Gone in a Flash; all in the family; spreadsheeting it high and deep; and other highlights of recent tax cases.
Bridgeview, Illinois: Tax preparer Hadi Isbaih, 42, of Palos Heights, Illinois, has been convicted on four counts of wire fraud.
His conviction stemmed from federal charges for fraudulently helping customers obtain loans under the CARES Act.
Isbaih owned and operated the tax prep business Flash Tax Service Inc. and from May to August 2020 submitted for several clients Paycheck Protection Program and Economic Injury Disaster Loan applications that contained materially false statements and misrepresentations about the clients' businesses, such as gross revenues and number of employees. He also prepared and submitted returns with the applications that lied about the number of employees, monthly payroll, gross revenues and annual income.
Isbaih charged clients several hundred dollars before he submitted the fraudulent applications. If the customers received the PPP or EIDL funds based on those applications, Isbaih charged more.
Each count is punishable by up to 20 years in prison.
Hopkinton, Massachusetts: Business owner Dariusz Pietron has pleaded guilty to defrauding the Internal Revenue Service and Travelers Insurance Company in relation to wages he paid to employees of his two companies.
Between 2012 and October 2018, Pietron owned and operated TJM Construction and Point Construction and failed to report employees' wages to the IRS, failed to withhold required employment taxes and failed to pay employment taxes to the IRS. Pietron also failed to disclose to Travelers the actual wages he paid to employees, which resulted in his paying less in workers' compensation premiums.
Pietron recruited and paid employees to establish shell companies to make it appear that TJM and Point's employees were subcontractors to whom he had no tax obligations. He failed to pay more than $1.1 million in employment taxes and defrauded Travelers of some $244,000.
The charge of failure to pay over taxes provides for up to five years in prison and three years of supervised release. The charge of mail fraud provides for up to 20 years in prison and at least three years of supervised release. Both carry a fine of $250,000 or twice the gross gain or loss, whichever is greater. Pietron has agreed to pay restitution to the IRS and Travelers Insurance and to forfeit $244,000.
Sentencing is Aug. 28.
Fairfield, New Jersey: Tax preparer Omar Khater, 33, has been sentenced to four years and nine months in prison for conspiring to obtain more than $4.4 million by defrauding the IRS.
Khater, who
They electronically submitted tax documents to the IRS falsely claiming that the individual taxpayers on those documents had earned income or won thousands — in some cases millions — of dollars in gambling and lottery winnings. The false filings also claimed tax withholdings on the purported income or winnings.
The Khaters and others typically submitted these fraudulent tax filings using the names and ID information of victims without the victims' knowledge or permission. The scheme caused the Treasury to issue refunds totaling $4.49 million, which the Khaters and others diverted to bank accounts they controlled.
Omar Khater was also sentenced to three years of supervised release and ordered to pay $4.49 million in restitution.
New Canaan, Connecticut: Businessman Vishal Dhar has pleaded guilty to tax evasion.
Dhar formed and operated various entities, including Grey Brown Inc. (a holding company for several restaurants operating under the name "Oaxaca Taqueria"), West Partners and NY Cloud Kitchens.
From about October 2013 through August 2023, he failed to disclose to the IRS income from his business and gifts from family members. Instead of paying his outstanding tax liabilities, Dhar paid off personal and business debts, invested in a business venture and paid personal expenses. He used financial accounts in the names of entities and other individuals rather than in his own, paid personal expenses with corporate funds and omitted significant assets on IRS forms. In addition, in a bankruptcy case he failed to disclose receipt of an Employee Retention Credit of $254,203.01.
For 2011 through 2020, Dhar owes $272,390.07 in back taxes, penalties and interest. He has agreed to pay that in restitution. Sentencing is August 15, when Dhar will face up to five years in prison.
Corona, California: Tax preparer Salvador Gonzalez has pleaded guilty to preparing and filing false returns for clients.
Starting in 2013, Gonzalez operated the tax prep business Grace's Lighthouse Resource Center. Gonzalez has prepared or assisted in preparing more than 11,000 returns that requested IRS refunds totaling more than $38 million.
He directed clients to create a phony corporation and to title homes, cars and other assets in the name of the corporation, then referred those clients to an associate to prepare the sham corporations' returns. The associate provided the clients with a blank spreadsheet and requested that they input business expenses.
At Gonzalez's direction, the clients included personal expenses, such as their mortgage payments, car payments and utility bills and then provided the spreadsheet to the associate. The associate used the spreadsheet to prepare the business returns, which would show a loss.
Gonzalez then prepared the clients' individual income tax returns that incorporated the fraudulent business losses and offset their income. To further reduce the clients' federal taxes, Gonzalez fabricated deductions on the personal returns such as unreimbursed employee expenses, cash contributions to charity, and medical and dental expenses.
Before 2019, he typically charged clients a flat $500 per return. In 2019, he started charging clients 1% of their gross income as a fee for his services.
Sentencing is Oct. 7. Gonzalez faces a maximum of three years in prison for each of the three counts of aiding and assisting in the preparation of false returns, to which he pleaded guilty. He also faces a period of supervised release, restitution and monetary penalties.
Utica, New York: Tax preparer Dianna Nolan, 48, has been sentenced to three years of probation after
Nolan admitted that she worked as a professional preparer between at least 2014 through 2018. On her personal income tax returns for 2017 and 2018, she did not report all the income she'd received as a preparer. She also filed income tax returns for clients that falsely claimed losses from rental properties.
Nolan was also ordered to pay $101,636 in restitution to the IRS for tax years 2014 through 2018.
Orlando, Florida: Tax preparer John Borgela has been sentenced to 30 months in prison and two years of supervised release and been ordered to pay $970,970 in restitution for conspiring to defraud the U.S. by preparing and filing false returns for clients.
From 2017 through 2020, Borgela ran Empire Tax Services with his co-conspirator Phedson Dore and filed hundreds of false returns each year. Borgela typically inflated tax withholdings and reported fictitious itemized deductions to generate undeserved refunds for clients. Borgela did not list on the returns his name as the person who prepared them or include Empire's EFIN, instead using his employees' names and the EFINs of other prep businesses.
Borgela and his conspirator caused a loss to the IRS of some $970,000. Dore was
