Bean scheme; jailhouse Glock; checkmate; and other highlights of recent tax cases.
Auburn, Washington: Assad Baragzai, 47, owner of a string of coffee stands, has pleaded guilty to making and subscribing a false return, admitting that between 2016 and 2020 he failed to report as much as $6 million in income.
Baragzai provided false information to his accountant, and the government believes that the tax loss exceeds $1.7 million. Baragzai disputes the government figures and believes that the tax loss is $1.3 million.
He is the second defendant to plead guilty in this investigation. In March, his brother-in-law, Rajesh Mathew, 45, pleaded guilty to making and subscribing a false return. In his plea agreement, Mathew, who also owns a string of coffee stands, admitted that he too underreported substantial income over several years. Mathew's sentencing is Oct. 9.
Both Baragzai and Mathew have agreed to make restitution to the IRS. Both may also face additional civil penalties, fines and interest.
Filing or subscribing a false return carries up to three years in prison and a $250,000 fine, or twice the gain or loss from the offense. Baragzai's sentencing is Nov. 18.
Chester, South Carolina: Resident Lawrencium Germaine Martin has pleaded guilty to tax evasion, to being a felon in possession of a firearm and to making false statements to federal investigators.
From at least 2019 through 2021, Martin operated Lancaster Tactical Supply. The company appeared legitimate, selling firearm accessories and parts, including Glock and Sig Sauer build kits, slides, imitation suppressors, optics and body armor. But at least 380 customers from 43 states lodged complaints with the Better Business Bureau and the South Carolina Department of Consumer Affairs, generally alleging that the company took their money and failed to ship the products.
Investigators with the IRS, the FBI and U.S. Postal Inspection Service determined that the revenue LTS was generating was significant. Although the money was deposited into Martin's personal bank accounts and LTS was operated out of Martin's residence and Martin's business location, investigation also revealed that Martin failed to pay state or federal income tax for 2015 through 2022.
Martin admitted that he evaded federal income tax; the IRS has determined that figure is more than $800,000 for 2020 alone but Martin admitted to no specific figure. He further admitted that he obtained the personal ID information of another person through a legitimate employment relationship and then operated LTS in that person's name without authorization so that revenue was reported as attributable to that person.
Agents searching Martin's residence and business found a 9-mm. handgun despite Martin's multiple felony convictions. Agents also found shipping labels and material associated with LTS. Martin admitted that he lied in authorities' interviews that he'd never heard of LTS, never received money from LTS or its customers, and did not know how his name became associated with LTS.
He faces up to 10 years in prison, mandatory restitution, a fine of up to $250,000 and up to three years of court-ordered supervision following any term of imprisonment.
Riverside, California: Luis E. Perez, owner of area temporary staffing companies, has pleaded guilty to two charges for willfully evading payment to the IRS of nearly $30 million in taxes, penalties and interest and to causing a false federal return to be filed as part of an effort to conceal nearly $30 million in additional tax liabilities incurred by his companies.
His companies — which include Checkmates Staffing Inc., Staffaide Inc., BaronHR, BaronHR West Inc. and Fortress Holding Group — were required to withhold trust fund taxes from employee wages and to pay the withholdings to the IRS. From May 2009 to January 2017, his companies failed to pay the IRS the payroll taxes for 2001 to 2003, 2006 to 2008 and 2010, including trust fund taxes.
Beginning in June 2007, the IRS attempted to collect Perez's outstanding tax liability, which by February 2017 had grown to $29,593,378. Perez attempted to thwart collection efforts by purchasing luxury items from his business bank accounts, including numerous cars and a boat, and concealing his ownership by placing the titles of these items in the names of his businesses and other individuals. He also obtained a Visa Black credit card in the name of another person (now his wife).
While on pretrial release for these matters, from October 2018 to August 2019 he aided and assisted in the preparation of returns that substantially understated the wages paid to the employees of BaronHR West. He later admitted that he caused his company to underreport employee wages and other compensation by some $130,879,521, which resulted in the company's failure to pay some $29,633,516 in federal employment taxes.
Sentencing is Jan. 16. Perez, who has been in federal custody since Aug. 15, faces up to eight years in prison.
Detroit: Noli and Isabel Tcruz have been sentenced to prison on charges of being involved in a health care fraud kickback conspiracy, tax evasion and fraud.
Noli Tcruz was sentenced to six years and Isabel Tcruz to 38 months. This follows the sentencing earlier this year of two doctors who pleaded guilty to receiving kickbacks and bribes from the married couple.
The Tcruzes were convicted and sentenced for schemes related to their operation of several local home health care companies that purported to provide legitimate medical care to homebound Medicare beneficiaries but in fact engaged in fraud. The couple engaged in a $5 million conspiracy to illegally pay kickbacks and bribes to acquire referrals for home health care for Medicare beneficiaries, and refused to pay their income tax obligations for both personal and business taxes.
After their last home health company was shut down in February 2020, Noli Tcruz began engaging in Covid-19 program fraud and used a family member's ID and company to steal from and defraud the Small Business Administration and Health and Human Services out of more than $250,000 in pandemic assistance funds.
Dr. Terry Baul and Dr. David Calderone have pleaded guilty to accepting kickbacks and bribes for referring Medicare beneficiaries to the Tcruzes. The two physicians were required to pay more than $3 million in restitution and forfeiture judgments and are excluded from Medicare and other federal health care programs.
Quincy, Florida: Cedrick Campbell, 49, has been sentenced to two years in prison after previously pleading guilty to 11 counts of aiding in preparing false returns.
Between 2018 and 2022, Campbell, reportedly a former math teacher, ran an unofficial tax prep business from his home, where he prepared and filed false federal returns. Campbell falsely represented the taxpayers' deductions, credits and the refund due.
He was also ordered to pay $378,041 in restitution.
Uniontown, Pennsylvania: Resident James E. Frey Jr. has pleaded guilty to a charge of willfully filing a false return.
Frey deposited checks from his businesses' customers into his personal bank accounts and kept money from checks made payable from his companies to other individuals that were never actually sent. His personal income tax returns for years including 2019 were false in that they failed to report the income from those checks.
Sentencing is Jan, 14. The charges provide for up to three years in prison and a fine of up to $250,000 or twice the gain or loss from the offense, or both.
