CPAs gone wrong; on the waterfront; trooper tricks; and other highlights of recent tax cases.
Jacksonville, Florida: Preparer Joanna Arlean Tukes has pleaded guilty to aiding and assisting others with the filing of fraudulent tax returns.
Since 2012, Tukes owned and operated a prep business where she reported false information on returns, including false claims for deductible expenses and losses. She then e-filed the returns and caused the IRS either to issue refunds when taxes would have been owed or to issue larger refunds than would have been due without the fraud.
Tukes prepared and filed a 2015 return in which she represented that the client had a business with no income and $99,651 in expenses. She also represented that the taxpayer had incurred medical and dental expenses of $29,600 and unreimbursed employee expenses of $15,600. She knew that the taxpayer was a wage-earning employee of a corporation and did not operate a business in 2015, and that the taxpayer had not incurred the expenses. The IRS issued a refund of $28,836 when the taxpayer should have owed $12,459.
She faces a maximum of three years in prison and has agreed to pay $366,000 restitution to the IRS.
Uniondale, New York: Former preparer Mariano Exantus has been sentenced to two years in prison for aiding in the preparation of a false tax return.
Exantus owned and operated the prep business Latrex Multi Service. From at least 2011 through 2016 he prepared and filed fraudulent federal returns for his clients on which he inflated refunds or caused the clients to be issued undeserved refunds. Exantus falsified itemized deductions and also claimed false credits, including the American Opportunity Tax Credit. The tax loss was more than $250,000.
Exantus was also ordered to serve a year of supervised release and to pay restitution to the IRS.
Phoenix: CPA Joshua J. Levine has pleaded guilty to one count of aiding in the preparation of a false return.
In 2013, Levine helped Nicholas Abraham prepare a phony 1120S for Worldwide Capital Holdings Corp., of which Abraham was director. The 1120S reported a business expense that was fabricated to reduce Worldwide’s net taxable income for 2012.
The two and others participated in preparing a false $227,140 invoice for consulting. They agreed that Worldwide would pay the invoice, with the amount recorded as a business expense. The scheme caused the evasion of the payment of $79,499 in taxes.
In 2014, Levine helped Abraham falsify a 1040 with a phony business rental property to generate false deductions and benefits. The tax loss was $1,093.
Lansing, New York: CPA Andrew N. LaVigne, 66, has been sentenced to 87 months in prison for bankruptcy fraud, mail fraud and money laundering.
LaVigne, who practiced for more than 30 years, filed for personal bankruptcy in 2004. At the time, he owed some $7.6 million to more than 80 creditors following a failed scheme to use their money to purchase sports and entertainment memorabilia for resale. During his years-long bankruptcy proceedings, he claimed that his only asset was his home and paid back no money to the investors.
LaVigne admitted that during his bankruptcy he used his CPA practice’s bank accounts to conceal between $3.5 million and $9.5 million in assets from the U.S. Bankruptcy Court and the Office of the United States Trustee. He laundered money by depositing funds unrelated to his practice into his business accounts and then using that money for his own benefit and that of his family, including buying himself sports memorabilia and writing checks to himself totaling tens of thousands of dollars that were never disclosed in his bankruptcy proceeding.
LaVigne also admitted to defrauding an elderly client in a $4.6 million mail fraud. Between 2014 and 2016, LaVigne convinced the elderly victim to pay $3.6 million for shares of a company that LaVigne created, which LaVigne claimed would develop a piece of waterfront property in Ithaca, New York. After the victim bought most of the company, LaVigne obtained an additional $1 million from her, purportedly as a further investment in the company.
He did not use the $1 million to invest in the company and never developed the property. Instead, he used the victim’s money to write checks to himself, pay for construction of a house for a family member and fund the payroll for his practice. LaVigne also laundered payments he received from this scheme through his CPA practice accounts.
LaVigne was also ordered to pay more than $3.6 million restitution to his victims.
Plainfield, New Jersey: Preparer Samuel Davis Jr., 54, has been sentenced to 30 months in prison for conspiring to defraud the IRS, falsifying his returns and witness tampering.
Davis was a detective sergeant in the N.J. State Police while owning and operating the tax prep business Get Organized Tax Accounting. He retired from the state police in 2016 after 28 years. For tax years 2011 to 2016, Davis and his co-conspirator prepared false individual income tax returns for clients. They used a number of fraudulent practices, including falsely claiming deductions, fabricating educational credits and submitting fake receipts to inflate refunds.
For tax years 2012 through 2014, Davis also filed false personal income tax returns by underreporting business income. In October 2018, Davis discovered that his son had received a subpoena to appear and testify before a grand jury, and he attempted to persuade his son to provide false testimony.
Davis was also ordered to serve three years of supervised release and pay a fine of $10,000 and restitution to the IRS of $71,558.
Co-defendant Kyna Felder-Ruiz was sentenced to three years of probation for her role in the scheme, according to published reports.
Highland, California: Robert Manuel Gamboa Jr., a.k.a. Paul Timothy Garcia, 32, has been sentenced to 54 months in prison for participating in a $1.9 million tax fraud using stolen IDs, including those of children.
Gamboa — along with co-defendants Charlene Castrejon, 61, Raymond Salazar, 55 and Rebecca Mona Sandoval, 35 — schemed to steal more than $1.9 million over two years by filing fraudulent income returns using stolen personal ID information such as names, Social Security numbers and dates of birth of third parties, including minors. The defendants ultimately got away with over $550,000. Gamboa’s role in the scheme involved cashing U.S. Treasury refund checks and opening bank accounts as necessary to cash the fraudulently obtained checks. Gamboa also participated in an elaborate credit card takeover scheme in which, using stolen IDs, he hijacked credit card accounts.
Gamboa also was ordered to pay $110,626.64 in restitution.
Berlin, Connecticut: Gelin Sterling, 31, has been sentenced to 15 months in prison to be followed by a year of supervised release for preparing false returns.
Sterling owned and operated the prep business Sterling Tax Plus, and for the 2014 through 2017 tax years prepared returns for numerous clients that included false mileage expenses, false charitable donations and other false income items.
Earlier this year, Sterling pleaded guilty to one count of aiding in the preparation of false tax returns. Sterling is a citizen of Haiti and faces immigration proceedings when released from prison.
Sterling was also ordered to pay $250,000 in restitution to the IRS. The amount may be reduced as his clients resolve their own tax liability with the IRS.
Norwalk, Connecticut: Bookkeeper Penni Sherman, a.k.a. Penni Parker, 52, has pleaded guilty to fraud and tax offenses stemming from an embezzlement.
Sherman operated PSP Accounting Bookkeeping and provided bookkeeping services to area businesses. Between 2011 and 2018, she stole $418,197.09 from clients and used the funds to pay her credit card bills and to cover other personal expenses, including salon services. Sherman failed to report the embezzled funds and other business receipts on her returns, resulting in a federal tax loss of $125,167.
Sherman pleaded guilty to one count of wire fraud, which carries a maximum of 20 years, and one count of making and subscribing a false tax return, which carries a maximum of three years. Sherman has agreed to make full restitution to victims and to the IRS.