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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.

August 19, 2016

A Germantown, Tennessee, resident and business owner was sentenced to one year in prison and ordered to pay more than $10 million in restitution for failing to pay over employment taxes to the Internal Revenue Service (IRS), announced the Justice Department’s Tax Division and U.S. Attorney Edward L. Stanton III of the Western District of Tennessee. According to court documents, Larry Thornton, 67, was the majority owner, president and chief executive officer (CEO) of Software Earnings, Inc. (SEI), a Memphis company that produced and installed check processing. Thornton was also the 100 percent owner, CEO and president of First Touch Payment Solutions, LLC (First Touch), a Memphis company that provided merchant services for credit card processing. Thornton, as CEO and president of SEI and First Touch, had ultimate and final decision-making authority regarding SEI’s and First Touch’s business activities and had authority to exercise significant control over SEI’s financial affairs. Thornton admitted that he was responsible for collecting, accounting for, and paying over to the IRS federal income taxes and Federal Insurance Contributions Act (FICA) taxes that were withheld from the wages of SEI and First Touch’s employees. DOJ

August 11, 2016

A federal grand jury in the Southern District of Florida returned an indictment on July 28, charging two Florida income tax return preparers with one count of conspiring to defraud the United States and nine counts each of aiding and assisting in the preparation of false federal income tax returns, announced the Justice Department’s Tax Division. According to allegations in the indictment, Earl Moise and Shahab Shaukat, both of Palm Beach County, Florida, conspired to prepare false and fraudulent individual income tax returns for others for the 2010 through 2012 tax years. Moise and Shaukat operated the Stuart, Florida branch of Tax R Us, preparing false returns inside that office. Additionally, Moise is charged with one count of fraudulently filing his own federal income tax return for 2011. It is alleged that these tax returns included false education and American Opportunity credits, as well as false statements regarding business income or deductions. DOJ

August 9, 2016

A priest for the Roman Catholic Diocese of San Jose pleaded guilty to four counts of tax evasion, announced the Justice Department’s Tax Division. Father Hien Minh Nguyen, 56, admitted that over a period of four years, he stole money his parishioners donated to the Diocese and willfully evaded paying income taxes on the money he misappropriated each year from 2008 through 2011. He admitted that he deposited this money into his personal bank account, did not disclose this income to his return preparer, did not keep records of the donations he stole, and filed false income tax returns which did not report this money. DOJ

August 9, 2016

A Franklin, Tennessee, man was sentenced to 48 months in prison for engaging in an extortion and wire fraud scheme involving former presidential candidate Mitt Romney’s tax returns. Michael Mancil Brown, 37, was found guilty at trial on May 12, 2016 of six counts of wire fraud and six counts of using facilities of interstate commerce to commit extortion. U.S. District Judge Billy Roy Wilson of the Eastern District of Arkansas, sitting by designation in the Middle District of Tennessee, imposed the sentence and also ordered Brown to pay $201,836 in restitution to PricewaterhouseCoopers LLP. According to testimony at trial, evidence recovered from a computer seized from Brown’s residence in 2012 implicated Brown in a scheme to defraud Romney, the accounting firm of PricewaterhouseCoopers and others by falsely claiming that he had gained access to the PricewaterhouseCoopers internal computer network and had stolen tax documents for Romney and his wife, Ann D. Romney, for tax years prior to 2010. DOJ

August 4, 2016

An Austin, Texas, businessman was convicted by a federal jury on four counts of filing false tax returns and corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, announced the Justice Department’s Tax Division. According to the evidence presented at trial, Victor Antolik owned and operated a commercial janitorial business in Austin, San Antonio and Houston, Texas, for which he used a variety of business names, including Diversified Building Services Inc., DBS Services Inc., Partners in Cleaning, PIC Building Services and BSI Industries. Antolik also earned income as a real estate agent, real estate broker and property manager. Antolik earned a portion of his real estate income through his companies SGN Realty Inc. and Signature Realty Services. Antolik submitted to the Internal Revenue Service (IRS) four false individual income tax returns on which he underreported his income for tax years 2004, 2007 and 2008. In addition, between 1998 and 2014, Antolik attempted to obstruct the IRS by, among other things, attaching altered Forms W-2 and 1099 to his tax returns, providing false information to his accountants that were used to prepare both corporate and individual income tax returns on his behalf and using nominees to conceal income and assets. DOJ

August 3, 2016

The U.S. Tax Court made a whistleblower award of $17.8 million to a pair of whistleblowers which for the first time includes a portion of criminal fines and civil forfeitures in addition to part of the taxes the government recouped because of information they provided.  The parties involved in the case weren’t disclosed but it appears to stem from the prosecution of Wegelin & Co, the Swiss bank that closed after it pleaded guilty in 2013 to conspiring with U.S. taxpayers to hide money from the IRS.  WSJ

August 2, 2016

An Atlanta, Georgia, based tax return preparer pleaded guilty to one count of wire fraud, announced the Justice Department’s Tax Division. According to court documents, Cheryl Singleton, 29, owned and operated Advanced Tax Services, a tax preparation business with multiple locations throughout the Atlanta area. From 2012 through 2015, Singleton and her employees filed false tax returns that fraudulently inflated clients’ refunds. In addition, Singleton and her employees falsely advised individuals that they could qualify for a $1,000 government stimulus payment. Singleton and others used these individuals’ personal identification information to electronically file false income tax returns in those individuals’ names, without their knowledge or consent. Court documents further allege that Singleton used healthcare financing credit cards held in the names of other individuals to fraudulently obtain payment for cosmetic dental care services. DOJ

July 21, 2016

A Montgomery County, Alabama, resident was sentenced to 48 months in prison for her role in a stolen identity refund fraud scheme, announced the Justice Department’s Tax Division. Wendy Huff, 32, admitted that between January 2013 and August 2015, she worked at two loan companies in Montgomery, Alabama, and had access to the personal identifying information of customers. Huff agreed to steal information from her employers and provide it to her co-conspirator James Vernon Battle, 31. Battle used that information to file over 335 returns claiming more than $400,000 in fraudulent refunds and directed the requested tax refunds to prepaid debit cards and U.S. Treasury checks, which were mailed to addresses in Montgomery, including Huff’s residence. Battle also brought several U.S. Treasury tax refund 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. DOJ

June 20, 2016

A College Park, Maryland, man was sentenced to 97 months in prison following his conviction in November 2015 by a federal jury on one count of conspiring to defraud the United States and six counts of filing false income tax returns, announced the Justice Department’s Tax Division. According to the evidence presented at trial, between March and June 2009, Charles W. Parker Jr., 49, recruited clients for co-conspirator Penny Jones, 65, formerly of Rigby, Idaho. Jones, a tax return preparer in Idaho, prepared tax returns falsely reporting the amount of taxes withheld and purportedly paid to the IRS. Parker collected financial information from clients and provided it to Jones for the preparation of the false tax returns. Parker caused the filing of 14 false tax returns in just a six month period that fraudulently claimed $7,753,940 in tax refunds. DOJ

July 14, 2016

A Jamaica, New York, resident pleaded guilty in the U.S. District Court for the Eastern District of New York to one count of conspiracy to defraud the United States, announced the Justice Department’s Tax Division. Nafeesah Hines, 46, who worked at the U.S. Food and Drug Administration (FDA), admitted that between 2008 and 2012, she participated in a scheme to submit false tax returns seeking fraudulent income tax refunds in excess of $3.4 million to the Internal Revenue Service (IRS). According to the indictment, Hines worked with Rodney Chestnut, a retired New York City Department of Correction officer, and Clive Henry, a former IRS employee in the business of preparing tax returns, to recruit clients to this scheme, which involved using fraudulent IRS Forms 1099-OID to falsely claim refunds of taxes that were never paid over to the IRS. The indictment alleged that Hines, Chestnut, and Henry collected fees from clients based on a percentage of the refunds received, and supplied the clients with correspondence containing false and frivolous claims to send to the IRS in response to IRS warning letters regarding the false tax returns. DOJ
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