Tax Fraud Blotter: Scam song
Two for one; underreporting more than a million; $500 for fake info; and other highlights of recent tax cases.
Orlando, Florida: A federal court has entered a permanent injunction against Lakeesha Tucker, Lakeesha Tucker LLC and Simplified Financial Services LLC, barring them from preparing federal returns for others and owning or operating a prep business.
The court previously entered a judgment against all three defendants for $1,628,046.50 after an earlier order stated that this amount was a reasonable approximation of defendants’ ill-gotten gains for the preparation of returns.
The government alleged that the defendants prepared returns making false or fraudulent claims for the Earned Income Tax Credit. Among the misconduct alleged, defendants reported phony business-related income and expenses and job-related expenses and claimed false education credits and charitable contributions.
Pittsburgh: Two preparers from the same prep firm have pleaded guilty to charges of aiding or assisting in the preparation or filing of false federal income tax returns.
Preparer Daniel K. Hamilton has pleaded guilty to charges of aiding or assisting in the preparation or filing of false federal income tax returns.
In connection with the plea, the court was informed that between 2010 and 2016 Hamilton, of Arnold, Pennsylvania, and a preparer for Cititax Refund Co., prepared federal income tax returns that included false Schedule C information and that requested more than $2 million in false EITC refunds.
His sentencing is Oct. 2, when he faces a total sentence of three years in prison for each count, a fine of $100,000 or both.
Preparer Quincy K. Denson of Clairton, Pennsylvania, has also pleaded guilty on charges of aiding or assisting in the preparation or filing of false federal income tax returns. While also a preparer at Cititax, he prepared false federal returns that included false Schedule C information and that requested a false tax refund for the taxpayer.
Denson’s sentencing is Oct. 3. The law provides for a total sentence of three years in prison for each count, a fine of $250,000 or both.
Hartford, Connecticut: Attorney Justin C. Freeman, 47, has been sentenced to eight months in prison, followed by a year of supervised release, for filing returns that substantially underreported his income.
According to court documents and statements in court, Freeman, of Manchester, Connecticut, is an attorney who owns and operates his own law practice. For the 2010, 2011 and 2012 tax years, he signed individual federal income tax returns that underreported more than $1.2 million in income from his law practice; the returns were filed by his preparer.
For 2010, Freeman reported $476,228 in total income but actually earned $860,041.93. For 2011, he reported $410,002 in total income but earned $1,093,147.43. For 2012, he reported $529,673 in total income but earned $696,559.43.
The tax loss to the IRS was $419,259.
On Nov. 28, Freeman pleaded guilty to one count of filing a false return. Since learning he was under investigation, Freeman has paid the $419,259 he owed for the 2010 through 2012 tax years and an additional $3,329,527 in taxes, interest and penalties for the 2013-2016 tax years, and estimated payments for the 2017-2019 tax years. He still owes some $1.3 million in back taxes, interest and other penalties.
Atlanta: Precious metals broker Saleem Hakim has been sentenced to 21 months in prison after his conviction on three counts of failing to file income tax returns.
According to court documents and evidence, Hakim, who was arrested and jailed after he failed to appear for his original sentencing date, received funds from clients, converted a portion of the funds to precious metals and kept the remainder. From 2011 through 2013 he retained more than $1 million yet filed no federal income tax returns.
Hakim, a former resident of Smyrna, Georgia, and Troy, Michigan, was also ordered to serve a year of supervised release and to pay $639,006 in restitution to the IRS and $4,603.28 in costs of prosecution.
Trotwood, Ohio: Preparer Angela Redd, 46, pleaded guilty to preparing false returns that claimed significant refunds, according to published reports.
Court documents revealed that between February 2012 through April 2015 Redd charged up to $500 per return. She reportedly prepared the returns using false information she created, such as fake Schedule C income and bogus education expenses. This false information reportedly caused a tax loss to the IRS of $47,183.
Redd has agreed to pay $47,183 in restitution, news outlets said, adding that she faces a maximum of five years, a fine of up to $250,000 and restitution to the IRS. Sentencing is Aug. 9, reports also added.
New York: Kae Wook Lee, owner and CEO of Mona Lisa 7 Corp., through which he operated a karaoke bar in Queens, has been sentenced today to a year and a day in prison for failing to collect and pay employment taxes.
According to court documents, between 2011 and 2013 Lee diverted some of his bar’s receipts to bank accounts held in the names of shell corporations he created. Lee then withdrew from those accounts to pay employees’ wages in cash without collecting, accounting for or paying over federal employment taxes. Lee concealed the cash payroll from his accountant and signed false returns that underreported employee wages and employment taxes owed.
Lee was also ordered to serve two years of supervised release and pay $612,500 in restitution to the IRS.
Maui, Hawaii: Former preparer Nicole Rapoza has pleaded guilty to 14 counts of aiding and abetting the preparation of false and fraudulent 2014 State of Hawaii returns.
Rapoza was convicted in 2016 for filing false and fraudulent 2012 and 2013 returns.
The state will dismiss 12 counts against Rapoza, who faces imprisonment of not more than three years or probation and a fine of not more than $100,000 per count, when sentenced on Aug. 9.
Durant, Mississippi: Preparer Teresa C. Chism has been sentenced to five years in prison for preparing and filing a fraudulent claim for a tax refund with the IRS.
According to court documents, from 2005 through 2015 Chism operated prep businesses in Mississippi under the names Mo’ Money, MoneyCo USA and Lady T Taxes. She falsified clients’ returns in different ways to increase refunds, including reporting false wages, self-employment income and expenses and education credits.
Chism, who pleaded guilty last year, prepared more than 550 false income tax returns, seeking more than $3.5 million in fraudulent refunds. She was also ordered to serve three years of supervised release and pay $135,134 in restitution to the IRS.
New York: Precious metals broker Christopher Wolf, of Dania Beach, Florida, has been sentenced to two years in prison for evading income tax and aiding and assisting in the preparation of false returns.
According to court documents and evidence at trial, in 2010 and 2011 Wolf operated Rothchild & Associates in Brooklyn, where he sold precious metals to investors over the phone. Although Wolf controlled all aspects of Rothchild’s operations, it was technically owned by a third party. Wolf concealed income he earned from Rothchild by instructing the third party owner to pay his commissions to two shell corporations.
Wolf filed a false 2010 individual income tax return that reported none of his commissions for selling precious metals. For 2011, he did not file an individual tax return. He also caused corporate income tax returns to be filed for the companies where he deposited his commissions but included phony deductions.
Wolf’s conduct caused a tax loss of some $240,000 to the IRS. He was also ordered to serve three years of supervised release and to pay $237,550 in restitution.
In 2000, in an unrelated case, Wolf was convicted of securities fraud, money laundering and conspiracy to commit wire fraud and was sentenced to prison for more than 10 years.