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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.

				

			

			
						
					
			

	
		
		

			

				
				
December 19, 2018

				 The U.S. has filed a complaint to bar EcoVest Capital, Inc. and associated individuals from continued activities related to the defendants' allegedly abusive conservation easement syndication tax scheme.  As set forth in the complaint, taxpayers may take a "qualified conservation contribution" deduction equivalent to the fair market value of a conservation easement, but only if certain requirements with respect to the donation of an interest in property for conservation purposes are satisfied. The defendants allegedly have organized, promoted, and sold ownership interests in at least 96 sham “conservation easement syndicates” which lack economic substance.  The syndicates have reported over $2 billion in improper tax deductions, resulting in hundreds of millions in tax underpayments.   DOJ				 					 

						
Tagged in:
													  Abusive Tax Shelters, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 4, 2018

				 In connection with their work for the "Panama Papers" law firm of Mossack Fonseca & Co. and its affiliates, Ramses Owens, Dirk Brauer, Richard Gaffey, and Harald Joachim Von Der Goltz have been indicted for actions related to the firm's efforts to circumvent U.S. tax laws on behalf of their clients through the use of offshore accounts and shell companies which Mossack Fonseca created.  The defendants then used an alleged “playbook” to repatriate un-taxed money into the U.S. banking system. The defendants are charged with wire fraud, tax fraud, and money laundering, among other offenses. In the last two months, three of the defendants have been arrested; Ramses Owens remains at large.  DOJ				 					 

						
Tagged in:
													  Abusive Tax Shelters, 
													  Money Laundering, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 21, 2018

				 Two owners of Erin’s Own Home Healthcare Inc., a Boston-area home healthcare company, pleaded guilty for underreporting income to the IRS resulting in over $1 million in losses.  Hannah Holland and Sheila O’Connell admitted that between 2010 and 2014, they cashed over $3.5 million of Erin’s Own business checks through nominee bank accounts controlled by an unnamed individual, and did not report this income to the IRS.  DOJ; USAO Mass.				 					 

						
Tagged in:
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 21, 2018

				 Wagdy Guirguis of Honolulu, the owner of several engineering businesses, and Michael Higa, a CPA and the controller for those businesses, were convicted on multiple counts arising from a tax evasion scheme that diverted funds from Guirguis's business entities.  The entities failed to pay the IRS withheld employment taxes, failed to report all income received, and failed to file required returns.  Guirguis was also found to have impeded the IRS investigation and made false statements to revenue officers.  DOJ				 					 

						
Tagged in:
													  Employment Tax Fraud, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 19, 2018

				 Teymour Khoubian of Beverly Hills, California, has pleaded guilty to filing false tax returns which concealed offshore accounts he held and earned income from.  Khoubian had declined to disclose the accounts under the IRS's Offshore Voluntary Disclosure Program.  As part of his guilty plea, Khoubian agreed to a penalty of $7.7 million and an additional $612,310 in restitution to the IRS. Khoubian faces a prison sentence of three years.  DOJ				 					 

						
Tagged in:
													  Abusive Tax Shelters, 
													  Criminal Proceedings, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 16, 2018

				 The owner of Virginia-based Family Discount Pharmacy, Jerry R. Harper, Jr., was sentenced to 41 months in prison for failing to account for and pay more than $5 million in employment tax liabilities, despite withholding such taxes from employee wages.  Between 1998 and 2014, Harper filed only one quarterly employment tax return for the pharmacy.  DOJ				 					 

						
Tagged in:
													  Criminal Proceedings, 
													  Employment Tax Fraud, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 15, 2018

				 The heir of a family skincare business has been sentenced to almost 3 years in prison for multiple counts of tax fraud. James Wright of B&P Company, Inc.—which has been selling a wrinkle reduction product called Frownies since 1889—allegedly diverted money from the company to a series of entities that he then used to fund personal expenses. Through a company he called The Remnant, Inc., Wright paid rent and utilities for himself and other immediate family members. Through a private foundation he called Fore Fathers Foundation, he paid high school and college tuition for his five children. According to the DOJ press release, Wright had previously pleaded guilty to concealing income through trusts. In addition to the new prison sentence, he is ordered to pay almost restitution of $150,000. DOJ				 					 

						
Tagged in:
													  Criminal Proceedings, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 5, 2018

				 Following a court trial, a federal court in Utah has ordered that RaPower-3 LLC and International Automated Systems, Inc. stop all promotion and marketing and disgorge $50 million collected in an abusive tax scheme involving false tax deductions and solar energy credits.  The companies and their principals marketed what they claimed was technology that could be used in the production of solar energy and which, they further claimed, entitled the purchasers to take certain tax deductions and solar energy tax credits.  In fact, however, the technology was phony and defendants knew that its purchasers would not be entitled to the tax deductions and credits.  DOJ				 					 

						
Tagged in:
													  Abusive Tax Shelters, 
													  Environmental Fraud, 
													  Tax Credit and Deduction Fraud, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 4, 2018

				 David Tielle of Harrisburg, Pennsylvania, pleaded guilty to tax fraud for his role in the submission of over $4 million in fraudulent claims for tax refunds under the Biodiesel Mixture Tax Credit by Keystone Biofuels Inc.  Tielle inflated fuel amounts reported to the IRS, claiming tax refunds on fuel Keystone was not producing. To account for the inflated fuel amounts, Tielle created false books and records and engaged in a series of sham financial transactions. USAO MDPA; DOJ.				 					 

						
Tagged in:
													  Environmental Fraud, 
													  Tax Credit and Deduction Fraud, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 21, 2018

				 Jose Martin Andrade Flores, the owner of the American Superior chain of second-hand clothing stores in the Los Angeles area, plead guilty for American Superior's failure to report $3.7 million in income to the Internal Revenue Service.  From 2012 through 2016, Flores concealed from his corporate tax preparer cash sales and deposits into foreign bank accounts that were made on behalf of American Superior.  USAO C.D. Cal.				 					 

						
Tagged in:
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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