Expensive expenses; just a suggestion; examination concluded; and other highlights of recent tax cases.
Belle Glade, Florida: A federal court has permanently barred tax preparer Brandhi Shaw from preparing federal tax returns for others.
She prepared returns at Premier Financial Services and Premium Financial Solutions, allegedly understating the tax her clients owed or overstating the refunds they could claim.
Shaw, who agreed to the civil injunction order, allegedly prepared returns fabricating business expenses of more than $40,000 in one case and more than $20,000 in expenses, plus more than $22,000 in costs of goods sold, in another.
Manchester, New Hampshire: Businessman Walter Rodriguez has been sentenced to 18 months in prison for employment tax fraud.
From 2011 to 2013, Rodriguez aided and abetted several drywall companies that were evading payment of employment taxes. He found workers for the companies for construction jobs; the companies then issued checks in the names of fictitious or fraudulent identities and provided those checks to Rodriguez. He converted the checks to cash and paid the workers off the books.
Rodriguez, who pleaded guilty in January, enabled the payment of $1.7 million in unreported wages, causing a tax loss of $416,000.
He was also ordered to serve a year of supervised release and to pay some $416,163 in restitution to the United States.
Sumrall, Mississippi: Businessman Charles Chandler Smith, 43, has been sentenced to five years on probation and ordered to pay $494,444 in restitution for filing a false return.
Smith, who pleaded guilty in December, took advantage of a deduction strategy suggested by a financial advisor. Smith admitted to transferring $1,305,090 from an account held by his business, Lil Mad, to another company and falsely claiming it as a business expense on his 2014 return. Smith also falsely claimed that his income with Lil Mad was only $143,070.
Durham, North Carolina: Preparer Karen Marie Jones has been sentenced to 22 months in prison for conspiring to defraud the IRS. One of her co-conspirators also pleaded guilty for her role in the scheme.
Jones owned Jones and Stone Taxes. From 2012 through 2017, Jones and two other preparers at Jones and Stone, Andrea Marie Pasley and Audrey Renetta Odom, conspired to prepare false returns for clients. The returns claimed false education credits or dependents or manipulated clients’ income to qualify for larger Earned Income Tax Credits. Some clients were charged up to $3,000 for preparing returns.
The tax loss is some $1.2 million. Pasley has pleaded guilty and will be sentenced on August 11; she faces a maximum of five years in prison and a period of supervised release, restitution and monetary penalties. Odom pleaded guilty in December and will be sentenced in June.
Jones was also ordered to serve three years of supervised release and to pay some $1,264,493 in restitution to the United States.
Wausau, Wisconsin: Accountant Leonard Kersten, 55, has been sentenced to 30 months in prison, to be followed by three years of supervised release, for tax evasion.
Kersten failed to report as income $1.7 million he embezzled from his employer between 2007 and 2017. He used his position as accountant to issue checks to himself or his spouse, then altered the company’s records to make it appear that the checks were issued to pay legitimate suppliers. He and his spouse paid some $350,000 less in taxes than they should have.
Kersten, who pleaded guilty, will pay $347,979.96 in restitution to the IRS.
Palm Beach County, Florida: Businessman Dusko Bruer has been sentenced to two years in prison for not reporting his foreign financial accounts from 2006 through 2015 and for willfully evading assessment of millions in taxes from 2007 through 2014.
From 2003 through 2009, he owned and operated a company that bought U.S.-made agricultural machinery and parts and sold them globally. Bruer’s company had numerous employees and reaped millions of dollars in annual gross receipts.
The company filed no employment or corporate tax returns, nor did the company pay employment or income taxes. From 2003 forward, the company also never paid Bruer a salary. Instead, he directed that millions from the company’s accounts be used to pay his personal expenses, to make foreign investments and to transfer money to his family.
To conceal his income, from 2006 through at least 2015 Bruer owned and controlled bank accounts held at financial institutions in Croatia, Germany, Serbia and Switzerland, which he did not report. Between 2007 to 2011 alone, Bruer transferred $5.8 million from domestic accounts to these foreign accounts. In total, between 2007 and 2014 Bruer did not report receiving $7,726,213 in income, nor did he pay $2,789,538 in taxes.
Bruer used his unreported offshore accounts to fund his lifestyle, including the purchase of foreign property, a $1.35 million yacht and a waterfront Florida home for $1,650,000.
He was also ordered to serve two years of supervised release and to pay some $2,789,538 in restitution to the United States.
Memphis, Tennessee: Former IRS tax examiner Linda I. Williams has pleaded guilty to defrauding the IRS by filing false returns for taxpayers.
Williams prepared fraudulent returns seeking refunds for taxpayers and, in some cases, directed part of the refunds as compensation to herself without the taxpayers’ knowledge. She claimed more than $500,000 in false deductions.
Williams, an IRS tax examiner during the fraud, is also accused of failing to report any of her tax prep income on her own returns. She also sought to have taxpayers lie to investigating Treasury and IRS agents concerning her receipt of tax prep income.
Sentencing is Aug. 12. Williams was charged with filing 10 false returns. She faces up to three years in prison for this offense and a fine of $250,000.
Frenchville, Pennsylvania: Preparer Kathy Billotte, 60, has been sentenced to 27 months in prison and a year of supervised release on her convictions of aiding and assisting in the preparation or filing of a false income tax return and criminal contempt and false statement to the government.
Billotte operated the prep business K B Tax Services and falsified annual income tax returns prepared for at least 15 individuals from 2013 through 2017, ensuring the individuals received undeserved refunds. Specifically related to the offense to which she pleaded guilty, in February 2016 Billotte prepared and filed a 2015 federal income tax return for a taxpayer on which she fraudulently reported that the taxpayer operated a private business and incurred business expenses. Billotte also inflated unreimbursed business expenses and charitable donations.
Federal tax loss totaled $193,102.15, including interest. Billotte was ordered to repay the IRS in full.
While the criminal tax case was pending, Billotte, who had a 1999 felony conviction for fraudulently obtaining U.S. postal money orders, falsified court documents allowing her to serve on a federal grand jury. During her service, she improperly shared information that had come before the grand jury.
Cincinnati: Accountant Ronald R. Geesner has pleaded guilty to providing a false statement to the IRS.
Since March 2017 Geesner has served as the in-house accountant/bookkeeper at two Cincinnati businesses. When questioned about this role, Geesner lied to IRS agents to conceal his true earnings.
As a result of his concealment, the Social Security Administration paid Geesner $31,525 in undeserved benefits.
False statement or representation to an agency of the United States carries a maximum of five years in prison and a $250,000 fine.
