Tax Fraud

November 9, 2017

A business owner was charged by a federal grand jury in Boston, Massachusetts, with attempting to obstruct the internal revenue laws, aiding and assisting in the filing of fraudulent corporate, personal, and employment tax returns, tax evasion, and structuring financial transactions, announced the Justice Department’s Tax Division. According to the indictment, Nicholas Boulas, of North Reading, owned and operated Nick’s Painting Service Inc. (NPS), which provided painting services to residential and commercial customers in the Boston area. From 2009 through 2014, Boulas allegedly concealed approximately $4 million in business receipts by cashing approximately $2.7 million in checks and directing a substantial number of customers to write checks to him personally, which he cashed and deposited using multiple personal bank accounts. According to the indictment, he structured cash transactions to involve less than $10,000 in currency in order to evade the banks’ reporting requirements – banks are required to file reports with the U.S. Treasury for transactions involving more than $10,000 of currency, conducted by or on behalf of the same person on the same day. DOJ

October 30, 2017

A St. George, Utah, financial advisor pleaded guilty to his role in selling fraudulent tax-avoidance and investment strategies to his clients, announced the Justice Department’s Tax Division. According to documents and information provided to the court, Henry Brock, pleaded guilty to tax evasion, securities fraud and wire fraud. Brock founded a financial services company in 2009 and served as the president from 2009 through 2017. As President, he marketed and sold a fraudulent tax scheme, called “IRA Exit Strategy,” to potential investors. Brock promised investors that he could provide a way for them to avoid paying taxes on IRA withdrawals, which would otherwise be subject to Internal Revenue Service (IRS) penalties and taxes. To implement his scheme, Brock caused his business to issue tax forms to his clients falsely representing that they were investors in his business who incurred losses, which served to offset the clients’ tax liabilities. As a result, Brock caused clients to file fraudulent income tax returns claiming a total of approximately $3.8 million in bogus business losses and resulting in a tax loss of over $1.1 million. DOJ citizen, who resided in St. Louis, Missouri, was sentenced to 78 months in prison for mail fraud, aggravated identity theft, voter fraud, and re-entering the United States after having been removed. According to documents filed with the court, Kevin Kunlay Williams, a.k.a. Kunlay Sodipo, 56, and others stole public school employees’ IDs from a payroll company and used them to electronically file more than 2,000 fraudulent federal income tax returns seeking more than $12 million in refunds. He also stole several return preparer’s Electronic Filing Identification Numbers (EFINs) and used them to secure tax-related bank products and services that facilitated the issuance of tax refunds, to include blank check stock and debit cards. Williams used the blank stock to print checks funded by the fraudulent refunds and directed some of the refunds onto debit cards. DOJ

October 19, 2017

New York announced the conviction of Yankee Clipper Food Services I Corporation on felony charges stemming from an extensive scheme to avoid paying New York taxes between 2011 and 2015. Following an investigation conducted by the Attorney General’s Office, the company, along with several individuals and affiliated airport food service companies doing business under the trade name "Express Hospitality Group," agreed to pay $13 million to settle separately filed civil claims initially raised by a whistleblower under New York State’s False Claims Act. The plea and civil settlement are the first resolution in the Attorney General’s ongoing investigation into the contracting and procurement process at JFK Airport—an investigation dubbed "Operation Greased Runway." NY

October 17, 2017

A federal jury sitting in Miami, Florida, convicted a resident of Pompano Beach, Florida, of filing fraudulent tax returns, wire fraud and filing false monthly reports with the U.S. Probation Office. According to evidence presented at trial, Timothy J. Beverley, 61, worked as an airplane broker at Majestic Jet Inc., a company in Pompano Beach that provided aircraft charters. From 2010 through 2013, Beverley stole more than $1.5 million from Majestic Jet by directing airplane escrow agents to wire funds from the sale of planes to nominee bank accounts that Beverley controlled. Beverley also stole funds directly from Majestic’s business bank accounts and used the money to pay for personal expenses including his boat and rent. Beverley did not report this income on his 2010 through 2013 personal tax returns. While working at Majestic Jet, Beverley was on supervised release stemming from his federal conviction for money laundering in January 2004. As a condition of his supervised release, Beverley was required to file monthly reports with the U.S. Probation Office that listed his net earnings from employment. Between November 2009 through October 2012, Beverley did not disclose the money he stole from Majestic Jet on his filed reports. DOJ

October 16, 2017

A federal court in Houston, Texas, permanently enjoined Levett Navarro Camarena and her son Chase Edward Camarena from preparing federal tax returns for others, including under the name of the business Hispanic Services. Levett Camarena and Chase Camarena agreed to civil injunction orders that require them to cease preparing federal tax returns. According to the government’s complaint, Levett Camarena and Chase Camarena, through a business called Hispanic Services located on Nyland Street in Houston, Texas, routinely prepared federal tax returns for customers that contained false, improper, or inflated individual deductions on Schedule A (Itemized Deductions) and business expenses on Schedule C (Profit and Loss from Business Sole Proprietorship). Furthermore, the returns reported Schedule C businesses that did not exist, according to the complaint. DOJ

October 6, 2017

A federal grand jury in Brooklyn, New York, returned indictments separately charging two tax return preparation business owners with stolen identity tax refund fraud. The first indictment charges Hakeem Bamgbala, a Brooklyn resident and owner of Kaybamz Inc., a tax preparation business in Brooklyn; Afolabi Ajelero, a Queens resident; and Michael Campbell, a Brooklyn resident, with conspiring to commit aggravated identity theft and aggravated identity theft. Bamgbala and Ajelero also are charged with wire fraud. The indictment alleges that Bamgbala and Ajelero used stolen IDs to file tax returns with the Internal Revenue Service (IRS) and obtain refunds to which they were not entitled. Bamgbala and Ajelero allegedly purchased tax refund products that allowed them to print client refund checks drawn on a bank account into which the IRS directly deposited the refunds. Bamgbala, Ajelero and Campbell allegedly conspired to deposit these checks into a second bank account and then withdrew the funds. DOJ

September 25, 2017

A federal court in Detroit, Michigan has permanently barred Tax Pioneer Co. and its owner Dieasha Davis from operating a tax return preparation business and preparing federal tax returns for others. Tax Pioneer Co. and Davis agreed to the civil injunction order entered against them. According to the suit filed in January 2017, Davis, a former manager and tax return preparer for a Liberty Tax Service franchisee, prepared fraudulent tax returns both during her time at Liberty Tax Service and, since 2013, at Tax Pioneer. Davis and Tax Pioneer prepared tax returns with false or inflated income and expenses, bogus dependents, improper filing statuses, and false itemized deductions, all with the purpose of fraudulently maximizing customer refunds and refundable credits, according to the complaint. The government also alleges that Davis advised at least one customer audited by the Internal Revenue Service (IRS) to submit false records to the IRS in an effort to convince auditors that bogus expenses claimed on the customer’s tax returns were, in fact, legitimate. DOJ

September 25, 2017

An Orem, Utah former chiropractor, who also owned a health care products business, was sentenced to 33 months in prison for tax evasion and corruptly endeavoring to obstruct the internal revenue laws. Louis Hansen, 65, was convicted following a jury trial in July. According to documents submitted to the court and evidence presented at trial, Hansen attempted to evade the payment of his federal income taxes for the years 2005, 2006, 2007 and 2010. For the years 2005, 2006 and 2010, Hansen filed a tax return reporting that he owed taxes, but did not fully pay the amounts due. For 2007, Hansen’s return was audited and additional taxes assessed. In March 2012, Hansen sent a check to the Internal Revenue Service (IRS) in the amount of $342,699 that was drawn on a closed bank account held in the name of another individual, and claimed that the check paid off his tax debt. Hansen then sent a signed letter to the revenue officer assigned to collect his unpaid taxes, claiming that he had paid the taxes owed. A few months later, Hansen sent 10 additional checks all in the amount of $425,000, to at least six IRS locations, all drawn on another closed account in the name of a different individual, claiming to pay the back taxes due. DOJ