The mortgage the merrier; going pro; get me a cell, stat; and other highlights of recent tax cases.
Capital Heights, Maryland: Business owners Ercin and Lizette Kalender, of Alexandria, Virginia, have been sentenced to a year and a day in prison, to be followed by three years of supervised release, for conspiracy related to tax fraud in their corporate filings and business taxes.
Ercin Kalender owned and operated Butch’s, an auto body shop. Lizette Kalender worked at the shop as a manager and bookkeeper, handling tax reporting and regularly working with an outside agency that prepared taxes for Butch’s and the personal returns for Ercin and Lizette.
For 2015 through 2018, the Kalenders conspired to include materially false information on their 1120s filed for Butch’s, including a significantly lower figure for gross income and taxable income. They diverted revenue and avoided significant revenues being deposited into Butch’s corporate accounts and reported to the IRS.
The Kalenders kept two sets of financial records: The shop’s annual income for 2015 through 2018 was underreported by more than $6.6 million; the federal tax loss was $2,219,602.
In 2018, the Kalendars looked to sell Butch’s. An undercover federal agent posed as a potential buyer, and during their conversations Ercin and Lizette explained the profitability of Butch’s and revealed their long-standing underreporting of revenues and income and that Lizette reported sizeable W-2 income, which helped them evade scrutiny by the IRS.
While working with the outside tax prep and accounting agency, Lizette deliberately hid the money flowing through a local check-cashing business, sending bank statements for the corporate accounts, check stubs, credit card statements, payroll records and other business records, but withholding the revenue received through the cashed checks. She also showed falsified records to the agent.
Ercin also said that he paid all his employees’ extra compensation in cash to avoid tax obligations, except for one secretary.
In 2019, after the Kalenders became aware of the IRS investigation, Butch’s reported gross receipts of more than $4.5 million, an increase of more than $2.2 million over the fiscal year 2018.
The couple was also ordered to pay $2,219,602 in restitution.
Covington, Georgia: Tax preparer Yomarie Febres has been sentenced to 51 months in prison for conspiring to defraud the U.S. by promoting a nationwide tax fraud scheme involving more than 200 participants in at least 19 states.
Febres prepared 77 false income tax returns that collectively sought more than $23.8 million in federal refunds. Between 2014 and 2016, Febres’s conspirators held seminars throughout the country where they promoted the scheme and recruited clients to file false federal returns by telling them that their mortgages and other debts entitled them to refunds. Information collected from clients was then provided to Febres for use in the preparation of false returns.
The returns claimed that banks and other financial institutions had withheld large amounts of income taxes from the clients, which entitled the clients to refunds. The financial institutions had in fact not paid income to or withheld any taxes from the clients.
The returns caused the IRS to pay out more than $15 million in fraudulent refunds. Febres concealed her role in the scheme by falsely reporting that all of the returns were self-prepared.
Febres admitted that her conspirators charged clients some $10,000 to $15,000 to participate. She received a portion of the fee — typically $500 per client — for each return she prepared. She also did not report on her 2014 and 2015 returns the income she received for preparing these returns and she claimed false business losses on her personal returns.
Several conspirators have already been sentenced in the case.
Febres was also ordered to serve two years of supervised release and pay $11,140,842.65 in restitution to the IRS.
Elsewhere, tax preparer Eurich Griffin III of St. Petersburg, Florida, has been sentenced to 57 months in prison for conspiring to defraud the U.S. by preparing false and fraudulent returns.
Between 2013 and 2018, Griffin, who
Griffin and his conspirators filed fraudulent documents with the IRS that matched the withholding information listed on the returns. He also submitted fraudulent promissory notes to the IRS totaling more than $1.35 million in which he falsely purported to pay the clients’ tax debts.
He was also ordered to pay more than $1.6 million in restitution to the United States.
Los Angeles: Tax preparer Seir Robinson Havana, 46, has pleaded guilty to conspiring with others to defraud the IRS and the Paycheck Protection Program.
Havana was the vice president/director and CEO of Mana Tax Services and conspired to commit two sets of frauds.
From May 2019 through November 2021, Havana conspired with Quin Ngoc Rudin and others to prepare and file phony federal income tax returns on behalf of at least nine professional athletes. The returns reported fabricated business and personal losses to generate undeserved refunds. Havana and his conspirators told the athletes that Rudin had specialized knowledge that their prior tax professionals had lacked and that Mana could obtain large refunds. The conspirators also told them that Mana could amend prior-year returns to correct purported errors.
Mana charged 30% of the resulting refund, which Havana told the athletes to send to shell entities that he controlled. He collected more than $3.1 million in fees.
From April 2020 through December 2021, Havana and his conspirators used Mana to apply for PPP loans on behalf of small businesses, shell entities with few or no employees controlled by the conspirators and business entities controlled by others. The conspirators grossly inflated the number of employees and monthly payroll costs on the loan applications and submitted fabricated returns supporting them. Some of the business owners never saw their loan applications before Mana filed them and some of the businesses were not eligible for PPP loans.
Mana again charged a fee of 30%, this time of the value of the loan received. Havana and his conspirators directed the businesses to pay the fee through cashier’s checks and to falsely note on the memo lines that the funds were related to payroll. The cashier’s checks were deposited into accounts controlled by Havana, who then transferred the funds to other bank accounts.
Investigators later seized more than $11.8 million from accounts containing PPP loan fraud money controlled by Havana and others. He also surrendered cashier’s checks worth some $5.6 million.
The two schemes resulted in total losses of more than $25 million.
Sentencing is Nov. 9. Havana faces a maximum of five years in prison for the conspiracy charges and 20 years for money laundering, as well as a period of supervised release, restitution and monetary penalties. Rudin, who pleaded guilty in May, will be sentenced Sept. 14.
Golden, Mississippi: Dr. Kevin L. Crandell has been sentenced to three years in prison for failing to pay his taxes.
Crandell was an emergency room physician who earned $30,000 to $40,000 per month and stopped paying personal income taxes in 2007. From 2006 through 2012, he accrued some $972,493 in tax debt, including penalties and interest.
Crandell submitted a false 433-A in 2014 to negotiate a payment plan for his tax liabilities. He lied on that form that his expenses exceeded his income and failed to list assets and business bank accounts that he was using for personal expenses.
Though Crandell attempted to blame a tax resolution service he hired in 2010, he intentionally manipulated his pay stubs to show a decrease in his 2014 annual income before submitting the pay stubs to the resolution service.
He was also ordered to pay $972,493 in restitution.
