Tax Fraud Blotter: Home is where the scam is
Refuge of a scoundrel; elder care and hockey tickets; on the flyer; and other highlights of recent tax cases.
Grand Rapids, Mich.: Preparer Faheem Olugbodi, a.k.a. Faheem Abdul Nichols and James Moore, 48, was sentenced to 42 months in federal prison after pleading guilty to preparing fraudulent returns from 2011 through 2013.
Olugbodi admitted collecting personal information from taxpayers and then reporting false income listed as household employment to generate refunds based on the Earned Income Tax Credit. Olugbodi acknowledged that he obtained $1,827,450 by filing approximately 322 fraudulent returns. Evidence showed that Olugbodi utilized multiple bank accounts, including one in the name of a local mosque to conceal his scheme.
He was directed to pay $1,827.450 in restitution and ordered to serve two years supervised release following the prison term.
East Amherst, N.Y.: Former nursing homes owner Marc Korn, 62, has pleaded guilty to bank theft and willful failure to pay tax.
Authorities said Korn is the former owner of the Batavia Nursing Home in Batavia, N.Y., and the Fairchild Manor Nursing Home in Lewiston, N.Y. Korn admitted to committing bank theft in connection with his actions concerning a credit card and loan, and also admitted failing to pay over employment taxes related to his nursing homes over three quarters in 2009.
In 2008, he sought a loan to refinance the Batavia Nursing Home. In June 2008, the bank provided $3.9 million to refinance the nursing home and provided Korn with a credit card. As part of the application for the loan, the defendant submitted a personal financial statement and guaranty on which the bank relied when underwriting the loan.
The statement contained numerous falsehoods, including an overvaluation of his primary residence: Korn stated that the property was valued at $1,465,000, when at the same time he was contesting its value with the Town of Amherst for purposes of property taxes, alleging it was worth between $500,000 and $550,000. Additionally, the defendant provided the bank with statements of bank accounts that he claimed to own.
These statements also contained falsehoods — including one statement for which Korn claimed ownership of an account containing $50,000 in February 2008 when the account actually contained $1 and belonged to someone else. The loan and payments on the credit card went into default and the bank lost more than $2.4 million.
Prior to March 2009, for both Batavia Nursing Home and Fairchild Manor Nursing Home, Korn used a service to collect and pay over employment taxes owed. Beginning in March 2009, he ceased using the service and subsequently intentionally failed to pay federal employment taxes owed for the second, third and fourth quarters of 2009. Korn spent the funds on personal expenses, including restaurants, hockey tickets, jewelry and his children’s tuition.
Sentencing is March 13. The charges each carry a maximum of two years in prison and a $200,000 fine. Korn also agreed to pay more than $2.5 million in restitution to three private entities, along with some $850,000 to the IRS.
Bessemer, Ala.: Preparer Pamela Whitt, a.k.a. Pamela Motley, was sentenced to two years in prison for filing false returns, according to published reports.
Whitt, who pleaded guilty, reportedly made false representations on her 2011 and 2012 individual returns by willfully underreporting receipts from her business and further falsely listed her filing status as single. The receipts related to over 1,000 federal income tax returns prepared, accounts said, adding that she filed false returns for her clients to inflate the refunds.
Whitt agreed to pay restitution of $146,177, reports added.
Boston: The co-owners of a local home health care company have pleaded guilty to underreporting income to the IRS, resulting in more than $1 million in losses.
Hannah Holland, 51, of Quincy, Mass., and Sheila O’Connell, 51, of N. Weymouth, Mass., pleaded guilty to one count of conspiracy to defraud the U.S. and three counts of aiding and assisting in the preparation of false returns.
According to court documents, Holland and O’Connell co-owned and operated Erin’s Own Home Healthcare Inc. and between 2010 and 2014 cashed more than $3.5 million of Erin’s Own business checks through nominee bank accounts controlled by an unnamed individual. During this time, Holland also personally cashed more than $77,000 of Erin’s Own business receipts.
None of these funds were reported to the IRS or accounted for in tax filings; Holland and O’Connell provided their preparer with a limited set of the financial records that did not cover the funds the pair diverted.
Erin’s Own caused a loss of $1,126,112 to the IRS.
Sentencing is Feb. 13. The conspiracy charge provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Aiding and assisting in the preparation of false returns provides for a sentence of no greater than three years in prison, one year of supervised release and a fine of $250,000.
New Haven, Conn.: Printing company owner Louis Goldberg, 71, has been sentenced to one year of probation for his role in a tax avoidance scheme.
According to court documents and statements in court, Goldberg owns Good Copy Printing Center Inc. GCP employed Goldberg’s nephew, Ira Malkin, as a principal salesman, and Malkin earned substantial commissions from GCP based on sales made to customers. Between approximately 2003 and 2012, Goldberg had some knowledge that GCP paid many of Malkin’s personal expenses. With Malkin’s consent, GCP reduced his commissions by the amount of personal expenses the company paid. GCP then reported to the IRS through W-2s that Malkin had earned substantially less income than he truly earned, reducing the Medicare payroll taxes it reported and paid.
In addition, GCP handled printing jobs for Comcast, which included GCP mailing out flyers and paying the relevant postage expense with the expectation that GCP would subsequently be reimbursed for that expense. Goldberg knew that Malkin had GCP pay the postage expense for the Comcast mailings, had Comcast reimburse Malkin for the cost of the mailings, and then had GCP reduce Malkin’s earned commissions by the amount of postage paid by GCP. Through this arrangement, between approximately 2009 and 2012 GCP further underreported Malkin’s income on W-2s.
Between 2003 and 2012, GCP underreported a total of $40,490 in Medicare taxes.
Goldberg has paid the IRS approximately $105,000 in restitution, which includes the $40,490 in Medicare taxes he owed, interest and a penalty.
On Sept. 7, Goldberg pleaded guilty to one count of aiding and assisting in the filing of a false return. On Feb. 27, 2018, Malkin pleaded guilty to one count of tax evasion and admitted that he failed to pay $484,581 in federal income taxes on more than $1.5 million in unreported income. On Aug. 9, he was sentenced to six months of imprisonment and six months of home confinement. Malkin has repaid the IRS all of his back taxes but still owes more than $700,000 in interest and penalties.
Springfield Gardens, N.Y.: Preparer Oyeniyi Jaiyesimi, owner of the tax prep business Pace Financial Services, has pleaded guilty to nine counts of wire fraud, nine counts of aggravated ID theft and 17 counts of aiding or assisting in the preparation and filing of false returns.
According to court documents, Jaiyesimi used stolen IDs to file fraudulent federal returns and to obtain undeserved refunds.
From 2013 through 2015, Jaiyesimi also filed multiple false returns for clients that fraudulently claimed dependent exemptions.
Sentencing is April 3, when Jaiyesimi faces a maximum of 20 years in prison for each count of wire fraud, a minimum of two years in prison for each count of aggravated ID theft and a maximum of three years in prison for each count of aiding or assisting in the preparation of false returns. He also faces a period of supervised release, restitution, forfeiture and monetary penalties.