Thanks, cuz; golf fees but no income; the mix master; and other highlights of recent tax cases.
West Palm Beach, Florida: A federal court has ordered tax preparer Nate E. Dameus to pay $213,500 in fees he received for preparing tax returns in violation of a permanent injunction that barred him from filing, preparing or helping to prepare federal returns for others.
The government alleged that Dameus, d.b.a. Mobile Tax Express Services in May 2021, prepared returns for customers that fraudulently understated the tax those clients owed or overstated the refund to which they were entitled, or both. The complaint alleged that Dameus prepared returns with fabricated withholdings and bogus claims for unreimbursed employee business expenses such as mileage, tools, cell phone services and meals. In addition, the complaint alleged that Dameus routinely falsified home-improvement expenses to claim residential energy credits his clients were not entitled to receive.
With his consent, the court issued an injunction in September 2021 that permanently barred Dameus from preparing returns for others. The U.S. filed in July for the court to hold Dameus in contempt for violating that injunction. According to the motion, Dameus used the PTIN of his cousin, Fedson Dameus, to covertly prepare at least 305 returns for clients in 2022 in violation of the injunction. The motion also alleged that at least some of those returns reported fictitious business and "other income" losses and false employer credits for paid family and medical leave.
Dameus consented to being in contempt for continuing to prepare returns in violation of the injunction and agreed to pay $213,500. He was also ordered to surrender ill-gotten fees and to reimburse the government for investigation and procedural costs.
West Warwick, Rhode Island: Thomas Huling, who conducted a decade-long Ponzi scheme that left some investors empty-handed and the government seeking tax payments, has pleaded guilty to wire fraud and tax evasion.
Between 2008 and 2018, Huling orchestrated a scheme that raised some $14 million and caused losses of more than $6 million to his victims. He promoted several bogus investment projects, including high-yielding bond trading platforms; a car emissions reduction technology; and an online advertising and marketing company.
He solicited funds for these investments by representing, among other things, that the money would be used for the particular project he was promoting and that the investments would achieve substantial returns with little or no risk within a short time.
To enhance his credibility, Huling incorporated religion, the possibility of charitable work and association with well-known individuals into his pitches. In truth, Huling diverted investor money to fund a lavish lifestyle that included high-end vehicles, membership and golf fees at country clubs, gambling, clothing, restaurants, vacations and travel, as well as improvements to his residence.
He created and used multiple shell companies; opened more than 50 bank accounts; and engaged in convoluted financial transactions between various accounts before ultimately using the funds personally. When investors contacted Huling with concern about the status of their investments, Huling gave them false excuses and promises or avoided their calls. He also used money from new investors to pay off earlier ones.
Between 2009 and April 2018, Huling reported no taxable income, paid no income taxes and for certain years filed false and fraudulent individual and corporate returns. He used nominee bank accounts and paid for personal expenses using cash and corporate debit cards. He also manipulated the books and records of his companies to record sham loans, titled personal assets in the name of shell companies and made false statements to IRS agents as to his income, expenses and business activities.
Sentencing is Dec. 19. Huling faces a maximum of 20 years in prison for wire fraud and five years for tax evasion. He also faces a period of supervised release, restitution, forfeiture and other monetary penalties.
Burgaw, North Carolina: Randy L. Garriss, convicted of conspiracy to defraud the U.S. and attempts to interfere with administration of internal revenue laws, has been sentenced to three years on the first count and to a year and a day on the second, to be served concurrently.
He was also sentenced to three years of supervised release on the first count and to a year of supervised release on the second.
The conviction stemmed from incidents beginning in April of 2004 when Theodore Nelson and his son, Steven Nelson, created more than 25 sham trusts to hide their income and assets from the IRS. The Nelsons used forms created by co-defendant Loren Brown. The trusts were partially designed to make it difficult for the IRS to determine the Nelsons' federal income tax liability.
The Nelsons appointed John Sheridan and Brown as trustees and successor trustees for the trusts. When Sheridan died in 2011, Garriss took over.
The Nelsons reside in Letcher, South Dakota. Garriss and Brown acted as signers for South Dakota bank accounts associated with the Nelson trusts and performed most of their actions on behalf of the tax evasion in South Dakota. Among other acts, Garriss and Brown also mailed to the IRS a "protest and demand for administrative review" on behalf of the Nelsons. Garriss signed on his own behalf and that of Brown as trustees for Steven Nelson and the Nelsons' trusts.
Scottsdale, Arizona: Contractor Ryan C. Patterson has been found guilty on three counts of tax evasion.
Patterson failed to accurately report his income between 2014 and 2016. He received checks from customers made out to him personally and then deposited the checks into his personal checking accounts. He also received payments in cash that he failed to report.
Patterson failed to report more than $1.9 million in gross income and avoided paying a combined total of $700,000 in taxes due over three tax years. He reported a loss of $38,000 in 2016 despite, in the same year, purchasing a primary residence for $445,000 along with other lavish expenditures.
Sentencing is Dec. 5.
Miami: Ethan Thomas Trainor has pleaded guilty to attempted tax evasion.
Trainor used sophisticated online techniques to conceal from the IRS more than $1 million in cryptocurrency he earned through illegal dark web transactions.
Trainor used cryptocurrency to buy and sell hacked online account logins (usernames and passwords) on dark web marketplaces. From 2014 to 2017, Trainor earned more than $1 million in cryptocurrency through dark web transactions and tried to avoid paying taxes on it by using services and techniques designed to conceal that the money was his. For example, Trainor ran his virtual currency transactions through "mixers," online services that pool the cryptocurrency transactions of different users, then distribute "clean" cryptocurrency to the users' virtual wallets.
Sentencing is in December. Trainor faces up to five years in prison.
McComb, Mississippi: Tax preparer Elizabeth Stephens, 41, has pleaded guilty to preparing false returns for clients.
Stephens worked at a local tax prep business and between 2014 and 2017 prepared returns for clients that included one or more false items, including false W-2 information and Schedules C. These false expenses and altered W-2s reduced taxable income and maximized the Earned Income Tax Credit.
Sentencing is Jan. 10. She faces a maximum of three years in prison and a $100,000 fine.
Baltimore: Staffing exec Jonas Purisch has pleaded guilty to failing to account for and pay over employment taxes to the IRS.
He operated two employee staffing companies. Between March 2018 and March 2021, Purisch withheld but did not pay over to the IRS more than $2 million in payroll taxes on behalf of employees.
Purisch has agreed to pay more than $3.4 million in restitution to the IRS. Sentencing is Dec. 12, when he will face a maximum of five years in prison, as well as a period of supervised release, restitution, and monetary penalties.
In April 2013, Purisch was convicted in Maryland of filing a false individual income tax return and willful failure to file a tax return; he was then sentenced to three months in prison.
