Criminal harvest; going informal; any way you slice it; and other highlights of recent tax cases.
Little Rock, Arkansas: Preparer Jerry Green, 40, reportedly of Grand Prairie, Texas, has pleaded guilty to conspiracy to defraud the IRS after his participation in a scheme that rerouted more than $11.5 million intended to benefit farmers who had been discriminated against.
Green admitted preparing at least 82 false returns as part of a scheme to defraud the United States Department of Agriculture. In 1997, a group of African-American farmers filed a class-action lawsuit alleging they had been discriminated against when they applied for farm credit, credit servicing or farm benefits from USDA. A similar lawsuit alleged that Hispanic and female farmers also experienced discrimination in USDA farm benefit programs.
Both lawsuits were settled and resulted in a claims process where farmers could make a claim for financial relief by showing they had applied for participation in a USDA benefit program and had been denied. Successful claims resulted in an award of $62,500. Of that, $50,000 would be made payable to the claimant and $12,500 transferred directly to the IRS as a tax withholding.
Green worked for tax prep service First Choice Taxes and admitted that he was hired by a current co-defendant to assist with filing false returns for black farmers litigation claimants. In November 2013, Green opened his own prep business, Jiffy Tax and agreed with his conspirators to prepare fraudulent returns for Hispanic women’s farmers and ranchers claimants in exchange for $550 per return. The false returns Green filed totaled $4,615,009.
Anchorage, Alaska: Sanh Sunni Thampithak, a.k.a. “Allysia” or “Ally,” 54, has been sentenced to a year and a day in prison for aiding and advising false income tax returns.
Thampithak, who pleaded guilty in September, filed fraudulent returns as an informal preparer for tax years 2015 to 2017 and routinely misrepresented herself to her clients as a legitimate preparer. She did taxes for the Lao community and others in Anchorage, charging them $100 to $300 per return, but she would obtain unwarranted refunds for her clients by inflating certain Schedule A deductions and expenses. She also failed to put her PTIN on clients’ returns.
Thampithak filed at least 89 fraudulently prepared returns and became the subject of a federal investigation after her IP addresses were linked to questionable 1040s. During the investigation, Thampithak knowingly prepared a fraudulent return for an undercover agent and then lied to investigators.
She was also ordered to complete a year of supervised release and pay $348,759 in restitution.
Philadelphia: Business owner Donald Dougherty has pleaded guilty to one count of filing a false federal income tax return and one count of theft of employee benefit funds.
Dougherty, owner of Dougherty Electric, was charged in November with multiple charges of bank fraud, tax fraud and theft from employee benefit plans. Also charged with tax fraud was an accountant who worked for Dougherty.
He agreed to pay $92,913 in federal taxes due after his taking false business deductions. He also agreed to pay $266,000 restitution to the International Brotherhood of Electrical Workers Local Union 5 in Pittsburgh, arising from his failure to make $266,000 in contributions to Local 5’s employee benefit funds.
In 2007, Dougherty pleaded guilty to and was imprisoned for filing false income tax returns, tax evasion, making an unlawful payment to a union official, theft of employee benefit funds and related offenses. In the current case, he agreed to pay all restitution still owed in this previous case.
Dix Hills, New York: Accountant James G. Guerra has pleaded guilty to a federal tax offense.
Guerra worked as an accountant for Bruno DiFabio, owner of several pizza restaurants in Connecticut and New York. DiFabio and his businesses removed cash from the registers and didn’t deposit into the restaurants’ operating bank accounts; Guerra also knew DiFabio had a practice of paying his employees in cash. Although Guerra was aware that DiFabio was failing to collect required withholding taxes from his employees and, in turn, not paying over these taxes to the IRS, Guerra reviewed and approved DiFabio’s quarterly federal returns that were signed and filed.
Guerra pleaded guilty to one count of willful failure to collect and pay over withholding taxes, an offense that carries a maximum term of imprisonment of five years. Sentencing has not been scheduled.
DiFabio pleaded guilty in 2018 to one count of conspiracy to file false income tax returns and payroll tax returns. When he pleaded guilty, he agreed that the loss to the IRS in income taxes and employment taxes for the 2013 through 2015 tax years was $816,954. Also that year, DiFabio’s business partner in some of his restaurants, Steven Cioffi, pleaded guilty to one count of aiding and assisting in the filing of a false return. In 2019, Idalecia Lopes Santos, a bookkeeper who worked for DiFabio, pleaded guilty to one count of tax evasion. All three await sentencing.
Middle River, Maryland: Jacob McNeill, 53, has been convicted on four offenses relating to the filing of Maryland returns.
During tax year 2017, McNeill, an unregistered preparer, operated Mack’s Tax Service from his home. McNeill assumed the identity of one of the children of his clients to file a false return and steal the state refund.
McNeill also failed to file a personal return reporting the income he earned as a preparer.
He pleaded guilty to filing a false tax return, failure to file a tax return, identity fraud and theft. He was ordered to pay $41,000 in restitution and was sentenced to probation before judgment and five years of supervised probation. He is prohibited from acting as a preparer.
Millen, Georgia: Preparer Shawree A. Hagins has been sentenced to three years of probation after she admitted preparing fraudulent federal income tax returns that resulted in illegally excessive refunds for clients.
Hagins prepared at least 36 returns on behalf of 12 clients, fraudulently claiming undeserved deductions. The claims resulted in a federal tax loss of $75,000.
Hagins, who pleaded guilty to fraud and false statements related to tax filings, was also ordered to pay $75,000 in restitution.
Tolland, Connecticut: Business owner Kenneth W. Sweeney has pleaded guilty to a federal tax offense.
Sweeney owned and operated K&S Construction and for the 2013 through 2016 tax years typically used a preparer for his personal income tax returns. When meeting with his preparer, Sweeney did not provide documents reflecting the gross receipts or expenses for his business and instead verbally provided income and expenses that he knew significantly underreported the gross receipts of his business and his income.
Sweeney’s conduct resulted in a tax loss of at least $100,000.
He pleaded guilty to one count of aiding and assisting the filing of a false tax return, an offense that carries a maximum term of imprisonment of three years.
