Avast scamming; just can't stay away; Urban legend; and other highlights of recent tax cases.
Newark, New Jersey: David Buckingham, of Elizabeth, New Jersey, a former associate director of a global maritime service group, has been sentenced to 27 months in prison for embezzling from the company and failing to pay over federal payroll taxes.
Buckingham, who previously pleaded guilty, was associate director and head of the New York office of a global maritime service group headquartered in London. From 2016 through 2018, he used his access to the company's accounts to embezzle hundreds of thousands of dollars by writing checks to himself or to "cash." He falsified the company's books and records to make the payments appear to be legitimate business expenses.
From February 2016 to October 2018, he also failed to account for and pay over federal payroll taxes for the employees of the company in the amount of $277,051.
Los Angeles: Convicted felon Quin Ngoc Rudin, 55, has been sentenced to 10 years in prison for conspiring to defraud the IRS and the Paycheck Protection Program.
Rudin, who previously
He conspired with his brother, Thanh Rudin, 59, of Rosemead, California, with Seir Havana, 46, of North Hollywood, California, and with others to prepare and file false federal income tax returns on behalf of at least nine professional athletes. The returns reported fictitious business and personal losses to generate undeserved refunds. Rudin also filed amended returns for most of the athletes for prior years to correct what he falsely characterized as "errors" made by their previous accountants. Mana charged the athletes 30% of the resulting refunds.
Rudin's fraud caused a total tax loss of more than $19 million.
Second, Rudin and his conspirators, including Milton Estrada, 49, of Fullerton, California, at Mana also prepared and submitted false applications for Paycheck Protection Program loans on behalf of small businesses, shell companies and other business entities they controlled. Rudin and his conspirators prepared fraudulent applications for these firms in exchange for 30% of the resulting loan. Some of the business owners never saw their loan applications before Mana filed them.
Rudin and his conspirators directed the businesses to pay the conspirators with cashier's checks and to note on the memo lines that the checks were related to payroll. Rudin and the conspirators inflated the number of employees and monthly payroll costs claimed on the applications. Some of the businesses were ineligible for any PPP loans because they did not have any payroll expenses.
The fraud loss to the U.S. government from the PPP scheme exceeded $43 million. Rudin committed these crimes while he was on supervised release for another fraud in California.
Thanh Rudin and Havana will be sentenced on Nov. 9. Estrada will be sentenced on Dec. 21.
The United States recovered over $15 million of the fraud proceeds.
Jacksonville, Florida: Kevin Edward Hargrave, formerly known as Kevin Edward Wade, of Locust Grove, Georgia, has pleaded guilty to conspiring to commit wire fraud and to defraud the U.S. to impede the functions of the IRS.
Hargrave controlled a number of companies, including WSA Optimization Firm, that purported to offer "credit repair services" to the public. He promoted these services through multiple websites, radio advertising, emails, texts and posts on YouTube and social media sites. This marketing promised to "erase bad credit" information from consumers' credit reports within 90 days, "guaranteed."
Multiple customers reported to federal investigators that they paid for credit repair services, saw no such results and were denied refunds. When an undercover federal agent called to inquire about these repair services, he was told that WSA used "federal laws to remove all negative derogatory items off your credit." A company representative also lied that WSA employed five attorneys and 23 paralegals.
Instead, the company just sent form letters — with bogus return addresses — to credit reporting agencies and falsely claimed that all negative credit information on the customers' reports was the product of ID theft or fraud.
More than $8 million in deposits were made into the business bank accounts controlled by Hargrave and a family member; the money went for luxury vehicles, mortgage payments on residences, personal credit cards, jewelry, items at retail stores, utilities, restaurants and other expenses.
Hargrave's joint returns for 2016 through 2019 underreported taxable income and improperly claimed business expenses. The IRS estimates that since 2015 he cost the U.S. more than $250,000 in tax revenue.
Hargrave, who faces up to five years in prison, agreed to pay restitution to both the IRS and to victims of the credit scheme. He also agreed to forfeit $1.5 million, proceeds of wire fraud.
Matawan, New Jersey: Businessman Thomas Bertoli has pleaded guilty to one count of an indictment charging him with corrupt interference with the administration of the internal revenue laws.
Bertoli, individually and through his companies, obtained payments from clients, including payments from developers and construction firms and payments from political campaigns for political consulting services in New Jersey.
In June 2014, Bertoli was interviewed by an IRS collections officer. Bertoli had not filed returns for 2009 to 2013 despite earning income during that period and owing a total of $195,889 in taxes. At that time, Bertoli was earning income principally from his operation of Urban Logistics, a company which he owned and for which he was the sole employee. Bertoli falsely claimed, however, that he was employed as a construction worker to conceal the existence of Urban Logistics and the income that he earned from this company.
After the interview and until November 2015, Bertoli was aware of certain actions taken by the IRS to collect taxes that he owed, including applying levies and requiring that he make an estimated tax payment for calendar 2014. He continued to conceal the existence of Urban Logistics and that he was earning substantial income from that company.
Corrupt interference with the administration of the IR laws carries a maximum of three years in prison and a maximum $250,000 fine. The plea agreement provides that Bertoli will be sentenced to up to 18 months in prison and make full restitution of $1.17 million to the IRS for unpaid taxes. Sentencing is Feb. 7.
Durham, North Carolina: Tax preparer Amanda Caldwell has pleaded guilty to aiding and assisting in the filing of a false federal return.
Caldwell worked at Tax Time Solutions as a return preparer along with Whitney Danielle Sales and Janelle Marie Corley. Sales owned Tax Time.
Sentencing is Feb. 22. Caldwell faces up to three years in prison, supervised release of up to a year and monetary penalties.
Sales and Corley, who previously
Montgomery, Alabama: Tax preparer Lashunda Deann Crittenden, 43, has been sentenced to 16 months in prison to be followed by a year of supervised release for aiding and assisting in the preparation of a false income tax return.
Crittenden operated a tax prep service where she prepared federal income tax returns for clients. She admitted that in February 2018, she prepared and e-filed a return that claimed a client incurred $8,726 in qualified solar electric property costs, $6,358 in medical and dental expenses, and $8,364 in gifts to charity despite knowing that the client was ineligible for these for calendar 2017. The IRS subsequently paid an inflated refund and Crittenden profited.
Crittenden was also ordered to pay a $20,000 fine and $11,993 in restitution to the IRS.
