A dim bulb; morally bankrupt; 1st to jail; and other highlights of recent tax cases.
Prior Lake, Minnesota: Business owner Robert Schlosser has pleaded guilty for attempting to evade federal income taxes by submitting an incomplete bankruptcy filing.
From 2000 until 2023, Schlosser owned and operated a business that installed Christmas lighting, special event lighting and decoration displays for customers. In 2018, he filed for bankruptcy and listed the IRS as a creditor for his unpaid federal income taxes. Schlosser attempted to evade the payment of his delinquent taxes by filing false bankruptcy schedules that concealed assets to hinder IRS collection efforts.
He admitted that his conduct resulted in a tax loss to the IRS of $429,848.
He faces up to five years in prison, as well as a period of supervised release and monetary penalties.
Agoura Hills, California: Real estate developer Mark Handel has been sentenced to 41 months in prison for failing to disclose on a bankruptcy petition that he had earned nearly $2.3 million in income and for failing to report almost $6.9 million in income on his returns.
Handel, who pleaded guilty in February, filed a bankruptcy petition in April 2015 on which he claimed no income from 2013 until April 2015. In fact, he'd earned some $2,263,221 in income through DTMM Construction Inc., his West Los Angeles-based real estate development company, the name of which, according to court documents, stood for "Don't Touch My Money."
To further conceal his income, Handel arranged for DTMM to be registered in his wife's name but used the company to deposit the profits from his own work and to pay for his and his family's living expenses.
Handel concealed his income from his creditors by depositing it into DTMM's accounts. Among the assets Handel hid from creditors included his interest in real estate in Livermore, California, which later was sold for some $3,545,712.
In October 2016, Handel signed and filed a false federal income tax return for 2015 that failed to disclose some $1,096,175 in additional income. For the tax years 2010 to 2017, Handel failed to report some $6,886,877 of income on his federal returns. He also falsely reported a net operating loss of $7,259,119 on his 2017 federal income tax return and underreported his income on his 2018 return by $1,411,050 and admitted to failing to pay $460,408 in additional tax.
He was further fined $20,000, ordered to forfeit some $3,545,712 and ordered to pay the IRS some $1,618,836 in outstanding tax liabilities, including penalties and interest. He has paid that amount to the IRS.
Ames, Iowa: Tax preparer Bakou Kees Vonty, a.k.a. Bob Vonty, has been sentenced to 18 months in prison for preparing, presenting and making false returns.
Vonty prepared and filed hundreds of federal individual income tax returns for clients from about 2011 to 2022. On a 2019 tax return, Vonty, on behalf of an individual, falsely reported business losses and qualified education expenses. Further, in at least 2016, Vonty falsely reported business losses and qualified education expenses on his own return.
Vonty's false returns resulted in a combined tax loss exceeding $400,000.
As part of his plea agreement, he agreed to not prepare, file or assist in any way with the preparation of federal or state tax returns for any third parties. He must also serve a year of supervised release.
Flat Rock, North Carolina: Walter "Terry" Douglas Roberts II has been sentenced to a year in prison for his role in conspiring to defraud the United States in a syndicated conservation easement tax shelter scheme that claimed more than $1.3 billion in fraudulent deductions.
From 2008 to 2019, Roberts conspired to fraudulently inflate the value of the conservation easements upon which deductions were based. At the trial of his co-conspirators Jack Fisher and James Sinnott, Roberts testified that he became a licensed appraiser in 2007 and began providing appraisals of conservation easements that same year.
From 2008 through 2019, Roberts said that he fraudulently inflated values of at least 18 conservation easements by, among other things, not following normal appraisal methods, making false statements and either personally manipulating or relying on knowingly manipulated data to reach a targeted appraisal value — communicated to him by co-conspirators — that would result in the desired tax deduction amount. Roberts admitted that he inflated some appraisals by at least 600%.
The easements Roberts fraudulently appraised as part of the scheme claimed some $466,961,000 in tax deductions, resulting in a tax loss to the IRS exceeding $129 million.
Fisher and Sinnott were convicted at trial and await sentencing. To date, at least five additional defendants have pleaded guilty to criminal conduct related to Fisher's syndicated conservation easement tax shelters.
Roberts was also ordered to serve three years of supervised release, perform 120 hours of community service and pay $129,210,760 in restitution to the United States.
Clarkston, Georgia: Tax preparer Mohamed Hersi of Decatur, Georgia, has been sentenced to prison for filing false returns.
Hersi filed false returns on behalf of unwitting clients, collected more than $1 million in fees and then failed to disclose his own income to the IRS.
He owned and operated Map Wireless Inc., d.b.a. "1st Tax Center," "Metro Tax Center" and "Investment Financial Services." Between 2016 and 2020, Hersi prepared and filed income tax returns for his clients that claimed false Schedule C items, withholdings, education credits, expenses and itemized deductions to inflate refunds.
On some occasions, Hersi provided one version of the return he planned to file to his clients then filed a different version with the IRS that included both falsely claimed items and different direct deposit information.
During the scheme, Hersi collected more than $1.2 million in fees from his clients but never disclosed that income to the IRS, resulting in a loss of more than $400,000.
He was sentenced to two years in prison to be followed by a year of supervised release and was ordered to complete 40 hours of community service and to pay $439,543 in restitution. He is also prohibited from preparing taxes for others.
Perkiomenville, Pennsylvania: Business owners Theodore Shearba and Jennifer Cemini have pleaded guilty to conspiring to defraud the U.S. related to evading employment taxes.
Shearba and Cemini owned a landscaping and excavation business. They did not report income received from the business, nor did they pay employment taxes the business owed to the IRS. They attempted to thwart IRS efforts to collect the unpaid employment taxes by depositing business gross receipt checks in nominee bank accounts.
Shearba also did not file personal income tax returns for 2019, 2020 or 2021.
Together, the pair caused a tax loss to the IRS of $682,446.80.
Sentencing is Feb. 27. They each face a maximum of five years in prison, as well as periods of supervised release, restitution and monetary penalties.
Orlando, Florida: Wendel Algarin has been sentenced to 30 months in prison for conspiring to defraud the IRS.
Between 2012 and 2019, Algarin, who pleaded guilty in August, operated a scheme to assist various subcontractors in the evasion of payroll taxes and workers' compensation insurance premiums. He conspired with the subcontractors to pay their undocumented construction workers off the books.
He facilitated the scheme by operating three shell companies that he allowed subcontractors to list as their employees' employers. In return, he was paid fees of nearly $2 million. He used the money to live a lavish lifestyle, including the purchasing of multiple luxury automobiles.
Algarin defrauded the U.S. out of more than $3.5 million in tax revenue.
