Just make up employees; working from home; distrust; and other highlights of recent tax cases.
Corvallis, Montana: Former lawyer Ronald Dean Lords, who admitted to defrauding investors and to evading income taxes in a real estate investment scheme in which he lost more than $1 million, has been sentenced to three years in prison, to be followed by three years of supervised release.
The government alleged that Lords operated Eagles Landing Legal Services and was also a licensed realtor and general contractor who operated Eagles Landing Construction. The latter purported to develop real property and build homes.
From 2011 to 2018, Lords defrauded 14 victims by convincing them to invest in his construction company. He told victims he would use the money to build homes, make monthly interest payments and repay the money after the homes were sold. Lords also said he would return the victims’ money within 30 days of any request.
Instead of funding construction projects, Lords used some of the new money to make interest payments to prior investors and lost most of it in the futures market. When some victims demanded their principal back, Lords admitted he lost more than $1 million in the market and didn’t have their money.
The government further alleged that Lords failed to declare $432,608 he received from several victims in 2015 as other income on his taxes, resulting in unpaid taxes of $152,734 for that year.
Atlanta: Husband and wife Tiyari and Farah Collins have pleaded guilty to defrauding the U.S. Small Business Administration by obtaining some $1.9 million in fraudulent loans from the Paycheck Protection Program and Economic Injury Disaster Loan programs.
Tiyari Collins, who owned and operated the tax prep business Collins Financial Services Group, also pleaded guilty to filing thousands of fraudulent returns resulting in a federal tax loss of at least $3.8 million.
He submitted applications for six fraudulent PPP loans and five fraudulent EIDL loans in mid-2020, totaling more than $1.9 million. Farah Collins was involved in submitting four of these fraudulent applications and received some $365,000 in the fraudulently distributed PPP and EIDL funds. In the applications the Collinses falsely represented, among other things, the company’s average monthly payrolls, the number of employees working for the relevant company and the company’s revenues.
The Collinses also submitted false returns in connection with several of these applications. Tiyari Collins paid another individual to prepare the fraudulent payroll reports that were submitted as part of the applications. For example, Tiyari Collins asked this individual to prepare a fraudulent payroll report showing total yearly wages to be some $850,000 for Collins Financial Services Group and to “make up employees if necessary,” authorities said.
The Collinses owned or controlled seven entities that sought fraudulent PPP and EIDL loans; the couple used the money for, among other things, luxury goods, personal credit card bills and office furnishings. After the fraud was discovered, federal agents seized some $588,900 of the stolen money.
Separately, Tiyari Collins, through his tax prep business, filed and caused to be filed thousands of fraudulent federal returns between about January 2015 and April 2020, resulting in more than $3.8 million in losses to the IRS. He inflated clients’ refunds by, among other things, fraudulently claiming they qualified for certain credits and by filing fraudulent Schedule Cs to reduce taxable income. The clients never authorized Collins to include this materially false information in their federal returns.
Agents detected this fraud in part with information provided by the IRS Scheme Detection Center, which identified a pattern of suspicious returns connected to Tiyari Collins and his tax prep businesses. Agents then used an undercover operation and information from a federal search warrant executed in June 2020.
Tiyari Collins pleaded guilty to one count of conspiracy to commit wire fraud and one count of aiding and assisting in the preparation of a false return. Farah Collins pleaded guilty to one count of conspiracy to commit wire fraud. Sentencing for both is March 15.
Cincinnati: Barry Rene Isaacs, 35, founder, owner, CEO and president of a nonprofit, has been sentenced to four years in prison for using thousands of dollars for personal expenses instead of paying over federal payroll taxes.
Hope 4 Change, a nonprofit that provided housing and care for adults with developmental disabilities, drug addiction problems and mental disorders, employed between 120 and 180 individuals in 2013 and 2014. The nonprofit withheld FICA taxes from its employees’ paychecks but did not pay over the employment taxes to the IRS for five quarters in late 2013 and 2014. Isaacs caused Hope 4 Change to spend thousands for clothing, massages, beauty care, travel and personal vehicles for himself and his family; he also fraudulently applied for an auto loan and credit card using someone else’s Social Security number.
Isaacs fled after being charged in April 2019 and was arrested in Texas nine months later. He pleaded guilty last spring.
Teela Gilbert of Cincinnati, Hope 4 Change’s vice president, “student affairs” director and office manager, has also pleaded guilty to wire fraud and aggravated ID theft.
Isaacs was also ordered to pay some $246,000 in restitution to a company from which the co-defendants induced payments for false invoices.
Clarksville, Tennessee: Restaurateur Quanwei Shi has been sentenced to 20 months in prison for conspiracy to harbor illegal aliens; harboring illegal aliens; money laundering; tax evasion; and employment tax fraud.
Shi, majority owner of the New China Buffett & Grill, and co-owner Chongqiang Chen, 30, also of Clarksville, were arrested in April 2020 after a 14-count indictment charged them in a scheme to harbor undocumented workers and to defeat the tax laws of the U.S. Shi pleaded guilty in March.
Between 2017 and April 2019, Shi conspired to conceal and harbor illegal aliens from China and Guatemala. The workers were not required to complete any forms related to their immigration status and were paid in cash. The workers lived with Shi at his residence and worked in the kitchen where they wouldn’t interact with the restaurant’s customers.
Shi also underreported gross receipts on company’s corporate returns for tax years 2017 through 2019 and failed to collect, account for and pay over employment taxes, for an overall tax loss of $440,941.
The judge also ordered forfeiture of Shi’s house and two vehicles and ordered restitution of $417,149.
Chen pleaded guilty in July and will be sentenced on Feb. 25.
Philadelphia: Albert Upshur, a.k.a. Kelinde Jaha, has been sentenced to seven years in prison for conspiring to defraud the IRS and assisting others in filing false income tax returns.
Last summer Upshur and conspirator Yolonda Thompson, a.k.a. Qhama Al, were found guilty of one count each of conspiring to defraud the IRS and eight counts each of helping others to file false returns.
Between 2009 and 2015, the pair tried to obtain millions of dollars in a scheme they referred to as the Debt Payoff Process. Thompson and Upshur formed the Yolonda Denise Thompson Living Trust. Participants were told that if they paid money to Upshur and filed returns and other documents Thompson prepared for them, they could access funds from the Thompson Trust to pay off their mortgages and other debts.
In reality, the federal returns that Thompson prepared and that participants filed claimed refunds that the participants were not entitled to; the returns collectively sought fraudulent IRS refunds of more than $300 million.
After the IRS began to investigate the Debt Payoff Process, Upshur and Thompson attempted to obtain money from the IRS by other fraudulent means, including using checks drawn on closed bank accounts and trying to use financial instruments such as fictitious bonds. They also continued to file false returns for themselves and others after the IRS assessed civil penalties against them and notified them that they were under criminal investigation.
Upshur was also ordered to serve a year of supervised release. Thompson’s sentencing is Feb. 15.
