Hormones run wild; Ricky lost that number; asphalt bungle; and other highlights of recent tax cases.
San Angelo, Texas: Three tax preparers whose fraudulent returns cost the IRS some $18 million have been found guilty.
Hugo Cesar Granados, 60, manager of Columbia Tax Service, his adult daughter Blanca L. Granados, his adult son Hugo Alberto Granados and his employee Saul Garcia-Soto were indicted in 2021. Garcia-Soto pleaded guilty last month to assisting in the preparation and presentation of false documents; the remaining defendants were convicted of conspiracy to defraud the United States and multiple counts of aiding in the preparation and presentation of false documents.
The elder Granados and his conspirators falsified their clients' 1040s to inflate refunds. They routinely fabricated clients' Schedules A and Schedules C, claiming the taxpayer owned a business when no such business existed, claiming unreimbursed employee expenses such as travel and per diems, and claiming business expenses related to maintenance, utilities, supplies, insurance and professional services that were never incurred or were grossly inflated.
Columbia Tax Service claimed more than $900,000 in income in 2015 and more than $1.3 million in income in 2016.
Garcia-Soto testified that in 2016, Columbia Tax employees met with the elder Granados because taxpayers were not receiving their refunds from the IRS. When questioned, Granados asked the employees if they thought the company was doing something illegal. Garcia-Soto, Blanca Granados, and Hugo A. Granados all replied yes. In response, the elder Granados smiled and turned back to his computer.
Two clients testified that they did not operate daycare centers as stated in their returns, but rather cared for family members for free; another admitted that his wife did not operate a retail business that generated expenses as stated on the couple's return.
Prosecutors also introduced into evidence the company's "tax preparation manual," a handbook that outlined how to commit fraud. The manual advised tax preparers to manipulate income to maximize refunds rather than referring to the law to determine whether an activity was a business for income tax purposes and whether expenses properly qualified as a business deduction.
The estimated tax loss was some $18 million for tax years 2013 to 2017.
Hugo C. Granados and Blanca Granados now each face up to 14 years in prison; Hugo A. Granados faces up to 17 years. Garcia-Soto faces up to three years and will be sentenced in October.
Grayling, Michigan: Endocrinologist Bashar Kiami, 53, of Roscommon, Michigan, has pleaded guilty to tax evasion.
Kiami owned and operated Northern Michigan Endocrine, a solo practice. From 2014 to 2017, he filed corporate returns on which he underreported the practice's gross receipts and overstated its expenses.
As the sole shareholder, Kiami reported business income from the practice on his individual income tax returns. By underreporting the practice's business income, he fraudulently reduced his tax liability for 2014 through 2017, causing a federal tax loss of more than $250,000.
Kiami faces up to five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Seffner, Florida: Construction exec Ricky Gonzales has pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to defraud the United States.
Gonzales owned and managed Ricky's Construction Company, purported to supply construction services and a labor force to work for contractors. Ricky's had agreements with contractors and subcontractors to use workers purported to be his company's employees at construction sites; these workers were often undocumented aliens who were working for and under the daily supervision and direction of the contractors. Gonzales or others regularly received payroll checks from these contractors that were then cashed to pay the "employees" of Ricky's Construction.
Gonzales falsely represented in insurance applications that his company had limited payroll and a limited number of employees who worked on construction jobsites. He also caused the transmission of fraudulent wire communications to numerous contractors representing that his company's employees had full workers' comp coverage.
Ricky's received and cashed more than $7 million in checks from various construction contractors for his purported employees, far exceeding the limited payroll figures that Gonzales had reported to his workers' compensation insurance company. Ricky's also failed to ensure that job site workers were legally authorized to work in the U.S. and that state and federal payroll taxes were paid for these workers. The contractors who actually paid the workers' wages and used their services were also able to avoid responsibility for those duties.
The fraud caused a loss of some $1,094,450 in unpaid payroll taxes.
Gonzales faces a maximum of 20 years in prison on the conspiracy to commit wire fraud count and up to five years on the conspiracy to defraud count.
Weymouth, Massachusetts: Robert Brainard, owner of a local paving company, has pleaded guilty to tax evasion.
Brainard, former owner of Got Pavement Needs, underreported income on his personal returns for tax years 2014 through 2021, resulting in an income tax loss of more than $593,993. To hide his control of the business, Brainard transferred ownership of his company in a straw sale while maintaining control over the company's operations and income.
The charge of tax evasion provides for up to five years in prison, up to three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Sentencing is Oct. 17.
New York: Tax preparer Afolabi Ajelero has been sentenced to five years in prison for conspiring to commit aggravated ID theft and aiding in the preparation of false returns for his transportation business.
Ajelero worked at the tax prep business Kaybamz during tax season from approximately 2012 through 2016. He conspired with owner Hakeem Bamgbala and others to prepare and file returns seeking fraudulent refunds in the names of individuals whose identities had been stolen.
Bamgbala then forged the names of the taxpayers on the refund checks and provided the checks to Michael Campbell and other conspirators to be cashed at banks. Among other roles, Ajelero was responsible for supplying his EFIN for use on each fraudulent return and helping fabricate tax paperwork to satisfy a third party that audited some of the returns filed by Kaybamz.
Ajelero also owned Mo-Betta Ventures, a transportation business that provided airport shuttle services in the New York City area. From 2011 through 2016, he aided the filing of false corporate returns for that company. Each return included false items, including exaggerated fuel tax credits or deductions intended only for off-highway vehicles such as farm equipment.
Ajelero was also ordered to serve two years of supervised release and pay some $45,000 in restitution to the U.S.
Bamgbala previously pleaded guilty but died before he could be sentenced. Campbell previously pleaded guilty and was scheduled to be sentenced this month.
Haines City, Florida: Tax preparer Christel Joseph has been sentenced to 30 months in prison for preparing false and fraudulent tax returns. Joseph had pleaded guilty on Feb. 16, 2022.
Joseph, who pleaded guilty in February, and her husband Naeem prepared false returns by claiming fraudulent refunds and credits to which their clients were not entitled, including education tax credits, fuel tax credits and dependent care credits. In 2015 and 2016, the Josephs helped prepare and file fraudulent returns from Haines City and from Roanoke, Virginia.
The IRS issued more than $230,000 in fraudulent refunds.
Last month, Naeem Joseph was sentenced to 21 months in prison.
