Tax Fraud

February 17, 2017

Three people were found guilty by a jury in the U.S. District Court for the District of Columbia of federal charges for participating in a scheme to file false federal income tax returns in order to fraudulently obtain tax refunds to which they were not entitled. All three defendants were found guilty of one count of conspiracy to commit theft of government funds and to defraud the United States. According to the government’s evidence, members of the conspiracy participated in a massive and sophisticated stolen identity refund fraud scheme that involved an extensive network of more than 130 people, many of whom were receiving public assistance. The conspirators fraudulently claimed refunds for tax years 2005 through 2012, often in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners. Returns were also filed in the names of, and refunds were issued to, willing participants in the scheme. The returns filed listed more than 400 “taxpayer” addresses located in the District of Columbia, Maryland and Virginia. DOJ

February 10, 2017

A now retired business school professor, who amassed a $220 million fortune in secret foreign accounts, was sentenced to seven months in prison for conspiring to defraud the United States and to submit a false expatriation statement to the Internal Revenue Service (IRS). He also has been assessed and paid a $100 million civil penalty for his concealment of these accounts. According to documents filed with the court and statements made during the sentencing hearing, Dan Horsky, 71, formerly of Rochester, New York, is a citizen of the United States, the United Kingdom and Israel who served for more than 30 years as a professor of business administration at a university located in New York. Beginning in approximately 1995, Horsky invested in numerous start-up companies, virtually all of which failed. One investment in a business referred to as Company A, however, succeeded spectacularly. In 2000, Horsky transferred his investments into a nominee account in the name of “Horsky Holdings” at an offshore bank in Zurich, Switzerland (the “Swiss Bank”) to conceal his financial transactions and accounts from the IRS and the U.S. Treasury Department. DOJ

February 9, 2017

Roxann Gist and Dominique King, both of Chicago, Illinois, pleaded guilty to conspiracy and other charges related to a scheme to obtain fraudulent tax refunds using stolen ID information. According to documents filed with the court, from 2012 to 2015, Gist, 45, and King, 26, along with another co-conspirator filed at least 858 fraudulent income tax returns, using stolen names and social security numbers. Those returns sought approximately $2,780,724 in refunds. As part of the scheme, Gist and King acquired the personal identification information of thousands of unsuspecting individuals, and directed others to receive and collect fraudulent income tax refund checks, and to open up bank accounts to receive direct deposits of such refunds. They also recruited others to provide addresses where refund checks could be delivered. DOJ

February 8, 2017

Hugh Robinson, a San Pablo, California resident, was sentenced to serve ­­144 months in prison for filing tax returns using the identities of deceased individuals and stealing social security and refund checks destined for other individuals. In October 2016, Robinson, 46, was convicted of conspiring to steal public money, stealing public money, and aggravated identity theft. According to the evidence presented at his trial, from at least August 2013 through April 2015, Robinson and his co-conspirators took names and personal identification information of deceased individuals from California death records and used them to file income tax returns seeking refunds. Robinson and his co-conspirators directed the refunds to addresses and bank accounts that they controlled. Robinson also bought and cashed legitimate refund and social security benefits checks that he knew had been stolen. Robinson and his co-conspirators obtained fraudulent California IDs and used them to cash the refund and social security checks at various stores, including in the Richmond-area. total, Robinson intended to cause a loss of more than $1.5 million. DOJ

January 31, 2017

An Atlanta, Georgia based tax return preparer was sentenced to 150 months in prison today for filing tax returns fraudulently claiming more than $20 million in refunds, announced the Justice Department’s Tax Division. According to documents filed with the court, Cheryl Singleton, 29, owned and operated Advanced Tax Services, a tax preparation business with multiple locations throughout the Atlanta area. Singleton hired and trained employees to prepare fraudulent tax returns and encouraged them to manipulate the numbers to maximize their clients’ refunds. From 2011 through 2016, Singleton and her employees included false dependents and fraudulent Schedule C businesses on their clients’ returns in order to inflate their refunds. Singleton and her employees also manipulated other individuals into providing their personal identification information by telling them they could qualify for an “Obama Stimulus” payment. and others used these individuals’ personal identification information to file fraudulent income tax returns in their names, without their knowledge or consent. DOJ

January 26, 2017

New York announced a lawsuit against STAR Exemption Advisor, YCA Corp. and its business owner Arie Gal, for allegedly scamming thousands of new homeowners out of at least $1.5 million by charging them excessive fees to enroll them in the Basic STAR Exemption Program, which is otherwise free. The lawsuit, filed in Nassau County Supreme Court, seeks to provide full restitution to all those affected, and a complete accounting to identify all consumers who are entitled to such refunds. The lawsuit also seeks additional costs, damages, and to permanently enjoin the respondents from marketing any Basic Star rebate or property tax reduction services within the State of New York. The Attorney General’s office also secured a temporary restraining order enjoining the defendants from continuing doing business in New York State, to pay full restitution and damages to all injured consumers and to render a full accounting of all victims to the office. The temporary restraining order also froze all of the defendants’ assets. NY

January 24, 2017

The government unsealed a plea agreement with the owner and operator of Columbus Southern Medical Center, which provided unlawful prescriptions of controlled substances to addicts throughout the Midwest and who engaged in a series of schemes to evade more than $3.5 million in taxes, announced the Justice Department’s Tax Division. Kevin B. Lake, 50, of New Albany, Ohio, pleaded guilty to drug, tax and fraud charges and agreed to the forfeiture of what remains from the $29 million in seized funds earned from the clinic’s illegal activities, after restitution is paid from the funds. According to court documents, Lake owned and managed Columbus Southern Medical Center through one or more corporate or trust entities which he used to insulate himself from the illegal drug trafficking being conducted at the clinic. In the filed plea document, he admitted that between 2006 and 2013, he knew doctors and staff at the 2912 South High Street clinic prescribed controlled substances to patients without a legitimate medical purpose. During that time, hundreds of patients showed up daily – 85 percent of whom were returning patients – to receive prescriptions of oxycodone, hydrocodone and Xanax. The percentage of patients who were prescribed these controlled substances rose each year, jumping from nearly 60 percent in 2004 to nearly 92 percent in 2009 and 2010. DOJ

January 24, 2017

A former Poplar Grove, Illinois woman pleaded guilty in federal court in Rockford, Illinois to mail fraud and aggravated identity theft. According to documents filed with the court, from 2012 through 2014, Shameka Carr, 30, used individuals’ names, social security numbers and dates of birth without their knowledge or consent to file fraudulent income tax returns. Carr directed the fraudulently claimed refunds to prepaid debit cards and refund checks which she had mailed to addresses in Rockford and its surrounding areas. Carr admitted to an intended tax loss of $1,026,284. DOJ

January 24, 2017

A former Queens, New York return preparer pleaded guilty to aiding and assisting in the preparation of false income tax returns. According to documents filed with the court, from in or about 2004 through 2014, Vanya Thompson, 39, ran a tax return preparation business, which operated under a number of names, including Lyn Services, Ricardo Multi-Service and Katie’s Multi-Service. To generate larger refunds for her clients, Thompson falsified items on their returns such as charitable deductions and business income, expenses, and losses, causing a tax loss of more than $250,000. DOJ