Stonewalled; cashing out; trailer trash; and other highlights of recent tax cases.
Johnstown, Pennsylvania: Two residents of the Northern Cambria area of Pennsylvania have pleaded guilty to charges of violating federal tax, anti-fraud and money laundering laws.
Sarah Stiles and David Bachik pleaded guilty to two counts each.
Stiles was vice president of Life Changing Support Services, which provides housing to individuals with intellectual disabilities. She was personally responsible for the withholding and payment of employment taxes related to employees.
In the quarter ending December 2019, she failed to account for and pay over to the IRS $21,284.89 in payroll taxes. Stiles also admitted to failing to account for and pay over $2,063,544 in employment taxes between March 2013 and December 2019.
From about August 2019 and continuing until February 2020, Stiles and Bachik conspired to commit wire fraud. Around 2019, Stiles was removed as a signature authority from LCSS bank accounts but remained in her role as vice president. Stiles and Bachik, believing that Stiles was being unfairly compensated, embezzled and stole LCSS money. They devised a scheme by which Stiles would direct payments from LCSS to a fake company controlled by Bachik and Bachik would disburse the stolen money to Stiles and himself.
In 2019, they formed the fictitious "Stonewall Business Management" to receive payments from LCSS. For seven months beginning around July 2019, Stiles deceived LCSS into issuing 12 cashier's checks totaling $56,308.10 to Stonewall. Around August 2019, Bachik withdrew from one Stonewall bank account $9,000 in LCSS funds that had been stolen.
Sentencing is Dec. 6, when they face up to 20 years in prison, a fine of up to $500,000 or both.
Independence, Missouri: Junaid "Jay" Sahibzada, of Lenexa, Kansas, owner of two local jewelry stores, has pleaded guilty to evading federal reporting for cash transactions by failing to file a Form 8300.
Sahibzada co-owns Gold-N-Time, a kiosk shop, and Jawa Jewelers, a storefront, both in the Independence Center mall. He admitted that he met with an undercover federal agent posing as a heroin dealer interested in laundering money by making cash purchases of jewelry from Gold-N-Time, transporting the jewelry to Chicago and then reselling it for cash.
The agent told Sahibzada he did not want any government forms filed for his purchases, which Sahibzada said would not be a problem because no one would know about cash purchases. The undercover agent purchased two pieces of custom jewelry from Sahibzada for $21,100. Sahibzada did not subsequently file or instruct any employee to file the cash transaction.
Sahibzada faces up to five years in prison. He must also pay a money judgment of $21,100.
Freeland, Pennsylvania: Tax preparer Leidi M. Paulino, 46, owner of the tax prep business LP Multiservices, has pleaded guilty to aiding and assisting clients in the preparation and filing of false returns.
During 2019 and 2020, she helped clients prepare and file materially false returns that sought education tax credits, including the American Opportunity Tax Credit, to which the clients — most of whom were not even college students — were not entitled.
Paulino acknowledged that the loss was $550,000 to $1.5 million dollars, and she agreed to make restitution to the IRS of $888,377. She also faces up to three years in prison, a term of supervised release following imprisonment and a fine.
Conway, South Carolina: Former resort exec Troy Benjamin Bittner, of Myrtle Beach, South Carolina, has pleaded guilty to wire fraud and filing a false return.
From November 2020 to December 2021, Bittner was a general manager at an RV resort. During that time, guests commonly canceled reservations, and he fraudulently generated $828,516.00 in customer refunds that were not authorized or requested by guests for reservations. After generating the refunds, Bittner wired them to his personal financial accounts.
On February 27, 2022, Bittner e-filed a 2021 Form 1040 in which he substantially understated his total income, resulting in a tax loss of $270,686.
He faces up to 20 years in prison and a fine of up to $250,000 or the greater of twice the gross gain or gross loss of the offense, restitution and three years of supervision after imprisonment.
Lakewood, New Jersey: Exec Josef Neuman has admitted failing to pay over some $10 million in payroll taxes.
Neuman was CEO of a business in Lakewood that provided administrative services to operators of nursing homes and other health care facilities, including at least some 20 entities co-owned and operated by Neuman.
During tax years 2017 and 2018, he failed to pay over to the IRS more than $10 million in payroll taxes owed by the companies. Instead he used the money to pay other business expenses and employee salaries.
Neuman faces up to five years in prison and a fine of $10,000. Sentencing is Dec. 13.
Severn, Maryland: Business owner Jerry Lee Redman has pleaded guilty to evading federal income taxes.
He owned Redman Services Inc., a paving and construction company. For at least 2015 through 2018, he filed corporate income tax returns for RSI that underreported the business' gross receipts. He had customers write checks to him personally instead of to RSI and deposited those checks into his personal bank account. During the same years, Redman also failed to report other income he received from RSI.
He withdrew and caused others to withdraw funds from RSI's business account to pay for his personal expenses but did not report those funds as income on his returns. Some of the withdrawals for personal expenses were also falsely deducted as business expenses on RSI returns.
Redman caused a loss to the IRS of some $666,113. He faces up to five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Newtonville, Massachusetts: Certified nurse assistant Patrick S. Kityo, 43, has agreed to plead guilty to underreporting his income to the IRS.
Kityo owned and operated the home health care company Every Step Home Care Inc. It's alleged that during 2016 and 2017 Every Step's total gross receipts were at least $2 million. He allegedly failed to report all of Every Step's gross receipts to his tax preparer, instead only reporting those gross receipts that Kityo deposited into Every Step's business bank account and not those he received via checks written to Kityo personally.
Kityo allegedly caused his tax preparer to underreport nearly $2 million in gross receipts and allegedly failed to pay at least $306,603 in personal income taxes.
The charge of aiding the preparation of a false tax return provides for up to three years in prison, a year of supervised release and a fine of up to $250,000.
