Thousands of victims, millions in refunds; bogus taxpayers in three states; the roof caves in; and other highlights of recent tax cases.
Eugene, Ore.: Emmanuel Oluwatosin Kazeem, 35, of Bowie, Maryland, and Nigeria, has been sentenced to 15 years in prison for leading a conspiracy to steal IDs and file fraudulent returns.
According to court documents and evidence, in May 2013 a victim in Oregon notified the IRS that false federal and state returns were e-filed using her and her husband’s ID information, including Social Security numbers and dates of birth. An IRS investigation led to search warrants of residences in Illinois, Maryland and Georgia and to numerous email and IM accounts used by Kazeem and other co-conspirators.
At a Chicago residence, agents seized some 150 prepaid debit cards and $50,000 in money orders. In Maryland and Georgia, agents seized more than 50 electronic devices, 40 money orders in amounts exceeding $29,000, $14,000 in cash and numerous prepaid debit cards containing more than $12,000 in fraudulent refunds. The search warrants helped agents identify Kazeem as the mastermind of a scheme that resulted in the conspirators possessing stolen information from more than 259,000 victims.
Kazeem purchased more than 91,000 IDs from a Vietnamese hacker that originated from an Oregon company’s private database. The company provided pre-employment and volunteer background checks for thousands of clients. Kazeem divided the identities into batches and shared them with other co-conspirators. They were in turn used to file fraudulent returns between 2012 and 2015.
Kazeem trained and directed co-conspirators including his younger brother, Michael Oluwasegun Kazeem, to use stolen IDs to obtain thousands of e-filing PINs to bypass IRS authentication. They acquired more than 19,500 e-file PINs during the conspiracy. Kazeem also used taxpayers’ information to gain unauthorized access to many taxpayers’ IRS transcripts; conspirators also used pre-paid debit cards with the victims’ stolen IDs to receive direct federal e-refund deposits.
Kazeem was linked to 10,139 fraudulent federal returns attempting to get more than $91 million in refunds, and to successfully receiving over $11.6 million. Refunds were withdrawn from the debit cards and at least 2,000 wire transfers totaling more than $2.1 million were sent to Nigeria. More than 700 of those transfers, totaling more than $690,000, were directly linked to Kazeem.
He used the money to place a nearly $200,000 down-payment on a newly constructed house and to purchase a $175,000 townhouse. His average monthly credit card payment during 2012 to 2015 exceeded $8,300. He also attempted to use his stolen funds to develop a $6 million, 4-star hotel in Lagos, Nigeria.
In May 2015, Kazeem transferred the townhouse to his sister in Nigeria for $10 and included her on the deed to his Maryland residence, also for $10. He was arrested one day later.
IRS agents determined Kazeem had no verifiable sources of income between 2012 and 2015. In order to disguise the source of the fraudulent refunds, he listed sources of income from bogus employers in reports to both the IRS and immigration authorities. After entering the U.S. on a student visa from Nigeria, Kazeem engaged in marriage fraud to evade immigration laws. In April 2014, while leading the tax fraud scheme, he filed for naturalization under the Immigration and Nationality Act.
Based on the false information provided to U.S. Citizenship and Immigration Services, he was approved. The same year he personally participated in filing more than 1,445 fraudulent federal returns and received almost $3.4 million from returns paid out by the IRS.
Last August, Kazeem was convicted on 19 counts, including mail and wire fraud, aggravated ID theft and conspiracy to commit mail and wire fraud. Five other co-conspirators previously received federal prison sentences for their roles in the conspiracy.
He was also ordered to pay more than $12 million in restitution and will be subject to deportation when released from prison.
Oxon Hill, Md.: Antonio Cooper, 47, has been sentenced to seven years in prison for his involvement in a scheme to fraudulently obtain millions of dollars in income tax refunds.
Cooper, who pled guilty in 2016 to conspiracy to commit theft of government funds, theft of public money and aggravated ID theft, was part of a massive stolen-ID refund fraud that involved more than 130 people, many of whom were receiving public assistance.
Conspirators fraudulently claimed refunds for tax years 2005 through 2012, often in the names of people whose IDs had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners. Returns were also filed in the names of, and refunds issued to, willing participants in the scheme.
The returns filed listed more than 400 “taxpayer” addresses in the District of Columbia, Maryland and Virginia. According to court documents, the overall case involved the filing of at least 12,000 fraudulent federal income tax returns that sought at least $42 million in refunds.
Conspirators played various roles in the scheme: stealing ID information; allowing their personal ID information to be used; creating and mailing fraudulent federal returns; allowing their addresses to be used for receipt of the refund checks; cashing the refund checks; providing bank accounts into which the refund checks were deposited and forging endorsements of ID-theft victims on the refund checks.
The returns typically reported inflated or fictitious income from a sole proprietorship and claimed phony dependents to generate an Earned Income Tax Credit. Some two dozen participants in this scheme have pleaded guilty; three have been convicted.
According to the government’s evidence, Cooper actively participated in the scheme from approximately February 2010 through July 2012. He also recruited others to do so. Among other things, Cooper used others’ addresses to receive checks, bought personal ID information needed to complete tax forms and cashed some of the fraudulently-obtained tax refund checks.
Cooper was also ordered to serve three years of supervised release and to pay $2,420,241 in restitution to the IRS. A forfeiture money judgment of $806,747 was also ordered.
Annandale, Va.: Preparer Jose Manlapaz, 55, has been convicted on charges of conspiracy, aiding in the preparation of false returns, and mail and wire fraud.
According to court records and evidence, Manlapaz owned and operated the prep business JBM Financial Services or JBM Financial Group in Falls Church, Virginia. Between 2007 and 2017, he prepared thousands of false returns for clients by adding false or inflated items, including education credits, child care expenses and fake businesses. Manlapaz knew that these items would cause many clients to be audited and set up a “document mill” in the Philippines, TMendoza Accounting Services, to fabricate fake receipts and tax forms.
After he learned of an investigation in 2013, Manlapaz and JBM kept preparing false tax returns but removed his preparer information so it looked like his clients were submitting the returns.
Manlapaz faces a maximum of 20 years in prison when sentenced on September 28. The jury also determined that more than $1.34 million should be forfeited as proceeds of the crime.
Greenville, Mich.: Roofing company owner John Frederick Snyder, 71, has pleaded guilty to charges of tax evasion for the 2011 tax year.
According to his plea agreement and court records, Snyder consistently failed to timely file returns and, when he did file, underreported his business income. He purposely deposited less than all of his business income into his business account without informing his accountant. Instead, he signed customer checks over to his suppliers to pay for the materials and services.
Snyder also carried out his tax evasion by depositing checks made payable directly to him for the work of his roofing business into his personal bank accounts, taking back cash at the same time or negotiating the entire amount of the checks for cash. He used some of this unreported cash to pay his employees.
Snyder further admitted to willfully evading the assessment of income taxes for 2009 to 2014 by underreporting his income by more than $6 million.
He agreed to pay $414,160 in restitution, representing his tax loss plus penalties and interest. He faces up to five years in prison and a fine of up to $250,000.