Villa Ripoff; school's really out; indictment to Injury; and other highlights of recent tax cases.
Walled Lake, Michigan: Business owner Yigal Ziv has pleaded guilty to failure to collect and pay over employment taxes.
Ziv owned and operated Multinational Technologies, a software developer. From the first quarter of 2014 through the first quarter of 2018, he collected some $691,000 in employment taxes from MTI's employees but did not file employment tax returns or pay the withheld taxes to the IRS.
Even after learning of an ongoing IRS criminal investigation in May 2018, Ziv did not file MTI's employment tax returns from the fourth quarter of 2019 through the fourth quarter of 2020 and did not pay over to the IRS some $199,000 in payroll taxes withheld.
While he did not pay over taxes to the IRS, Ziv caused MTI to spend hundreds of thousands of dollars for his personal benefit, including home mortgage payments, luxury auto lease payments and department store purchases.
Sentencing is Feb. 22. He faces a maximum of five years in prison. He also faces a period of supervised release, monetary penalties and restitution.
Pittsburgh: Former exec Joseph W. Nocito, of Sewickley, Pennsylvania, has pleaded guilty to conspiracy to defraud the U.S.
Between 2006 and 2012, Nocito, CEO and president of Automated Health Systems, conspired to fraudulently write off millions of dollars as business expenses against other companies he owned in the construction of his 39,000-square-foot home known as "Villa Noci," including both the exterior and interior construction, design and furnishings, an outdoor pool, landscaping, a playground, a tennis court and a bocce court. He also fraudulently expensed millions for other personal expenses such as luxury vehicles, personal fitness and private school tuition for grandchildren.
Nocito avoided paying some $4 million in personal income tax between 2006 and 2012. He also conspired to conceal Automated Health's taxable income by shuffling millions of dollars through these companies and falsely characterized the transfers as management, administrative or consulting expenses, causing him to significantly underreport company profits. He avoided paying an estimated $11 million in corporate income tax for the conspiracy period.
He agreed to pay $15,824,056 in restitution to the IRS before his sentencing on March 23. He faces up to five years in prison, a fine of $250,000 or both.
Leavenworth, Kansas: Isaac Johnston, former deputy director of the Jackson County Department of Corrections, has pleaded guilty to tax evasion.
Johnston admitted that he failed to file personal income tax returns for 2012 through 2020. The total personal income tax loss to the IRS was $215,061, based on total taxable income of $1,277,442 for those years.
In May 2018, Johnston filed a W-4 with his then-employer, the Jackson County Department of Corrections, in which he claimed to be exempt from federal income tax withholding. He had also filed a W-4 three years before with his then-employer, CoreCivic, in which he claimed to be similarly exempt.
He must pay $83,390 plus interest in restitution to the IRS and faces up to five years in prison.
Columbus, Georgia: Tax preparer Erica Montgomery, 49, of Fort Mitchell, Alabama, was reportedly among five individuals sentenced for conspiring to defraud the U.S. Department of Education's financial aid programs.
She was sentenced to 51 months in prison and three years of supervised release.
From around August 2010 through May 2018, the defendants created and ran a sham university, a satellite campus of the Apex School of Theology (Apex Columbus). Sandra Anderson, of Hampton, Georgia, the former director of Apex Columbus, enrolled hundreds of individuals who were not qualified and who had no desire to obtain a theological education and had them pose as students. The defendants and their conspirators then fraudulently completed financial aid applications in students' names. The defendants either stole student financial aid refund checks or required students to cash their aid checks and provide a portion to the conspirators.
The Department of Education issued approximately $12 million in fraudulently procured financial aid.
News outlets said that Montgomery, who ran the prep business Dylon Tax Service, recruited fake students from her pool of clients. She promised "free money" if they registered as students, according to court documents cited, and assured them they would not have to complete any schoolwork or attend classes.
The other defendants were sentenced to prison terms of 36 to 108 months.
Tampa, Florida: Allen Levinson, formerly known as Allen Ameh, has been sentenced to 78 months in prison for wire fraud related to an international tax scam.
Levinson, a resident of Nigeria, was arrested on Dec. 2, 2020, while attempting to enter the United Kingdom. He was extradited to the U.S. and pleaded guilty upon his arrival in February.
He was the leader of a scheme that attempted to defraud the U.S. of more than $63 million through the filing of false returns in the names of hundreds of ID-theft victims. The scheme operated from 2014 through 2019.
Through job placement ads and word of mouth, Levinson recruited conspirators T'Andre McNeely, Brandon Williams, Michael Carr, and others to collect the proceeds of the fraud and send it to Levinson, who used sophisticated cyber means to obtain the personal data used to file the returns. He also hired other foreign nationals, including individuals located in a boiler room in Vietnam, to prepare and file the returns quickly and in large batches.
The returns were filed from real accounting firms across the U.S., all of whom had been hacked by third parties and often had their information sold on the dark web, including on a website formerly known as the xDedic Marketplace.
Out of the $63 million claimed in tax refunds, the IRS paid more than $5.5 million, most of which went to Levinson.
McNeely and Carr were each previously sentenced to six years and six months in prison; Williams was previously sentenced to a year and a day.
Carmichael, California: Attorney Scott Norris Johnson, 60, filer of thousands of disability discrimination lawsuits and formerly an attorney with the IRS, has pleaded guilty to filing a false return.
Johnson owned and operated Disabled Access Prevents Injury, a legal services corporation. First using this corporation and later a law firm, Johnson filed more than 4,000 lawsuits in California and elsewhere under the Americans with Disabilities Act of 1990 and related California statutes, naming himself as plaintiff.
Johnson, who worked as an attorney at the IRS earlier in his career, was required to report the taxable portion of the lawsuit settlements and awards he received. He nonetheless intentionally underreported this income on his 2012, 2013 and 2014 returns. He and Disabled Access paid little to no income tax for those years; the loss to the IRS exceeded $250,000.
Sentencing is March 7. Johnson faces up to three years in prison, as well as a period of supervised release, restitution, and monetary penalties.
Cherry Hill, New Jersey: Financial planner John Ryan has been sentenced to 26 months in prison for evading more than $1 million in federal taxes.
Ryan, an independent planner, helped broker sales between clients and various financial businesses. One of these businesses engaged Ryan to receive client funds on behalf of the business and to operate and control one of its financial accounts.
Ryan attempted to evade payment of his federal income taxes by converting the business and client funds in that account to his personal income. He was able to conceal that he was withdrawing client funds and drawing checks on the business account; he then failed to report as income the cash he skimmed from the account.
Ryan was also sentenced to two years of supervised release and ordered to pay $1,058,859 in restitution to the government.
