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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 22, 2018

A grand jury sitting in the Eastern District of Michigan returned an indictment yesterday charging a former healthcare consultant with wire fraud, mail fraud, corruptly endeavoring to obstruct the internal revenue laws, and tax evasion, announced the Justice Department’s Tax Division. According to the indictment, from 2011 through August 2014, Sonja Emery falsely represented her professional status, educational background, and work experience to secure and maintain highly paid consulting positions in the health-care industry. Emery allegedly falsely represented to her employers that she was a registered nurse, had worked in health-care management positions, and had various degrees, including a bachelor of science in nursing, master’s degrees in health administration, and a doctor of philosophy degree. The indictment further alleges that, from 2011 to 2014, Emery earned six-figure salaries, failed to file timely tax returns and failed to pay the substantial income tax due and owing on her income. DOJ

May 16, 2018

A federal grand jury returned an indictment against a Rogersville, Tennessee resident charging him with obstruction of the internal revenue laws, filing fraudulent multi-million dollar liens against government employees, and filing false claims for tax refunds, announced the Justice Department’s Tax Division. According to the indictment, Brian Leo Snow obstructed the internal revenue laws over a period of at least nine years by, among other things, filing false tax returns; filing false UCC Financing Statements against individuals seeking to collect his back taxes; and by filing a document with Hawkins County Register of Deeds in an attempt to terminate tax liens filed against him by the IRS. The indictment also charges that Snow filed three false claims with the IRS claiming over $144 million in tax refunds to which he was not entitled. DOJ

May 8, 2018

A Wilson, North Carolina tax return preparer was sentenced to 24 months in prison for filing a false claim for refund with the Internal Revenue Service (IRS), announced the Justice Department’s Tax Division. According to documents and information provided to the court, in early 2015 Tawanda Denise Pitt, managed Integritax, a tax preparation business in Wilson, North Carolina. Pitt falsified taxpayer client returns by claiming phony dependents and education credits and reporting fake businesses in order to seek refunds to which her clients were not entitled. Pitt also admitted that she trained other preparers to file fraudulent returns. She caused a tax loss between $550,000 and $1.5 million; the total tax loss resulting from false education credits alone exceeded $780,000. DOJ

May 8, 2018

Posted  05/8/18
Korean national Un Hag Baeg has been sentenced to four years in prison and ordered to pay $7.26 million in restitution for his role in a scheme to evade the payment of excise taxes on cigarettes by falsely claiming that the cigarettes had been exported. Baeg, who operated Far East Marine Ship Supply Company, which provided services to cargo ships, created false records claiming that the cigarettes had been delivered...

April 26, 2018

A resident of Troy, Michigan, pleaded guilty to filing a false tax return, announced the Justice Department’s Tax Division. According to court documents, Mythi Nguyen co-owned Y & B Nail Supply, a nail salon wholesale business located in Madison Heights, Michigan. From 2009 through 2011, Nguyen underreported more than $1.1 million in business gross receipts from her tax returns, which caused a total tax loss of $272,680.72. DOJ

April 18, 2018

A Salinas, California, resident pleaded guilty to conspiring to file fraudulent claims for income tax refunds, announced the Justice Department’s Tax Division. According to documents and information provided to the court, during 2012, Ana Bajo a/k/a Ana Covarrubias, 43, conspired with others to obtain the personal identifying information of others and use it to file more than 2,300 fraudulent income tax returns with the Internal Revenue Service (IRS). These returns reported fake wages and fraudulently claimed dependents, education expenses and tax credits. In total, the returns sought approximately $9.7 million in refunds, of which the IRS paid more than $7.5 million. Bajo, and her co-conspirators, directed the fraudulently obtained refund checks into bank accounts that they controlled. DOJ

April 17, 2018

A federal grand jury sitting in Greenbelt, Maryland, returned an indictment, which was unseal, charging a married couple with conspiracy to defraud the United States and four counts of filing false tax returns, announced the Justice Department’s Tax Division. According to the indictment, Robert M. Underwood and Deborah J. Underwood, operated a used automobile parts and scrap metal business in Clinton, Maryland from 2009 through 2012 under the names “B Underwood’s Used Auto Parts” and “B Underwood Used Auto Parts, LLC.” The business allegedly purchased used and salvage cars, stripped them for parts to resell, and sold the remains to a Baltimore-based scrap yard. DOJ

April 16, 2018

A federal court in Orlando, Florida, ordered that Patrick Clarke disgorge $500,000, and Ruby Rodriguez disgorge $100,000, of the proceeds they received for the preparation of tax returns, the Justice Department announced. Clarke and Rodriguez agreed to the orders. On Nov. 13, 2017, the Court permanently barred Clarke, Rodriguez, Tax MD Inc., and V.I.P Tax Services Inc. from preparing federal tax returns for others. The civil injunction order, to which the defendants also agreed, was signed by Judge Carlos E. Mendoza of the U.S. District Court for the Middle District of Florida. DOJ

April 12, 2018

A Miami escort service owner pleaded guilty to filing a false tax return, announced the Justice Department’s Tax Division. According to court documents, Dennis Zarudny, 40, filed a false individual income tax return for 2012 that underreported his total income from his escort business, Denzar Inc., which did business as "Elite Escort Service" in the Miami area. Zarudny’s escort service was marketed on the internet as a "prestigious escort agency providing 24 hour outcall escort services & adult entertainment for upscale gentlemen and couples in South Florida." DOJ

April 5, 2018

A federal grand jury sitting in Fort Pierce, Florida, returned an indictment, charging a Hobe Sound, Florida, resident with tax evasion, mail fraud, wire fraud, theft of government funds, and Social Security disability fraud announced the Justice Department’s Tax Division. According to the indictment, Arthur John Kranz, was a doctor specializing in psychiatry. Beginning in 2002, Kranz allegedly made a claim on his private disability policy that he was unable to work, and began receiving disability payments from his insurance company. The indictment further alleges that in December 2003 Kranz submitted an application to the Social Security Administration (SSA) for disability benefits, which was approved. As part of his application, Kranz agreed to notify the SSA if he returned to work. The indictment charges that between 2006 and 2013, Kranz worked as a psychiatrist at a hospital in Pennsylvania and earned over $1.6 million in income, but did not report this fact to the SSA or the insurance company. DOJ
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