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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.

May 3, 2016

A resident of Bowie, Maryland, was sentenced to four years in prison after pleading guilty in January 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. Marc A. Bell, 49, a former employee of the District of Columbia’s Department of Youth Rehabilitation Services (DYRS), admitted taking part in a massive and sophisticated identity theft and false tax return scheme that involved an extensive network of more than 130 people, many of whom were receiving public assistance. According to court documents, the scheme involved the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $42 million from the U.S. Treasury. DOJ

April 28, 2016

Two men who conspired to file more than 1,200 false tax returns using stolen identities were sentenced to prison. Ernest James Simmons Jr., 29, of Phenix City, Alabama, was sentenced to 24 months and 15 days in prison followed by five months of home detention and Calvin J. Perry, 28, of Atlanta, Georgia, was sentenced to 32 months in prison. Simons and Perry each pleaded guilty in December 2015 to one count of conspiracy to defraud the government with respect to filing false income tax refund claims and one count of aggravated identity theft. According to court documents and evidence presented at the sentencing hearing, between 2010 and 2012, Simmons and Perry conspired with Perry’s mother, Pamela Ann Smith, to run a large-scale stolen identity refund fraud scheme from Smith’s tax return preparation business, Jaycal Tax Service, in Phenix City. Simmons was directly connected to false returns claiming more than $700,000 in fraudulent refunds and Perry was directly connected to false returns claiming over $1 million in fraudulent refunds. DOJ

April 22, 2016

An Austell, Georgia husband and wife pleaded guilty to charges relating to their involvement in a stolen identity income tax refund fraud scheme. Anthony Alika, 42, pleaded guilty to one count of conspiracy to commit money laundering. His wife Sonia Alika, 27, pleaded guilty to one count of illegally structuring cash withdrawals to evade bank reporting requirements. In January 2016, Anthony Alika and Sonia Alika were charged with laundering the proceeds from a stolen identity refund fraud scheme. The indictment alleged that Anthony Alika, along with Rapheal Atebefia, 33, of Austell, Georgia, obtained means of identification of actual individuals, including their names and social security numbers, and used this information to access the IRS “Get Transcript” database. The indictment further alleged that Anthony Alika, Atebefia, and others obtained prepaid debit cards from stores located in multiple states, registered the cards in the names of the stolen identities, filed false income tax returns using the stolen identities and information obtained from the Get Transcript database, and directed the IRS to deposit the tax refunds onto these cards. DOJ

April 18, 2016

According to a civil lawsuit filed by the Justice Department, Rose M. Chazulle, a tax return preparer in Miami has prepared fraudulent federal tax returns that claim education and fuel credits to which her clients are not entitled. The suit seeks to bar Chazulle and her company, RMC Professional Services Corporation, from preparing federal tax returns for others. According to the complaint, Chazulle prepared federal income tax returns for customers that falsely claimed refundable credits, including American Opportunity Tax Credit and Lifetime Learning Credit. Chazulle included the false education credits for customers who did not incur educational costs and otherwise did not qualify for this credit. The complaint estimates that Chazulle’s conduct cost the United States over $14 million for the tax years 2011 to 2013. DOJ

April 15, 2016

The Department of Justice filed a civil injunction suit seeking to bar Patrick Clarke of Hallandale Beach, Florida, and Ruby Rodriguez of Orlando, Florida, from owning, operating, or franchising a tax return preparation business and preparing tax returns for others. The complaint also requests that the court order Clarke and Rodriguez to disgorge the fees that they obtained through the alleged fraudulent tax return preparation. According to the complaint, Clarke owns and operates Tax MD, a tax return preparation business with stores in Florida and North Carolina. Rodriguez allegedly manages one of Clarke’s stores located in Orlando. Clarke’s preparers, including Rodriguez, allegedly target primarily low to moderate income customers with misleading advertisements, prepare and file fraudulent tax returns to improperly increase their customers’ refunds and profit through unconscionable, exorbitant and often undisclosed fees—all at the expense of their customers and the U.S. Treasury. DOJ

April 14, 2016

A federal grand jury returned an indictment charging a District of Columbia tax return preparer with 35 counts of aiding in the preparation of false tax returns. According to the indictment, Joann Little worked at a tax return preparation business called Instant Tax Service, presently operating under the name Speedy Tax Service, which is located at 1002 H Street, NE, in Washington, D.C. The indictment alleges that Little prepared false personal income tax returns for clients for tax years 2009 through 2014. She is alleged to have attached schedules that reported inflated or fictitious deductions, which resulted in fraudulently claimed income tax refunds. DOJ

April 14, 2016

Three tax return preparers based in Minneapolis, Minnesota, were sentenced to prison for their involvement with a fraudulent return-preparation business with multiple storefronts in the Minneapolis area. According to the evidence presented at the trial, Ishmael Kosh, Amadou Sangaray, Francis Saygbay and a fourth individual, Chatonda Khofi, 50, of St. Paul, Minnesota, established a storefront location of Primetime Tax Services Inc. (Primetime), a tax return preparation business in the Minneapolis area. Along with a fifth individual, David Mwangi, 47, of Arlington, Texas, the defendants prepared over 2,000 fraudulent individual income tax returns on behalf of customers of Primetime for filing with the Internal Revenue Service (IRS) for the years 2006, 2007 and 2008. The defendants also prepared approximately 1,700 fraudulent state income tax returns for filing with the state of Minnesota for those years. At the sentencing hearing, Judge Tunheim found that the defendants’ conduct caused a total tax loss of between $1.5 and $3.5 million. DOJ

April 7, 2016

A Staten Island, New York, tax return preparer and business owner was sentenced to prison for preparing false federal income tax returns. Alabi Gbangbala aka Babatunde Alabi Babaia, 52, was sentenced by U.S. District Court Judge Carol Bagley Amon to serve 18 months in prison, followed by one year of supervised release, and ordered to pay $178,209 in restitution to the Internal Revenue Service (IRS). According to court documents and in-court statements, Gbangbala was the operator of Broadfield, a tax return preparation business located in Staten Island. For tax years 2008 and 2009, Gbangbala prepared false federal individual income tax returns for Broadfield clients by, among other things, failing to report accurate exemptions, falsifying business receipts and losses on Schedules C, and inflating or fabricating charitable contributions and unreimbursed employee expenses. He also filed false tax returns for himself by underreporting his income for tax years 2008 through 2010. DOJ

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
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