Taxable Talk

Well, back in December of 2002 a woman named Norma Coronel allegedly gave birth to nineteen children. I never heard of this, and with the birth supposedly happening in nearby Los Angeles, I’m certain that a woman giving birth to 19 children would have made the news. (Yes, nondecuplets would be having 19 children at once.)

Ms. Coronel allegedly put down all 19 of her “children” on her tax return. The IRS was skeptical. Perhaps it’s the fact that the largest number of live births at once (with all the children surviving) is eight. Perhaps it was the 18 supposedly phony social security numbers. (Ms. Coronel did give birth to a son in December of 2002.)

No matter, the IRS and Social Security Administration investigated, and Ms. Coronel has been arrested and charged with 35 counts of filing false tax returns, using Social Security numbers fraudulently, and theft. She faces a maximum of 143 years in prison and fines of up to $5.6 million.

This is perhaps one of the most Bozo tax fraud cases I’ve ever read.

Nick Holquin, Jr. was a tax preparer in San Jose. He decided to invest in a Mississippi land development project. When the economy tanked, the project did, too.

Mr. Holquin was able to get twelve individuals to loan him money for this project. Unfortunately, he neglected to tell them about his bankruptcies. His attorney, Dennis Lempert, told the San Jose Mercury that he should have disclosed the one bankruptcy he was aware of. Trouble is, there were at least four others.

He also told clients he was a CPA. He wasn’t.

And the topper was that he neglected to file his own state tax returns…for the last 20 years.

Back in March Mr. Holquin pleaded no contest to tax evasion and fraud. He was sentenced on August 4th to 44 months in prison plus he must make total restitution to the fraud victims and the Franchise Tax Board of over $1.4 million.

I guess I’m now beginning to be impacted by jet lag. I see a headline titled, “Fake rabbi admits million-dollar tax fraud,” and just go on. It hits me a few moments later, though, that this is real.

The US Attorney’s Office press release gives the crux of the story in the first sentence: “A former Chicago man who lived in Israel since 2003 pleaded guilty [on Friday] to federal tax fraud conspiracy charges, admitting that he orchestrated a group of family members and others who tried to obtain at least $54 million in fraudulent federal and state income tax refunds using the identities of at least 2,900 prisoners and deceased persons.” The man is Marvin Berkowitz, and he did get at least $4.5 million from the IRS and state tax agencies. Also involved in the scheme was his son David (he earlier pleaded guilty); charges are pending against another son Yair and his son-in-law Eric Berkowitz.

The scheme itself was quite complex:

According to Berkowitz’s plea agreement, between 2003 and August 2009, Berkowitz directed a conspiracy to file thousands of fraudulent state and federal income tax returns, using the names and social security numbers of federal inmates and deceased persons without their or their families’ knowledge or consent. The false returns included various fictitious and false items, including addresses and phone numbers, deductions, business losses and expenses, credits, and W-2 wage and 1099 income statements of earnings from employers. Berkowitz forged the signatures of the purported taxpayers on the returns, and then mailed packages from Israel containing the false returns, together with stamped envelopes, addressed to the IRS and state taxing agencies, to individuals working for him in the United States. Berkowitz instructed those individuals to mail the envelopes from different mailboxes in order to avoid raising suspicion at the IRS and state taxing agencies…

…Berkowitz variously misrepresented to a number of individuals that he worked with that he was a tax preparer, a certified public accountant, a rabbi, an attorney, and/or that he operated a tax preparation business. In some cases, Berkowitz provided these individuals with letters purporting to confirm that Berkowitz was employed by a company managing the tax returns of clients stationed in the Middle East, as well as with documents purporting to be powers of attorney authorizing Berkowitz, or Berkowitz’s co-conspirators, to act on behalf of the taxpayer.

This isn’t Marvin Berkowitz’s first brush with the law. Back in 1984 he received a permanent injunction from acting directly or indirectly as a tax preparer. That obviously didn’t work. The 188 to 235 months he’ll spend at ClubFed will likely make it a lot more difficult for him to act as a tax preparer, though.