Pushing 100 notices; nothing but the tooth; checking out; and other highlights of recent tax cases.
Le Roy, Minnesota: Tax preparer Craig Jacobson, 67, has been sentenced to two years of probation after pleading guilty to two felony counts of failure to collect and remit taxes, according to published reports.
Jacobson was reportedly charged after the Minnesota Department of Revenue revealed that he failed to file multiple withholding returns, filed false withholding and federal returns, and failed to pay withholding taxes for four years.
In late 2020, the state began investigating Jacobson after learning about criminal tax violations occurring from 2015 to 2018, according to published reports. During that time, reports said, Jacobson was CEO of two companies — M&I Tax Accounting and C&C Tax Service Inc., both of which were registered with the state for corporation tax, sales and use tax, and withholding tax accounts.
From 2015 to 2016, M&I reportedly withheld taxes from employees' wages but never turned those taxes in. The state of Minnesota sent more than 60 notices to M&I, reports added. From 2017 to 2018, C&C withheld taxes from its employees' wages, but again, the state reportedly said no withheld taxes were paid despite tax authorities sending another 30 notices.
During the same period, Jacobson reportedly had substantial gambling winnings and losses but his returns showed no federal taxes reflecting this. A tax specialist for the state compared Jacobson's individual returns that he filed for Minnesota with those he filed with the IRS. The two didn't match, reports said.
News outlets added that before the plea deal Jacobson was charged with 10 felony counts of failing to file withholding tax returns, 10 felony counts of failing to pay withholding tax, four felony counts of filing false or fraudulent individual income tax returns and one felony count of filing a false withholding return.
Ft. Worth, Texas: A U.S. District Court has permanently barred tax preparer Ruben Gonzalez and anyone acting with him or at his direction from preparing federal returns for others. Gonzalez consented to the injunction.
Gonzalez is banned from using his business, "Sin Barreras Income Tax," to prepare returns for others. The government's complaint alleged that Gonzalez or those working for him significantly overstated clients' refunds in a substantial number of returns prepared at the business from 2021 to 2023 by fabricating or inflating business losses, by fabricating charitable donation deductions and by falsely claiming energy credits and COVID family sick leave credits. The complaint alleges Gonzalez cost the U.S. more than $20 million in lost tax revenue from 2021 to 2023.
The injunction requires Gonzalez to notify each person for whom he or preparers at Sin Barreras prepared federal returns, amended returns or refund claims from 2021 to the present. Gonzalez must also post a copy of the injunction where he conducts business and post a statement on social media accounts and websites that he is barred from preparing returns.
Princeton Junction, New Jersey: Professor and pharmacy co-owner Gordian A. Ndubizu, 69, has been convicted of evading federal income taxes and filing false returns.
During tax years 2014 through 2017, he was a professor of accounting at a university in Pennsylvania as well as the co-owner of Healthcare Pharmacy in Trenton, New Jersey. Healthcare Pharmacy was organized as an S corporation, the income of which flowed through to Ndubizu and his wife and was to be reported on their personal income tax returns.
He prepared fraudulent books and records for Healthcare Pharmacy, inflating costs of goods sold to reduce and underreport the pharmacy's profits flowing through to him and his wife. Among other falsehoods, Ndubizu identified certain wire transfers as payments to purchase goods sold by the pharmacy when these wire transfers were made to personal bank accounts under his control and to bank accounts in Nigeria associated with an automotive company under his control.
Ndubizu's returns for tax years 2014 through 2017 underreported his income and falsely reported that he had no financial interest in or signature authority over any foreign bank accounts. He failed to report some $3.28 million in income from the pharmacy, resulting in the evasion of some $1.25 million in tax.
Each count of tax evasion carries a penalty of up to five years in prison and a fine of $250,000. Each count of filing a false tax return carries a maximum of three years in prison and a fine of $250,000.
Hastings, Minnesota: Tax preparer Tania Fay Pryor, 37, has been sentenced to six months in jail for felony tax evasion, according to published reports.
Pryor, who reportedly once owned five H&R Block franchises and a daycare center, must also pay restitution and serve five years of probation.
Pryor was initially charged with 18 tax-related counts between 2006 and 2008 and owed more than $43,000 in unpaid taxes, reports said, adding that she pleaded guilty last May to four counts of failing to file returns or report her income and to two more charges of failing to pay taxes.
She reportedly failed to file returns or pay taxes, including for her former employees, though she deducted the money from their paychecks. According to cited state records, Pryor did not file withholding returns and tax deposits for her tax-preparing business for 2007 and 2008. A criminal complaint filed in a local county district court said Pryor owed more than $7,500 in withholding tax for 2006 for that business, according to reports.
Newark, New Jersey: Business owner Alain Rodrigues, 49, has admitted evading taxes through a check-cashing scheme.
Rodrigues owned and operated a construction company in Newark and Old Bridge, New Jersey, and beginning around 2017 deposited a portion of the payments from his customers into a business bank account; he then converted the balance to cash and money orders that he deposited in a personal bank account or used to pay cash wages to employees.
Rodrigues only reported the portion of the company's revenue that was deposited in the business bank account on his business taxes and did not report the business revenue deposited directly into his personal bank account as income on his personal income taxes. The company, under his direction, also did not report to the IRS the cash wages it paid to employees nor collect or pay over employment taxes on these wages.
Rodrigues and his company paid $554,873 less than they owed in income taxes and failed to collect and pay over $793,139 in employment taxes, a total of some $1.35 million.
Sentencing is Dec. 19. Each count of tax evasion and failure to collect and pay over taxes carries a maximum of five years in prison and a $250,000 fine. As part of his plea agreement, Rodrigues has agreed to pay the government $1.35 million in restitution and to file amended returns.
Pickerington, Ohio: Office manager Eric Moesle has pleaded guilty to failing to pay more than $750,000 in employment taxes and to failure to file returns.
From 2014 through 2020, Moesle was the office manager for Elemental Dental in Pataskala, Ohio, where he oversaw payroll, bookkeeping and tax return prep. At Moesle's direction, Elemental withheld Social Security, Medicare and income taxes from employees' wages but did not pay over those taxes to the IRS nor file employment returns. During that time, the business also failed to pay over the employer's share of those taxes.
Interviewed by the IRS in 2022, Moesle lied that he didn't know that the employment taxes hadn't been paid and that Elemental's employment tax returns and W-2s hadn't been filed; he also falsely stated these failures or omissions were unintentional.
Moesle caused a federal tax loss of $760,255.
