Capital offenses; loan wolf; on the hook; and other highlights of recent tax cases.
Little Rock, Arkansas: A former state senator, Jeremy Hutchinson, has been sentenced to 46 months in prison for accepting multiple bribes and tax fraud.
From 2010 through 2017, Hutchinson, who previously pleaded guilty, stole thousands of dollars in state campaign contributions for his personal use and then filed false federal income tax returns from 2011 to 2014. Hutchinson was also hired as outside counsel by an orthodontist who owned and operated orthodontic clinics throughout Arkansas. In exchange for payments and legal work, Hutchinson pushed legislation beneficial to the doctor.
Hutchinson stole more than $10,000 in state campaign funds for his personal use and falsified his 2011 tax returns, including failing to report $20,000-per-month-payments he received from one law firm and other sources of income.
He is still pending sentencing for his role in a separate multimillion-dollar scheme that involved embezzlement, bribes and illegal campaign contributions for elected public officials. He accepted bribes from employees and executives of Preferred Family Healthcare Inc., a Springfield, Missouri-based charity. In exchange for the bribes, Hutchinson provided favorable legislative and official action for the charity.
Last year, Preferred agreed to pay more than $8 million in forfeiture and restitution to the federal government and the State of Arkansas under the terms of a non-prosecution agreement in which the charity admitted the criminal conduct of its former officers and employees. Several former executives from the charity, former members of the Arkansas state legislature and others have pleaded guilty in the multi-jurisdiction investigation.
Seffner, Florida: Tax preparer Thomas Johnson has been sentenced to three years in prison for his role in the preparation of more than 1,000 fraudulent returns.
Between 2015 and 2017, Johnson, who
Johnson concealed his activity by listing other persons as the preparers of most of the false returns. He also required that his clients split those large refunds with him.
He was also ordered to pay $1,688,931.90 in restitution to the IRS.
Lynn, Massachusetts: CPA David Plunkett, 57, has been sentenced for creating fraudulent returns and submitting fraudulent letters to lenders in a multiyear mortgage fraud scheme.
He was sentenced to time served (approximately a day in prison) and three years of supervised release.
Plunkett, who previously pleaded guilty to one count of bank fraud and one count of aiding in the submission of false returns, was charged in 2018 along with co-defendants Joseph Bates III and George Kritopoulos.
Last fall, Kritopoulos was sentenced to four years in prison and two years of supervised release after being convicted of one count of conspiracy, two counts of wire fraud, six counts of bank fraud, one count of aiding the preparation of a false income tax return and one count of obstruction of justice; he was also ordered to pay restitution to lender victims in the amount of $2,238,354 and forfeit $700,000.
In January, Bates was sentenced to 18 months in prison and three years of supervised release after pleading guilty to one count of conspiracy, three counts of wire fraud affecting a financial institution and two counts of bank fraud; Bates was also ordered to pay $2,238,354 in restitution and forfeit $700,000.
From 2006 through 2015, the three schemed to defraud banks and other financial institutions by causing false information to be submitted for borrowers — people recruited to purchase properties — primarily in Salem, Massachusetts. The properties were usually multifamily buildings with two to four units, which Kritopoulos and Bates then converted into condominiums. Kritopoulos recruited new borrowers to purchase the individual condominium units and recruited Plunkett to prepare false returns in the names of the buyers to support the fraud. The false information to lenders included, among other things, representations concerning borrowers' employment, income, assets and intent to occupy the property.
The borrowers did not have the financial ability to repay the loans. In all but two instances among 21 properties, they defaulted on their payments, resulting in foreclosures and losses to the lenders.
Plunkett also signed letters falsely representing that his CPA firm had prepared corporate tax returns for one of the shell entities, when in fact no such returns had ever been prepared or filed.
Plunkett was also ordered to pay $147,500 in restitution to victims and $64,284 in restitution to the IRS.
Newport News, Virginia: Eric Bautista, who worked as an independent contractor for area commercial fishing companies, has pleaded guilty to evading federal income taxes.
From about January 2017 through December 2020, he was paid more than $500,000 yet failed to file federal income tax returns for 2012 through 2020. He was levied by the IRS but took steps to evade his income taxes, including working under a stolen ID and dealing heavily in cash.
For 2012 through 2020, Bautista owed a tax debt of more than $170,000.
He pleaded guilty to evasion of income taxed and will be sentenced on June 24. He faces a maximum of five years in prison.
Las Vegas: Tax preparer Maria Magdalena Mendoza, 51, has pleaded guilty to two counts of aiding and assisting in the preparation and presentation of false income tax returns.
From at least 2007 to 2017, Mendoza worked as a tax preparer and owned the tax prep businesses "Taxes & More" and "Taxs y Mas." She used false or inflated deductions and credits on returns for clients. She also used clients' personal ID information to falsely obtain a larger refund on her own returns.
She prepared more than 700 tax returns that claimed more than $3 million in refunds from the IRS. The tax loss exceeded $1.2 million.
The maximum penalty is three years in prison per count, a term of supervised release, restitution and monetary penalties. Sentencing is May 18.
New Bedford, Massachusetts: Victor M. Cruz has pleaded guilty to evading federal income taxes for seven years.
From 2015 through 2017, while earning between $183,000 and $212,000 annually as a crewmember for various fishing vessels, Cruz failed to file federal returns on his income for any of the years. He also filed no federal income tax returns for tax years 2010 through 2014 while receiving an annual income of at least $150,000.
Despite receiving at least two notices from the IRS directing him to file returns and pay delinquent taxes, Cruz failed to file any federal tax returns and took other measures to prevent authorities from tracing his income or determining his tax liabilities.
In total, Cruz evaded paying more than $431,000 in federal taxes, not including penalties and interest.
The charges of tax evasion each provide for up to five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Sentencing is May 9.
Adair, Oklahoma: Businessman Donald E. White has pleaded guilty to failing to pay over employment taxes.
White was president and owner of Power Utility Services, where he filed a 941 for the first quarter of 2016 but intentionally did not pay over some $31,010 in taxes withheld from employees' paychecks. He also did not pay withholdings for multiple quarters between October 2009 and December 2017.
In total, he caused a federal tax loss of some $516,021.
White faces up to five years in prison, as well as a period of supervised release, restitution and monetary penalties.
