solicit or demand money and other things of value to influence an employee of a financial institution and three counts of tax offenses. The charges against Perez stemmed from his accepting nearly $500,000 in cash and other items from co-conspirators in connection with his supervision of certain customer business with the bank. As vice president, Perez generally oversaw Ocean Bank’s lending relationships with corporate customers of the bank.

Perez admitted to accepting bribes, including payments for expensive watches, Super Bowl tickets and other items for his personal use, as well as substantial amounts of cash. Perez accepted the payments intending to be rewarded and influenced in connection with his role in approving Ocean Bank’s issuance of letters of credit, loans and overdraft privileges to his co-conspirators. Perez also admitted that he failed to report income from those bribes for tax years 2005, 2006 and 2007, resulting in lost tax revenue of approximately $91,000 to the federal government.