Hundreds of occasions; now for the hard labor; fool me twice; and other highlights of recent tax cases.
Scranton, Pennsylvania: Tax preparer Donald Royce, 46, of Orlando, Florida, has been sentenced to 46 months in prison for defrauding taxpayers of more than $250,000.
In 2017, Royce was indicted on one count of mail fraud and eight counts of filing fraudulent tax forms. He alleged that he was incompetent to stand trial due to a head injury that he claimed had occurred four years before. Between 2019 and 2021, Royce was evaluated by medical professionals to assess his claims; evaluators reported that Royce presented "cave-man" speech and claimed he was unable to understand his charges or assist his attorney in his defense.
At a competency hearing in November, a neuropsychologist testified that there was no medical basis for Royce's allegations; a judge found Royce competent to stand trial.
Royce, who pleaded guilty in March to one count of mail fraud charge and one count of tax fraud, admitted that as a tax preparer in Scranton he defrauded a number of local taxpayers in 2014. After providing the victim taxpayers with a copy of their federal return that showed the correct refund, Royce submitted fraudulent returns that inflated the refund due. After the IRS sent the refund to Royce, he kept the difference between the legitimate refund and the higher fraudulent amount. In one case, Royce told clients to provide him with their tax payment and instead of forwarding the payment to the IRS, Royce kept the payment for himself.
His victims suffered more than $250,000 in losses. The judge also found that Royce's intentional actions to feign incompetency amounted to obstruction of justice.
Royce must serve three years of supervised release after he's released from prison. The court further ordered that money seized from Royce be used to pay more than $336,000 in restitution to more than 40 victims and the IRS, and that he must forfeit more than $155,000 in proceeds of his crimes.
Kansas City, Missouri: Executive Richard Scott Simkins of Ft. Lauderdale, Florida, and formerly of Overland Park, Kansas, has been sentenced for embezzling $3.1 million from his employer and failing to pay nearly $1 million in taxes.
Simkins was sentenced to 42 months in prison and ordered to pay $2,032,282 in restitution to Genesys Industrial Corp. (in addition to $145,742 in restitution previously paid; $1,005,000 in restitution to Travelers Insurance Co.; $867,713 to the IRS; and $129,131 to the Kansas Department of Revenue.
Simkins, who pleaded guilty a year ago, must also forfeit his residential property in Overland Park and pay a money judgment that represents the proceeds of his embezzlement.
He was CFO of Genesys, which engineers and designs automated production systems and machinery. Simkins admitted that he embezzled at least $3.1 million from 2013 to his termination in 2020 by writing checks on the Genesys account to pay the personal expenses of himself and a co-worker whom he supervised.
Simkins embezzled $2,853,370 for himself and aided and abetted another employee's embezzlement of some $325,000. Cheryl A. Rose, of Freeman, Missouri, the accounting manager at Genesys, pleaded guilty in a separate but related case to conspiracy to commit mail fraud.
On hundreds of occasions, Simkins signed company checks to pay for personal spending. His embezzlement increased from at least $144,107 in 2013 to at least $588,717 in 2019. Genesys paid more than $500,000 to investigate, document and remediate Simkins' and Rose's embezzlement.
Simkins also admitted that he failed to report the stolen income on his federal income tax returns and his Kansas state personal income tax returns. The total federal tax loss was at least $867,713; the total Kansas tax loss was at least $129,131.
Simkins spent his embezzled money on retail purchases, including jewelry, travel, tickets to Disneyland and Disneyworld, vehicles, pool and lawn care, college tuition, fraternity payments, and rent and mortgage.
New York: Juan Carlos Castro Gonzalez of the Bronx has been sentenced to 40 months in prison in connection with COVID-19-related tax and unemployment benefits schemes that resulted in losses of more than $570,000 and intended losses of more than $3.3 million.
From 2019 to 2021, Castro Gonzalez, who pleaded guilty last April, conspired to commit wire fraud by defrauding government agencies. He worked with others to obtain fraudulent tax refunds and Economic Impact Payments; between June 2020 and August 2021, he also conspired to obtain CARES Act unemployment insurance benefits.
With respect to the tax fraud, he controlled several bank accounts under different identities and used them to deposit and receive, among other things, U.S. Treasury payments in the names of other individuals. He is responsible for $56,648.01 in losses to the IRS.
Castro Gonzalez also verified CARES Act UI benefit applications to the New York Department of Labor that had been submitted using the names and Social Security numbers of people who were unaware that such applications had been made using their information. The funds were sent to bank accounts or to prepaid cards, at least some of which were controlled and received by Castro Gonzalez. The actual losses were $500,079 and the intended losses some $3,363,000.
Castro Gonzalez was also ordered to pay $574,202.01 in restitution and to forfeit the same amount to the government.
Surprise, Arizona: Anthony Henry Williams has been found guilty of one count of conspiracy, seven counts of false claims to the IRS, eight counts of money laundering and one count of mail fraud.
In 2018 and 2019, Williams submitted seven false returns to the IRS, claiming more than $3 million in refunds. The IRS processed one of these returns that resulted in an unwarranted $600,000 refund to Williams.
When the IRS later advised him that the return was fraudulent and that he needed to return the money, Williams instead bought two luxury vehicles and a home, among other expenditures.
Sentencing is March 27.
Kenmore, New York: Michael MacPherson has pleaded guilty to mail fraud and tax evasion.
In 2017, MacPherson solicited an individual from Kansas to invest in a bulk cigarette deal, telling the individual that he had an agreement with a Native American tribe in New York to purchase cigarettes at a discounted rate and resell them at a significant markup. MacPherson claimed that in exchange for a $75,000 investment the individual would receive a 15-20% return within 90 to 120 days. The individual sent MacPherson a check made payable to Paget Trust LLC, the company through which MacPherson primarily operated his business activities.
MacPherson instead spent the money on payments to a country club, travel, utilities, retail purchases, gas, clothing, groceries, restaurants and other items.
Later that year, MacPherson contacted the individual again to solicit a $20,000 investment for the purchase of carbon fiber, promising a 30% return within 180 days. The individual sent MacPherson a check for $20,000, made payable once again to Paget Trust, and once again MacPherson instead used the money to pay a defaulted business loan and for cash withdrawals, airline flights, car rentals, utilities, retail purchases, gas, groceries, restaurants, hockey tickets and other items.
Between 2015 and April 2019, MacPherson tried to evade income taxes. For tax year 2015, he failed to file a federal income tax return despite receiving gross income totaling some $265,254 (including some $232,500 from a second individual — once again, MacPherson used the money on personal expenses). For the 2017 tax year, MacPherson omitted some $80,156 in gross business receipts. The amount of tax loss to the United States is $93,815.
The charges carry a maximum of 20 years in prison and a $250,000 fine.
