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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.

July 8, 2016

A Subway franchisee and resident of Alexandria, Virginia, was sentenced to more than two years in prison for conspiracy to defraud the United States, announced the Justice Department’s Tax Division. Obayedul Hoque, was sentenced to 30 months in prison followed by two years of supervised release by U.S. District Judge Liam O’Grady. According to court documents, Hoque owned and operated Skyhill Shell, a gas station in Alexandria and multiple Subway restaurant franchises in Washington, D.C., Arlington, Virginia, and Alexandria. Hoque admitted that between 2008 and 2014, he and his co-conspirators, who were managers of some of the Subway franchises and the gas station, conspired to defraud the United States for the purpose of obstructing the IRS in the ascertainment and collection of individual and corporate income taxes. Hoque and his co-conspirators did not deposit all of the gross receipts of the gas station or the Subway franchises into the corporate or partnership bank accounts. Instead, Hoque and the managers retained a portion of the gross receipts for their personal benefit and failed to report those funds to the IRS. DOJ

July 8, 2016

The Justice Department and Internal Revenue Service announced that Congresswoman Corrine Brown and her chief of staff were indicted for their roles in a conspiracy and fraud scheme involving a fraudulent education charity. The indictment alleges that between late 2012 and early 2016, Brown and Simmons participated in a conspiracy and fraud scheme involving One Door for Education – Amy Anderson Scholarship Fund (One Door) in which the defendants and others acting on their behalf solicited more than $800,000 in charitable donations based on false representations that the donations would be used for college scholarships and school computer drives, among other things. According to the indictment, Brown and Simmons allegedly solicited donations from individuals and corporate entities that Brown knew by virtue of her position in the U.S. House of Representatives, many of whom the defendants led to believe that One Door was a properly-registered 501(c)(3) non-profit organization, when, in fact, it was not. DOJ

July 7, 2016

An Oregon, Ohio, psychiatrist pleaded guilty to tax evasion in the U.S. District Court for the Northern District of Ohio, announced the Justice Department’s Tax Division. Sandra Vonderembse admitted that despite earning compensation in excess of $240,000 per year from 2009 through 2011 as a psychiatrist working for multiple businesses and the state of Ohio, she falsely claimed zero taxable income and zero tax owing for each of those years on federal tax returns. In tax years stretching back to 2005, Vonderembse failed to pay taxes due on her income and filed tax returns falsely claiming taxable income as “None.” From 2005 to 2011, she also had her earnings paid to nominee entities to conceal income from the Internal Revenue Service (IRS) and sent fake financial instruments to the IRS in purported payment of her taxes. Vonderembse faces a statutory maximum sentence of five years in prison, as well as a term of supervised release. She has agreed to pay restitution to the IRS in the amount of $565,000. DOJ

June 30, 2016

A Marietta, Georgia, resident pleaded guilty in the U.S. District Court for the Northern District of Georgia to one count of theft of public money and one count of aggravated identity theft, announced the Justice Department’s Tax Division. Peter Isika, 46, admitted using stolen identities to file at least 50 false tax returns for tax years 2013 and 2014 claiming more than $500,000 in fraudulent refunds. Isika admitted that he purchased the stolen identities over the Internet and used those identities to obtain the fraudulent tax refunds. Isika directed the refunds to prepaid debit cards or bank accounts that he controlled. DOJ

June 27, 2016

A Fulshear, Texas, woman was sentenced to 40 months in prison following her conviction on three counts of filing false federal tax returns and one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, announced the Justice Department’s Tax Division. Tamny Denise Westbrooks, 53, was convicted in November 2015 after a four-day jury trial in the U.S. District Court for the Southern District of Texas. According to the evidence at trial and court documents, Westbrooks was the day-to-day manager of JATS Tax Service, a tax preparation business located in Charlotte, North Carolina. Westbrooks, who worked for JATS as an independent contractor, underreported her net profits by inflating her business expenses for tax years 2007, 2008 and 2009. She also obstructed and impeded the Internal Revenue Service (IRS) by filing false tax returns for herself and others and by paying workers in cash while failing to file the required W-2 or 1099 forms reporting their compensation. DOJ

June 22, 2016

A former Credit Suisse AG banker, who has been a fugitive since 2011, pleaded guilty in U.S. District Court in the Eastern District of Virginia to charges related to aiding and assisting U.S. taxpayers in evading their income taxes, announced the Justice Department’s Tax Division. Michele Bergantino admitted that from 2002 to 2009, while working as a relationship manager for Credit Suisse in Switzerland, he participated in a wide-ranging conspiracy to aid and assist U.S. taxpayers in evading their income taxes by concealing assets and income in secret Swiss bank accounts. Bergantino oversaw a portfolio of accounts, largely owned by U.S. taxpayers residing on the West Coast, which grew to approximately $700 million of assets under management. Bergantino admitted that the tax loss associated with his criminal conduct was more than $1.5 million but less than or equal to $3.5 million. DOJ

June 21, 2016

A San Antonio, Texas, artist was sentenced in the U.S. District Court for the Western District of Texas in San Antonio to 12 months in prison, announced the Justice Department’s Tax Division. Carlos Cortes pleaded guilty to one count of failure to file a 2009 tax return on April 21. According to court documents, Cortes is an artist who works in the medium of “Faux Bois,” an artistic imitation of wood or wood grains in various media. His work has been commissioned by the city of San Antonio along with several San Antonio businesses. According to Internal Revenue Service (IRS) records, Cortes did not file individual income tax returns for 2006, 2007, 2008 and 2009 despite earning gross income well in excess of the filing requirements. Cortes admitted that he had gross income of $62,043 in 2006, $66,138 for 2007, $457,192 for 2008 and $781,847 for 2009. DOJ

June 16, 2016

A Pembroke Pines, Florida couple was sentenced to prison for their role in a stolen identity tax refund fraud scheme, announced the Justice Department’s Tax Division. According to court documents and evidence presented at the sentencing hearing, between July 2009 and August 2014, Walther Wilson Godfrey, Rhonda Perry Gittens and others conspired to defraud the United States by filing false federal income tax returns using stolen identities. Gittens owned and operated 2G, Inc., a tax return preparation business, and G&G Check Cashing Inc., a check cashing business, both of which were located in Pembroke Pines. Godfrey and Gittens obtained the personal identification information of actual individuals, some deceased, including names, social security numbers, addresses and dates of birth, without the individuals’ authorization, to prepare and file false income tax refund claims for the years 2009 through 2011. Judge Bloom also ordered Godfrey and Gittens to pay $792,442 in restitution to the IRS. DOJ

June 15, 2016

The Justice Department’s Tax Division announced that a Brooklyn, New York, tax return preparer was sentenced to 36 months in prison following her guilty plea on Sept. 21, 2015, to two counts of aiding and assisting in the preparation of false income tax returns. Awilda Rosario, 40, owned and operated a tax preparation business in Brooklyn called Edujas Multiservices Corporation. Rosario prepared false individual income tax returns for clients for tax years 2008 through 2013. She attached false schedules that reported business losses the taxpayers did not incur and attached schedules that reported inflated or fictitious deductions. She also attached forms claiming fictitious education and fuel tax credits that the taxpayers were not entitled to receive. After the Internal Revenue Service (IRS) revoked the Electronic Filing Identification Number (EFIN) for Edujas Multiservices Corporation, Rosario obtained at least two different EFINs and continued to prepare and submit false tax returns for her clients that listed a different paid tax return preparer and tax preparer firm. DOJ

June 8, 2016

Two Memphis, Tennessee, area residents were sentenced to prison for conspiring to defraud the United States and aiding and assisting in the preparation of false tax returns, announced the Justice Department’s Tax Division. Jeremy Blanchard, 35, and Erik Pittman, 35, both of Memphis, were sentenced to serve 70 and 33 months in prison, respectively, to be followed by three years and one year of supervised release, respectively. According to court documents, Blanchard and Pittman were partners in a return preparation business, Mo Money Taxes, which operated three locations in the Richmond, Virginia, area. Blanchard, Pittman and others prepared numerous false tax returns for their customers for the 2011 tax year. Blanchard and Pittman admitted that they created and inflated fictitious and fraudulent tax credits, including the Earned Income Credit and the American Opportunity Credit, to claim tax refunds that customers were not entitled to receive. DOJ
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