Archive for the ‘Tax Fraud’ Category

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On Wednesday the Rabbi Will Go to ClubFed

Monday, March 19th, 2012

I’ve reported on Spinka before. The Grand Rabbi of Spinka, Naftali Tzi Weisz, was jailed for two years for his part in a charitable donation (but not really charitable donation) tax fraud scheme.

Apparently, there’s more to investigate. A Grand Jury in Los Angeles summoned another rabbi, Moshe Zigelman, to testify. He refused, citing the Jewish principle of “mesira.” As the Los Angeles Times has reported, he believes he must answer to a higher authority.

Unfortunately for the rabbi, the judge Margaret Morrow disagrees. The Volokh Conspiracy has an interesting discussion of the legal issue of whether the First Amendment trumps the government’s right to subpoena. For now, the government has won; he must report to prison on Wednesday.

Of course, when I think of “higher authority,” this television commercial from 1975 comes to mind.

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Confidence…Make that Confidence Man

Sunday, March 11th, 2012

A former IRS employee decided to head to Thailand after bilking investors in a Ponzi scheme. That country wasn’t a great choice, as there is an extradition treaty to the US. Adding to his woes was his general disdain for paying taxes.

Richard Saunders ran a company called Advisors Capital Holdings in St. Louis. He guaranteed good returns for investors, but he apparently stole a page from Mr. Ponzi: He paid his investors using new investors’ money. That works for a while, but sooner or later the scheme will fall apart. He also took plenty of the money for his own use.

Mr. Saunders, who used to work for the IRS, also didn’t like filing tax returns or paying taxes. He filed his 1992 to 1998 returns late, and didn’t bother to pay the amounts due. He lied to the IRS (never a good idea), and then headed off to Thailand in 2008. He was deported back to the US in early 2011 and arrested.

Mr. Saunders pleaded guilty in October, and received his sentence last week: 72 months at ClubFed for wire fraud, and 60 months (to be served concurrently) for tax evasion. He must also make restitution of $6 million to the Ponzi scheme victims and $446,000 to the IRS.

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I Hope You Like Florence, Colorado

Monday, March 5th, 2012

Kevin Small has had a decidedly interesting career. He has had 30 arrests for all sorts of crimes (including violent crimes). While enjoying Pennsylvania’s state prisons, he decided to commit tax fraud from the IRS. He was “caught” after obtaining over $1 million in phony refunds; it’s unclear if the money was recovered. He received 11 additional years at ClubFed (though it’s unclear if that was to be served consecutively or concurrently with his Pennsylvania sentence).

In January, it appeared that he was free. A judge of the US District Court–apparently the same one who sentenced him to 11 years–ordered him free. He was released.

The document was forged. Oops.

Eventually, the US Marshals Service got wind of his release (on March 1st). Four days later, Mr. Small found himself back behind bars after being arrested in Philadelphia. He now faces a litany of state and federal charges. And when (if) he gets out of the maximum security prison in Pennsylvania, he has Florence, Colorado to look forward to.

News Stories: Here and Here.

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Well, She Didn’t Get Charged with Impersonating a CPA…

Monday, February 13th, 2012

Every so often a client asks me to send a mortgage company a letter noting that I prepared their tax returns, and verifying their income for those years. I haven’t been asked to send a letter to a mortgage company where I invent numbers and falsely claim that I prepared someone’s return. (If I were to be so asked, I’d quickly say “no thanks.”) Of course, one always needs to be aware of the Bozo contingent.

From Bakersfield comes the story of Patricia Ann King. She ran The Tax Kings, which did tax preparation work in Bakersfield. From the Department of Justice press release:

King prepared and provided to her co-defendants false and misleading verification letters that purported to verify loan applicants’ self-employment history and income, among other information. King received compensation payments from the co-defendants for providing the verification letters. King knew that the verification letters were to be submitted by the co-defendants to lenders in support of applications for loans for the purchase or refinance of properties and that the lenders would rely on the letters to approve the loans. King admitted that her actions caused lenders to incur losses of approximately $530,000.

She pleaded guilty to aiding and assisting in the preparation of a false tax document and three counts of mail fraud. She also admitted to impersonating a CPA.

I have been coming around to Joe Kristan’s view of the IRS regulating tax professionals. Ms. King had a license from CTEC, the California state body that licenses non-CPAs/EAs/Attorneys who prepare tax returns. (I verified her license–though it expired last November–on the CTEC website.) Her taking the required continuing education courses didn’t stop her from committing four felonies. The IRS being the regulatory body won’t stop bozo individuals from committing bozo actions. But I digress….

In any case, Ms. King will be sentenced in April.

Posted in Scams, Tax Fraud | 1 Comment »

Hiding a Golf Course and Millions

Monday, January 30th, 2012

It’s one thing to hide a few dollars. It’s quite another to hide a few million dollars. The IRS’s assault on UBS, the Swiss bank, has reaped some more indictments. This time, three individuals involved in venture capital are alleged to have hidden away millions of dollars and a golf course in Colorado through secret Swiss accounts.

Stephen M. Kerr and Michael Quiel were Phoenix businessmen; among their businesses were two venture capital firms. The goal of such firms is to invest in start-up companies, and hope to take a few “public” (on stock exchanges) and reap large rewards. If the Department of Justice is correct, Mr. Kerr and Mr. Quiel had an additional method of making money.

They are alleged to have partnered with a former San Diego attorney, Christopher Rusch, to have used UBS to hide money and control of corporations. From the Department of Justice press release:

Beginning in or before 2004, and continuing through at least December 2007, Kerr and Quiel obtained control of shares of stock of publicly traded domestic companies in a way that concealed their ownership of the stock. Kerr and Quiel then deposited the stock, or proceeds from the sale of the stock, to multiple undeclared bank accounts set up with the assistance of Rusch at UBS in Switzerland and at another Swiss bank. These accounts were all held in the names of nominee entities to further conceal Kerr’s and Quiel’s ownership. Kerr and Quiel also used the accounts to conceal income earned from the subsequent sale of this stock from the IRS. In 2007, the combined total net assets in Kerr’s accounts exceeded $5.6 million and Quiel’s accounts exceeded $2.6 million. Rusch maintained signature authority over the secret accounts and, with the assistance of a Swiss account manager and financial intermediary, facilitated transactions on behalf of Kerr and Quiel.

Mr. Rusch is also accused of having his own secret offshore accounts at UBS and a bank in Panama. It appears Mr. Rusch’s website is still active. The indictment was handed down in early December but was not released until the three were in custody (today). It probably wasn’t difficult for the DOJ to find Mr. Rusch; a quick Google search noted that he resided in Panama part-time as of 2010. I find it interesting to note that Mr. Rusch was a tax attorney.

In any case, the three are accused of conspiracy, FBAR violations, and filing false tax returns. All are looking at a lengthy stay at ClubFed if found guilty.

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Posted in Tax Fraud | 2 Comments »

Only $16,788 Per Phony Child

Tuesday, December 6th, 2011

The saga of the woman who did not give birth to nondecuplets is complete. Via Joe Kristan comes word that Norma Coronel made a plea deal and was ordered to repay the IRS $302,186.

Though the linked story states she gave birth to 20 phony children, earlier reports indicated it was just 19 (with one of them real). I’ll use the smaller number (erring on the side of caution, I suppose) which equates to a repayment of $16,788 per phony child.

As I said when I first reported on this story, claiming something that’s very newsworthy on your tax return that’s false is a sure way to get into trouble. This was truly Bozo.

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Real Housewife Tax Cheats in my Backyard

Friday, December 2nd, 2011

I’m a resident of Orange County (well, if you read the next post I write…), and I missed the Real Housewife Tax Cheats in Orange County. Luckily, Joe Kristan caught it.

The Orange County Premium Fraud Task Force, a collaboration of investigators from OCDA, DOI, EDD, FTB and the Contractors State License Board investigated the couple for two years and discovered that between 2000 and 2008, they fraudulently submitted 42 claims for uninsured injured workers and underreported $29 million in payroll to SCIF in order to avoid paying Workers’ Compensation Insurance premiums.

Yes, proceeds from illegal income are taxable.

Posted in Orange County, Tax Fraud | Comments Closed

The Secret Decoder Ring Strikes Again!

Tuesday, November 15th, 2011

I’ve written about Sharon Kukhahn before. Ms. Kukhahn thought that there was some magical way to decode your IRS file and magically make your taxes disappear! Ms. Kukhahn sold her packages to the public and pocketed $2,000 – $3,000 per sale. As P.T. Barnum said, “There’s one born every minute.”

Back in 2008, the Department of Justice obtained an injunction against her from selling her worthless decoding scheme. (There is no secret IRS file to decode that will make your taxes disappear.) One would think that Ms. Kukhahn would fade into the sunset.

Nope.

In April 2010 Ms. Kukhahn was arrested, charged with conspiracy and tax evasion. Not only did Ms. Kukhahn allegedly promote phony tax schemes, she also supposedly orchestrated a letter writing campaign to stop the IRS from collecting taxes.

Ms. Kukhahn was found guilty back in May. Ms. Kukhahn supposedly used the proceeds from her scheme to buy a yacht and other worldly goods; meanwhile, many of her clients are suffering under tax debts they’ll never be able to repay.

Sentencing is set for Wednesday.

Now, if you really want a decoder ring, here’s an offer from nearly 60 years ago that (at the time) would get you one. It wouldn’t have removed your taxes, but it was a decoder ring:

Posted in Scams, Tax Fraud | 1 Comment »

A Hockey Player, A Tax Refund, Two Thefts, and Fraud

Friday, October 28th, 2011

Saku Koivu is a center for the Anaheim Ducks (they won in Minnesota last night,) and is a resident of Quebec. In September 2009 he received a tax refund of $140,899.04 from Quebec (Mr. Koivu used to play for the Montreal Canadiens). And that’s where the fun begins.

Someone stole that check from Mr. Koivu. That’s the first theft. That thief is unknown.

The person who stole the check goes to Go-Remit, a check cashing business in Côte-des-Neiges, Quebec. The former owner, David Nowak, thinks he’s dealing with an authorized agent of Mr. Koivu (the thief also has identity documents) and will cash the check. But he doesn’t keep $135,000 in his store, so he uses a third-party vendor to get the funds. He picks them up, and keeps them in a paper bag under the back seat of his car.

You’re a step ahead of me, right? Someone stole the bag containing the $135,000. That thief, too, hasn’t been found.

Meanwhile, what is Mr. Nowak to do? He decides to take small amounts from some of his clients to make up the $135,000.

Mr. Nowak’s fraud is discovered by the police after some of his clients think something is wrong. Mr. Nowak pleads guilty but gets a very lenient sentence of time served due to the unusual circumstances of the crime. He also is on probation for two years.

And I’ve only summarized the twists and turns of fate that move through this story.

News Story: La Presse (French)
Summary: Puck Daddy

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Diamonds in the Fraud

Monday, September 26th, 2011

There’s a new theory in the world of tax fraud promoters: Redemption. Joe Kristan had a post last week on some Kansas City fraudsters who used this method. The “idea” behind this is (as best as I can determine) that the federal government is holding money for you and all you have to do is send in various paperwork to get it.

The fraud in question was not confined to Kansas City. From Detroit comes the news of Diamond Tax Services. Damian Jackson, his wife Holly, and Tammy Daniels, are accused of promoting a tax fraud scheme. Mr. Jackson, a minister at a Detroit area church, used phony Form 1099-OID to obtain over $1.6 million in fraudulent refunds. The Department of Justice has asked a federal court to issue an injunction barring the three from preparing federal tax returns to others.

There may be a criminal prosecution in their future, too. The press release accuses the Jacksons of claiming $2.5 million in phony refunds on their tax returns. Those kinds of numbers tend to get IRS criminal investigation quite interested.

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