Tax Fraud Blotter: Deliberately Made
Twice as pleasant; mobile violation; A to Z in prison; and other highlights of recent tax cases.
Pittsburgh: John C. Thornton of Gibsonia, Pennsylvania, owner and operator of Tax Centers of America franchises in Pittsburgh, pleaded guilty to aiding or assisting in the preparation or filing of false federal income tax returns.
Between 2012 and 2017, IRS investigators uncovered a high pattern of personal income tax returns containing Schedule Cs and the falsification of those schedules that were prepared and filed by Thornton and his company’s tax preparers.
Sentencing is June 21. Thornton faces no more than three years in prison, a $250,000 fine or both.
Del Mar, California: CEO Michael Todd Lucas was sentenced to 18 months in prison for employment-related tax crimes.
Lucas controlled TradeMotion Inc., which sold software to car dealerships. From the fourth quarter of 2011 to the third quarter of 2015, he collected more than $2.1 million in holdbacks from TradeMotion employees and issued them W-2s. He only paid $760,017 of those funds to the IRS.
Lucas also failed to pay the IRS employment taxes withheld on behalf of employees of other companies he controlled, resulting in an additional tax loss of more than $3.5 million.
He was also ordered to serve three years on probation and pay some $4.9 million in restitution.
Houston: Tax preparer Marcia Angella Johnson was sentenced to 15 months in prison followed by a year on probation for falsely preparing returns after being ordered not to engage in the preparation business.
Johnson, who pleaded guilty last fallreceived suspended sentences in his three previous criminal cases and yet continued to commit crimes.
His 2011 case, which the United States chose to pursue civilly rather than criminally, involved his submission of more than 200 statements with a loss to the government of over $1 million. In this case, an injunction and a default judgment were issued against Johnson, prohibiting him from preparing statements. The tax credits she sought in that case were described in a filing as “so exaggerated that no reasonable person could conclude they were anything other than deliberately fabricated.”
At the time of her plea, Johnson admitted that since 2016 she had been preparing tax returns for clients, even though she had been prohibited from doing so. During this time, she prepared numerous returns that claimed various false items, including false wages, salaries, tips, and tax credits such as Earned Income Tax Credit, Child Tax Credits, and US Opportunity Tax Credits.
The federal government suffered a loss of at least $54,545 in tax revenue, which Johnson was ordered to repay as part of her sentence. Johnson admitted to pocketing some $14,000 after preparing each year from 2016 to 2019. She previously admitted to preparing or helping to prepare some 200 false statements.
El Cajon, California: Two former tax preparers have pleaded guilty to a scam that resulted in the production of hundreds of false statements.
Mimi Bozzo, aka Mimi Morrison, and Vincent Bozzo conspired to file false tax returns. The Bozzos, both 60 years old and whose residences are now listed in Trinity, Texas, previously owned and operated a tax preparation business in El Cajon under various trade names, including “All Pro Services” and ” A to Z Tax Preparation”. The companies reached out to taxpayers by handing out flyers and business cards at local welfare offices, homeless shelters and streetcar stations.
The Bozzos admitted that from January 2014 to April 2018, they prepared and filed several hundred federal tax returns containing false Schedule C income and expenses, resulting in inflated credits and refunds. They encouraged taxpayers to create fake receipts for income and expenses, then prepared and submitted returns based on those receipts. In total, the false returns prepared and filed by the Bozzos caused the IRS to disperse refunds to taxpayers whose losses exceeded $225,000 to $540,000.
Sentencing is June 13. They face up to five years in prison and a $250,000 fine.
Big Island, New York: William J. Costello II, a practicing attorney before he was convicted of tax evasion, was sentenced to two years probation and ordered to pay $128,740.49 in restitution to the IRS.
Costello attempted to evade payment of income tax from 2005 to 2007 and from 2009 to 2012 and to evade assessment of income tax due from 2014 to 2017. He placed his income beyond the reach of the IRS by using his “lawyer account interest” for personal gain. , by depositing both personal and business income into their account, and then using that account to pay for their personal expenses.
From the account, among others, Costello wrote checks to himself, his ex-wife, his current wife, and other family members.
Lauderdale Lakes, Florida: Tax preparers Nikency Alexis and Thony Guillaume were sentenced to prison for conspiracy to defraud the United States and preparing false returns.
Alexis, owner and operator of Unity Tax & Financial Services, was sentenced to 45 months in prison; Guillaume, a preparer at Unity, was sentenced to 40 months.
From 2011 to 2016, the two prepared returns for clients who claimed fictitious business and education expenses. After learning of the criminal investigation, Alexis and Guillaume continued to produce false statements and concealed their involvement by listing others as paid preparers.
In total, Alexis and Guillaume requested more than $2.8 million in fraudulent federal reimbursements.
Both were also sentenced to three years of probation. Alexis was ordered to pay some $464,006 in restitution to the IRS; Guillaume was ordered to pay some $221,823.
Atlanta: Business leader Lucious D. Mack, 49, pleaded guilty to making false statements to the IRS and stealing public funds.
He filed fraudulent corporate tax returns that falsely claimed refunds, specifically a 1120 for 2015 for his company, Carter Industries Inc. The return falsely claimed that the company prepaid and paid taxes additional long-term capital gains totaling $235,515. The capital gains payment supposedly came from the sale of property in Dekalb County, Georgia.
Property records showed that Mack’s company never owned the property listed in the return’s supporting documents. The IRS also confirmed that the agency never received a tax payment of any kind from or on behalf of Carter Industries for the 2015 tax year. The return fraudulently claimed a reimbursement in the amount of $109,521.
Mack also filed a 1120 for that year for another company, Carter International Holdings Inc., which falsely claimed long-term capital gains taxes allegedly from the sale of property in the Bibb County, Georgia. Bibb County property records also confirmed that Mack’s company never owned the property listed in the exhibits and, again, the IRS confirmed that he never received payment from Carter International Holdings tax for 2015.
This return claimed a refund of $105,877. The IRS issued a Treasury check for the amount, which Mack deposited and then spent the money for his personal benefit.
Sentencing is May 10.
New York: Osvaldo Caceres, a former owner of a drywall business in the borough of Queens, pleaded guilty to helping prepare a false corporate statement for his business.
Caceres owned and operated OSVI Drywall Corp. and helped prepare the company’s income tax return for the tax period February 1, 2013 through January 31, 2014. The return understated the company’s gross receipts and caused a federal tax loss totaling $926,379.
Sentencing is June 14. Caceres faces a maximum of three years in prison as well as supervised release, restitution and monetary penalties.