Tax Fraud

March 14, 2016

A New York tax return preparer pleaded guilty in the U.S. District Court for the Eastern District of New York in Central Islip, New York, to one count of aiding and assisting in the preparation of a false tax return. According to court documents, Thelma Rodriguez-Garden, 54, owned and operated a tax preparation business called Garden Insurance Agency Corporation, which was located in Bay Shore, New York. Rodriguez-Garden prepared false individual income tax returns for clients of Garden Insurance Agency for tax years 2008 through 2011. On the tax returns, Rodriguez-Garden included grossly inflated or wholly fictitious itemized deductions for unreimbursed employee expenses. The information to which Rodriguez-Garden pleaded guilty alleges that she filed 47 false tax returns that caused a loss to the government of more than $100,000. DOJ

March 11, 2016

Two Subway franchise managers and a gas station manager, all residents of Virginia, pleaded guilty to aiding and assisting in the filing of false tax returns. As part of their guilty pleas, the defendants admitted that they did not deposit all of the Subway franchises’ or the gas station’s gross receipts into the corporate or partnership bank accounts. Instead, they retained a portion of the gross receipts for their personal benefit. Additionally, two of the defendants admitted that they maintained detailed records of the Subway franchises’ and gas station’s total sales, the amounts deposited into the bank accounts and the amounts distributed to each of them for their personal benefit, and that they later destroyed those records. DOJ

March 9, 2016

The Justice Department and Internal Revenue Service announced the guilty pleas of Cayman National Securities Ltd. (CNS) and Cayman National Trust Co. Ltd. (CNT), two Cayman Island affiliates of Cayman National Corporation. CNS and CNT pleaded guilty to a criminal Information charging them with conspiring with many of their U.S. taxpayer-clients to hide more than $130 million in offshore accounts from the U.S. Internal Revenue Service and to evade U.S. taxes on the income earned in those accounts. CNS and CNT entered their guilty pleas pursuant to plea agreements requiring the companies to, among other things, produce through the treaty process account files of non-compliant U.S. taxpayers who maintained accounts at CNS and CNT, and pay a total of $6 million in financial penalties. DOJ

March 3, 2016

A federal grand jury sitting in Chicago, Illinois returned an indictment on Feb. 11 against a resident of a Chicago suburb, charging him with 10 counts of wire fraud, 10 counts of aggravated identity theft and one count of access device fraud. Jonathan Herring aka Byron Taylor, Marco Brown and Quang Dang of Harvey, Illinois, participated in a stolen identity refund fraud scheme, according to allegations in the indictment. Herring is alleged to have obtained stolen identities of members of the U.S. Air Force, among others. Herring used the stolen identities to electronically file false income tax returns seeking tax refunds with the Internal Revenue Service. Herring is alleged to have received the fraudulently obtained tax refunds in the form of direct deposits into various bank accounts that he controlled. DOJ

March 2, 2016

The Justice Department announced that a former chief deputy auditor for LaPorte County, Indiana, was sentenced to 84 months in prison for embezzling over $150,000 from the LaPorte County government, tax fraud and defrauding her father-in-law out of more than $600,000. Mary Ray, 68, of LaPorte, was also ordered to forfeit $137,249.59 and pay $801,315.66 in restitution as part of her sentence. According to evidence presented at trial, from September 2011 through December 2012, while she served as chief deputy auditor for LaPorte County, Ray embezzled more than $150,000 from county coffers and underreported her income on her U.S. Individual Tax Returns by failing to report the embezzled funds. DOJ

February 23, 2016

The Justice Department announced that the owner of a St. Louis, Missouri, tax return preparation business was arrested on two counts of tax evasion. According to the indictment, from 2005 to 2011, Semere Tsehaye, 38, was the owner and operator of at least 20 Instant Tax Service franchise locations operating in Illinois, Kansas, and Missouri. Instant Tax Service was a brand name of ITS Financial LLC, a nationwide tax preparation business headquartered in Dayton, Ohio. During the years 2010 and 2011, Tsehaye is alleged to have generated fraudulent financial summaries that understated gross receipts by a total of approximately $506,000 in 2010 and $1.03 million in 2011. DOJ

February 17, 2016

The Justice Department announced that an Enterprise, Alabama, resident was sentenced to 48 months in prison to be followed by three years of supervised release for accepting unlawful kickbacks and tax evasion. According to court documents and statements made in open court, Victor Villalobos, 47, worked for a federal prime contractor at Fort Rucker, Alabama. In 2009, Villalobos approached Maxim Silinsky, a Florida-based subcontractor for this company, and solicited illegal kickbacks on the federal subcontracts that Silinsky held in connection with the federal prime contractor. As part of his plea, Villalobos admitted that from June 2009 to December 2014, he received approximately 57 separate wire transfers totaling more than $1.9 million in kickback payments from various foreign and domestic bank accounts controlled by Silinsky. DOJ

February 16, 2016

A federal court in Chicago has ordered Servicios Latinos Inc. to close its nationwide tax preparation business. The order comes after the Justice Department filed a civil lawsuit against the business and its owners, Georgina Lopez, Pamela Miranda and Jorge A. Miranda, alleging that the defendants falsely understated their customers’ tax liabilities or overstated their customers’ entitlement to a tax refund. According to the complaint, Servicios Latinos operated out of approximately 84 stores in as many as 30 states, with locations including Kennet Square, Pennsylvania; Kansas City, Missouri; and Las Vegas, Nevada. The Internal Revenue Service has estimated that the loss to the U.S. Treasury from the defendants’ conduct exceeds $4.7 million for 2014 alone, according to the complaint. DOJ

February 4, 2016

Zurich-based Bank Julius Baer & Co. Ltd. agreed to pay $547 million to settle charges of conspiring with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide from the IRS billions of dollars in offshore accounts and evade U.S. taxes on the income earned in those accounts.  DOJ