A fraudster faces charges for soliciting taxpayer info for false returns, plus highlights of other recent cases.
Gibsland, La.: Preparer Melissa Cato faces felony charges for a fraud that cost taxpayers an estimated $300,000 after she allegedly altered clients’ state income tax returns to claim fabricated losses for businesses that did not exist.
Auditors noticed a suspicious pattern with hundreds of returns Cato filed in the tax years 2012 through 2015; investigators determined that many of the clients had never owned or operated businesses, and had not claimed any business losses when they provided Cato with their tax records.
Jackson, Miss. – Preparer Carmecia Jordan, 33, has pleaded guilty to theft of government funds.
Jordan was half owner of the prep business Hour Tax, and beginning in 2013 submitted fraudulent returns and subsequently submitted fraudulent amended returns without the consent of her clients.
She then diverted the refunds from the amended returns to five different addresses under her control. Jordan later cashed these checks and spent the money without the knowledge of her clients.
Over three years, she defrauded the government of more than $245,000.
Sentencing is May 4, when Jordan faces a maximum 10 years in prison and a $250,000 fine.
El Cajon, Calif.: Two preparers and a recruiter working with those preparers have pleaded guilty to their involvement in a return scam that resulted in the filing of false returns, the use of stolen IDs and the receipt of more than $880,000 in bogus refunds.
Rahim Ali Cummings, 47, and Ebrahim Ashamu, 58, were area preparers. Rashad Abdul-Rahim, 46, worked with Cummings and Ashamu by recruiting customers and obtaining stolen IDs to use in the scheme.
According to the plea agreements, Cummings and Ashamu prepared and filed the false federal returns September 2011 and September 2012. Abdul-Rahim solicited and obtained the personal ID information from the victims using false pretenses, such as informing the victims they could obtain “free” government money from alleged grant and senior programs. He concealed his intention to use the information to file false returns.
Abdul-Rahim provided Cummings and Ashamu with the personal information of victims for Cummings and Ashamu to prepare and file the false returns. The IRS uncovered the scheme because a majority of the refunds were mailed to addresses controlled by Cummings, Ashamu and Abdul-Rahim.
Cummings received approximately $470,042 in fraudulent refunds directly deposited into bank accounts he controlled, Ashamu approximately $367,631 and Abdul-Rahim approximately $44,937 in fraudulent refunds and additional cash payments from Cummings and Ashamu.
The fraud caused approximately $882,610 in losses to the IRS. Each defendant has agreed to make full restitution to the IRS for the total amount of false refunds they each received.
Cummings and Abdul-Rahim pleaded guilty to conspiracy and Ashamu pleaded guilty to filing false claims and aggravated ID theft. The three also agreed to be permanently enjoined from preparing or filing federal income tax returns for anyone other than themselves.
Sentencing is May 1.
Tangipahoa Parish, La.: Preparer Alicia Washington, a.k.a. Alicia Keith, 41, has pleaded guilty to her role in a scheme to file federal returns using stolen IDs.
According to court documents, from 2008 through 2016 Washington and others obtained EFINs in the names of several prep businesses and used them to file fraudulent federal returns. Washington used stolen IDs belonging to individuals who had been arrested or jailed.
Washington and others in the scheme directed the IRS to issue refunds in the form of checks and prepaid debit cards, which were then negotiated by co-conspirators working as check cashers.
Sentencing is May 31. Washington faces a maximum of five years in prison for the conspiracy count and a minimum of two years in prison for the aggravated ID theft count. She also faces a period of supervised release, restitution and monetary penalties.
Greenville, Texas: Preparer Lourdes Ramirez has been sentenced to 22 months in prison for preparing false returns.
According to case documents, Ramirez, a Mexico national unlawfully residing in the U.S., operated TX ASAP Tax Services and Fiesta Tax Service, where from 2011 through 2014 she prepared some 1,163 federal returns that included fraudulent business income, losses, credits and deductions, and sought refunds to which her clients were not entitled.
Ramirez intended to cause a tax loss of approximately $1,155,383.
Ramirez was also ordered to serve a year of supervised release and to pay $128,958.85 restitution to the IRS, and was ordered removed from the U.S. to Mexico following her sentence.
Kansas City, Kan.: Preparer Antoine Dorsey has received 27 months in prison for filing false returns.
According to court documents, Dorsey, who pleaded guilty in April, owned and operated Day-1 Tax Service, and from 2009 through 2012 reported fictitious business income on clients’ returns to qualify them for the EITC and claim undeserved refunds.
Dorsey, who caused a tax loss of some $74,487, was also ordered to serve a year of supervised release and to pay $88,467 restitution.
Washington, D.C.: Preparer Joann Little, 60, has pleaded guilty to preparing fraudulent returns.
According to case documents, Little, of Suitland, Md., worked as a preparer at a prep business formerly known as Instant Tax Service and more recently as Speedy Tax Service. She prepared federal income tax returns for tax years 2009 through 2014 that sought refunds to which her clients were not entitled by including inflated charitable deductions, fictitious unreimbursed employee expenses and false businesses.
Little caused a tax loss of at least $262,714. The court did not set a sentencing date but Little faces a maximum of three years in prison for each count, a period of supervised release, restitution and monetary penalties.
Fort Lauderdale, Fla.: A federal court has permanently barred preparer Billy Philippe from preparing federal returns for others.
The government alleged that Philippe, of Broward County, Fla., prepared fraudulent returns for clients while majority owner of Advantage Tax Center Plus. Alleged falsehoods on the returns include inflating refunds by falsely claiming refundable credits, including the EITC and credits for education expenses.
The complaint further alleged that Philippe frequently claimed fraudulently inflated wages or self-employment income to maximize the EITC, a customer claimed.
According to the complaint, Philippe prepared at least 899 returns from 2011 and 2015. Audits of 44 returns prepared in 2014 and 2015 allegedly revealed that Philippe claimed credits that his clients were unentitled to take or understated their correct tax liability by more than a combined $300,000.
Philippe agreed to the civil injunction order entered against him, which requires him to turn over to the U.S. a list of all persons for whom he prepared federal returns since 2012.
Jeff Stimpson is a veteran freelance journalist who previously served as editor of The Practical Accountant.