U.S. attorney makes point on tax fraud, highlights several cases
A series of recent indictments and criminal prosecutions aims to rein in fraud among tax preparers and individual filers in Southwestern Illinois, officials said today.
Stephen R. Wigginton, U.S. attorney for the Southern District of Illinois, along with David E. Talcott, assistant special agent in charge, Internal Revenue Service/Criminal Investigation, Chicago Field Office, highlighted several cases that spell out the underlying message that fraudsters are stealing from lawful citizen when they cheat on their taxes.
“Stiff prison terms will help to end these thefts,” Wigginton said. “If you engage in tax fraud in the Southern District of Illinois, we will be looking for you and will put you in jail.”
Wigginton held a press conference to underscore the message, whose timing coincides with the arrival of tax season. He pulled out cases dating back two years to illustrate the problem.
“Return preparer fraud is a priority for IRS Criminal Investigation and we have committed many resources to investigating and prosecuting cases just like these,” said James C. Lee, special agent in charge, IRS Criminal Investigation, Chicago Field Office. “Taxpayers should be selective in choosing a return preparer, and have confidence knowing that person will prepare accurate tax returns and safeguard their financial information.”
Examples of the cases currently prosecuted highlight the effort.
United States v. Edric Russell, Lakesha Wilson, Melissa Wiley, Tanesa Beverly & Pierre Carter
On Jan. 22, a grand jury sitting in East St. Louis returned a 22 count indictment charging Edric A. Russell, 34, of East St. Louis, Lakesha R. Wilson, 27, of East St. Louis, Melissa L. Wiley, 33, of Granite City, Tanesa L. Beverly, 31, of Belleville, and Pierre J. Carter, 32, of East St. Louis, with conspiring to submit false claims to the United States and preparing false federal income tax returns.
Each of them worked as a return preparer at a tax preparation business known as Tax King. Tax King was located on Collinsville Avenue in East St. Louis. The false tax returns were for the 2011 and the 2012 tax years.
The indictment charges that the five tax preparers falsified items on their clients’ returns in order to cause the clients to receive larger refunds than they were entitled to. Specifically, it is alleged that the prepares: (1) created false Business Income and Schedules Cs in order to cause their clients to qualify for larger Earned Income Credits; (2) falsified wages, again to cause the clients to qualify for a larger EICs; (3) created false education expenses so that their clients would qualify for an American opportunity education credit; and (4) created false information regarding fuel taxes so that the clients would qualify for a federal fuel tax credit.
Tax King charged its clients fees which ranged from approximately $400 to $650. In addition, the five preparers typically requested cash “tips” that ranged from approximately $100 to $1,000. The charge of conspiring to submit false claims carries a maximum sentence of 10 years in federal prison and a $250,000 fine. Each charge of preparing false income tax returns carries a maximum sentence of three years in federal prison and a fine of $250,000.
United States v. Aisha Wright
Aisha Wright, 33, of Alton, waived indictment and pleaded guilty on Jan. 16 to two counts of making false claims against the United States. Aisha Wright operated A W Mobile Taxes, in Alton.
Potential fraud was detected by the Scheme Development Center of the I.R.S. Two undercover agents were sent to have tax returns prepared which were fraudulent. Further investigation revealed systematic preparation of false returns for taxpayers that falsified Schedule A deductions, Schedule C self-employment income, and falsified education expenses for receipt of the education tax credit. Total losses exceed $1 million.
Wright faces up to 10 years in prison, three years supervised release, a fine of up to $250,000 and restitution. Sentencing is scheduled for April 17.
United States v. Shanta Doss
A federal grand jury returned an indictment on Jan. 21, charging Shanta Doss, 31, of Shiloh, with 15 counts of making false claims against the United States through the filing of false federal tax returns, and one count of making a false declaration before a federal grand jury.
The indictment charges that Doss prepared false returns for others as a paid preparer but did not sign the returns. The indictment charges that she made up numbers for Schedule C self-employment, which allowed individuals to fraudulently receive additional earned income credit and larger federal tax refunds than they were entitled.
Doss faces up to 80 years in prison, three years supervised release, a $250,000 fine and restitution.
United States v. Doressa Braggs
On Thursday of this week, Doressa Braggs, 46, of Belleville, entered pleas of guilty to 10 counts of making false claims against the United States through the filing of federal tax returns and one count of aggravated identity theft in using a Social Security number of another during and in relation to wire fraud.
She faces a maximum sentence of up to 50 years in prison for the false claims and a mandatory consecutive two year prison sentence for the aggravated identity theft. In addition she faces up to three years supervised release, a $250,000 fine and restitution. As part of the plea, Braggs acknowledged that beginning in 2010 and continuing through the summer of 2012, she knowingly prepared and submitted false tax returns to obtain the payment of false and fraudulent federal income tax refunds from the Internal Revenue Service.
The IRS Scheme Development Center utilizes databases to research possible tax refund fraud schemes. The SDC linked tax returns based on Internet protocol addresses, wage amounts, federal tax withholding amounts, employers, occupations, electronic filing identification numbers, and bank accounts, which revealed a tax refund scheme. The false returns prepared by Braggs utilized Forms W-2 which claimed false wages and false federal income tax withholdings.
In some cases, she simply falsified the W-2s that she received from her clients, to overstate the wages and federal income tax withholding; in other cases (e.g., where the client was unemployed/did not have a W-2, she would fabricate an entirely false W-2-again, to report fictitious wages and federal income tax withholding. Many of the returns also claimed false Schedule C business expenses/losses.
Braggs would typically list grooming type professions (e.g., hairstylist, beautician, etc.) on the fabricated Schedule C’s that she filed with her clients’ returns. Braggs falsely did not list herself in the “paid preparer” section of the returns. Sentencing has been scheduled for May 8.
United States v. Sylvia Baker, Alicia Jackson, Sylvin Baker and Lamarion Shanes
A federal grand jury returned an eight-count indictment on Oct. 22, 2014, charging four Metro East residents with participating in a scheme to submit false claims for federal tax refunds.
Sylvia Baker, 30, Fairview Heights, and Alicia Jackson, 40, Belleville, are charged with participating in a conspiracy to defraud the United States by making false claims for tax refunds to the IRS by submitting false federal income tax returns.
Baker is also charged in five additional counts of submitting false tax returns for others and is charged with making a false statement to the IRS when interviewed during the investigation.
She faces a prison sentence of up to 40 years, a fine of up to $250,000, and up to three years’ supervised release after serving her sentence and mandatory restitution.
Alicia Jackson is also charged in two additional counts for making false claims for federal tax refunds and faces a prison sentence of up to 20 years, a fine of up to $250,000, and up to three years’ supervised release after serving her sentence and mandatory restitution.
Lamarion Shanes, 32, East St. Louis, is charged in two counts of making false claims for federal tax refunds and faces a prison sentence of up to 20 years, a fine of up to $250,000, and up to three years’ supervised release after serving her sentence and mandatory restitution.
Sylvin Baker, 58, East St. Louis, is charged in one count of making a false claim for a federal tax refund in submitting a false federal income tax return and faces a prison sentence of up to five years, a fine of up to $250,000, and up to three years’ supervised release after serving her sentence and mandatory restitution. Trial is scheduled for March 9.
United States v. Tajuana Sullivan
Tajuana L. Sullivan, 27, of Marion, on Nov. 26 entered pleas of guilty to conspiracy to defraud the Internal Revenue Service by submitting numerous false federal tax returns. She also pled guilty to aggravated identity theft for using a stolen identity of another in submitting a fraudulent tax return.
Sullivan faces a prison sentence of up to 37 years, a fine of up to $1,000,000, and up to three years’ supervised release after serving her sentence and mandatory restitution. Sentencing has been scheduled for March 26.
On Feb. 19, 2013, deputies with the Shelby County Sheriff’s Office conducted a traffic stop on a vehicle driven by Tajuana L. Sullivan. Upon a search of the vehicle, approximately 53 debit cards and a notebook with names and identifying information were found in Sullivan’s possession. The IRS Scheme Development Center utilizes databases to research possible tax refund fraud schemes. The SDC linked tax returns based on the notebook containing identifying information found in Tajuana L. Sullivan’s’ vehicle, IP addresses, employers, occupations, and electronic filing identification numbers , which revealed a tax refund scheme, some of which involved stolen identities.
The data provided by the SDC consisted of 2011 and 2012 tax returns, which were filed during the years 2012 and 2013, respectively. This tax refund scheme consisted of approximately 86 federal income tax returns, which claimed approximately $283,700 in fraudulent tax refunds.
United States v. Destry Marcotte
Destry Marcotte, 48, of Belleville, is awaiting sentencing scheduled for Feb. 4, for the offenses of making false claims against the United States through the submission of fraudulent returns and for failure to appear for sentencing.
On Oct. 23, 2013, Marcotte was convicted by a jury of making false claims against the United States. Before the IRS and during trial he made “sovereign citizen” claims of not being subject to the laws of the United States. He then failed to appear for his sentencing originally scheduled for May 1, 2014, and was indicted for failure to appear. He cut off and discarded a location monitoring device. He was apprehended on Sept. 22, 2014.
On Oct. 30, 2014, he entered a plea of guilty to the failure to appear offense. He faces a total maximum punishment of up to 30 years in prison; three years supervised release, a $250,000 fine, and restitution.
United States v. Melissa Perkins
On July 23, 2014, Melissa Perkins, 33, of Tioga County, N.Y., was charged with conspiracy to commit wire fraud through identity theft and tax fraud. Perkins has requested that the matter be transferred to the Northern District of New York for disposition. She faces a maximum penalty of up to 20 years in prison; three years supervised release, a $250,000 fine and restitution.
The indictment charges that on or about Jan. 31, 2014, through approximately Feb. 28, 2014, an unidentified co-conspirator hacked into a computer server of a CPA firm located in Alton.
The hacker reviewed tax return information of individuals and unlawfully obtained hundreds of individual personal identifiers including individuals’ Social Security numbers. The stolen personal identifier information was then used to unlawfully and fraudulently file federal tax returns using the stolen identities of clients of the Alton accounting firm in order to obtain fraudulent federal tax refunds.
It was part of the conspiracy to recruit individuals to open up bank accounts and prepaid debit card accounts in order to receive the federal tax refunds. In December 2013, Perkins allegedly opened up a bank account at M & T Bank at the direction of a conspirator who identified himself as “Scott McConnell” in order to receive money and forward the money on to the co-conspirator.
Perkins purportedly “met” Scott McConnell around October 2013, through an online dating website. McConnell identified himself as being in the U.S. Army and indicated he would be receiving money and would direct her to forward money to his mother in Nigeria. Perkins received numerous federal and state tax refunds which were deposited into her account. She would wire transfer the majority of the refunds to Nigeria. The indictment alleges that she continued to receive the deposits into her account and continued to forward the funds to Nigeria after being advised that her conduct was illegal.
United States v. Tanya Nichols and Justin Durley
Two Missouri residents were indicted by the federal grand jury on Aug. 20, 2014, in a lengthy indictment alleging that Tanya Nichols, 33, of St. Louis functioned as a dishonest tax preparer who filed false tax returns to claim inflated tax returns for low-income tax filers.
Nichols’ half-brother, Justin Durley, 30, of Hazelwood, Mo., was charged with theft of government property for his role in the refund scheme. Nichols and Durley are scheduled for trial on Feb. 9.
The tax refund scheme alleged that Nichols prepared fraudulent income tax returns for individual tax filers in order to generate “refundable tax credits,” such as the earned income tax credit and the child tax credit, which were refunded to the filer.
The false information contained in the income tax returns prevented the IRS from making an accurate assessment of tax liabilities. It also prevented the IRS from making a correct distribution of income tax refunds. The false tax returns generated a larger tax refund than the filers were entitled to receive. Nichols shared the proceeds generated from the fraudulent returns with the tax filers, while collecting a fee in excess of that typically charged by legitimate tax preparers.
Nichols also paid finders’ fees to those who recruited tax filers to participate in the scheme.
The indictment charges that Nichols and her coconspirators solicited low-income individuals residing in St. Louis and East St. Louis to become participants in the refund scheme by promising IRS tax refunds, sometimes marketed as “free money.”
The indictment explains that “refundable tax credits” are vulnerable to abuse because they have cash value to tax filers. That means a filer can receive “refund” payments for refundable credits even when the person filing the tax return has never paid any income tax whatsoever. In the case of low-income tax filers, it is common for a person to have little or no federal tax liability while still qualifying to receive these valuable refundable tax credits. This means that a low-income filer can receive a tax “refund” that exceeds the amount of income tax the filer actually paid.
In that situation, the filer is not receiving a refund of their money; but rather they are actually profiting from the tax code by receiving thousands of dollars’ worth of refundable tax credits that exceed the filer’s tax obligations. The indictment alleges that Nichols took advantage of this system by falsifying income, employment, dependents, and other factors, to fraudulently generate these large refundable tax credits.
Conspiracy is punishable by not more than five years in federal prison, a $250,000 fine, and not more than five years supervised release. Theft of government property is punishable by not more than 10 years in prison, a $250,000 fine and not more than three years supervised release. Each count of wire fraud is punishable by not more than 20 years in prison, a $250,000 fine, and not more than three years of supervised release. However, the United States Sentencing Guidelines must be applied to the case and considered by the court during sentencing.
