Folded; they didn’t need to know; sentence guaranteed; and other highlights of recent tax cases.
Shelton, Connecticut: Guy Smith, 62, has pleaded guilty to one count of tax evasion.
Smith owns and operates Centerline Interiors, which specializes in commercial interior construction, and is also a professional poker player who has played in tournaments at casinos in Connecticut and other locations around the U.S. and the Bahamas. Smith withdrew funds from both his business and personal bank accounts for his gambling business.
For the tax years from 2012 through 2016, Smith furnished his preparer with a summary of Centerline’s income and expenses but no bank statements. During these five years, Smith intentionally failed to report some $482,000 in income he received from Centerline. In addition, despite multiple IRS notifications, Smith concealed his gambling income from his preparer and paid no income taxes on more than $1 million in winnings.
For the 2012 through 2016 tax years, he failed to pay $821,415 in federal income taxes.
Sentencing is March 4, when Smith faces a maximum of five years in prison. He has agreed to cooperate with the IRS to pay all outstanding taxes, interest and penalties.
Brockton, Massachusetts: Preparer Jose Miguel Spinola has pleaded guilty to preparing false returns for others as well as filing a false tax return for himself.
Spinola pleaded guilty to two counts of preparing false returns and one count of filing a false return.
Between 2014 and 2017 Spinola prepared and filed federal income tax returns for clients that contained false, inflated and incorrect information. He added ineligible expenses on clients’ Schedules As for medical and dental expenses and unreimbursed employee business expenses, including meals and entertainment, business miles and work apparel. He also told clients the total federal refund they would receive without telling them about the bogus expenses.
Sentencing is March 23. Each count of aiding the preparation of false returns and filing false returns carries up to three years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater.
Addison, Texas: Staffing exec Chelsea Jolynn Tucker has pleaded guilty to tax evasion.
From approximately 1997 to 2016, Tucker was employed by a staffing and contract services company where she had various financial responsibilities, including administering payroll, preparing W-2s, making employment tax deposits, paying business expenses and monitoring the company’s tax obligations using tax software.
Between about 2012 and 2017, Tucker stole from the company in multiple ways: by paying herself as both an employee and a vendor; by issuing herself unauthorized bonuses and fraudulent expense reimbursements; by using a corporate credit card for personal purchases, and company money to pay personal credit cards; and by issuing company checks to a former employee. Tucker tried to dodge her income tax obligations by preparing W-2s that underreported the income owed to the IRS and failed to pay the company’s employment taxes.
The amount still owed to the IRS totals some $779,664.
Tucker faces up to five years in prison and a $100,000 fine.
Scranton, Pennsylvania: Francisco Rodriguez-Polanco, of the Bronx, New York, has been sentenced to 54 months in prison and two years of supervised release for conspiring to defraud the government and for aggravated ID theft.
Rodriguez-Polanco, who previously pleaded guilty, and his conspirators obtained fraudulent U.S. Treasury checks by stealing victims’ IDs to file false returns that generated significant refunds. He admitted that $550,000 to $1.5 million in losses occurred.
Rodriguez-Polanco, a citizen of the Dominican Republic who faces deportation at the end of his imprisonment, was also ordered to pay $857,729.65 in restitution. Co-defendant Marien Torres-Acevedo and conspirator Julio Polanco Suarez both pleaded guilty to similar offenses and await sentencing. A third conspirator, Alfred LiPuma, was previously sentenced to three years of probation and paid $2.1 million in restitution and fines.
Crystal Lake, Illinois: Contractor Gary T. Petersen has pleaded guilty to federal income tax evasion.
Petersen was president and sole shareholder of Petersen Sealcoating and Paving. During 2016 he deposited checks received by the company into his joint bank accounts with family members and a family member’s account that he controlled; he also cashed checks the company received and retained the cash with the intention of excluding the money from income reported by the company to the IRS. For calendar 2016, Petersen provided company income information to his preparer but concealed checks to the company that he deposited into his joint and controlled accounts and the checks he cashed.
The next spring, he filed a false 1040 stating that he and a co-filer had taxable income for the 2016 of $75,028 and that the tax due was $10,919. Petersen knew he and his co-filer had taxable income of some $1,174,261; the additional federal income tax due was some $402,431 for the 2016 tax year.
Petersen also admitted that during 2012 to 2015 he engaged in the same acts, underreporting the company’s income and his personal income on two tax forms for those years. Additional tax due totaled $618,687.
He faces a maximum of five years in prison, supervised release of up to three years and a fine of up to $250,000, or twice the gross gain or gross loss resulting from the offense, whichever is greater. Sentencing is Feb. 17.
St. Thomas, U.S. Virgin Islands: Residents Nisha Brathwaite and Darleen Thompson have been sentenced for conspiracy to defraud the U.S.
From January 2011 to July 2012, both women and others schemed to fraudulently obtain federal refunds. They caused income tax returns for tax years 2010 and 2011 to be e-filed in individuals’ true names and actual Social Security numbers but falsified the individuals’ income, tax withholdings, credits and other information.
As a result, $57,360 was deposited into Brathwaite’s bank account and $62,997.53 into Thompson’s.
Investigators determined that the U.S. lost hundreds of thousands of dollars from the scheme. Of 10 defendants charged in the Virgin Islands tax scheme, Brathwaite and Thompson are the second and third to be sentenced. Four others have entered guilty pleas and are pending sentencing. The remaining three are pending trial.
Brathwaite and Thompson were both sentenced to 21 months in prison and three years of supervised release and ordered to pay a special assessment of $100. Both were also ordered to pay restitution.
Portland, Oregon: Preparer Elizabeth Munoz has pleaded guilty to 13 counts of preparing and filing false income tax returns for clients and to four counts of filing false income tax returns for herself.
From 2015 to 2018, Munoz operated a tax prep business from her home, advertising that she would obtain for her clients the “Biggest Refund Guaranteed.” Munoz allegedly prepared 1,196 false and fraudulent individual income tax returns for about 629 clients, resulting in a tax loss of approximately $3 million through fraudulent refunds. Though Munoz charged clients up to $150 per tax return, she also reported no business income on her personal income tax returns from 2014 through 2017.
Sentencing is March 16. Each count carries a maximum of three years in prison, a $250,000 fine and a one-year term of supervised release. She will also be ordered to pay full restitution to the IRS.