No more flying Coach; under the bar; last scheme in Clarksville; and other highlights of recent tax cases.
Springfield, Missouri: Carrie Leigh Long, of Ash Grove, Missouri, has been sentenced to 41 months in prison for a wire fraud in which she embezzled more than $362,000 from her employer and failed to pay nearly $1 million in business payroll taxes and personal income taxes.
Long, who pleaded guilty earlier this year, was employed by Executive Coach Builders to provide in-house accounting services to that company and to Executive Bus Builders. The companies do business worldwide, building luxury buses, coaches and limousines. Long was hired in April 2014.
She admitted that she stole at least $362,175 from the companies from February 2016 to September 2020 and that she failed to pay approximately $902,226 of federal employment taxes. Instead, Long created a pool of funds in the companies' bank accounts from which she continued embezzling.
Long regularly wrote checks against the companies' accounts for unauthorized payments to herself. Long also stole and filled in unauthorized amounts on some pre-signed checks and companies' checks and made the checks payable to herself. She stole from the companies at least 198 times.
When the owner confronted her with evidence that she had stolen from the companies and that she had not paid over the companies' employment taxes, she continued to lie to him, forcing him to hire an accounting firm to investigate.
Long did not claim the unauthorized payments as personal income on her individual income tax returns from 2016 through 2020, resulting in a loss to the IRS of $65,039.
Beginning in April 2019, Long ceased to make regular payments to the IRS for the employment taxes the companies owed. She altered the companies' bank account statements and misrepresented her financial reports that the payments had been made. Long caused the companies to fail to pay over to the IRS approximately $902,226 of taxes for two quarters of 2019 and one quarter of 2020. When an IRS agent tried to collect those delinquent tax payments, Long falsely claimed they had been paid and provided forged bank account statements.
Long was convicted in state court of similar conduct with a previous employer and was still on probation for that crime at the time of this federal offense. In 2013 she pleaded guilty to stealing more than $88,000 from a client of her then-accounting firm employer. As in this federal case, she forged checks made payable to herself and endorsed in her own name against the victim's bank account. Long received a suspended five-year sentence, was ordered to serve 90 days "shock time," placed on probation for five years and ordered to pay restitution to her victim. Long's mother paid her court-ordered restitution on her behalf in the state case; Long used the money she stole from the companies in this scheme to pay her mother back.
In the recent case, the court also ordered Long to pay $1,329,440 in restitution: $362,175 to her employer and $1,071,802 to the IRS. The court also ordered Long to forfeit $362,175 to the government.
Rocky Mount, North Carolina: Two tax preparers have pleaded guilty to conspiring to defraud the U.S. by preparing and causing to be filed false federal returns.
From approximately 2009 through 2018, Betty Hawkins, 51, and Phyllis Ricks, 63, conspired with others to file false returns for clients of the prep businesses where they both worked. These returns included fictitious federal income tax withholding figures as well as other fraudulent items that generated fraudulent refunds the clients were not entitled to receive.
Hawkins, Ricks and their conspirators caused more than 1,000 false returns to be filed with the IRS that claimed a total of some $5 million in fraudulent refunds.
Sentencing is Dec. 16. Both face a maximum of five years in prison for conspiring to defraud the United States as well as a period of supervised release, restitution and monetary penalties.
Stonecrest, Georgia: Mack Devon Knight, 45, a three-time convicted felon who held himself out as a pastor, mortician, restaurateur and tax preparer, has admitted lying to receive COVID-19 small-business assistance.
Knight, formerly of Kingsland, Georgia, was sentenced to 29 months in prison to be followed by three years of supervised release after previously pleading guilty to two counts of wire fraud.
In February and March 2021, Knight applied for Economic Injury Disaster Loans from the Small Business Administration on behalf of multiple local businesses. Those applications falsely claimed that Knight had a series of businesses with hundreds of thousands of dollars of gross revenue prior to the pandemic. He admitted that those applications were fraudulent and that he had sent fictitious documents to the SBA, including a fake tax document and an altered bank record.
He received $149,900 from the SBA on behalf of a claimed tax business and used much of the money to buy a Mercedes-Benz sedan. As part of his plea agreement, Knight is forfeiting the vehicle to the U.S.
Knight, who in this case also agreed to pay $149,000 in restitution to the SBA, has at least three prior felony convictions for other frauds.
Bolton, Connecticut: Mark Pagani has been sentenced to 45 months of imprisonment, to be followed by three years of supervised release, for fraud and tax evasion.
From 2013 to at least August 2015, Pagani conspired with another person, who is now deceased, to defraud a victim investor of more than $1 million. Pagani's conspirator arranged investment deals with the victim, including the purported acquisition of mortgages on properties. Pagani drafted documents to memorialize certain investment deals, accepted funds from the victim and held the funds in accounts he controlled, then transferred funds to entities controlled by his conspirator and others.
By the time the victim investor made a third investment, which was to acquire mortgages on properties in Springfield, Massachusetts, and Middletown, Connecticut, Pagani knew that the first two investments had not occurred and that the third investment was not legitimate. In association with the third investment, the victim wired more than $1.3 million to an account Pagani controlled. These funds were commingled with other funds. To conceal the fraud and to create the appearance that it was a legitimate investment, Pagani wired false interest payments to the victim.
For 2014 through 2017, Pagani, previously a practicing attorney, paid for personal and other expenses using his law firm account and underreported his income on his federal returns, resulting in a tax loss of $181,702.
This is the third federal conviction for Pagani, who pleaded guilty last year.
Clarksville, Indiana: Tracy E. Leonard has been sentenced to nine months in prison after pleading guilty to subscribing to a false federal income tax return.
Leonard operated a private investigation business and from 2015 to 2019 hid his income from the IRS by cashing 186 business income-related checks at a local check-cashing business, rather than depositing the checks into a bank account. The check casher charged Leonard up to 10% to cash each check. During 2018 and 2019, Leonard cashed checks weekly that were typically more than $25,000 and often exceeded $50,000.
For those five years, Leonard's unreported income exceeded $1.1 million. He owes the IRS $300,339.
Gulfport, Mississippi: Tax preparer Orland Reed has been sentenced to 27 months in prison for preparing false tax returns for his clients.
Reed worked at a tax prep business and between 2012 and 2014 prepared returns for clients that included one or more false items, including false education credits, dependent information, federal income tax withholdings and retirement contributions to falsely inflate clients' federal refunds. At times, Reed also listed a different tax preparer though he prepared the returns.
At least twice Reed misappropriated portions of his clients' refunds that were sent by the IRS to the tax prep business in the form of prepaid debit cards. He withdrew some of the funds on the cards before delivering them to the clients.
Reed, who previously
