Tax Fraud Blotter: Rough waters
Three defaults and you’re out; scheme of several years; misstep by misstep; and other highlights of recent tax cases.
North Brunswick, New Jersey: Preparer Juan Solano, 46, has been sentenced to a year and a day in prison for income tax evasion.
Solano was the owner of J&C Solano Tax Service; during 2016 he reported that he earned $113,263 gross from J&C. Solano admitted that he failed to report an additional $318,228 that he earned from J&C during the 2016 calendar year. He also admitted that he filed false personal returns and evaded his taxes for 2013, 2014 and 2015.
Solano was also ordered to serve two years of supervised release and to pay $299,274 in restitution.
Richmond, Virginia: Tech consultant Rama Gogineni has pleaded guilty to failing to collect and pay over employment taxes.
Gogineni was president and director of Computech Services Inc., a technology consulting services firm. He was responsible for collecting and paying over to the IRS Social Security, Medicare and income taxes withheld from employees’ wages.
Beginning as early as 2007 and through 2015, Gogineni did not pay more than $980,000 in federal employment taxes and entered into three separate installment agreements with the IRS committing to make the payments, defaulting each time.
Sentencing is Feb. 10, when he faces a maximum of five years in prison and a period of supervised release, restitution and monetary penalties.
Medford, Oregon: Oluwole Oluwaseun Odunowo, of Houston, has been sentenced to 54 months in prison and three years of supervised release for his role in a nationwide conspiracy to commit mail fraud and aggravated identity theft.
The IRS began a lengthy investigation into the fraud scheme when, in May 2013, a victim notified the IRS that false federal and Oregon state returns were e-filed using her and her husband’s personal ID information. The IRS determined that the scheme required co-conspirators to amass a large supply of stolen U.S. taxpayer IDs; obtain IRS filing PINs; acquire prepaid debit cards in victims’ names; use fictitious email addresses; file fraudulent tax returns; and conceal refund proceeds by wiring cash to Nigeria. Fraudulent tax returns were filed using the identities of thousands of Oregon and Washington taxpayers.
The scheme lasted several years and netted co-conspirators more than $11.6 million. Using some 700 stolen IDs he received from a co-conspirator, Odunowo filed fraudulent returns seeking more than $1.5 million in refunds. These returns resulted in nearly $403,000 in refunds paid by the IRS.
Odunowo, who pleaded guilty in May, was also ordered to pay $402,846 in restitution to the IRS.
Greensboro, North Carolina: Former health care services CEO Javondell Stallings, of Whitsett, North Carolina, has been sentenced to 15 months in prison and a year of supervised release for tax offenses.
Stallings, who pleaded guilty a year ago, owned and operated Step By Step Care, which provided behavioral health care services and substance abuse treatment. In March 2013, Stallings submitted a materially false personal income tax return to the IRS for 2012.
During the recent sentencing hearing, Stallings was also found to have failed to pay employment taxes between the end of 2012 and the end of 2014.
He was ordered to pay $843,616 in restitution to the IRS.
Newark, New Jersey: Joseph Frank Abel of Camarillo, California, has pleaded guilty to conspiring to offer and sell unregistered securities and to subscribing to a false return in connection with his role in the BitClub Network, a cryptocurrency mining scheme worth at least $722 million.
From April 2014 through December 2019, the BitClub Network was a scheme that solicited money from investors in exchange for shares of purported cryptocurrency mining pools and rewarded investors for recruiting new investors. Abel promoted and sold shares of BitClub Network despite knowing that the network and its operators did not file a registration statement to register shares with the SEC. He instructed investors in the United States to use a virtual private network to hide their U.S.-based IP addresses and evade detection and regulation by law enforcement.
Abel admitted failing to report for tax year 2017 some $1 million in cryptocurrency as income he earned from his promotion of the BitClub Network.
The tax charge carries a maximum of three years in prison and a fine of $100,000. The conspiracy charge carries a maximum of five years in prison and a fine of $250,000, or twice the pecuniary gain to the defendant or loss to the victims. Sentencing is Jan. 27.
Ludington, Michigan: Ferry exec Paul Patrick Piper has been sentenced to 63 months in prison for bank fraud and filing a false federal income tax return.
Piper served as the financial controller for Lake Michigan Carferry, the company operating the ferry between Ludington, Michigan, and Manitowoc, Wisconsin. He embezzled more than $1.7 million between 2007 and 2018 by overriding normal accounting systems and writing checks directly to himself and to two of his affiliated businesses, Piper Tax & Accounting and Piper Group.
Piper either forged the signatures of company owners or used a signature stamp without the owners’ authorization. Piper hid these transactions by booking checks to an insurance expense code and making false entries to balance company accounts. He also filed false federal personal income tax returns.
The court imposed a forfeiture judgment for $1,740,037.91. Piper also forfeited vehicles and cash. Mandatory restitution for the victim is at least $1,740,037.91.
Chicago: Resident Lamesha Conley has been sentenced to two years in prison for conspiracy and identity theft charges related to a scheme to obtain fraudulent tax refunds.
Beginning in 2014, Conley provided more than 6,000 stolen IDs to Dominique King and Roxann Gist, who from the next two years used those IDs to file fraudulent federal income tax returns seeking more than $2.6 million in refunds. King and Gist directed that some of the refunds be mailed to Conley and other co-conspirators.
Conley was also ordered to serve a year of supervised release and to pay some $1,196,460 in restitution to the U.S. King, Gist and other co-defendants previously pleaded guilty for their roles in the scheme.
Springfield, Oregon: Saffron Gustafson, who owned several durable medical equipment stores, has been sentenced to 21 months in prison and three years of supervised release for defrauding health insurance plans of some $1.3 million and for evading $99,000 in federal income taxes.
Between June 2013 and August 2017, Gustafson owned and operated Saffron’s Specialized Medical, a durable medical equipment company. To defraud health insurance plans, Gustafson submitted bills requesting payment amounts inflated by 600 percent or more. Gustafson, and employees acting at her direction, fabricated invoices from her wholesaler and destroyed the genuine invoices.
She also evaded $99,606 in income taxes for 2015 by falsifying records and diverting profits from her company to pay various personal expenses, including paying off the mortgage on her parents’ rental property and paying her psychic.
Gustafson, who pleaded guilty in November, was also ordered to pay more than $1.3 million in restitution to the insurance plans.