Sister act; a day to think about it; cheat wagon; and other highlights of recent tax cases.
Orlando, Florida: Petra Gomez, who pleaded guilty in November, has been sentenced to eight years in prison for conspiracy to defraud the government and for tax evasion. Her sister, Jakeline Lumucso, previously pleaded guilty to conspiracy to defraud the government and was sentenced to four years in prison.
From January 2012 to June 2016, Gomez and Lumucso submitted more than 16,000 false federal returns, which resulted in nearly $25 million in fraudulent refunds. The sisters created five different tax prep companies, and in some instances opened the companies in the names of others to conceal the fraud.
When filing her 2014 return, Gomez also failed to declare more than $800,000 in income; she claimed $213,434 in earnings when she had actually earned $1,110,508.
The court also ordered Gomez and Lumucso to pay $24,940,495 in restitution to the IRS. Gomez was ordered to pay an additional $510,999 to the IRS for tax evasion.
Hollidaysburg, Pennsylvania: Anthony DiBona, 58, has been sentenced to one day in prison and two years of supervised release, with six months of home confinement with electronic monitoring, on his conviction of conversion of government funds and filing false returns.
In April 2013, DiBona received and converted falsely to his own use $57,242 in grant money from the Federal Emergency Management Agency. When filing his returns for tax years 2013 through 2015, he omitted all grant income from his 1040s.
After the IRS discovered that DiBona had received unreported income from the grant, he was advised the grant income was taxable. DiBona, through a tax preparer, filed a first set of amended returns for the relevant tax years and added the grant income. But in July 2018, he went to a different preparer and filed a second set of amended returns removing the grant income. Similarly, DiBona also filed an original return for tax year 2017 and omitted his grant income.
This resulted in a total tax loss of $19,809.
He was also ordered to pay $25,264.07 in restitution to the IRS and $57,242 in restitution to FEMA, among other conditions.
New York: Steven J. Kwestel, owner of an ambulance service, has pleaded guilty to failure to pay employment taxes.
He operated Courtesy Transportation Inc., a Brooklyn business that provided ambulance services. From 2013 through 2019, he withheld employment taxes from his employees’ paychecks but did not pay over to the IRS $1,302,841 in taxes owed.
Sentencing is Oct. 20. He faces a maximum of five years in prison as well as a period of supervised release, restitution and monetary penalties. He has agreed to pay back more than $1.2 million.
Palm Beach, Florida: A federal court has permanently enjoined four tax preparers from preparing federal income tax returns for others and from owning or operating any tax return business.
In issuing an injunction against Marcus Alty, Jeanait Mathurin, Prestige Tax Services Inc. (d.b.a. Just Tax Services) and Excellent Tax Services, the court found that the defendants prepared returns making false or fraudulent claims for the American Opportunity Tax Credit and the Earned Income Tax Credit, often based on fabricated business income and expenses. The order further holds that the defendants prepared returns that falsely claimed fuel tax credits and that reported false education expenses.
The complaint against the defendants alleged that their fraudulent activities resulted in a loss to the Treasury of more than $5 million.
New York: Bank of N.T. Butterfield & Son Ltd. has agreed to pay $5.6 million to the U.S. for assisting U.S. taxpayer-clients in opening and maintaining undeclared foreign bank accounts from 2001 through 2013.
The agreement was based on Butterfield’s “extraordinary cooperation,” authorities said, including its efforts in providing files for non-compliant U.S. taxpayer-clients, and provides that Butterfield will not be criminally prosecuted.
Butterfield must forfeit $4.896 million to the United States, representing certain fees that it earned by assisting its clients in opening and maintaining these undeclared accounts, and to pay $704,000 in restitution to the IRS, the approximate unpaid taxes arising from the tax evasion by Butterfield’s clients.
Butterfield admitted that it knew or should have known certain taxpayers were using their accounts to evade their U.S. tax obligations, acknowledging that it helped certain clients conceal from the IRS their beneficial ownership of undeclared assets maintained in foreign bank accounts. Tactics included maintaining undeclared accounts for clients that were held by sham entities; and opening accounts and facilitating the transfer of funds for U.S. clients despite obvious red flags that the clients were using the accounts to maintain undeclared assets or commit tax evasion.
In 2013, Butterfield implemented remedial measures to stop assisting taxpayers from evading federal income taxes. Butterfield’s cooperation included efforts to facilitate the production of some 386 client files for non-compliant taxpayers.
Boise, Idaho: Texas tax preparer Bushambale Kashunga has entered into a settlement of an investigation into alleged violations of Idaho’s Consumer Protection Act.
The Idaho attorney general began investigating Kashunga’s practices after the state audited the returns from 106 individuals who had used Kashunga, of Wichita Falls, Texas, as their preparer. The state tax commission found grossly overstated deductions and expenses for Kashunga’s clients, all of whom were members of Idaho’s refugee community.
Kashunga has denied the allegations.
Under the settlement, Kashunga is barred from preparing Idaho returns. He has paid $51,640 to reimburse Idaho customers who ended up with tax liabilities as a result of his preparation. He also agreed to reimburse the Idaho AG $5,000 for investigative costs.
Washington, D.C.: Resident Devell Lincoln, 55, has been convicted of conspiring to commit theft of public money, theft of public money and aggravated ID theft.
From 2011 to 2013, Lincoln conspired with Stephanie Twyman and others to cash tax refund checks fraudulently obtained by filing false federal income tax returns in the names of others. In total, the conspirators cashed more than $500,000 in fraudulent refunds at a check-cashing business, and Lincoln deposited more than $150,000 in fraudulent refunds using bank accounts he controlled.
While two of these accounts were in Lincoln’s name, one bank account was in the name of a third party who was deceased and one in the name of a company registered under the dead person’s name.
Lincoln faces a minimum of two years in prison for aggravated ID theft, five years for conspiracy and 10 years for theft of public money. He also faces a period of supervised release, restitution, forfeiture and monetary penalties.
Harrington, Delaware: Corporate secretary Sara Collins has pleaded guilty to intentionally failing to pay employment taxes on behalf of a local business.
Collins served as the corporate secretary of a plumbing, heating and air conditioning business for more than 20 years. From the first quarter of 2013 through the last quarter of 2019, she failed to file quarterly federal forms and paid fewer than $37,000 in payroll taxes for those six years.
In total, Collins failed to pay over $930,000 to the IRS.
She pleaded guilty to five counts of willful failure to pay over tax and faces a maximum of five years in prison for each count. Sentencing is Nov. 17.
