Tax Enforcement

April 5, 2016

A former resident of Portland, Oregon was sentenced to 37 months in prison for her role in a tax refund fraud scheme. Tataneisha White, 43, admitted to conspiring with multiple individuals, including Jasmine Mason, Shawntina Ware and Brandon Leath, all of Portland, to file more than 227 false income tax returns claiming more than $1 million in fraudulent refunds. The false information on the tax returns included fictitious W-2 wages and inflated withholding amounts to generate tax refunds ranging from $1,000 to $12,000. White also admitted that she and her co-conspirators shared personal identifying information and employer information with each other to file the false returns. In addition to the prison term, U.S. District Judge Robert E. Jones ordered White to serve three years of supervised release and pay restitution to the IRS in the amount of $626,750. DOJ

April 4, 2016

The Department of Justice announced a federal indictment charging Diane L. Kroupa, 60, and her husband, Robert E. Fackler, 62, with conspiring with each other to evade assessment of taxes. Each defendant is charged with conspiracy, tax evasion, making and subscribing false tax returns and obstruction of an Internal Revenue Service (IRS) audit. According to the indictment and documents filed in court, between 2004 and 2012, Kroupa and Fackler conspired to evade their tax obligations. Kroupa was appointed to the U.S. Tax Court on June 13, 2003, for a term of 15 years, but she retired on June 16, 2014. During the same period, Fackler was a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. According to the indictment and documents filed in court, as part of the conspiracy to defraud the United States, Kroupa and Fackler fraudulently claimed personal expenses as Grassroots Consulting business deductions. Additionally, in 2006, Kroupa and Fackler allegedly concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit. During a second audit in 2012, Kroupa and Fackler caused misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting. DOJ

April 1, 2016

A Montgomery County, Alabama resident pleaded guilty today to one count of wire fraud and one count of aggravated identity theft. According to court documents, James Vernon Battle, 30, used stolen personal identification information to prepare and file at least 335 false federal income tax returns for tax years 2013 and 2014 that fraudulently claimed more than $400,000 in tax refunds. Battle obtained the stolen personal identification information from Wendy Huff. Huff worked at two loan companies in Montgomery, Alabama. Battle directed the Internal Revenue Service (IRS) to issue the requested refunds via prepaid debit cards and U.S. Treasury checks. Those prepaid debit cards and checks were sent to various addresses in Montgomery, including Huff’s residence. Battle also brought several U.S. Treasury checks to Huff’s workplace where she used her position to cash them. Huff returned half of the proceeds to Battle and kept the balance for herself. Battle faces a statutory maximum sentence of 20 years in prison for the wire fraud charge and a mandatory minimum sentence of two years in prison for the aggravated identity theft charge, which will be in addition to any other term of imprisonment he receives. He also faces substantial monetary penalties and restitution. DOJ

March 24, 2016

A Montgomery County, Alabama, resident pleaded guilty to one count of conspiracy to commit wire fraud and one count of aggravated identity theft. According to court documents, between January 2013 and August 2015, Wendy Huff, worked at two loan companies in Montgomery, Alabama, and had access to the means of identification of customers, including their names, social security numbers and dates of birth. Huff agreed to steal names from her employers and provide them to James Vernon Battle, identified as a co-conspirator in the indictment. The government alleges that Battle used those names to file over 335 returns claiming more than $400,000 in fraudulent refunds and that he directed the Internal Revenue Service (IRS) to issue the anticipated tax refunds in the form of prepaid debit cards and U.S. Treasury checks, which were mailed to addresses in Montgomery including Huff’s residence. Huff subsequently delivered the prepaid debit cards to Battle. DOJ

March 24, 2016

Two residents of Kenner, Louisiana, pleaded guilty before Federal District Court Judge Lance M. Africk of the Eastern District of Louisiana for crimes related to the operation of their check cashing business, VJ Discount Inc. According to publicly filed documents, defendants Susantha Wijetunge and Manula Wijetunge owned VJ Discount Inc., a Louisiana corporation that operated a convenience store and check cashing business in Kenner. Susantha Wijetunge, VJ Discount Inc. and others cashed fraudulently obtained tax refund checks for multiple co-conspirators, for which they charged a higher fee than normal. Often, these transactions involved multiple checks and tens of thousands of dollars. In order to conceal this illegal activity, Susantha Wijetunge and others filed false reports with the government, or failed to file them as required by law. As part of their guilty pleas, the defendants and certain corporate entities they control agreed to the forfeiture of approximately $4.12 million dollars. DOJ

March 21, 2016

A Charlotte, North Carolina, area resident was sentenced to 41 months in prison for his involvement in a fraudulent tax return scheme. According to court documents and statements in court, in early 2011, Daniel Heggins, 44, and Joan Clark operated Guarantor Manufactures Inc. (GMI), a business that purported to help individuals who were in debt. Heggins and his co-conspirators, including Clark, prepared and filed false tax returns on behalf of GMI’s clients claiming fraudulent tax refunds from the Internal Revenue Service (IRS) in the amount of their clients’ debts. The intended loss of the conspiracy exceeded $4 million. Heggins also charged GMI’s clients bogus filing fees of $2,500 to $5,000 in order to prepare and file the fraudulent returns. Heggins and Clark pleaded guilty to conspiracy to defraud the United States in November 2015. DOJ

March 16, 2016

The U.S. District Court for the Central District of California has permanently barred Stacy John Sanchez of Orange County, California, from preparing federal tax returns for others. According to the complaint, Sanchez owned and operated 12 Liberty Tax Service franchise locations, primarily in the Los Angeles and Las Vegas areas. At these locations, Sanchez and his employees prepared federal income tax returns that, among other things, contained bogus Schedules C (Profit or Loss From Business), fake Form W-2 (Wage and Tax Statement) information and falsely claimed dependents, the suit alleged. In addition, the complaint alleged that Sanchez and his employees prepared fraudulent income tax returns using stolen names and social security numbers and kept the bogus refunds generated by these identity theft returns. The estimated loss to the U.S. Treasury from Sanchez and his employees’ misconduct is at least $14 million, according to the complaint.

March 14, 2016

A New York tax return preparer pleaded guilty in the U.S. District Court for the Eastern District of New York in Central Islip, New York, to one count of aiding and assisting in the preparation of a false tax return. According to court documents, Thelma Rodriguez-Garden, 54, owned and operated a tax preparation business called Garden Insurance Agency Corporation, which was located in Bay Shore, New York. Rodriguez-Garden prepared false individual income tax returns for clients of Garden Insurance Agency for tax years 2008 through 2011. On the tax returns, Rodriguez-Garden included grossly inflated or wholly fictitious itemized deductions for unreimbursed employee expenses. The information to which Rodriguez-Garden pleaded guilty alleges that she filed 47 false tax returns that caused a loss to the government of more than $100,000. DOJ

March 11, 2016

Two Subway franchise managers and a gas station manager, all residents of Virginia, pleaded guilty to aiding and assisting in the filing of false tax returns. As part of their guilty pleas, the defendants admitted that they did not deposit all of the Subway franchises’ or the gas station’s gross receipts into the corporate or partnership bank accounts. Instead, they retained a portion of the gross receipts for their personal benefit. Additionally, two of the defendants admitted that they maintained detailed records of the Subway franchises’ and gas station’s total sales, the amounts deposited into the bank accounts and the amounts distributed to each of them for their personal benefit, and that they later destroyed those records. DOJ

March 9, 2016

The Justice Department and Internal Revenue Service announced the guilty pleas of Cayman National Securities Ltd. (CNS) and Cayman National Trust Co. Ltd. (CNT), two Cayman Island affiliates of Cayman National Corporation. CNS and CNT pleaded guilty to a criminal Information charging them with conspiring with many of their U.S. taxpayer-clients to hide more than $130 million in offshore accounts from the U.S. Internal Revenue Service and to evade U.S. taxes on the income earned in those accounts. CNS and CNT entered their guilty pleas pursuant to plea agreements requiring the companies to, among other things, produce through the treaty process account files of non-compliant U.S. taxpayers who maintained accounts at CNS and CNT, and pay a total of $6 million in financial penalties. DOJ