Some kind of broke; summa cum crook; ticket punched; and other highlights of recent tax cases.
San Angelo, Texas: Tax preparer Hugo Cesar Granados, whose fraudulent returns cost the IRS millions, has been sentenced to 14 years in prison.
His adult son was also sentenced to 66 months in prison and his daughter to 80 months.
Granados, manager of Columbia Tax Service, his daughter, Blanca L. Granados, and his son, Hugo Alberto Granados, were
The elder Granados and his co-conspirators falsified clients' individual income tax returns to inflate refunds. They routinely fabricated Schedule A deductions and Schedule C statements, claiming the taxpayer owned a business when no such business existed, claiming unreimbursed employee expenses such as travel and per diems, and claiming business expenses related to maintenance, utilities, supplies, insurance and professional services that were never incurred or grossly inflated.
Columbia claimed more than $900,000 in income in 2015 and more than $1.3 million in income in 2016. The company's "tax preparation manual" handbook outlined exactly how to commit fraud; In a Skype chat introduced at trial, Blanca Granados wrote to a coworker: "Fraud is ridiculous here, yo…I swear."
Experts estimated the tax loss at more than $11.7 million.
Ponte Vedra Beach, Florida: Business owner Patrick Brian Hines has pleaded guilty to willful evasion of the payment of taxes.
Hines owned and operated telecommunication companies from 2004 through 2011. In April 2011, after several lawsuits against the entities and Hines, the entities filed for bankruptcy. In 2012, a new telecommunication company was established in the name of Hines's wife. Hines operated the company through nominees for his personal benefit from 2012 through 2018, during which time the company generated more than $4 million in revenue. The Federal Communications Commission issued a forfeiture order for the previous entities and Hines to pay $1.6 million.
In addition, in 2016, the California Public Utilities Commission filed a complaint against Hines and his companies, which resulted in a finding that Hines was responsible for $9.8 million plus interest, which remains outstanding. Hines used multiple nominee owners for the new company to distance himself from the company, and to evade and defeat the payment of income taxes and other obligations.
From 2012 through 2018, he arranged for $2.5 million to be spent on personal expenses from nominee accounts, to include $38,000 in personal training sessions, dues for two private clubs, $275,000 in mortgage payments for a multimillion-dollar residence, and tuition for his children's private schooling. Hines and his spouse continued to reside in a house in a local luxury area until the home was sold in May 2016 for $5.3 million; Hines and his spouse benefitted by over $1.79 million through the sale.
Hines had outstanding federal taxes for tax years 2010, 2011 and 2014. Beginning as early as Nov. 28, 2011, the IRS sent Hines collection notices of his unpaid taxes, yet Hines failed to pay. Despite advice from his accountant to pay his taxes, Hines claimed to be "broke" and living off of the proceeds from the sale of the house. On June 29, 2016, Hines filed a 433-A on which he falsely claimed to have no income but was supported by his spouse who gave him $3,479 per month, even though he knew that he had received the personal benefit of at least $2 million from 2012 through 2018.
Hines has accrued penalties and interest on his delinquent taxes, resulting in a total outstanding balance of $1,927,077.90. He faces a maximum of five years in prison and has agreed to pay full restitution to the IRS.
Kentwood, Louisiana: Michael J. Goll, branch manager of a New Orleans company that provides material handling equipment to businesses, has been sentenced to three years in prison on charges of wire fraud and filing false federal returns.
From January 2013 through September 2017, Goll defrauded his company of some $549,667.39, allegedly sending the company false invoices from shell companies that he had created, when in fact the work was either done by the company's own employees or not done at all. Also, as part of the scheme, Goll had a contractor who did personal work for him inflate bills to the company to cover the work done for Goll. Goll justified the overbilling by telling the contractor that he planned on buying the company in the future, although Goll never did purchase the company and never told his employer about the overbilling.
Additionally, Goll pleaded guilty to filing false federal returns. He filed personal income tax returns for 2014 through 2017 in which he failed to accurately report his income, including the money that he embezzled.
He also counseled three others, all of whom personally knew him, to file false returns. Goll told each that he had graduated summa cum laude from the University of New Orleans with a Ph.D in business administration, a degree that the University of New Orleans does not offer. Goll persuaded the victims to become his business partners in a fake restaurant enterprise then instructed them to file returns claiming false business losses; Goll had them then each pay to him a portion of their refund.
Through his own false returns and those of the three others that he aided, Goll caused a tax loss to the United States of $188,694.
As to the charge of wire fraud, Goll was sentenced to three years in prison and three years of supervised release. For filing false returns, he was sentenced to three years in prison and a year of supervised release, to be served concurrently with the wire fraud charge. Additionally, Goll was ordered to pay $200 in mandatory special assessment fees. A hearing regarding restitution will be held later.
Boston: Mohamed Jaafar, of Watertown and Waltham, Massachusetts, has pleaded guilty to his role in a tax fraud conspiracy arising from a "ten-percenting" scheme in which he cashed winning Massachusetts state lottery tickets for the ticket holders and claimed fake gambling losses to avoid taxes on the winnings.
Jaafar admitted to conspiring to purchase winning lottery tickets from the actual winners for cash at a discount of typically 10-30% of each ticket's value. This scheme, commonly referred to as "ten-percenting," allows lottery winners to avoid identifying themselves to the Massachusetts Lottery Commission or the IRS, avoiding taxes or child support payments on their winnings.
Jaafar admitted to presenting the winning tickets to the Massachusetts Lottery Commission as his own and collecting the full value of the tickets. He also admitted to reporting the ticket winnings on his income tax returns and improperly offsetting the claimed winnings with falsified gambling losses, avoiding federal income taxes.
Between 2011 and 2019, Jaafar and his alleged conspirators cashed more than 13,000 lottery tickets and claimed more than $20 million in lottery winnings. In 2019, Jaafar was by himself the third-highest individual ticket casher in Massachusetts.
Conspiracy to defraud the IRS provides for up to five years in prison, three years of supervised release, restitution and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Sentencing is March 8.
Ponchatoula, Louisiana: Tax preparer Kenisha R. Callahan has been sentenced to five years of probation and a year of home confinement after
Callahan, owner of Callahan Tax Service, prepared and filed a false 2015 1040 wherein she underreported her earned income. In 2015, she aided in the preparation and filing of a client's return that falsely stated to the IRS that the client owned a business, and that the client had a business loss for 2014.
Callahan committed financial aid fraud by falsely reporting the amount of income that she earned in 2015 to the Department of Education while applying for student loan forgiveness.
She was also ordered to pay $353,834 to the IRS and $191,738 to the Department of Education as mandatory restitution.
