What becomes of the brokenhearted; steal thyself; inside job; and other highlights of recent tax cases.
Clermont, Florida: Resident Aaron Aqueron has pleaded guilty to conspiring to defraud the United States by promoting a tax fraud to more than 200 individuals in at least 19 states. He also pleaded guilty to attempting to obstruct the IRS.
Aqueron recruited clients by convincing them that their mortgages and other debts entitled them to refunds. He collected tax and financial information from these clients to send to conspirators, who in turn tax prepared returns and other documents to submit to the IRS.
These returns falsely claimed that banks and other financial institutions had withheld large amounts of income taxes from the clients and that the clients were entitled to a refund. The institutions had actually paid no income to or withheld any taxes from the clients.
In total, the returns sought more than $14.6 million in refunds and caused the IRS to actually pay out more than $7.6 million.
Aqueron admitted he and his conspirators received fees from his clients of $10,000 to $15,000 each. He further admitted he did not report on his 2015 individual income tax return the income he received from the scheme; Aqueron personally filed returns on which he fraudulently claimed that he was entitled to refunds. In response to one of these false returns, the IRS issued Aqueron a refund of $193,347.97.
He also admitted that he attempted to obstruct IRS efforts by helping coach clients on ways to obstruct IRS collection. For example, after learning that one client had begun to receive letters from the IRS about collections, Aqueron instructed the client: “Make sure you move money out of your name and out of the banking institutions and be smart.”
Aqueron also attempted to obstruct IRS efforts to collect his own fraudulently obtained refund, including by transferring money into a trust.
He faces a maximum of five years in prison for conspiring to defraud the U.S. and three years for corruptly endeavoring to obstruct or impede the IRS. He also faces a period of supervised release, restitution and monetary penalties. His conspirators are scheduled for trial in January.
Millville, New Jersey: Resident Rubbin Sarpong admitted to conspiring to commit wire fraud and money laundering and to tax evasion in connection with a romance fraud.
From January 2016 to September 2019, Sarpong and his conspirators, several of whom reside in Ghana, participated in an online romance scheme, defrauding victims in New Jersey and elsewhere. Sarpong and the conspirators set up dating profiles on various websites using fictitious or stolen IDs and posing as U.S. military personnel stationed overseas. After establishing virtual romantic relationships with victims, the conspirators asked them for money, often for the purported purpose of paying to ship gold bars to the United States. The conspirators told many victims that their money would be returned once the gold bars were received.
Sarpong and the conspirators used several email accounts and VoIP phone numbers to communicate with victims and instruct them on where to wire money, including recipient names, addresses, financial institutions and account numbers. At least 40 identified victims wired money to Sarpong and others in the U.S., including to 13 bank accounts controlled by Sarpong, some of which were in the names of his friends, relatives and a fictitious business entity. Victims also mailed personal checks or cashier’s checks to the conspirators and transferred money to the conspirators via money transfer services. The funds were withdrawn in cash, wired to other domestic bank accounts and wired to other conspirators in Ghana.
Sarpong purchased property in Ghana and posted photographs of himself on social media with large amounts of cash, high-end cars, designer clothing and expensive jewelry.
Despite having received approximately $1.14 million in taxable income from the scheme during tax years 2016 through 2018, he filed no income tax returns and paid no income tax, resulting in a tax loss of $387,923.
The conspiracy to commit wire fraud and conspiracy to commit money laundering charges to which Sarpong pleaded guilty each carry a maximum of 20 years in prison and a $250,000 fine, or twice the gross gain or loss resulting from the offense, whichever is greater. The tax evasion charge carries a maximum of five years in prison and a $250,000 fine.
Sarpong agreed to make restitution for the loss, which is estimated at $1.76 million, as well as to pay $387,923 in taxes to the IRS. He also agreed to make full restitution to the U.S. Department of Health and Human Services, the U.S. Department of Agriculture and the State of New Jersey.
Sentencing is March 21.
St. Paul, Minnesota: Dr. Mark B. Reimer has been sentenced to two years in prison and ordered to pay $857,127.24 in restitution for failing to pay income taxes for years.
Reimer is a physician who operated his own medical practice in Texas from 2003 through 2007 and who from 2007 through 2015 worked as a physician for a private employer in Minnesota. From 2003 through 2012, he earned an annual salary of more than $440,000.
Reimer and his wife, Ana C. Reimer, filed joint returns admitting that he had earned more than $4.3 million during those 10 years and that he owed more than $1.2 million in federal income taxes. In addition, Reimer owed a $20,000 personal penalty because he had failed to pay employment taxes arising out of his Texas practice between 2005 and 2007.
Despite having the ability to pay them in full, the Reimers, who pleaded guilty in January, withdrew more than $337,000 in cash from bank accounts they controlled to prevent the IRS from collecting it. The couple transferred more than $353,000 to their four adult children and spent more than $251,000 on airline, furniture and other retail purchases.
In 2013 and again in 2015, they jointly filed for bankruptcy for the sole purpose of evading the IRS. During the bankruptcy proceedings, the defendants falsely testified under oath that they had made no monetary transfers or gifts to their children prior to filing for bankruptcy.
Mark Reimer was also sentenced to a year of supervised release; Ana Reimer was sentenced to two years of probation. The couple was also ordered to pay $857,127.24 in restitution.
Bellevue, Washington: CPA Steven G. Shimizu, 70, has pleaded guilty to attempting to evade or defeat tax.
He owned and operated the tax prep business S&S CPA Corporation and admitted that in tax years 2013, 2014 and 2015 he hid income from his business by attributing it to other entities. He underpaid his taxes by more than $884,000.
Shimizu admitted that he used two business entities, the partnership Shimizu & Shimizu and CS Medical Consultants, to evade taxes. In the years at issue, the entities had no business activity and no income or expenses, but for 2013 and 2014 Shimizu attributed income that he earned from his CPA corporation as income to the partnership. He then created phony business expenses that reduced the income taxes owed. He used the same scheme with CS.
Additionally, in tax years 2013 to 15, Shimizu sought to record personal expenses as business expenses on the returns for the CPA business. He characterized withdrawals from business accounts as business expenses when they were actually cash withdrawals for his personal benefit, including for insurance, legal expenses and payments to family members.
Shimizu faces up to five years in prison. Sentencing is March 15.
Gregg Township, Pennsylvania: Inmate Eric Judkins of Manchester, New Hampshire, has been sentenced to a year and a day in prison to be followed by three years of supervised release for conspiring to defraud the IRS.
Judkins schemed to defraud the IRS while he was an inmate at U.S.P. Allenwood, a high-security prison. Judkins and others sought undeserved federal refunds by submitting 1040-EZs with false information on 80 occasions.
The conspiracy sought $108,000 from the IRS, although only a fraction of this amount was paid before the scheme was discovered.
Judkins was also ordered to pay $11,031.37 in restitution to the IRS.
