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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.

March 2, 2016

The Justice Department announced that a former chief deputy auditor for LaPorte County, Indiana, was sentenced to 84 months in prison for embezzling over $150,000 from the LaPorte County government, tax fraud and defrauding her father-in-law out of more than $600,000. Mary Ray, 68, of LaPorte, was also ordered to forfeit $137,249.59 and pay $801,315.66 in restitution as part of her sentence. According to evidence presented at trial, from September 2011 through December 2012, while she served as chief deputy auditor for LaPorte County, Ray embezzled more than $150,000 from county coffers and underreported her income on her U.S. Individual Tax Returns by failing to report the embezzled funds. DOJ

February 23, 2016

The Justice Department announced that the owner of a St. Louis, Missouri, tax return preparation business was arrested on two counts of tax evasion. According to the indictment, from 2005 to 2011, Semere Tsehaye, 38, was the owner and operator of at least 20 Instant Tax Service franchise locations operating in Illinois, Kansas, and Missouri. Instant Tax Service was a brand name of ITS Financial LLC, a nationwide tax preparation business headquartered in Dayton, Ohio. During the years 2010 and 2011, Tsehaye is alleged to have generated fraudulent financial summaries that understated gross receipts by a total of approximately $506,000 in 2010 and $1.03 million in 2011. DOJ

February 17, 2016

The Justice Department announced that an Enterprise, Alabama, resident was sentenced to 48 months in prison to be followed by three years of supervised release for accepting unlawful kickbacks and tax evasion. According to court documents and statements made in open court, Victor Villalobos, 47, worked for a federal prime contractor at Fort Rucker, Alabama. In 2009, Villalobos approached Maxim Silinsky, a Florida-based subcontractor for this company, and solicited illegal kickbacks on the federal subcontracts that Silinsky held in connection with the federal prime contractor. As part of his plea, Villalobos admitted that from June 2009 to December 2014, he received approximately 57 separate wire transfers totaling more than $1.9 million in kickback payments from various foreign and domestic bank accounts controlled by Silinsky. DOJ

February 16, 2016

A federal court in Chicago has ordered Servicios Latinos Inc. to close its nationwide tax preparation business. The order comes after the Justice Department filed a civil lawsuit against the business and its owners, Georgina Lopez, Pamela Miranda and Jorge A. Miranda, alleging that the defendants falsely understated their customers’ tax liabilities or overstated their customers’ entitlement to a tax refund. According to the complaint, Servicios Latinos operated out of approximately 84 stores in as many as 30 states, with locations including Kennet Square, Pennsylvania; Kansas City, Missouri; and Las Vegas, Nevada. The Internal Revenue Service has estimated that the loss to the U.S. Treasury from the defendants’ conduct exceeds $4.7 million for 2014 alone, according to the complaint. DOJ

February 8, 2016

According to a civil lawsuit filed by the Justice Department, three South Carolina Liberty Tax Service franchises deliberately prepared false federal income tax returns in order to increase their customers’ refunds. The complaint alleges that the franchisee for the three locations, Christopher Paul Haynes of Irmo, South Carolina, and his employees included a bogus “arts and crafts” business on one customer’s tax return and a bogus “hair care” businesses on another’s. The lawsuit states that Haynes’s Liberty Tax Service offices have prepared more than 9,700 federal income tax returns since 2010. Based on adjustments the IRS has made to tax returns prepared and filed by Haynes’s Liberty Tax Service offices for 2010 to 2013, the average tax deficiency for tax returns audited in connection with the IRS’s investigation of Haynes is $3,834 per tax return, according to the suit. DOJ

February 4, 2016

The Justice Department and the Internal Revenue Service announced the filing of criminal charges against Bank Julius Baer & Co. Ltd., a financial institution headquartered in Zurich, Switzerland. Julius Baer is charged with conspiring with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide billions of dollars in offshore accounts from the IRS and to evade U.S. taxes on the income earned in those accounts. The Justice Department also announced a deferred prosecution agreement with Julius Baer under which the company admits that it knowingly assisted many of its U.S. taxpayer-clients in evading their tax obligations under U.S. law. The agreement requires Julius Baer to pay a total of $547 million by no later than Feb. 9, 2016. DOJ

February 2, 2016

A government contractor based in Fort Lauderdale, Florida, was sentenced to 12 months and one day in prison for filing a false income tax return. According to court documents, Maxim Silinsky, 44, owned an aircraft-leasing and parts-supply company called Simplex Corporation. Simplex contracted with the federal government to lease Russian aircraft to the U.S. Air Force for training purposes and to supply parts and equipment to U.S. military forces deployed to Afghanistan. Silinsky used a complex web of domestic and foreign corporate entities and financial accounts to facilitate his underpayment of both corporate and individual income tax for the years 2007 through 2010. DOJ

January 20, 2016

A federal court in Rock Hill, South Carolina, ordered T-N-T of York County Inc. and TM Trucking of the Carolinas LLC, to stop violating their employment tax reporting, deposit and payment obligations. The government’s complaint alleged that T-N-T of York County and TM Trucking of the Carolinas together owed more than $2.7 million in federal employment and unemployment taxes for various periods from 2009 through 2014. DOJ

January 15, 2016

A resident of the District of Columbia was sentenced to 18 months in prison for his involvement in a far-reaching stolen identity refund fraud scheme in which he worked with others to obtain over $315,000 in income tax refunds through the filing of fraudulent federal income tax returns. Ezekiel Raspberry, 39, is among approximately 16 participants in this scheme who have pleaded guilty to charges in the U.S. District Court for the District of Columbia. The overall case involves the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $42 million. According to the government’s evidence, Raspberry participated in a massive and sophisticated stolen identity refund fraud scheme that involved an extensive network of more than 130 people. DOJ

January 5, 2016

A resident of Bowie, Maryland, pleaded guilty to federal charges for his involvement in a far-reaching identity theft and tax fraud scheme in which he assisted in the filing of fraudulent federal income tax returns seeking more than $4.4 million in refunds. The false tax returns sought refunds for tax years 2005 through 2013 and were often filed in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners. DOJ
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