Have a Claim?

Click here for a confidential contact or call:

1-212-350-2774

Tax Enforcement Actions

The Internal Revenue Service (IRS) is the United States agency with primary responsibility for enforcing federal tax laws, working with the Department of Justice. Whistleblowers with knowledge of violations of the federal tax laws can submit a claim to the IRS under the IRS Whistleblower Reward Program, and may be eligible to receive a monetary reward.

Below are summaries of recently-announced settlements or successful prosecutions by the IRS or DOJ. If you believe you have information about fraud or wrongful conduct which could give  rise to a claim under the IRS Whistleblower Reward Program, please contact us to speak with one of our experienced whistleblower attorneys.

October 15, 2018

The heir of a family skincare business has been sentenced to almost 3 years in prison for multiple counts of tax fraud. James Wright of B&P Company, Inc.—which has been selling a wrinkle reduction product called Frownies since 1889—allegedly diverted money from the company to a series of entities that he then used to fund personal expenses. Through a company he called The Remnant, Inc., Wright paid rent and utilities for himself and other immediate family members. Through a private foundation he called Fore Fathers Foundation, he paid high school and college tuition for his five children. According to the DOJ press release, Wright had previously pleaded guilty to concealing income through trusts. In addition to the new prison sentence, he is ordered to pay almost restitution of $150,000. DOJ

October 9, 2018

The co-owners of Erin's Own Home Healthcare Inc have been charged with tax fraud. Hannah Holland and Sheila O'Connell of Massachusetts allegedly cashed in over $3.5 million of their business's checks and hid records of the funds from their tax preparer, causing the IRS over $1 million in losses over four years. If convicted, they face over 10 years in prison and $1 million in fines. USAO MA

October 5, 2018

Following a court trial, a federal court in Utah has ordered that RaPower-3 LLC and International Automated Systems, Inc. stop all promotion and marketing and disgorge $50 million collected in an abusive tax scheme involving false tax deductions and solar energy credits.  The companies and their principals marketed what they claimed was technology that could be used in the production of solar energy and which, they further claimed, entitled the purchasers to take certain tax deductions and solar energy tax credits.  In fact, however, the technology was phony and defendants knew that its purchasers would not be entitled to the tax deductions and credits.  DOJ

October 4, 2018

David Tielle of Harrisburg, Pennsylvania, pleaded guilty to tax fraud for his role in the submission of over $4 million in fraudulent claims for tax refunds under the Biodiesel Mixture Tax Credit by Keystone Biofuels Inc.  Tielle inflated fuel amounts reported to the IRS, claiming tax refunds on fuel Keystone was not producing. To account for the inflated fuel amounts, Tielle created false books and records and engaged in a series of sham financial transactions. USAO MDPA; DOJ.

September 21, 2018

Jose Martin Andrade Flores, the owner of the American Superior chain of second-hand clothing stores in the Los Angeles area, plead guilty for American Superior's failure to report $3.7 million in income to the Internal Revenue Service.  From 2012 through 2016, Flores concealed from his corporate tax preparer cash sales and deposits into foreign bank accounts that were made on behalf of American Superior.  USAO C.D. Cal.

August 24, 2018

Executives of Utah-based biodiesel company Washakie Renewable Energy, and another individual associated with NOIL Energy Group in California, were indicted for falsely claiming over $500 million in renewable fuel tax credits. The individuals allegedly created false production records and other paperwork to make it appear that fuel transactions that qualified for the tax credit were occurring.  The indictment also included allegations of money laundering.  DOJ

June 22, 2018

Joseph Racine and Arnouse Merlien, two Atlanta-based tax preparers, have pleaded guilty to conspiracy to violate federal tax laws by misrepresenting to the IRS that their clients were qualified to receive certain credits and deductions. The misrepresentations caused $3.5M in lost tax revenue for the US. USAO Northern District of Georgia

May 30, 2018

The owner of general contracting business pleaded guilty to filing a false tax return, announced the Justice Department’s Tax Division. According to court documents, Wade Ybarzabal, of Mandeville, Louisiana, owned a general contracting business, Ybarzabal Contractors LLC. On his 2012 tax return, Ybarzabal underreported his business’s gross receipts by more than $475,000, resulting in an additional tax liability of more than $160,000. Ybarzabal also underreported his business’ gross receipts on his 2013 and 2014 tax returns. The total tax loss resulting from Ybarzabal’s fraudulent conduct for is more than $250,000. DOJ

May 24, 2018

A federal grand jury sitting in the Western District of Virginia returned an indictment charging a Collinsville, Virginia pharmacist with failing to account for and pay over employment taxes, announced the Justice Department’s Tax Division. According to the indictment, Jerry R. Harper, Jr., owned and operated Family Discount Pharmacy, Inc. (FDP) in Stanleytown, Virginia, with multiple locations in Stuart, Rocky Mount, Chatham, and Brosville, Virginia. As owner of FDP, Harper was allegedly responsible for collecting and paying over FDP’s employment taxes. The indictment charges that during 2011 to 2014, FDP accrued employment tax liabilities of more than $1.2 million and that Harper withheld those taxes from FDP employees’ wages. He then allegedly failed to fully pay over the amounts withheld to the Internal Revenue Service (IRS). DOJ

May 23, 2018

A resident of Queens, New York, pleaded guilty to failing to collect and pay over employment tax, announced the Justice Department’s Tax Division. According to court documents, Kae Wook Lee was the sole owner and chief executive officer of Mona Lisa 7 Corporation, through which he operated a karaoke bar in the Flushing neighborhood of Queens. Between 2011 and 2013, Lee diverted part of his karaoke business’s receipts to bank accounts in the names of shell corporations he created. Lee then withdrew funds from those bank accounts to pay employees’ wages in cash without collecting or paying over employment taxes to the Internal Revenue Service (IRS). Lee concealed the cash payroll from his accountant and signed and filed false tax returns that underreported employee wages. The tax loss to the IRS caused by the defendant’s conduct was $612,500. DOJ
1 2 3 4 21

Learn about Whistleblower Rewards Programs

Newsletter

Subscribe to receive email updates from the Constantine Cannon blogs

Sign up for: