Self abuse; sufferin' sovereigns; 1 more thing 2 do; and other highlights of recent tax cases.
Tarzana, California: CPA Bernard Turk has pleaded guilty to helping a client fraudulently obtain a $1.2 million COVID-19 business loan by preparing a false corporate return.
Turk runs a tax prep business and in February 2021 helped a long-time client submit a false application for a Paycheck Protection Program loan on behalf of the client's company, Agency 126, a purported marketing and video production agency in Irvine, California.
Turk prepared a false federal corporate income tax return claiming that Agency 126 paid employees $5,383,401 in wages during 2019. Turk provided the false return to his client to submit to a bank to support the PPP loan; to hide his involvement, Turk marked the return "self-prepared." He admitted that both he and his client knew that Agency 126 had no employees, paid no wages and never filed federal returns.
The client electronically submitted the return to the Small Business Administration and the bank, but removed "self-prepared" and replaced it with Turk as the preparer. The bank and the SBA approved and funded the loan and wired $1,212,312 to a bank account that the client controlled. For his role in the scheme, Turk was to receive a percentage of the proceeds when the bank forgave the loan.
Sentencing is Oct. 7. Turk pleaded guilty to one count of wire fraud, which carries a maximum of 20 years in prison.
Columbia, Maryland: Toyosi Alatishe, a.k.a. Felix Victor Johnson, has been sentenced to 10 years and six months in prison for conspiracy to commit credit/debit card fraud, wire fraud and aggravated ID theft in connection with two schemes from 2012 to 2015 to obtain fraudulent refunds.
He was also ordered to serve a period of supervised release following his release from prison and pay restitution of $2,287,959.67.
A jury convicted Alatishe on all 16 counts charged in the indictment in January 2019. The court had previously sentenced Alatishe and has now re-sentenced him after he appealed his conviction and sentence. At the re-sentencing, his 2019 term was reduced six months based on the harsher conditions of confinement caused by the pandemic. His request for a time-served sentence was rejected.
In the first scheme, which occurred from 2012 to 2013, Alatishe misused his position as a caretaker for residents of a group home for individuals suffering from severe mental and physical disabilities, using their personal information to file fraudulent returns with the IRS and Maryland. Alatishe also obtained access to the personal ID information of other mentally disabled Maryland victims who lived at group homes run by a company where Alatishe's ex-wife worked, as well as eight other victim taxpayers from across the country.
He filed the fraudulent returns through an online filing company and had the refunds deposited into bank accounts he controlled, including an account opened using a fraudulent Nigerian passport in the name of Felix Victor Johnson. The returns contained false information concerning the taxpayers, including their marital status, spouses, dependents, employers, wages, withholdings, tax due and owing and refund amounts. Alatishe received stolen refunds of more than $30,000 in March and April 2013.
In the second scheme, a conspirator in Florida used an accountant's ID to fraudulently purchase debit cards from First View Financial, purportedly so that clients of the accountant could have their refunds transferred directly from the IRS to the cards. The conspirator asked First View to mail 2,000 prepaid debit cards to an address in Tampa, Florida, which was actually the address of Regus Management Group, a company that provided virtual office services to businesses.
Still posing as the accountant, the conspirator contracted with Regus for mail forwarding. All mail received by Regus in the victim accountant's name was forwarded to Alatishe's address in Maryland.
In 2015, the personal ID information of more than 300 individuals nationwide was used without their permission and knowledge to file false federal returns. More than 300 of the First View debit cards were activated and loaded with IRS refunds from the fraudulent returns.
The total value of the IRS funds loaded onto the cards was more than $2.2 million. During February and March 2015, Alatishe and his co-conspirator withdrew more than $1 million through ATM and POS transactions, including the purchase of $40,000 in money orders. The funds on the cards were eventually frozen.
Woonsocket, Rhode Island: Jesus Jose Mendez, a businessman described in court documents as a "vital cog" in a tax conspiracy that defrauded the U.S. of millions, has been sentenced to three years of probation.
Mendez, co-owner of J&J Drywall, a subcontracting business incorporated in Massachusetts and operating in Rhode Island, and his fugitive business partner paid the bulk of their employees, mostly undocumented workers, cash under the table.
From 2013 to 2017, Mendez and his partner allegedly used check-cashing businesses to cash more than 600 business receipt checks totaling more than $16 million, later traveling to construction sites with backpacks full of cash to pay their employees. During the same period, the pair made more than $4 million in deposits in the business' bank accounts, frequently in amounts of less than $10,000. Most of the remaining millions were allegedly used for a cash payroll.
The IRS calculated the total federal tax loss at $2,821,463; the Massachusetts Department of Labor calculated a loss of unemployment contributions at $62,730. Mendez was ordered to repay the full amounts.
Columbia, South Carolina: Resident Alice Felder-Lucas has been sentenced to more than three years in prison for false claims against the U.S. and theft of government funds.
Felder-Lucas filed fraudulent 1040s petitioning for a refund of $708,190. She provided a false 1099 claiming millions of dollars of income and withholdings. Her return was flagged by the IRS for potential fraud but the money was still released to her.
Although the IRS was able to claw back some $30,000 of the refund once the fraud was discovered, Felder-Lucas had transferred most of the money to other bank accounts. She used it to purchase a new house and car.
She also filed several documents alleging she was a "sovereign citizen," a broad term applying to a loose association of tax protesters, financial scheme promoters and conspiracy theorists. The court rejected these claims.
She was sentenced to 41 months in prison for each count, to run concurrently and to be followed by three years of court-ordered supervision. She was also ordered to pay all outstanding federal tax balances and $678,486.97 in restitution.
Bridgeport, Connecticut: Tax preparer Torise Baker, 39, has been sentenced to three months in prison to be followed by a year of supervised release for tax fraud.
For the 2014 through 2016 tax years, Baker, an Enrolled Agent
In April 2016, Baker met with an undercover agent posing as a client. The agent provided Baker with a W-2 for the 2015 tax year, claiming no gifts to charity and offering no information about other valid deductions. On the return that she prepared and filed for the agent, Baker included false deductions: $5,520 in deductions for charitable gifts; $2,105 for parking fees, tolls and transportation; and $2,660 for uniforms and protective clothing.
Baker also failed to file her own federal returns and pay taxes for 2015 and 2016.
She was ordered to pay $112,956 in restitution to the IRS and a $7,500 fine, and to serve the first month of her supervised release in home detention. Many of her clients' returns will need to be amended; Baker's restitution may be reduced as her clients resolve their own federal tax liability.
