Tax Fraud Blotter: In-laws’ outlaw
Abundant energy; ‘I wouldn’t go too high;’ maximum mileage from stolen IDs; and other highlights of recent tax cases.
Spokane, Wash.: Jin Chul “Jacob” Cha, 41, of Tustin, Calif., has been sentenced to 51 months of prison to be followed by three years of court supervision after pleading guilty to conspiracy to defraud the government and to commit wire fraud.
According to case information, Cha was a member of a conspiracy involving Gen-X Energy Group, a renewable energy company formerly in Washington. Between 2012 and 2015, he and co-conspirators falsely claimed the production of more than 9.4 million marketable renewable energy credits, which they then sold for more than $6 million and filed false claims for $2,506,094 in federal excise credit refunds. Much of the renewable fuel claimed to be produced at the Gen-X facilities was either not produced or was re-processed multiple times.
Restitution will be set at a later date.
Omaha, Neb.: Preparer Sharon Williams-Combs has been convicted of 14 counts of aiding and assisting in the preparation of false returns, according to published reports.
Williams-Combs worked at a Jackson Hewitt kiosk in a local Walmart, according to federal prosecutors. An undercover IRS agent reportedly caught her in the fraud after approaching Williams-Combs there and asking about implications on a refund of claiming false business expenses.
“It depends on what you want to do,” Williams-Combs responded, captured on an undercover audio recording used as evidence in the case and cited by news outlets. “I wouldn't go too high.”
A grand jury indicted Williams-Combs in connection with a series of fraudulent returns over at least five years for at least five people, news outlets said, adding that the total loss to the government exceeded $50,000. Sentencing is July 6, reports said.
Norwalk, Conn.: Bookkeeper Eddie Chan, 58, has been sentenced to five years of probation for filing false returns.
According to court documents and statements in court, Chan was employed as a bookkeeper for a private art firm in New York City, and between 2013 and 2015 withdrew funds from the firm’s business accounts without authorization from his employer; Chan used the money for personal expenses.
He failed to declare $271,166 in misappropriated funds on his federal income tax returns for 2013 and 2014, resulting in a loss of $78,214 to the IRS.
Chan, who in October pleaded guilty to one count of making a false statement on a federal return, admitted that he stole additional funds from his former employer and borrowed thousands of dollars from other individuals, much of which he used to gamble on horseracing.
Chan was ordered to pay some $500,000 in restitution to his former employer and to cooperate with the IRS to pay outstanding taxes, interest and penalties.
Riviera Beach, Fla.: Corry Pearson, 28, has been sentenced to 124 months in prison for operating a fraudulent prep business and submitting fraudulent returns using the stolen personal ID information of others.
Last October, a federal jury convicted Pearson of 18 criminal charges, including conspiracy to commit wire fraud, wire fraud, aggravated ID theft and money laundering. Evidence established that from 2011 through 2013 Pearson and his accomplices filed at least 770 fraudulent returns in the names of various people. They filed many of these returns using two prep businesses in West Palm Beach, Fla., that they controlled: Tax King and NPN Multiservices. The conspirators also filed other returns to make it appear the taxpayers had filed the returns themselves.
In some cases, the conspirators filed federal income tax returns in the names of people who were victims of ID theft. The conspirators also listed stolen IDs as preparers on fraudulent returns, making it appear that the fraud had been perpetrated by people who were actually victims of the ID theft.
The returns claimed $5,173,274 in fraudulent refunds. Pearson also engaged in financial transactions with the proceeds to disguise his control over the proceeds.
Pearson’s co-defendant, Stephane Cindy Anor, 28, of West Palm Beach, previously pled guilty to one count of conspiracy to commit wire fraud and was sentenced to 36 months in prison. Anor worked as a preparer at Tax King.
In a related case, Irene Wilson, 52, of Riviera Beach, previously pled guilty to conspiracy to defraud the U.S. by a false claim and was sentenced to three years of probation. Wilson helped Pearson file a fraudulent return and disguise his control of those proceeds.
A restitution hearing has been scheduled for July 13.
Troy, Mich.: Mythi Nguyen, co-owner of a nail salon wholesale business in Madison Heights, Mich., has pleaded guilty to filing a false return.
According to court documents, Nguyen co-owned Y&B Nail Supply and from 2009 through 2011 underreported more than $1.1 million in business gross receipts, which caused a total tax loss of $272,680.72.
Sentencing is Sept. 13, when she faces a maximum of three years in prison, as well as a period of supervised release, restitution and monetary penalties.
Orland Park, Ill.: Investment advisor Daniel Glick, 65, of Chicago, has been sentenced to 151 months in prison and been ordered to pay $5.2 million restitution for stealing $5.2 million from several clients, including his elderly in-laws.
Glick, who pleaded guilty earlier this year to one count of wire fraud, owned three local accounting and financial services firms: Financial Management Strategies, Glick Accounting Services and Glick & Associates. The firms purported to provide accounting, tax, investment and financial services.
During the scheme, Glick furnished forged checks and other phony documents to financial institutions and he lied to clients about the use and safety of their investments. He also misappropriated client funds to pay hundreds of thousands of dollars to two business associates and to make Ponzi-type payments to clients.
Most of the money belonged to elderly clients, including Glick’s mother- and father-in-law and two individuals in nursing homes. He used some of the stolen funds to pay personal and business expenses, including the purchase of a Mercedes-Benz automobile and payment of his mortgage.
Norwalk, Conn.: Landscaper Candido Valadares, a.k.a. Candide Valadares, 57, has been sentenced to two months in prison, followed by a year of supervised release, for filing false returns.
According to court documents and statements in court, Valadares, who pleaded guilty in November to one count of filing a false return, operates Candide’s Landscaping and Water Gardens and Candide Contractor & Natural Pools, as well as providing snow-removal services to his clients during winter. Investigation revealed that Valadares deposited receipts from his businesses into both his business and personal bank accounts and substantially underreported employee wages by paying certain employees out of his personal accounts.
Valadares used a preparer for his yearly returns; the preparer took figures from certain P&Ls from Valadares or his bookkeeper to prepare the returns, though Valadares knew that the P&Ls didn’t reflect all revenues deposited in his accounts and substantially underreported payroll.
His federal returns for 2009, 2010 and 2011 tax years underreported $488,182 in gross receipts, underreported his business payroll by some $350,000 and resulted in a loss of $165,763.52 to the U.S. Treasury.
Valadares is required to pay $165,763.52 in restitution and to cooperate with the IRS to pay any additional civil penalties and interest accrued on his unpaid taxes.
Reno, Nev.: Attorney Delmar Hardy has been sentenced to 25 months in prison for filing false federal income tax returns.
He was convicted in September of filing false individual returns for 2008, 2009 and 2010. According to court documents and evidence, Hardy falsified his 2008 through 2010 returns by not reporting more than $400,000 in cash income that his law practice received. His practice of not reporting cash dated back to at least 1999, which resulted in a total tax loss of more than $250,000.
He was also ordered to serve a year of supervised release and pay a $10,000 fine.