Special deal for undercover agents; class dismissed for 14 months; defense rests; and other highlights of recent tax cases.
Scranton, Pennsylvania: Tax preparer Donald Royce, 45, of Orlando, Florida, has pleaded guilty to a mail fraud charge and a tax fraud offense.
Royce defrauded a number of local taxpayers in 2014. After providing victims with a “client copy” of their return that showed the correct refund, he submitted fraudulent federal 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 for his personal use.
In one case, Royce instructed the victim 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 maximum for this offense is 23 years in prison, a term of supervised release following imprisonment and a fine of $500,000.
St. Louis: Tax preparer Robyn Tiffany Roberts has been sentenced to 54 months in prison for filing multiple false returns that triggered $432,000 in refunds, according to news reports.
Roberts previously pleaded guilty and admitted filing at least 18 false and fraudulent returns on behalf of 10 clients, including false information on wages, expenses and deductions and falsely claimed tax credits, reports added. She also reportedly admitted falsely inflating an undercover IRS agent’s refund from $357 to more than $4,000, in part by using a W-2 from someone else.
She used personal information from two former clients to fill in false dependent care information for other clients, and used false Social Security numbers to conduct personal financial business, according to plea documents cited by news reports.
New York: Community college professor and CPA Ahmed Abdelhalim has been sentenced to 14 months in prison for tax fraud.
Abdelhalim, a professor of accounting and income tax at LaGuardia Community College, used his Queens-based tax prep business, Master Tax Consultants, to prepare and submit numerous false income tax returns, as well as related IRS schedules and forms on behalf of his clients for tax years 2012 to 2016.
For example, he submitted fraudulent Schedules A that reported inflated or fictitious deductions like gifts to charity and unreimbursed employee expenses not actually incurred by his clients. He also submitted Schedules C that reported businesses that his clients were not involved with and losses for those companies that his clients did not incur.
This resulted in a loss to the U.S. of nearly $167,000.
Abdelhalim, who pleaded guilty in October, was also ordered to pay $166,906 in restitution.
Fishkill, New York: Joseph Smith, owner of a bagel company, has pleaded guilty to tax evasion and a wire fraud conspiracy.
Smith owned and operated New York Bagel, which operated in Pennsylvania and other states. Smith and Dennis Mason conspired to defraud individuals who sought to open new franchises of New York Bagel.
The pair induced the prospective franchisees to open up stores by understating the startup costs, overstating the number of franchises that were up and running and exaggerating the financial success of existing franchises. Smith and Mason charged prospective franchisees fees of $7,500 to $44,500 to gain rights to open stores. When prospective franchisees learned of the misrepresentations, Smith refused to refund these fees.
For the years 2014 through 2016, Smith deposited more than $1.3 million in franchise fees into New York Bagel bank accounts he controlled. He spent the money on personal items, including rent for his home, recreational travel, car payments for personal vehicles and everyday living expenses. Smith did not timely file corporate or individual income taxes for these three years or pay the taxes owed to the IRS.
Mason pleaded guilty in 2020 to wire fraud and conspiracy to commit wire fraud. Smith’s sentencing is May 24, when he faces a maximum of five years in prison on both the tax evasion and conspiracy charges, as well as a period of supervised release, restitution and monetary penalties.
Golden, Mississippi: Dr. Kevin L. Crandell has been convicted of tax evasion.
Crandell was an emergency room physician making a monthly salary of some $30,000 to $40,000 who stopped paying personal income taxes in 2007. During the years 2006 through 2012, Crandell accrued some $972,493 in tax debt, including penalties and interest.
The government presented evidence that in 2014 Crandell submitted a fraudulent 433-A to the IRS in an attempt to negotiate a payment plan for his outstanding tax liabilities. The 433-A misrepresented to the IRS that Crandell could not make tax payments because his personal income was lower than his expenses. It also failed to list assets and business bank accounts, which Crandell was using for personal expenses.
Though Crandell attempted to blame a tax resolution service he hired in 2010, evidence showed that he intentionally manipulated his pay stubs to show a decrease in his 2014 annual income before submitting the stubs to the tax resolution service.
Sentencing is June 7, when Crandell faces a maximum of five years in prison. He also faces a period of supervised release, restitution and a fine.
Torrance, California: Jeffrey Lawrence, a.k.a. Jey Lawrence, 59, has been sentenced to a year and a day in prison for tax evasion.
Lawrence pleaded guilty to a single count of tax evasion stemming from his referrals in 2015 of prescriptions to TC Medical Pharmacy. In 2015, Lawrence entered into an agreement with pharmacy owner Thu Van Le where Le would pay Lawrence for the referral of compounded medications prescriptions.
Between March and June of that year, Lawrence directed Le to pay more than $300,000 in referral fees to another person’s bank account to conceal Lawrence’s receipt of taxable income.
Lawrence did not file a tax return for the year in which he earned the referral fees that were paid to his nominee’s account. After deductions, Lawrence’s taxable income from the concealed referral fees was more than $280,000 and his tax due was more than $100,000.
He was also ordered to pay $100,919 in restitution.
Ashland, Oregon: Charles D. Squires, an employee of a defense contractor, has pleaded guilty to tax evasion.
Squires was the director of operations for a U.S. Department of Defense contracting company, eventually serving as its CEO for part of 2015. From 2010 through 2019, he did not report on his individual income tax returns all of the compensation he earned from the defense contracting firm.
In total, Squires did not report to the IRS more than $1.8 million in compensation he earned during this period, causing a tax loss to the government of some $666,080.
He faces a maximum of five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Houston: Construction company owner Arturo Alejandro Cruz has been sentenced to a year in prison for willfully failing to file returns.
Cruz did not file federal returns from 2011 through 2017 despite earning more than the minimum filing threshold each year. In 2012, for example, Cruz earned more than $460,000 from his co-ownership of a commercial construction business and the sale of that business. He deposited some of this income into a bank account he held in the name of a shell company and spent the money on such personal items as real estate and gambling.
Cruz was also ordered to serve a year of supervised release and to pay some $164,032 in restitution to the IRS.
