THREE "TAX BREAK 2000" DEFENDANTS SENTENCED TO PRISON FOR TAX FRAUD

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, March 11, 2015
Ex-Casino Owner, Nevada Businessman and Former NFL Player Sentenced to Prison in Massive Tax Fraud Scheme
Court Orders More than $35 Million in Restitution

A former casino owner from Henderson, Nevada, a former businessman from Las Vegas and a former NFL punter from Upland, California, were sentenced yesterday in U.S. District Court in Las Vegas to serve prison time and ordered to pay more than $35 million in restitution for conspiracy and fraud related to their promotion of a fraudulent tax product through the now-defunct National Audit Defense Network (NADN), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Alan Rodrigues, NADN’s former general manager and executive vice president, was sentenced to serve 72 months in prison to be followed by three years of supervised release and to pay a $2,000 special assessment by U.S. District Court Judge Miranda Du of the District of Nevada.  Rodrigues was ordered to pay restitution of more than $35 million to customers of NADN who purchased the fraudulent tax product.  Weston Coolidge, a businessman who previously served as NADN’s president, was sentenced by Judge Du to serve 70 months in prison followed by three years of supervised release, and to pay a $2,000 special assessment for his part in the fraud.  Coolidge was also ordered to pay restitution of more than $35 million to victims of the fraud.  Joseph Prokop, who previously served as the National Marketing Director for Oryan Management and Financial Services, a company affiliated with NADN, was sentenced to serve 18 months in prison to be followed by 30 months home confinement and three years of supervised release.  Prokop was also ordered to pay a $1,800 special assessment and restitution to victims of more than $35 million.  At sentencing, Judge Du found that the defendants were responsible for fraud losses of more than $36 million and an intended tax loss of more than $60 million.

On May 27, 2014, after a six-week jury trial, the three defendants were convicted of one count of conspiracy to defraud the United States, 13 counts of aiding and assisting in the preparation of false income tax returns and four counts of mail fraud.  Rodrigues and Coolidge were each convicted of an additional two counts of aiding and assisting in the preparation of false income tax returns.

“Business professionals who design, market and sell fraudulent tax products by criminally exploiting select provisions of the tax code will be prosecuted to the full extent of the law,” said Acting Assistant Attorney General Ciraolo.  “The prison sentences handed down yesterday against the defendants demonstrate that the Department of Justice is committed to holding individuals responsible for their criminal conduct.”

The evidence at trial established that through NADN, the defendants promoted and sold a product called Tax Break 2000 to customers throughout the United States.  NADN began to promote and sell Tax Break 2000 in early 2001.  Tax Break 2000 purported to be an online shopping website.  The defendants falsely and fraudulently told customers that buying the product would allow them to claim legitimate income tax credits and deductions under the Americans with Disabilities Act (ADA) by modifying the website each customer was provided to make it accessible to the disabled.  NADN charged $10,475 for the product to maximize the fraudulent income tax credits and deductions that individuals would claim on their tax returns.  Although the price of the product that was claimed on the tax returns was $10,475, the customers only paid between $2,000 and $2,695 out-of-pocket.  The remainder of the cost was covered by a promissory note that customers were not expected to repay.

The defendants knew that the websites provided to customers made little, if any, money from sales commissions and that they did not entitle the purchaser to either a tax credit or any deductions.  The defendants nonetheless taught and directed the tax return preparers working for NADN to prepare thousands of tax returns for customers that claimed the fraudulent tax credit and deductions.  When special agents of the Internal Revenue Service (IRS) began to investigate Tax Break 2000 and NADN, the evidence showed that the defendants sought to cover up the fraud by creating false IRS Forms 1099 that reported fictitious income to make it appear that the websites were in fact earning money.

From 2001 through approximately May 2004, NADN sold the Tax Break 2000 product more than 18,000 times to thousands of customers located throughout the United States.  As a result of the defendants’ fraud, thousands of NADN customers were audited by the IRS.  On April 13, 2004, the Tax Division filed a civil complaint seeking to enjoin, among others, NADN, Rodrigues, Coolidge and Prokop from selling fraudulent tax schemes, including Tax Break 2000.  NADN ceased operations in May 2004.

“We view schemes like Tax Break 2000 as organized tax evasion” said Special Agent in Charge John Collins of IRS Criminal-Investigation (IRS-CI).  “It is a top priority for the IRS to stop promoters of these harmful schemes.  The public should remember the old saying ‘if it sounds too good to be true, it probably is.’  Instead of being a tax break this fraudulent product cost the victims much more in the end with interest and penalties.”

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-CI who investigated the case.  She also commended the substantial efforts of former Trial Attorneys Timothy J. Stockwell and Katherine L. Wong, and Paralegal Larry Garland of the Tax Division, who prosecuted the case, and Trial Attorney Mark L. Williams of the Tax Division, who assisted with sentencing.  Acting Assistant Attorney General Ciraolo thanked the U.S. Attorney’s Office of the District of Nevada in Las Vegas for their substantial assistance.

REAL ESTATE BUSINESSMAN PLEADS GUILTY TO FRAUD

FROM:  U.S. JUSTICE DEPARTMENT
Thursday, February 19, 2015
Detroit Real Estate Businessman Pleads Guilty to Tax and Bank Fraud

On Feb. 18, a Detroit man pleaded guilty in the U.S. District Court for the Eastern District of Michigan to obstructing and impeding the Internal Revenue Service (IRS) and conspiring to commit bank fraud, Principal Deputy Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.

According to the information and other court documents, Richard Pierce failed to report over $9 million in gross business receipts during 2007 through 2013, derived from the various Detroit-area businesses that he operated and controlled, including Phoenix Real Estate Company, Phoenix Preferred Properties LLC, Detroit Matrix, First Metro Properties LLC, First Metro Real Estate Services LLC, Phoenix Office Plaza-II LLC, Rosedale/Grandmont Properties LLC, and RFP Ventures LLC.  In addition, on Nov. 26, 2007, Pierce participated in a bank fraud scheme wherein he caused the submission of a false loan application to a mortgage lender on which he falsely reported that the buyer was paying $77,900 for a residential property without disclosing that the buyer received a $46,340 “kickback” from the seller.

Sentencing is scheduled for July 8 before U.S. District Court Judge Arthur J. Tarnow of the Eastern District of Michigan.  Pierce faces a statutory maximum sentence of three years in prison for filing a false tax return and a statutory maximum sentence of 30 years in prison for conspiring to commit bank fraud, with maximum potential fines totaling $1.25 million.

Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS – Criminal Investigation, who investigated the case, and Trial Attorneys Mark McDonald and Christopher O’Donnell of the Tax Division, who are prosecuting the case.  She also thanked the U.S. Attorney’s Office in the Eastern District of Michigan for their assistance.

FOUNDER OF HAPPY'S PIZZA CONVICTED BY JURY OF TAX FRAUD

FROM:   U.S JUSTICE DEPARTMENT 
Wednesday, November 19, 2014

Happy's Pizza Founder Convicted of Multi-Million Dollar Tax Fraud Scheme
On November 19, in the U.S. District Court for the Eastern District of Michigan, a federal jury after deliberating 4.5 hours convicted the president and founder of Happy’s Pizza of conspiracy to defraud the United States and 32 counts of tax crimes, the Justice Department announced today.

Happy Asker’s convictions include three counts of filing false federal individual tax returns for the years 2006 through 2008, 28 counts of aiding and assisting the filing of false federal income and payroll tax returns for several Happy’s Pizza Franchises restaurants for the years 2006 through 2009, and one count of engaging in a corrupt endeavor to obstruct and impede the administration of the Internal Revenue Code.

During trial, the evidence established that Asker was the president, founder and public face of the Farmington Hills, Michigan, based Happy’s Pizza franchise.  He also had ownership interests in several Happy’s Pizza franchises located in Michigan, Ohio and Chicago.  From June 2004 through April 2011, Asker, along with certain franchise owners and employees, executed a systematic and pervasive tax fraud scheme to defraud the Internal Revenue Service (IRS).  Gross sales and payroll amounts were substantially underreported to the IRS on numerous individual corporate income tax returns and payroll tax returns submitted for nearly all 60 Happy’s Pizza franchise restaurants located in Michigan, Ohio and Illinois.  Evidence admitted at trial established that from 2008 to 2010, more than $6.1 million in cash gross receipts were diverted from approximately 35 different Happy’s Pizza stores in the Detroit area, Illinois and Ohio.  In total, the evidence at trial established that Asker and certain employees and franchise owners failed to report to the IRS approximately $3.84 million of gross income from the various Happy’s Pizza franchises and approximately $2.39 million in payroll.  The evidence at trial further established that a portion of this unreported income was shared among most of the franchise owners, including Asker, in a weekly cash “profit split.”  The cash was distributed among the investors and managers of the relevant franchises.  The IRS is owed more than $6.2 million in taxes as a result of this fraud scheme.

The evidence at the two-week trial also established that Asker purposely misled IRS-Criminal Investigation special agents during voluntary interviews conducted on Nov. 5, 2010, and Dec. 1, 2010.  Asker denied knowing co-defendant Arkan Summa, a convicted felon, and did not disclose Summa’s association with a number of Happy’s Pizza franchise restaurants.  Documents admitted during trial indicate Summa shared in diverted gross receipts from at least one Happy’s Pizza franchise in Toledo, Ohio.

Four other defendants in the case pleaded guilty prior to Asker’s trial.  On October 23, Maher Bashi, who served as Happy’s Pizza’s corporate chief operating officer, and Tom Yaldo, an owner of numerous Happy’s Pizza franchises, pleaded guilty to conspiracy to defraud the United States.  According to the indictment, their conduct included, among other things, creating and maintaining fraudulent accounting records and falsely reporting income taxes and payroll taxes.  On July 15, Summa pleaded guilty to engaging in a corrupt endeavor to obstruct and impede the due administration of the IRS, and Tagrid Summa, who is identified as a Happy’s Pizza franchise owner in documents admitted during trial, pleaded guilty to providing false documents to the IRS.

At sentencing, Happy Asker faces a statutory maximum sentence of five years in prison and a $250,000 fine for conspiracy to defraud the government.  The charges of filing a false income tax return and aiding or assisting in filing a false return carry a statutory maximum sentence of three years in prison and a fine of $250,000 for each count.  The obstruction charge carries a statutory maximum sentence of three years in prison and a fine of $250,000.  Asker’s sentencing is scheduled for March 5, 2015, in the Eastern District of Michigan.

The case was investigated by special agents from IRS-Criminal Investigation and the Drug Enforcement Agency.  Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald for the Justice Department’s Tax Division prosecuted the case.

NY CONSTRUCTION COMPANIES OWNER PLEADS GUILTY TO TAX FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, June 9, 2014

Owner of New York Construction Companies Pleads Guilty to Tax Fraud

Eric Anderson, of Dix Hills, New York, pleaded guilty today in the U.S. District Court for the Eastern District of New York to the willful failure to collect and pay over employment taxes, the Justice Department and Internal Revenue Service (IRS) announced.

According to court documents, Anderson owned three construction companies located in Dix Hills: Anderson Framing, Anderson Enterprise and Anderson Trim Specialty.  Anderson corruptly endeavored to obstruct the IRS between 2006 and 2008 by using a check cashing service to cash over $10.5 million of gross receipts checks paid to his construction companies.  He concealed his check cashing activities from his tax return preparer so that the income was not included on the companies’ tax returns.  Anderson paid his employees in cash while failing to collect and pay over employment taxes to the IRS.  He also diverted cash receipts earned by his companies for his own personal use.  Finally, after learning of the criminal investigation, Anderson shredded business records and lied to IRS investigators about his use of the check cashing service.  The estimated tax loss resulting from Anderson’s activities is between $1 and $2.5 million.

Anderson faces a statutory potential maximum sentence of five years in prison and a potential fine of up to $250,000.  U.S. District Judge Arthur Spatt set sentencing for Sept. 19, 2014.

The case was investigated by IRS-Criminal Investigation and is being prosecuted by Trial Attorneys Mark Kotila and Jeffrey Bender of the Justice Department’s Tax Division.

OWNER TAX RETURN FRANCHISE AND HEALTH PROVIDER BUSINESS PLEADS GUILTY TO TAX, HEALTH CARE FRAUD, MONEY LAUNDERING

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, April 10, 2014

Owner of Tax Return Preparation Franchise and Health Provider Business Pleads Guilty to Tax Fraud, Healthcare Fraud and Money Laundering

Claude Arthur Verbal II, formerly of Raleigh, N.C., and now of Miami, pleaded guilty to tax fraud, healthcare fraud and money laundering in two separate cases in federal court, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney Ripley Rand for the Middle District of North Carolina.  Verbal pleaded guilty to one count of conspiracy to defraud the United States, one count of aiding and assisting the preparation of false tax returns, one count of healthcare fraud and one count of money laundering.  The plea was accepted late yesterday by U.S. District Judge Catherine Eagles in Greensboro, N.C., and sentencing was set for Aug. 11, 2014.  Verbal faces up to 28 years in federal prison and $850,000 in fines, and has agreed to pay restitution to the Internal Revenue Service (IRS) and Medicaid.

The Tax Case

According to court documents, Verbal was the owner of Nothing But Taxes (NBT), a tax return preparation franchise with 10 branches throughout the state of North Carolina that operated from 2005 to at least 2012.  Verbal personally prepared false tax returns for clients of NBT and taught and encouraged his employees to do so as well.  Verbal and NBT employees frequently offered clients a dramatically larger tax refund if the clients agreed to make a cash payment to the person who prepared their return.  These cash payments were over and above the flat return preparation fee that NBT charged every client, whether or not their return was falsified.

According to court documents, from 2005 to 2007, Verbal personally prepared dozens of false tax returns on a computer at NBT’s location on Fayetteville Street in Durham, N.C.  One such return was a 2006 tax return for an NBT client that falsely reported the client had a Schedule C business and a dependent, which Verbal knowingly prepared and electronically filed with the IRS.  

According to court documents, the most common types of falsifications at NBT were false dependents, false Schedule C businesses, false tip income, false Earned Income Tax Credits (EITC) and false education credits.  Verbal himself falsified returns using these items and taught his managers and line employees how to do so as well.  Verbal and many of his employees facilitated the purchase and sale of false dependents at NBT by purchasing the names, dates of birth and social security numbers of individuals from the community for use as false dependents on other NBT clients’ tax returns.

According to court documents, in November 2010, one of Verbal’s employees informed a U.S. Probation Officer of the fraudulent practices at NBT’s location on Fayetteville Street.  The probation officer informed Verbal of this fraud and he falsely denied knowledge of it.  Afterward, Verbal took steps to keep the profitable Fayetteville Street location open and to continue operating as usual, but to also further distance himself from the fraudulent practices.  In order to do this, Verbal transferred the electronic filing privileges for that NBT branch to a nominee.  Verbal and others jointly persuaded, a relative of Verbal who allowed Verbal to use their name to apply for new electronic filing privileges for the Fayetteville Street location.  In exchange, Verbal and his wife paid the relative $10,000, and the relative had no role in operating NBT, no professional tax experience and no knowledge of the fraud that was occurring at NBT.

Later, in 2012, the IRS shut down electronic filing privileges at all 10 NBT branches due to persistent fraud.  Verbal re-applied for electronic filing privileges twice for all NBT locations, first in the name of the relative and, when that attempt failed, in the name of another relative who had no knowledge of NBT’s business.

Related Tax Cases

According to court documents, in a series of related cases in the Middle District of North Carolina, multiple other individuals employed by NBT – including branch managers, return preparers and client recruiters – have also pleaded guilty to charges involving federal tax fraud, fraud, and identity theft crimes.

According to court documents, in a related case, Rakecia Brame pleaded guilty to wire fraud, aggravated identity theft and aiding and assisting the preparation of false tax returns.  Brame, a former social worker with the Alamance County Department Social Services (DSS), admitted to selling the identities of DSS clients to NBT return preparers for use as false dependents on tax returns.

According to court documents, in another related case, Tasha Smith, a former NBT employee who later left and opened her own fraudulent tax return preparation businesses, pleaded guilty on April 8, 2014, to conspiracy to defraud the United States.

“The tax fraud committed by Claude Verbal and the other Nothing But Taxes defendants is an affront to honest, hard-working taxpayers,” said Assistant Attorney General Kathryn Keneally of the department’s Tax Division.  “The Justice Department will prosecute and seek just punishment against those who prepare fraudulent tax returns.”

“Today, Mr. Verbal admitted to owning a tax preparation business that blatantly ignored the tax laws by preparing false tax returns and misusing his electronic filing privileges,” said Chief of IRS-Criminal Investigation Richard Weber.  “Dishonest return preparers use a variety of methods to cheat the government, including falsifying information on the tax returns to generate larger refunds for their clients.  Criminal Investigation will continue to ensure that all tax practitioners, tax preparers and others who practice in the tax law profession adhere to professional standards and follow the law.”

The Healthcare Fraud Case

According to court documents, Verbal was the owner and operator of Infinite Wellness Concepts (IWC), a Medicaid behavioral health provider with locations in Burlington, Durham and Greensboro, N.C.  IWC was contracted to provide group therapy, intensive in-home services, enhanced mental health and substance abuse services.  Court documents state that Verbal acquired at least one million dollars in fraudulently obtained funds from the Medicaid program.  The fraudulent activities included:  
·          Changing diagnosis codes so that codes with higher reimbursement rates could be billed;
·          Falsely inflating the number of clients treated during group therapy;
·          Billing for services not rendered and submitting false treatment notes in support of the services not rendered using forged signatures from counselors and therapists,
·          Unqualified personnel conducting therapy; and
·          Creating fraudulent clinical assessments and creating clinical assessments prepared and signed by unqualified preparers.
According to court documents, Verbal used the proceeds of the tax and healthcare fraud schemes to make extensive purchases of luxury cars, homes and jewelry.  The money laundering charge to which Verbal pleaded guilty relates to the purchase of a $52,000 diamond ring with the proceeds of healthcare fraud.

In the course of the health care fraud investigation, law enforcement authorities seized $765, 917 from bank accounts controlled by Verbal, a 2011 Toyota Camry and four pieces of diamond jewelry, including a 7-carat diamond ring.  The United States initiated a civil forfeiture action alleging the properties constituted proceeds traceable to the health care fraud and on Sept. 19, 2013, Judge Eagles entered an order forfeiting the property to the government.

“Mr. Verbal’s fraudulent schemes victimized taxpayers in multiple ways, damaging Medicaid, the patients who rely on it, and the taxpayers who support it,” said U.S. Attorney Rand.  “Stopping these fraudulent activities is a priority of the Department of Justice, and we are committed both to bringing the fraudsters to justice and returning the ill-gotten gains to the victimized agencies.”

“The improper billing of the N.C. state community mental health program by unscrupulous providers will not be tolerated,” said Derrick Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta.  “This costs taxpayers millions of dollars each year and drains the Medicaid program of much needed resources.”

The tax case against Verbal was investigated by agents of IRS - Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Frank Chut and Trial Attorney Jonathan Marx of the Tax Division.  The healthcare fraud case against Verbal was investigated by agents of the Department of Health and Human Services, Office of Inspector General, the North Carolina State Bureau of Investigations, the North Carolina Department of Justice’s Medicaid Investigations Division and IRS – Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Robert Hamilton.

FARMER SENTENCED IN FARM SUBSIDY FRAUD CASE

FROM:  JUSTICE DEPARTMENT 
Friday, February 7, 2014
New Mexico Farmer Sentenced to Prison for Tax Fraud, Fraudulently Collecting Farm Subsidies

Bill Melot, a farmer from Hobbs, N.M., was sentenced to serve 14 years in prison today to be followed by three years of supervised release for tax evasion, program fraud and other crimes, the Justice Department, Internal Revenue Service (IRS) and U.S. Department of Agriculture’s (USDA) Office of Inspector General announced today.  Melot was also ordered to pay $18,469,998 in restitution to the IRS and $226,526 to the USDA.

Melot was previously convicted of tax evasion, failure to file tax returns, making false state ments to the USDA and i mpeding the IRS following a four-day jury trial in Albuquerque, N.M.  According to court documents and evidence presented at trial and at sentencing, Melot has not filed a personal inco me tax return since 1986, and owes the IRS more than $25 million in federal taxes and more than $7 million in taxes to the state of Texas.  In addition, Melot has i mproperly collected more than $225,000 in federal farm subsidies from the USDA by furnishing false infor mation to the agency.  Specifically, Melot provided the USDA with a false Social Security nu mber (SSN) and a fictitious e mployer identi fication nu mber (EIN) to collect federal farm aid.

According to court documents and evidence presented at trial, Melot took nu merous steps to conceal his ownership of 250 acres in Lea County, N.M., including notarizing forged deeds and titling the property in the na me of no minees.  The evidence also showed that Melot used false SSNs and fictitious EINs to hide his assets from the IRS.  Additionally, Melot maintained a bank account with Nordfinanz Zurich, a Swiss financial institution, which he set up in Nassau, Baha mas, in 1992, and failed to report the account to the U.S. Treasury Depart ment as required by law.

Assistant Attorney General Kathryn Keneally for the Justice Department’s Tax Division and Acting U.S. Attorney Steven C. Yarbrough for the District of New Mexico co mmended the investigative efforts of IRS - Cri minal Investigation and the USDA’s Office of Inspector General, as well as Tax Division Trial Attorney Jed Silvers mith and Assistant U.S. Attorney George Kraehe, who prosecuted the case.  Assistant Attorney General Keneally and Acting U.S. Attorney Yarbrough also thanked the Cri minal Investigation Division of the Texas Co mptroller of Public Accounts for assistance in prosecuting this matter.

MAN CONVICTED OF TAX FRAUD FACES UP TO 23 YEARS IN PRISON, $1.2 MILLION IN FINES

FROM:  JUSTICE DEPARTMENT 
Wednesday, January 22, 2014
Florida Man Convicted of Tax Fraud

The Justice Department and the Internal Revenue Service (IRS) announced today that on Jan. 21, 2014, a federal jury in Palm Beach, Fla., convicted Paul F. Wrubleski, a resident of Weston, Fla., of one count of corruptly impeding the due administration of the internal revenue laws and four counts of filing false claims for tax refunds.  Wrubleski was remanded into custody yesterday.

According to court documents and the evidence presented at trial, Wrubleski had a decade-long pattern of filing false documents with the IRS.  Wrubleski impeded the IRS by filing false W-4 forms that claimed he was exempt from income tax withholding and by filing false tax returns, including four tax returns that requested over $1.5 million in federal refunds.  Wrubleski also sent obstructive letters, tax returns and other false documents to the IRS between 1999 and 2010.  In addition, the indictment alleged and the evidence proved that Wrubleski filed for bankruptcy in 2006 in order to impede IRS collection actions.

Sentencing is scheduled for April 3, 2014.  Wrubleski faces a statutory maximum potential sentence of 23 years in prison and faces a fine of up to $1.2 million.

Assistant Attorney General Kathryn Keneally of the Tax Division commended the efforts of special agents of IRS – Criminal Investigation who investigated the case, as well as Tax Division Trial Attorneys Charles Edgar Jr. and Jed Silversmith, who prosecuted the case, with local assistance from the U.S. Attorney’s Office for the Southern District of Florida.

FORMER D.C. ACCOUNTANT RECEIVES PRISON SENTENCE FOR TAX FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 
Wednesday, December 11, 2013

Former Washington, D.C.-Area Accountant Sentenced to Prison for Tax Fraud

The Justice Department and Internal Revenue Service (IRS) announced today that John T. Hoang, of Woodbridge, Va., was sentenced in federal district court in Washington, D.C., for willfully aiding and assisting in the preparation of false income tax returns for the 2004 tax year.  U.S. District Judge Richard J. Leon sentenced Hoang to serve 48 months in prison, 24 months of supervised release and 240 hours of community service.  Judge Leon also ordered him to pay $331,896 in restitution to the IRS.  Hoang previously pled guilty on July 31, 2013.

According to court documents and statements made in court, Hoang was a certified public accountant (CPA) and an attorney.  From January 2005 through April 2007, Hoang operated John T. Hoang CPA, a tax return preparation business,, and was one of two partners who owned Tax-Smart Technology Services.  Hoang operated these businesses from various locations in Washington, D.C., and Fairfax, Va.  In 2008, a federal district court in Virginia barred Hoang from preparing federal tax returns.

As alleged in court documents, in his capacity as a tax return preparer, Hoang prepared and supervised the preparation of client tax returns to be filed with the IRS and various state taxing authorities.  For the tax years 2004, 2005 and 2006, Hoang prepared hundreds of U.S. Individual Income Tax Returns and earned substantial income from his tax preparation activities.  Hoang further received a substantial portion of the refunds issued by the IRS to his clients through his businesses.  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.  The false information resulted in the client-taxpayers reporting fake losses from business activity and receiving either refunds larger than those they were entitled or decreases in the amount of taxes due.  Hoang admitted that the tax loss caused by certain false returns he prepared was greater than $30,000 per return, and that he prepared at least 24 such false returns for the 2004 through 2006 tax years.

As part of the plea agreement, Hoang admitted that the total tax loss caused by his criminal conduct is greater than $1.5 million.
 
The case was investigated by IRS-Criminal Investigation and was prosecuted by Trial Attorneys Jorge Almonte and Jeffrey B. Bender of the Justice Department’s Tax Division.

CONSTRUCTION COMPANY OWNER INDICTED FOR TAX FRAUD

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, July 19, 2013

Owner of New York Construction Company Indicted for Tax Fraud
The Justice Department and Internal Revenue Service (IRS) announced that Gurmail Singh, of Richmond Hill, N.Y., was arrested yesterday following his indictment on July 11, 2013, for multiple tax crimes.  The indictment was unsealed yesterday following his arrest.

According to the indictment, Singh owned Fancy and Vicky Construction Co. Inc., a construction company in Richmond Hill. As alleged in the indictment, Singh used check-cashing services to cash more than $2.9 million of checks paid to his construction company for services between 2006 and 2008.  He concealed his check-cashing activities from his tax return preparers, and this income was not included as gross income on the company’s tax returns.  Singh also diverted cash receipts earned by his companies for his own personal use.

The indictment alleges that Singh filed false 2006 and 2007 corporate income tax returns for Fancy and Vicky Construction, failed to file a 2008 corporate income tax return for Fancy and Vicky Construction and failed to file individual income tax returns for 2007 and 2008.  Singh faces a potential maximum sentence of nine years in prison and a potential fine of up to $800,000.

A trial date has not been scheduled. An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division, commended the efforts of special agents of IRS–Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Mark Kotila and Jeffrey Bender, who are prosecuting the case.

JUSTICE ANNOUNCES NATIONWIDE SHUTDOWN OF FRAUDULENT TAX RETURN PREPARERS

FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, March 27, 2013
Justice Department’s Civil Injunction Program Shuts Down Fraudulent Tax Return Preparers and Promoters Nationwide
Federal Courts Enjoined More than 30 Tax Return Preparers and Tax Scheme Promoters in Past Six Months

The Justice Department today announced recent results of its civil injunction efforts to combat unscrupulous tax return preparers and tax fraud promoters. According to Internal Revenue Service (IRS) estimates, 60 percent of taxpayers use tax professionals to prepare and file their tax returns. Paid tax return preparers now prepare more than 80 million individual tax returns annually. For more than a decade, the department’s Tax Division, working with the Internal Revenue Service, has pursued a civil injunction program to stop fraudulent return preparers and promoters from violating federal tax laws and consumer protection laws. With the current tax-filing season underway, the Tax Division in the last six months has obtained permanent injunctions against more than 30 preparers and promoters doing business all over the United States.

Since Oct. 1, 2012, the Tax Division has obtained civil injunctions against both large-scale return preparation franchises and smaller, independent return preparers and promoters across the country. For example, on Oct. 22, 2012, a U.S. District Court in Dayton, Ohio, entered preliminary injunctions against ITS Financial LLC and its CEO, Fesum Ogbazion. ITS Financial is the parent company that owns the Dayton-based Intstant Tax Service tax-preparation franchise operation. Instant Tax Service claims to be the fourth-largest tax-preparation firm in the nation. The preliminary injunction remains in force pending trial on the government’s request for a permanent injunction, currently scheduled for May 2013. During December, January and February, federal district courts also permanently enjoined current and former Instant Tax Service franchisees in Las Vegas, Kansas City and Los Angeles , and entered a preliminary injunction against an Instant Tax Service franchisee in Indianapolis. Similarly, on March 1, 2013, a U.S. District Court in Tennessee permanently shut down a licensee of Memphis-based Mo’ Money Taxes LLC and MoneyCo USA LLC. Federal courts have also shut down return preparers in Mississippi, Florida, Louisiana and South Carolina, and promoters of alleged tax-fraud schemes in Michigan, New York and Kansas.

As alleged in the Tax Division’s civil injunction complaints, fraudulent return preparers commonly falsify information to take advantage of refundable credits available under federal tax law, often improperly manipulating customers’ income, expenses and dependents to hit the so-called "sweet spot" to maximize the refundable credit claimed. They also take advantage of customers by selling deceptive loan products with exhorbitant fees. As identified in the government’s complaints, some of the fraudulent schemes and practices that have been stopped through injunction orders recently include:

· Preparing phony tax-return forms with fabricated businesses and income;

· Claiming false education and homebuyer credits;

· Claiming false and inflated deductions;

· Claiming false filing status;

· Claiming false dependents;

· Selling deceptive loan products;

· Filing tax returns without customer consent or authorization;

· Preparing bogus W-2 forms, based on information from employee paystubs;

· Falsifying information on returns to claim inflated earned income tax credits; and

· Filing fraudulent tax returns using stolen taxpayer identities to obtain improper tax refunds.

Some preparers try to conceal their fraud by not signing the returns they prepare and by using stolen or fake social security numbers to misidentify the paid preparer.

"It is important that we make clear, especially now when honest taxpayers are filing their returns, that we will pursue those who would abuse our nation’s tax laws," said Assistant Attorney General for the Tax Division Kathryn Keneally. "Fraudulent tax return preparers and tax scheme promoters too often seek to take advantage of their customers as well as to undermine our tax system. I commend the Tax Division’s attorneys and our colleagues at the Internal Revenue Service for their steady diligence and tireless work in uncovering and shutting down these schemes and scams."

FIREARMS DEALER WHO CREATED SHAM TRUSTS TO HIDE INCOME WILL HE SENT TO PRISON

The following excerpt is form the Department of Justice website:
Wednesday, March 28, 2012
Honolulu Firearms Business Owner Sentenced to 51 Months in Prison for Federal Tax Offenses
Arthur Lee Ong of Honolulu was sentenced Tuesday to 51 months in prison and ordered to pay $1 million in restitution to the Internal Revenue Service (IRS) by District Court Judge Leslie Kobayashi today, the Justice Department and IRS announced today.   On Nov. 7, 2001, a federal jury in Honolulu convicted Ong of conspiracy to defraud the United States and six counts of tax evasion.

 According to evidence introduced at trial, Ong, the owner and operator of Thunder Bug Inc., doing business in the state of Hawaii as Magnum Firearms, failed to report to the IRS millions of dollars of income he earned from the sale of firearms and related products to federal, state, county and military agencies, as well as to the general public.  Ong, with the assistance of a Hawaiian attorney, created multiple sham trusts in 1990 for the purpose of hiding his income and assets.   He stopped filing personal income tax returns beginning in 1994 and also filed false tax returns on behalf of the sham trusts that fraudulently reported to the IRS that the income from his businesses was attributable to these trusts and not to him.

The evidence at trial showed that Ong evaded more than $600,000 in federal income taxes from 2000 to 2006.   In sentencing Ong, Judge Kobayashi found that Ong had attempted to evade more than $973,300 in federal and state income taxes from 1994 to 2009.

“There are some responsibilities that come with living in this great country, such as paying the federal income taxes that you legally owe,” said Kenneth J. Hines, the IRS Special Agent in Charge in Hawaii.  “With Tax Day right around the corner, this sentence sends a clear warning to anyone contemplating a tax crime.”

The case resulted from an investigation by IRS - Criminal Investigation and was prosecuted by Trial Attorneys Timothy J. Stockwell and Todd P. Kostyshak of the Justice Department’s Tax Division.