Twice as nice; moving violation; A to Z to jail; 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, has 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 Schedules C and falsification of these schedules that were prepared and filed by Thornton and tax preparers at his business.
Sentencing is June 21. Thornton faces not more than three years in prison, a fine of $250,000 or both.
Del Mar, California: CEO Michael Todd Lucas has been sentenced to 18 months in prison for employment tax crimes.
Lucas controlled TradeMotion Inc., which sold software to automotive dealerships. From the fourth quarter of 2011 through the third quarter of 2015, he collected more than $2.1 million in withholdings from TradeMotion employees and issued them W-2s. He paid only $760,017 of these funds to the IRS.
Lucas also did not pay to the IRS employment taxes withheld on behalf of the employees of other companies he controlled, causing an additional tax loss of more than $3.5 million.
He was also ordered to serve three years of supervised release and to pay some $4.9 million in restitution.
Houston: Tax preparer Marcia Angella Johnson has been sentenced to 15 months in prison to be followed by a year of supervised release for falsely preparing returns after being ordered to not engage in the prep business.
Johnson, who
Her 2011 case, which the U.S. elected to pursue civilly instead of criminally, involved her submission of more than 200 returns with a loss to the government of more than $1 million. In that case, an injunction and default judgment were issued against Johnson, barring her from preparing returns. The tax credits she tried to obtain in that case were described in a filing as “so exaggerated that no reasonable person could conclude they were anything but deliberately fabricated.”
At the time of her plea, Johnson admitted that since 2016 she had been preparing income 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 the Earned Income Tax Credit, Child Tax Credits and American Opportunity Tax Credits.
The federal government suffered a loss of at least $54,545 in tax revenue, which Johnson was ordered to pay back as part of her sentence. Johnson admitted to pocketing some $14,000 after preparing yearly from 2016 through 2019. She previously admitted to preparing or assisting to prepare some 200 false returns.
El Cajon, California: Two former tax preparers have pleaded guilty to a scam that resulted in the filing of hundreds of false returns.
Mimi Bozzo, a.k.a. Mimi Morrison, and Vincent Bozzo conspired to file false income tax returns. The Bozzos, both 60 and with residences now listed in Trinity, Texas, previously owned and operated a tax prep business in El Cajon under various business names, including “All Pro Services” and “A to Z Tax Preparation.” The firms solicited taxpayers by passing out flyers and business cards at local welfare offices, homeless shelters and trolley stations.
The Bozzos admitted that from January 2014 through April 2018 they prepared and filed several hundred federal income tax returns that contained false Schedule C income and expenses resulting in inflated credits and refunds. They encouraged taxpayers to create false receipts for income and expenses and then prepared and submitted returns based on these receipts. In total, the false returns prepared and filed by the Bozzos caused the IRS to disperse refunds to taxpayers with losses exceeding $225,000 to $540,000.
Sentencing is June 13. They face up to five years in prison and a $250,000 fine.
Grand Island, New York: William J. Costello II, a practicing attorney before being convicted of tax evasion, has been sentenced to two years of probation and been ordered to pay $128,740.49 in restitution to the IRS.
Costello attempted to evade paying income taxes for 2005 through 2007 and 2009 through 2012 and to evade assessment of income tax due for 2014 through 2017. He placed his income outside the reach of the IRS by using his “Interest on Lawyer Account” for personal use, depositing both personal and business income into his account and then using that account to pay personal expenses.
From the account, among other things, 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 have been sentenced to prison for conspiring 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 through 2016, the two prepared returns for clients that claimed fictitious business and education expenses. After learning about the criminal investigation, Alexis and Guillaume continued to file false returns and concealed their involvement by listing others as the paid preparers.
In total, Alexis and Guillaume sought more than $2.8 million in fraudulent federal refunds.
Both were also ordered to serve three years of supervised release. Alexis was ordered to pay some $464,006 in restitution to the IRS; Guillaume was ordered to pay some $221,823.
Atlanta: Business exec Lucious D. Mack, 49, has pleaded guilty to presenting false claims to the IRS and to stealing government funds.
He filed fraudulent corporate income tax returns that falsely claimed refunds, specifically an 1120 for 2015 for his company, Carter Industries Inc. The return falsely claimed that the company prepaid taxes and paid additional long-term capital gains taxes totaling $235,515. The capital gains payment was supposedly from the sale of property in Dekalb County, Georgia.
Property records showed that Mack’s company never owned the property that was listed in the return’s supporting documents. The IRS also confirmed that the agency never received tax payments of any kind from or on behalf of Carter Industries for the 2015 tax year. The return fraudulently claimed a refund in the amount of $109,521.
Mack also filed an 1120 for that year for another company, Carter International Holdings Inc., that falsely claimed the payment of long-term capital gains taxes supposedly from the sale of property in Bibb County, Georgia. Bibb County property records similarly confirmed that Mack’s company never owned the property listed in the supporting documents and again the IRS confirmed that it never received tax payments from Carter International Holdings for 2015.
That return claimed a $105,877 refund. 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, former owner of a drywall business in the Borough of Queens, has pleaded guilty to helping prepare a false corporate return for his business.
Caceres owned and operated OSVI Drywall Corp. and helped prepare the company’s corporate return for the tax period of Feb. 1, 2013, through Jan. 31, 2014. The return underreported 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.
