Teemco player; reverse that merger!; ATM gamble doesn’t pay off; and other highlights of recent tax cases.
Phoenix: Preparer Oscar Hernandez, 58, has been sentenced to 18 months in prison and ordered to pay $121,548 in restitution to the United States.
In 2004 Hernandez, who worked as a preparer for nearly 25 years, opened the tax prep business R Robin Tax Services. He admitted that he filed at least 44 fraudulent returns between 2010 and 2013, which caused a loss to the U.S. of $121,548.
Hernandez admitted that he falsified returns for his clients by improperly claiming head of household status, adding false dependents and claiming false exemptions and credits, all of which reduced taxes and inflated refunds.
Lansing, Mich.: Local resident Oghenevwakpo Igboba has been sentenced to 162 months in prison to be followed by three years of supervised release.
In September, a jury found Igboba guilty of one count of conspiracy to defraud the U.S., one count of wire fraud, eight counts of making a false claim to the U.S. and eight counts of aggravated ID theft.
Igboba used other individuals’ personal ID information to access tax information using an IRS website then used that information to file false federal income tax returns directing the IRS to pay fraudulent refunds to bank accounts he controlled. He directed hundreds of thousands of dollars to himself; IRS systems stopped many of the stolen returns from being issued, but Igboba personally received at least $57,000 as a result of his crime.
He was also ordered to pay $514,823 in restitution, a money judgment of $48,205 and $1,800 in court assessments.
Oklahoma City: Gregory D. Lorson, of Panama City Beach, Fla., has been sentenced to five years in prison for not paying federal payroll taxes withheld from wages of the employees of Teemco LLC.
According to case papers, Teemco was an environmental sales and consulting company and Lorson, who was president and CEO of the company from 2010 until it closed in mid-2015, did not forward withheld payroll taxes to the IRS but used that money to fund the company’s advertising campaign and to pay other creditors and expenses.
Lorson pleaded guilty on June 15, admitting that Teemco withheld federal payroll taxes from employees’ wages and that he directed employees not to forward the withheld payroll taxes to the IRS. He also admitted that he failed to file quarterly federal tax returns for Teemco from 2010 to 2015.
He agreed to pay $3,003,220.47 in restitution to the IRS for withheld payroll taxes and other federal taxes that Teemco never paid to the IRS. He also agreed to pay an additional $542,162.53 in restitution to the Oklahoma Tax Commission for employees’ state taxes that were withheld but never paid to state tax authorities.
West Palm Beach, Fla.: Former school police officer Ronnie Arnest Williams, 57, has been sentenced to time served and 12 months of supervised release for filing a false income tax return.
Williams, who previously pleaded guilty to filing a false personal income tax return for tax year 2017, was required to surrender his certificate to be a police officer and resign as a school police officer. Williams had held certificates to be a corrections officer since 1985 and a police officer since 1994, and had worked in law enforcement for some 32 years.
According to the court docket, he contacted a parent of a child at the school where he was employed as a safety officer to obtain the names of minor children he could claim as dependents on his pending 2017 personal income tax return. Williams wanted two children’s names and Social Security numbers to claim as dependents to inflate his refund.
The IRS received the false return that claimed a refund of more than $5,000 greater than that to which Williams was entitled, and rejected the filing as the Social Security numbers did not match the ages of the children being claimed.
Immediately after the rejection, Williams filed a personal income tax return that did not claim any dependents.
Orono, Minn.: Scott Phillip Flynn, 57, has been sentenced to 87 months in prison and been ordered to pay some
According to the guilty plea and court documents, between 2005 and 2015 Flynn evaded millions of dollars in income taxes by fraudulently hiding millions of shares of stock that he obtained for himself.
In 2006 and 2008, he assisted two privately held Wisconsin-based companies, Tower Tech Systems and Advanced Fiberglass Technologies, in becoming publicly traded through stock-for-stock “reverse merger” transactions. As compensation, millions of shares of publicly traded stock in the resulting public companies were transferred to Integritas Inc. and Diversified Equities Partners, both controlled by Flynn.
Flynn, who exercised control over the stock, which had considerable value, did not report receipt of the shares of stock as income on his individual returns. To conceal his control and ownership of the stock and to evade income taxes, he caused a portion of the stock to be put in the names of Australian nominees recruited by a co-conspirator. The nominees, who never actually owned or controlled the stock, were directed to open brokerage accounts in the U.S. to receive the shares, but Flynn possessed their login and password data so he could maintain control of the accounts and the shares of stock.
When Flynn needed money during the course of the conspiracy, he caused the Australian nominees to sell shares of stock and transfer the proceeds to entities in the U.S. that he controlled and which in turn made payments to Flynn or on his behalf. These sales generated millions of dollars in income, which he purposely failed to report to the IRS.
Tulsa, Okla.: Independent contractor John D. Petrig, 49, has pleaded guilty to one count of tax evasion.
According to court documents, from 2000 to 2012 Petrig worked for a company installing ATM machines inside casinos. The company paid him commissions based on the number of transactions executed at the ATMs.
In 2012, Petrig late-filed his 2005 return, reporting an income of $394,317; he did not pay the $110,372 in taxes that he owed. Instead, during that year he tried to evade payment. When the IRS sent a levy to Petrig’s employer directing that his commission payments be forwarded to the IRS to pay his taxes, Petrig sent a letter to his employer instructing that his future commissions be paid to a fictitious corporation.
Sentencing is May 7, when Petrig faces a maximum of five years in prison, a fine of up to $250,000, and up to three years of supervised release.
Hattiesburg, Miss.: CPA Carl Nicholson has been convicted of conspiracy to defraud the United States, six counts of aiding in the preparation of false returns and four counts of filing false returns.
According to court documents and evidence, from 2012 to 2014 Nicholson conspired with a client to falsely classify personal expenses as business expenses and filed false returns on the client’s behalf. On one occasion, Nicholson directed that a $250,000 payment to one of the client’s personal trusts be classified as a business expense.
Nicholson was also found guilty of filing his own false personal income tax returns for 2012 through 2015. He falsely claimed expenses, failed to report income and under-reported the gain on the sale of his accounting firm Nicholson & Co.
Sentencing is May 23, when he faces a maximum of five years in prison for the conspiracy charge and three years for each charge of filing false returns and aiding in the preparation of false returns. He also faces supervised release and restitution.
