Barely any business; happy to take a check; second time’s the charm; and other highlights of recent tax cases.
Matteson, Illinois: Resident Shawn P. Stewart has been sentenced to three years in prison for causing the IRS to issue fraudulent refunds.
He filed eight fraudulent returns seeking more than $3.1 million in refunds; the IRS issued him more than $815,000 in refunds. He created construction and other companies that barely did any business and used those businesses to create W-2s that falsely listed him as earning up to millions of dollars in wages. The large wages allowed him to list correspondingly large federal income tax withholdings, and he used purported Schedule E losses from the businesses to greatly reduce the wage income and then claim large refunds.
He used the money to fund a luxurious lifestyle, buying, among other items, several BMWs and expensive dinners and shopping at luxury retail stores.
New York: Tax preparer Carlos De La Torre, 79, of Little Neck, New York, has pleaded guilty to one count of mail fraud and two counts of filing false income tax returns in connection with a long-term scheme to steal from his clients and defraud the IRS and the New York State Department of Taxation and Finance.
From at least around 2014 through about 2020, De La Torre, sole proprietor of a bookkeeping and prep business, told clients how much they allegedly owed in state and federal personal and business taxes. The clients then gave him checks in those amounts.
Instead of submitting the checks as payments to be applied toward clients’ tax liabilities, De La Torre altered the checks and mailed them to the IRS and the state of New York as estimated tax payments to be credited against his own personal taxes. Those payments greatly exceeded his own tax liabilities each year and at the end of each tax period De La Torre fraudulently sought and received refunds from the IRS and New York.
De La Torre stole more than $466,000 from the victims through this scheme. He also filed false federal and state returns in connection with this scheme by failing to report this money, defrauding the IRS and New York of at least $91,663, including interest.
He faces more than 20 years in prison when sentenced on Dec. 21.
Tucson, Arizona: Former official Keith Bee has pleaded guilty to one felony count of filing a false income tax return, news reports said, adding that he must pay $343,000 in restitution and faces up to 10 months in prison.
Bee, a former state legislator who became a justice of the peace in 2007, was indicted in 2018 on three counts of filing false statements on returns for his business, Bee Line Bus Transportation, and on one count of attempting to impede an investigation, reports said.
In the plea deal, news outlets said, Bee described how he reduced his tax liability for three years by overstating his expenses in tax filings, and acknowledged using personal expenses and the depreciation of assets. According to his 2018 indictment cited by news reports, the expenses included payments for sports cars, including six Ford Mustangs, two Corvettes and a Porsche. Expenses also reported included work on residential properties in Arizona and Washington State, including a garage for his cars, a pool and spa, landscaping and custom window treatments.
The indictment said Bee maintained the checking accounts in the name of his bus company and used them to pay for the personal expenses, adding that the information was turned over to his tax preparer. Bee also claimed several personal vehicles as business vehicles and failed to report a $178,000 capital gain for tax year 2011, according to documents cited.
The IRS began auditing Bee’s returns in 2014, news outlets said, and Bee provided mismatching vendor invoices and information that authorities said had been doctored to disguise the payments for personal items.
Houston: Former tax preparer Marcia Angella Johnson has entered a guilty plea to falsely preparing returns following a prior order not to engage in that business.
She admitted that since 2016 she had been preparing returns for clients even though she had been prohibited from doing so. During this time, she prepared numerous returns that claimed various false items on her clients’ behalf, including false wages, salaries, tips and credits such as the Earned Income Tax Credit, Child Tax Credits and the American Opportunity Credit. The U.S. suffered a loss of at least $54,545 in tax revenue.
Johnson admitted to pocketing between $13,000 and $15,000 after preparing returns each year from 2016 through 2019.
She previously admitted to preparing or assisting to prepare approximately 200 false returns; in 2011, the court banned her from conducting a prep business.
Sentencing is Nov. 16. Johnson faces up to three years in prison and a possible $100,000 fine. She also agreed to pay restitution to the IRS.
Troy, Illinois: Businessman Gary Hunsche has been sentenced to four years in prison for willfully failing to pay millions in federal employment taxes.
Hunsche, who pleaded guilty in May, owned and operated a pair of local staffing companies: Unique Risk Management and Unique Personal Consultants. The businesses employed thousands of employees who were then leased to clients as temporary workers.
Between 2011 and 2016, Hunsche withheld federal income taxes, Social Security and Medicare taxes from employees’ paychecks but never paid the money over to the IRS, resulting in a loss to the U.S. of more than $9.4 million.
Hunsche used approximately $4 million of the money for improvements to his personal residence, including an indoor basketball court, a barn, a lake and partial construction of a home with a swimming pool.
He was also ordered to spend 18 months on supervised release.
Atlanta: Bamidele Muraina, a Nigerian national who hacked tax prep firms and filed fraudulent unemployment benefit claims and returns using stolen ID information, and Gabriel Kalembo, a previously convicted fraudster who laundered the fraudulent assets, have been sentenced to prison.
Muraina was a Nigerian national residing in the Atlanta area. Between at least January 2018 and continuing through about April 2020, Muraina hacked into multiple tax prep and accounting firms in several states, including a Brunswick, Georgia-based accounting firm. Muraina obtained access to the firms’ accounts with a national prep program, stole personal ID information from their clients and e-filed more than 275 fraudulent individual income tax returns in their names.
His fraudulent returns sought refunds from the IRS exceeding $2.6 million.
In May 2020, Muraina used stolen ID information from Washington residents to submit false claims for unemployment insurance benefits. His false claims exploited a federal COVID-19 pandemic relief program that expanded eligibility for unemployment benefits and provided an additional unemployment benefit of $600 per week. Based on Muraina’s fraudulent claims submitted in the names of some 50 Washington residents over one week, the state issued more than $280,000 in unemployment benefits.
Muraina directed fraudulent funds from his schemes to be deposited into bank accounts set up by co-conspirators, including Kalembo, who was convicted in 2017 of conspiracy to commit wire and bank fraud in the Northern District of Georgia. Kalembo recruited Zambian nationals to travel to the U.S. on tourist visas to incorporate sham corporations in Georgia and open business bank accounts in the names of those corporations. After the fraudulent funds were deposited into those accounts, Kalembo laundered the funds by cashing money orders purchased with debit cards linked to the accounts.
Muraina was sentenced to 70 months in prison to be followed by three years of supervised release; he was also ordered to pay $561,125.62 in restitution. Kalembo was sentenced to 50 months in prison to be followed by two years of supervised release and ordered to pay $298,008.71 in restitution.
