Pizza Franchise Owner and Four Others Indicted for Alleged Federal Tax Fraud Crimes

July 17, 2013

The Federal Bureau of Investigation (FBI) on July 16, 2013 released the following:

“WASHINGTON— The Justice Department announced today that Happy Asker, franchise owner of multiple Happy’s Pizza franchises, was indicted by a federal grand jury in Detroit along with Maher Bashi, Tom Yaldo, Arkan Summa, and Tagrid Bashi for multiple tax offenses arising from a conspiracy to underreport taxable income and payroll taxes of nine Happy’s Pizza franchises. All defendants with the exception of Happy Asker were arrested.

A multiple-count indictment was unsealed in the Eastern District of Michigan charging Happy Asker, Maher Bashi, and Tom Yaldo with conspiracy to defraud the United States by keeping fraudulent accounting records and falsely reporting income taxes and payroll taxes due and owing.

The indictment alleges that from approximately June 2004 through April 2011, the defendants conspired with each other to divert business receipts, underreport wages, and understate the true income and expenses of specified Happy’s Pizza franchises. According to the indictment, the scheme resulted in the specified franchises paying more than $2.1 million in unreported wages to employees and shareholders.

Additional charges in the indictment include three counts of filing a false individual income tax return as to Happy Asker; 21 counts of aiding in the filing of false payroll tax returns as to Happy Asker and Maher Bashi; 23 counts of aiding in the filing of false payroll tax returns as to Tom Yaldo on behalf of specified Happy’s Pizza franchises; and 11 counts as to Happy Asker and Maher Bashi for aiding in filing false corporate tax returns on behalf of specified Happy’s Pizza franchises.

Finally, the indictment also charges Happy Asker and Maher Bashi with one count of obstructing the due administration of the internal revenue laws. Arkan Summa and Tagrid Bashi are also charged together in a count of obstructing the due administration of the internal revenue laws and Tom Yaldo is also charged with one count of obstructing the due administration of the internal revenue laws.

An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent until proven guilty. If convicted of the conspiracy charge, the defendants face up to five years in prison and a $250,000 fine. The charges of filing a false income tax return and aiding or assisting in filing a false return carry a maximum penalty of three years in prison and a fine of $250,000 for each count. The obstruction charge carries a maximum penalty of three years in prison and a fine of $250,000 for each count.

This case was investigated by Internal Revenue Service-Criminal Investigation, the Drug Enforcement Administration, and the FBI and is being prosecuted by Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Justice Department’s Tax Division.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Federal Agents Arrest Six People Across Alabama Charged with an Alleged State Inmate in Tax Refund Scheme

June 7, 2013

The Federal Bureau of Investigation (FBI) on June 6, 2013 released the following:

“BIRMINGHAM—Federal agents today arrested six people in four cities across Alabama who are charged in connection with a five-year federal tax fraud conspiracy directed from inside an Alabama state prison, announced U.S. Attorney Joyce White Vance, Internal Revenue Service-Criminal Investigation Division Special Agent in Charge Veronica Hyman-Pillot, and FBI Special Agent in Charge Richard D. Schwein, Jr.

The man charged as the leader of the conspiracy, Shermaine “Shade” German, 56, now incarcerated in Bibb County Correctional Facility in Brent, was an inmate at Donaldson Correctional Facility in Bessemer at the time of the conspiracy. He is charged with orchestrating the far-reaching tax fraud scheme from Donaldson, where he obtained the names, birth dates, and Social Security numbers of other people, often fellow inmates, including prisoners on death row and those serving sentences of life without parole. He used their information to create false income tax returns that contained fabricated amounts of tax withholdings, according to the indictment unsealed following the arrests.

German also created false power of attorney forms, which he mailed out of the prison along with the false income tax returns, according to the indictment. Various other members of the conspiracy notarized the power of attorney forms and used them to cash or deposit income tax refund checks received as part of the scheme, according to the indictment.

Six of seven people charged in the conspiracy with German were arrested today in Huntsville, Montgomery, Eufaula, and Mobile.

“Schemes such as this involve millions of dollars stolen from legitimate taxpayers and the U.S. Treasury,” Vance said. “Thanks to the diligent and cooperative efforts of law enforcement, we were able to shut down this long-term fraud.”

“Individuals who commit refund fraud and identity theft with this degree of trickery, dishonesty, and deceit deserve to be punished to the fullest extent of the law,” Hyman-Pillot said. “We, along with the United States Attorney’s Office, continue to do our part in protecting the sanctity and integrity of the tax system.”

“This case, as others our office and our law enforcement partners have investigated, shows that a person’s identity and identification numbers have become a valuable commodity to today’s criminal and should be guarded diligently by their owners,” Schwein said.

The 20-count May indictment filed in U.S. District Court charges that German and his co-defendants conspired from January 2008 through May 2013 to obtain payment of false claims for refunds from the Internal Revenue Service by filing fraudulent federal income tax returns in other people’s names.

Charged along with German in the conspiracy are: Ronald Webster, 55; Brenda Joyce McDonald, 55; and Yvette Berry Pinckney, 48, all of Montgomery; Marlo Yvette Miller, 46; and Irene King Douglas, 58, both of Huntsville; Cynthia Dianne Ware, 49, of Eufaula; and Barbara Ann Grimes, 62, of Mobile.

McDonald is the one defendant not yet in custody.

Further details of the scheme, as outlined in count one of the indictment, are as follows:

Douglas sent blank tax return forms to German in prison. Douglas also received and cashed or deposited proceeds from tax refund checks using power of attorney forms she had someone else notarize.

German used two addresses in Montgomery and one in Mobile as return addresses where tax refunds should be delivered. One of the addresses was a Montgomery P.O. Box owned by Webster; one was the Montgomery apartment address of McDonald on Bonaparte Boulevard; and the third was a Mobile P.O. Box from which Grimes collected refund checks and power of attorney forms.

Webster collected IRS refund checks mailed to his P.O. Box and provided the checks and power of attorney forms to other co-conspirators, including Miller and Ware in Huntsville and Pinckney in Montgomery. Pinckney notarized power of attorney forms and, along with other co-conspirators, used the forms to cash or deposit fraudulent refund checks. Proceeds from the scheme were deposited into Pinckney’s Regions Bank account. Pinckney communicated with German on a contraband telephone he had in prison.

Miller cashed or deposited the fraudulent refund checks she received from Webster into Regions Bank or Redstone Federal Credit Union.

McDonald collected fraudulent refund checks mailed to her Montgomery apartment and provided them to Webster.

Grimes received fraudulent refund checks and power of attorney forms at the Mobile P.O. Box, had the power of attorney forms notarized, and then used them to cash or deposit the checks.

Counts two through nine of the indictment charge German and Webster with making false claims to the IRS.

Counts 10 through 15 charge German with mail fraud for causing or aiding others in causing the U.S. Postal Service to deliver fraudulent refund checks to the Montgomery and Mobile addresses.

Count 16 charges German, Webster, McDonald, and Grimes with conspiracy to commit mail fraud against the U.S. Department of Treasury.

Counts 17 through 20 are aggravated identity fraud charges against German and Webster for using other people’s identifying information to create and file false tax returns.

The conspiracy to defraud the government and false claims charges both carry a maximum penalty of 10 years in prison and a $250,000 fine. Mail fraud and conspiracy to commit mail fraud both carry a maximum penalty of 20 years in prison and a $250,000 fine. Aggravated identity fraud carries a two-year minimum mandatory prison sentence that must be served consecutively to any other sentence imposed in the crime.

The IRS and FBI investigated the case. Assistant U.S. Attorney Russell E. Penfield is prosecuting the case.

The public is reminded that an indictment is only a charge. A defendant is presumed innocent, and it will be the government’s responsibility to prove guilt beyond a shadow of a doubt at trial.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


FBI arrest three former football players on allegations of ID-theft and tax-related fraud charges

May 1, 2012

The Miami Herald on May 1, 2012 released the following:

“Feds bust three former football players on ID-theft and tax-related fraud charges

BY JAY WEAVER

Two ex-National Football League players and a former Miami high school star have been arrested by the FBI on federal charges in connection with an alleged scheme to steal people’s identities and file false tax returns in others’ names to collect thousands of dollars in refunds, according to authorities.

The two ex-NFL players charged with defrauding the federal government and ID theft are: William Joseph, a University of Miami defensive tackle drafted in the first round by the New York Giants in 2003, and Michael Bennett, a University of Wisconsin running back also drafted in the first round by the Minnesota Vikings in 2001.

The third defendant, Louis Gachelin, is the half-brother of Denver Broncos star Elvis Dumervil. Gachelin was a standout at Miami Jackson High and Syracuse University as a defensive lineman and signed as a free agent with the New England Patriots in 2004. But he never made the final roster. Gachelin played in 2005 for NFL Europe’s Frankfurt Galaxy.

Joseph and Gachelin grew up in Miami; Bennett was born in Milwaukee.

All three were questioned after their arrests Monday by FBI agents at the bureau’s North Miami Beach regional office. They were then transferred to the Federal Detention Center in downtown Miami for court appearances Tuesday afternoon before U.S. Magistrate Judge Robert Dube, according to the clerk’s office. Details of the alleged scheme are expected to be disclosed in a criminal complaint to be released later Tuesday.

FBI spokesman Mike Leverock declined to comment.

As part of a related investigation, the FBI also arrested about a half-dozen other defendants Monday.

Authorities say the latest tax-related fraud case, while unique because of the ex-NFL defendants, is yet another indication of escalating identity-theft crimes in South Florida.

In April, a Coral Springs woman pleaded guilty to stealing the identities of U.S. Marines and others in a tax-refund scheme designed to trick the Internal Revenue Service into sending her tens of thousands of dollars, according to the U.S. attorney’s office.

Dorothy Boulin, 29, pleaded guilty in Miami federal court to one count each of fraud and aggravated identity theft. She faces up to 22 years in prison, but as part of her plea agreement Boulin agreed to work in an “undercover role” for the FBI that could significantly reduce her prison term.

For her scam, Boulin used an electronic IRS number — normally issued to legitimate tax preparers — to file false returns in the names of at least 14 people, including several U.S. Marines serving in Afghanistan, according to court records. The bogus returns sought more than $53,000 in refunds.

Boulin’s plea agreement cited a person identified only as “C.J.” as the supplier of the names, dates of birth and Social Security numbers of Marines victimized in her scam.

Crooks like Boulin have graduated from everyday credit-card fraud to stealing people’s identities such as names, dates of birth and Social Security numbers in order to rob taxpayers of refunds before they file their returns with the Internal Revenue Service, according to the U.S. attorney’s office in Miami.

Authorities say tax-return rackets are particularly pernicious because they harm two victims: the federal government as well as legitimate taxpayers whose identities and refunds have been stolen.

Here’s the root of the problem: Scammers have exploited a hole in the IRS electronic filing system, according to the U.S. Government Accountability Office.

The federal watchdog agency found that the IRS does not actually match tax returns to the W-2 income forms that employers file until months after the filing season ends on April 15. Employers file them at the end of February or early March, but the agency does not match them up with employees’ incomes reported on 1040 forms until June.

That’s way too late to catch identity thieves who file false returns in others’ names early in the year. What’s more, the IRS offers to download the refunds onto prepaid debit cards for speed and convenience.

Because of the relative ease, everyday criminals are moving into identity-theft rackets, using computers, the Internet and online tax services to fleece the IRS and taxpayers. The GAO reports that the number of identity theft-related fraud incidents on tax returns reached 248,000 in 2010, about five times more than in 2008.

In the past two years, the IRS has “redoubled” efforts to fight tax fraud by identity theft, according to Steven T. Miller, the IRS’s deputy commissioner for services and enforcement, who testified before the U.S. Senate Finance Committee in March.

Miller told the panel that last year the IRS launched new software filters to flag fraudulent returns, and new procedures for handling suspect returns.

Recent federal legislation may help combat the crime.

U.S. Sen. Bill Nelson, D-Florida, who presided over the March hearing, has sponsored a bill that would make it a felony, punishable by up to five years in prison, to use someone else’s Social Security or taxpayer identification numbers to file a fraudulent return.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Tax Crimes Least Likely To Be Prosecuted At U.S. Attorney’s Office In Los Angeles

April 16, 2012

Huffington Post on April 16, 2012 released the following:

“By Kendall Taggart

The U.S. attorney’s office in Los Angeles is less likely to prosecute criminal cases referred by the Internal Revenue Service than its counterparts in the rest of the state, according to a California Watch analysis of five years of data.

The eastern district, which includes Sacramento and Fresno, was the most likely to prosecute IRS referrals, the data shows. But the U.S. attorney in Los Angeles was the only office in the state that fell slightly below the national average of prosecuting criminal IRS cases.

Each U.S. attorney has broad discretion over the priorities for his or her district. They determine which criminal cases referred to them by other law enforcement agencies they want to pursue and which cases to close without prosecuting.

It is difficult to determine why the Los Angeles office lagged behind its peers.

“It’s definitely puzzling,” said Terree Bowers, a former U.S. attorney. Since leaving the Los Angeles office, Bowers said he brought a fraud case to the office’s attention and was surprised that it didn’t act on the case.

The agency did not comment specifically on the findings, but Bruce Riordan, a U.S. attorney’s office spokesman, said: “I have been associated with the Department of Justice and the Central District of California for more 20 years, and based on my experience, the Central District has a longstanding and well-deserved reputation, both locally and nationally, for vigorously and successfully prosecuting criminal tax violations.”

The IRS investigates and refers cases about tax fraud, money laundering, narcotics trafficking, organized crime and public corruption.

Compared with the volume of cases it handles, the IRS refers only a small percentage for federal prosecution. Syracuse University’s Transactional Records Access Clearinghouse, which compiled the data analyzed by California Watch, estimated that the odds of having the IRS refer a case to a federal prosecutor were about 12 per million nationwide last year.

In California, the IRS referred about 540 cases to federal prosecutors in the last fiscal year. When adjusted for population, the odds of having a case referred to a federal prosecutor in the state are 15 per million, slightly higher than the national average.

When they do receive cases from the IRS, three of the state’s four U.S. attorneys prosecute alleged offenders at a rate above the national average, the data shows.

Across the country, close to 54 percent of all IRS referrals are prosecuted. In the eastern district covering Sacramento, that prosecution rate is about 62 percent. For the northern San Francisco and the southern San Diego districts, the prosecution rate is the same: 57.8 percent. For Los Angeles, the rate falls to 51.4 percent.

The IRS has several ways of enforcing tax law, including audits and civil charges.

“The heavy gun of the IRS is criminal enforcement, but it’s a much less frequent event,” said David Burnham, a co-director of the Transactional Records Access Clearinghouse.

The federal tax filing deadline is tomorrow. But in the months leading up to that day, U.S. attorneys sometimes file several tax fraud indictments as a deterrent, Bowers said.

Since January, the U.S. attorney’s eastern district office has announced more than six fraud cases, including charges against three Sacramento women who are accused of trying to claim more than $1.3 million in fraudulent tax refunds. The scheme involved more than 280 false tax returns and numerous identify-theft victims.

According the the U.S. attorney’s office, the women filed fraudulent returns through TurboTax and obtained the tax service’s Green Dot debit cards “loaded with the tax return money.” The actual loss to the IRS was $962,079, out of the $1.3 million claimed by the women using various identities.

And late last month, the Los Angeles office announced that a former Los Angeles Dodgers pitcher, William S. Bene, had signed a plea agreement admitting that he did not pay taxes for an illegal business selling karaoke machines. The U.S. attorney’s office said Bene sold counterfeit karaoke jukeboxes and failed to report $600,000 in sales to the IRS.

As part of his plea agreement, the U.S. attorney said, Bene admitted he had illegally copied and sold karaoke songs on hard drives that each carried about 122,000 songs.

“Intellectual Property crimes are not victimless,” U.S. Attorney André Birotte Jr. said in a statement last month. “As this federal case shows, these crimes of stealth hurt the small businesses that do play by the rules, and they also deprive the federal government of tax revenue that could be put to beneficial use.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Two Physicians Indicted in an Alleged Conspiracy to Defraud the IRS by Concealing Their Income and Filing False Tax Returns

March 29, 2012

The Federal Bureau of Investigation (FBI) on March 28, 2012 released the following:

“GREENBELT, MD—A federal grand jury has indicted cardiologist Abdul H. Fadul, age 75, and Ali Al-Attar, age 49, a doctor of internal medicine, of Alexandria and McLean, Virginia, respectively, today on charges of conspiracy to defraud the United States by attempting to hide their true income and aiding in the preparation of false tax returns.

The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Acting Special Agent in Charge Eric C. Hylton of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Special Agent in Charge Nicholas DiGiulio, Office of Investigations, Office of Inspector General of the Department of Health and Human Services.

“This case should serve as a warning to anyone who is tempted to cheat on their taxes,” said U.S. Attorney Rod J. Rosenstein. “The IRS can and will pursue evidence of tax fraud and bring federal criminal charges.”

According to the indictment, Fadul and Al-Attar held joint ownership interests in nine medical practices located in Maryland and Virginia, with each medical practice having its own bank account. For tax years 2004 and 2005, Fadul and Al-Attar engaged an accounting firm in Maryland to prepare income tax returns for themselves and the joint medical practices. The defendants advised the accounting firm that it was standard practice for each of the joint medical practices to deposit the business receipts it generated, including payments from patients and insurance companies, into its own bank account. On March 26, 2004, Fadul and Al-Attar opened a joint bank account in their own names, into which they began depositing business receipts without telling their accountants.

The five-count indictment alleges that from March 26, 2004 through July 12, 2006, Fadul and Al-Attar conspired to defraud the U.S. by concealing their total income. Specifically, Fadul and Al-Attar deposited a total of over $500,000 in checks from patients and insurance companies for medical services rendered into the joint account in their names, rather than into the bank account of the medical practice that had generated the payment. The defendants then allegedly spent the money on personal items including real estate and other personal investments.

The indictment further alleges that Fadul opened a joint account with his wife and a separate account in his name only, which he then used to deposit payments from patients and insurance companies for services rendered by Fadul at medical practices he owned, including Cardio Vascular Center LLL, which Fadul owned with his wife. Fadul used the funds in both the joint account he owned with his wife and his personal account for his own enjoyment, including a $155,000 payment to the Fisher Island Club in Florida.

Fadul and Al-Attar concealed these personal accounts from the accounting firm, causing the accounting firm to prepare 2004 and 2005 income taxes for the doctors and their wives that fraudulently omitted the income the doctors had deposited into their personal accounts. Fadul and Al-Attar are both charged in the conspiracy and with aiding in the preparation of false tax returns for tax year 2005. Fadul is also charged with aiding in the preparation of false tax returns for tax years 2006 and 2007.

Fadul and Al-Attar face a maximum of five years in prison for the conspiracy. Al-Attar faces a maximum of three years in prison for aiding in the preparation of a false tax return and Fadul faces a maximum of three years in prison on each of three counts of aiding in the filing of false tax returns. No court appearance has been scheduled.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.

United States Attorney Rod J. Rosenstein praised the IRS-CI, FBI, and HHS Office of Inspector General for their work in the investigation. Mr. Rosenstein thanked Special Assistant United States Attorney Daren Firestone and Assistant United States Attorney David I. Salem, who are prosecuting the case.”

US v Abdul H. Gadul and Ali Al-Attar – Federal Criminal Indictment

18 U.S.C. § 371

26 U.S.C. § 7206

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

————————————————————–

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


IRS policies help fuel tax refund fraud, officials say

March 20, 2012

CNN on March 20, 2012 released the following:

“By Scott Zamost and Randi Kaye, CNN Special Investigations Unit

North Miami Beach, Florida (CNN) — Criminals across the country are raking in billions of dollars in tax refunds through a new and brazen form of fraud that takes advantage of the IRS’s fast online returns, law enforcement officials say.

Using laptops and free Wi-Fi connections, criminals are stealing identities and using the names of legitimate taxpayers to file fraudulent online tax returns. They’ve raked in billions, buying luxury cars, expensive jewelry and plastic surgery, police said.

“It’s like the federal government is putting crack cocaine in candy machines,” said Detective Craig Catlin of the North Miami Beach, Florida, Police Department. “It’s that easy.”

First, thieves obtain Social Security numbers and other personal information from insiders at hospitals, doctor’s offices, car dealerships or anywhere the information is stored. Then, they file an online tax return using the real taxpayer’s name and a fictitious income. In most cases, the criminals buy a debit card so the IRS can issue the refund on that card, although some thieves have also gotten their returns on actual Treasury checks.

The thieves know that the IRS does not verify the employer W-2s sent with the return until after the refund is issued.

It is a particular problem in the state of Florida, according to law enforcement officials.

“We can’t go … two days in a row without making a traffic stop, and there’s going to be tax return fraud in the car,” Catlin said. “We could stop an 18-year-old kid who’s got five (debit) cards. The average is $5,000 per card. So they’ll have $25,000, which is really cash, even though it’s on debit cards.”

And it’s not just small-time criminals, he said.

“We have other cases that range up to $100 million where subjects have opened up corporations and bank accounts and business accounts,” Catlin said. “And they’re receiving millions of dollars from the IRS that are all fraudulent.”

Prisoners’ tax refund scam nets millions from IRS

Last year, North Miami Beach police arrested the leader of the “Money Avenue” gang that they say specializes in tax return fraud. When police searched his home, they found about $250,000 in debit cards “just sitting on the dining room table for that week’s worth of work,” Catlin said.

“And inside his closet, there were nine to 10 spiral notebooks, ledgers of names, Social Security numbers, and dates of birth and the dollar amounts of returns that they’ve done on 3,000 victims,” he added.

It’s a crime that has replaced drug dealing in many neighborhoods.

“They’re sitting on a computer or iPad; they’re doing a return with a stolen identity where they don’t have to rob anybody or stick a gun in anybody’s face or run through the streets from police,” Catlin said.

Although tax refund fraud has been around for decades, North Miami’s interim police Chief Larry Gomer said the speedy returns and the option of having your refund issued on a debit card are making it easier for criminals to pull off the fraud.

“I think (the IRS’s) intentions might have been good in trying to speed returns to members of the community, but I think the problem is, they have set up a system that is too easy to abuse,” Gomer said.

He suggested that the IRS slow its processing of tax returns.

“Right now, when someone becomes a victim of income tax fraud and they catch it, it could take up to a year for them to get their return,” Gomer said. “But the way that the IRS is running the system right now, somebody can make a fraudulent return, (and) they are mailing out a check to them in two weeks without checking the information on the return.”

In Florida, where identity theft is rampant, the cities of North Miami Beach and Tampa have been particularly hard hit by the fraud. Police estimate that in the past two years, criminals in Tampa have cashed in on $450 million in fraudulent tax return money.

Even police who are fully aware of the scam have become targets themselves, including four North Miami Beach Police Department detectives who specialize in combating tax refund fraud and officers in other South Florida police departments.

Police in Tampa discovered “a written tutorial that tells you step by step how to commit this type of crime,” according to the city’s police chief, Jane Castor.

“Throughout those written pages, it says how simple it is to do it,” she said. “We’ve also heard from people on the street that it’s about a five-minute street-corner lesson.”

In fact, a police informant who teaches friends how to commit the fraud said anyone could learn it.

“It’s like friends get together, and everybody brings their laptops, and we all work together,” the informant said. “Some people I know get up at like 8 in the morning and don’t finish until 8 at night.”

Law enforcement officials said that if the IRS stopped allowing the use of debit cards, that would curtail a majority of the fraud.

“The debit cards are a huge problem,” Castor said. “Plus … the (IRS’s) focus, from my understanding, is getting these tax returns out quickly … so instead of focusing on getting those out quickly, (the IRS should) put more of a focus on the fraudulent aspect of it.”

Deputy IRS Commissioner Beth Tucker pointed out that the debit cards are widely used by legitimate taxpayers who may not have a bank account.

“One hundred and forty million folks are filing their returns every year. Not every taxpayer has a bank account, and so the debit cards that are issued by a third-party provider are a legitimate way for taxpayers to get their refund,” she said.

Last year, the IRS reported 938,664 fraudulent returns related to identity theft, totaling $6.5 billion, Treasury Inspector General for Tax Administration J. Russell George told a House subcommittee this month.

Treasury officials say that was money identified by the IRS as fraudulent but not actually issued. The IRS could not provide an estimate of how much fraudulent refund money it has issued.

“Any dollar that goes out of our tax system related to refund fraud is a dollar too much,” Tucker said. “We have noticed that there are more folks attempting identity theft. We’re in the middle of filing season, and we should be able to have a better assessment of exactly what the dollar amount could potentially be.”

Last year, the IRS identified at least 582,000 taxpayers who were the victims of identity theft, which is more than double the amount from only three years prior.

In testimony before Congress last year, National Taxpayer Advocate Nina Olson said the IRS has implemented a number of filters to catch the fraud, including an electronic marker to mark accounts of verified identity theft victims, an IRS identity theft affidavit form and a standardized list of acceptable documents to substantiate identity theft.

Tucker said the IRS filters are “in place from the start of the filing season” and are “part of our prevention and detection.” She also said the IRS has trained 40,000 employees across the country in the past three months to deal with identity theft.

Also, the IRS last year began issuing an Identity Protection Personal Identification Number to victims of identity theft when filing their future returns.

But the filters, according to Olson’s annual report to Congress, “inevitably block large numbers of proper refund claims” since there “is no easy way to distinguish proper claims from improper ones.”

Tax refund fraud by identity theft will be the subject of Tuesday’s hearing before the Senate Subcommittee on Fiscal Responsibility and Economic Growth. It is the third hearing on the issue since last year.

Tampa officials have expressed concern that the IRS is not doing enough to combat the situation, which Castor said is one of the worst cases of fraud she has seen in her career.

“In my 28 years of law enforcement, I don’t think that I have ever seen this magnitude of fraud that is just wide open,” the police chief said. “It’s wide open and there just doesn’t seem to be much being done about it.”

Tampa Mayor Bob Buckhorn said he’s angry that the IRS has not done more to help the city combat the fraud.

“As far as I’m concerned, they’re missing in action,” Buckhorn said. “They have not been helpful; they have not been a player; they have not taken responsibility for their side of the enforcement. If anything, you know, we’ve been banging our heads against their door asking for help and getting nothing in response. The silence has been deafening.”

Tucker disagreed with the mayor, noting that the IRS has “significantly increased the amount of resources we’ve devoted to identity theft, a heinous crime.”

A week after CNN’s March 6 interview with Tucker, the IRS sent a team of officials to meet with police officials in North Miami Beach and Tampa.

Buckhorn said the problem in Tampa is “just the tip of the iceberg” and offered this warning to the mayors of other U.S. cities:

“Go back and ask the IRS in (your) jurisdiction, ‘What are you doing? Is this a problem in my jurisdiction?’ Because I guarantee you it is,” Buckhorn said. “You may not know it, but it is.””

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Douglas McNabb – McNabb Associates, P.C.’s
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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Lakecia Motley Sentenced to 63 Months in Federal Prison for Tax Fraud Conspiracy

August 23, 2011

The U.S. Attorney’s Office Middle District of Alabama on August 22, 2011 released the following:

“MONTGOMERY WOMAN SENTENCED IN TAX FRAUD CONSPIRACY  
  
Montgomery, Alabama – Lakecia Motley, 32, of Montgomery, was sentenced to 63 months in federal prison for tax fraud announced, George L. Beck, Jr., United States Attorney for the Middle District of Alabama. Motley was also ordered to pay $676,465.49 in restitution to the United States.

On August 12, 2011, Motley pleaded guilty to conspiracy to file false and fraudulent federal income tax returns, in violation of Title 18, United States Code, Section 286. At the plea and sentencing hearings, the United States proved that between 2005 and 2007, Motley and her co-conspirators filed numerous fraudulent tax returns using stolen identity information. The United States lost a total $676,465.49 from the false tax returns.

The case was investigated by Internal Revenue Service, Criminal Investigation, and the United States Secret Service. The case was prosecuted by Assistant United States Attorney Jared Morris.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Joseph M. Tages Indicted for Engaging in an Alleged Health Care Fraud Scheme and Federal Income Tax Fraud

August 13, 2011

The Federal Bureau of Investigation (FBI) on August 12, 2011 released the following:

“CHICAGO— An Aurora physician was indicted for allegedly engaging in federal tax and health care fraud in connection with operating a medical clinic he owned, federal law enforcement officials announced today. The defendant, Joseph M. Tages, was charged in a 12-count indictment returned yesterday by a federal grand jury. Tages allegedly diverted more than $750,000 in cash receipts from his medical practice and failed to report the income on both corporate and individual federal income tax returns for the years 2004-06, thus avoiding payment of more than $260,000 in taxes he owed on that income. He also allegedly defrauded various health insurance providers, including labor union health and welfare funds, by submitting reimbursement claims falsely stating that he regularly saw patients for follow-up office visits on Mondays, two days after performing such outpatient procedures as removing genital warts.

Tages, 65, of Plainfield, will be arraigned at a later date in U.S. District Court in Chicago. Tages owns West Suburban Medical and Surgical Associates S.C., and operates the Aurora Health center (AHC) on Weston Avenue in Aurora. He was charged with six counts of filing false corporate and individual income tax returns, two counts of mail fraud, and four counts of making false statements involving a health care benefit program. The indictment also seeks forfeiture of at least $10,000.

The charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, together with Robert D. Grant, Special Agent in Charge of the Chicago Office of Federal Bureau of Investigation; Alvin Patton, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and James Vanderberg, Special Agent in Charge of the U.S. Department of Labor Office of Inspector General in Chicago.

The tax charges allege that Tages diverted a total of $765,593 in cash receipts from AHC and under-reported the business’s income on its corporate tax returns for 2004-06. As a result, AHC failed to pay approximately $267,956 in corporate taxes owed to the IRS. At the same time, he allegedly failed to report the diverted cash on his personal income tax returns by a total of $766,772 during those three years. As he result, he failed to pay approximately $282,787 in personal taxes owed to the IRS.

Between 2006 and 2009, Tages allegedly defrauded various health insurance providers by falsely claiming reimbursement totaling at least $10,000 for services that he did not provide. According to the indictment, between 2001 and 2009, Tages diagnosed genital condyloma on numerous male patients at his affiliated Latino Institute of Surgery, and generally performed wart removal procedures on Saturdays. That same day, he allegedly falsely noted in some patients’ files that he had already seen the patient in his office on the upcoming Monday. Subsequently, Tages submitted insurance claims falsely stating that patients were seen in his office when they were not, the indictment alleges.

Between 2006 and 2009, the indictment alleges that Tages diagnosed gastro esophogeal reflux disease, also known as GERD or acid reflux, in numerous patients and caused others to perform an esophagogastroduodenoscopy, or EGD, procedure on Saturdays in which a bendable tube with a camera is inserted through a patient’s mouth to examine the esophagus, stomach and small intestine. Again, that same Saturday he allegedly falsely noted in some patients’ files that he had already seen the patient in his office on the upcoming Monday. Tages then submitted insurance claims falsely stating that patients were seen in his office when they were not, the charges allege. The government is being represented by Assistant U.S. Attorney Kaarina Salovaara.

The charges in the indictment carry the following maximum penalties on each count: mail fraud—20 years and a $250,000 fine; making false statements involving health care programs—five years in prison and a $250,000 fine; and filing false corporate and individual income tax returns—three years in prison and a $250,000 fine, and restitution is mandatory. In addition, defendants convicted of tax offenses face mandatory costs of prosecution and remain civilly liable to the government for any and all back taxes, as well as a civil fraud penalty of 75 percent of the underpayment plus interest. If convicted, however, the court must determine a reasonable sentence to impose under the advisory United States Sentencing Guidelines.

An indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Theodore L. Freedman, a Lawyer, Indicted in Manhattan Federal Court with Four Counts of Tax Fraud in Connection with Alleged False and Fraudulent Statements to the IRS

July 15, 2011

The U.S. Attorney’s Office Southern District of New York on July 14, 2011 released the following:

“FORMER PARTNER AT MAJOR INTERNATIONAL LAW FIRM CHARGED IN MANHATTAN FEDERAL COURT WITH TAX FRAUD VIOLATIONS

PREET BHARARA, the United States Attorney for the Southern District of New York, and CHARLES R. PINE, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal investigation Division (“IRS-CID”), announced that THEODORE L. FREEDMAN, a former senior partner at a major international law firm (the “Law Firm”), was charged yesterday in Manhattan Federal Court with four counts of tax fraud in connection with false and fraudulent statements he allegedly made on his tax returns that resulted in more than $1 million in losses to the IRS. Among other things, FREEDMAN, 63, misrepresented his partnership income at the Law Firm by approximately $2 million, and fraudulently claimed over $500,000 in expenses for a sole proprietorship law practice that did not exist. FREEDMAN voluntarily surrendered to authorities this morning, and will be arraigned before U.S. Magistrate Judge JAMES C. FRANCIS IV later today.

Manhattan U.S. ATTORNEY PREET BHARARA stated: “As alleged, Theodore Freedman, an accomplished and well-compensated attorney, abdicated his legal and ethical responsibilities by cheating on his taxes. Just like every ordinary citizen, privileged professionals have to pay their taxes too, and we will continue working with our partners at the IRS to ensure that they do.”

IRS Special Agent-in-Charge CHARLES R. PINE said: “To build faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share. The IRS-Criminal Investigation Division, together with the Department of Justice will investigate and prosecute those who violate our tax system.”

According to the Indictment filed yesterday:

FREEDMAN was a senior partner in the New York office of a major United States law firm, where he was a member of the Law Firm’s restructuring group. In that capacity, FREEDMAN received income that was calculated as a percentage of the Law Firm’s partnership income for a given year. The Law Firm issued FREEDMAN, the IRS form that reports an individual partner’s share of income or loss from the partnership. According to the form, FREEDMAN’s aggregate income for calendar years 2001 through 2004 was approximately $5,388,699.

As charged in the Indictment, FREEDMAN self-prepared, signed, and filed tax returns for calendar years 2001 through 2004. Rather than reporting the true and correct amount of partnership income he received from the Law Firm for the years in question, FREEDMAN falsely and fraudulently under-reported his income in the aggregate amount of approximately $2,097,211.

In addition, FREEDMAN also attached to each of his tax returns for those same years a Schedule C, which is supposed to report the amounts of income and expenses, and the resulting net profit or loss, for a taxpayer’s self-owned business. On each of the Schedules C for these tax years, he falsely and fraudulently claimed to have sustained significant losses for a fictitious sole proprietorship — a legal practice — in the total aggregate amount of approximately $542,358. That sole proprietorship was fictitious.

In total, FREEDMAN’s false statements on his self-prepared returns resulted in a tax loss to the IRS of more than $1 million.

FREEDMAN faces a maximum sentence of three years in prison on each of the tax fraud counts, for a total maximum of 12 years in prison.

Mr. BHARARA praised the work of the Internal Revenue Service, Criminal Investigation Division.

This case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney E. DANYA PERRY is in charge of the prosecution.

The charges contained in the Indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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James E. Moss, Who Owned and Operated “Flash Tax,” was Federally Indicted with Four of His Employees By A Federal Grand Jury Sitting in Montgomery, Alabama

June 16, 2011

U.S. Department of Justice on June 16, 2011 released the following press release:

Five Alabama Tax Return Preparers Charged with Tax Fraud

WASHINGTON – A group of five tax return preparers were indicted in the Middle District of Alabama on tax fraud charges, the Justice Department and Internal Revenue Service (IRS) announced today. James E. Moss, who owned and operated “Flash Tax,” was charged with four of his employees by a grand jury sitting in Montgomery, Ala. Moss along with Lutoyua N. Thompson, Chiquita Q. Broadnax, Avada L. Jenkins and Melinda M. Lambert were each charged with one count of conspiracy to defraud the United States and 27 counts of assisting in the preparation of false tax returns.

According to the indictment, the group conspired to knowingly place false information on taxpayers’ returns in order to obtain higher tax refunds from the IRS. The indictment further alleges that the group sought at least $129,266 in fraudulent tax refunds from the IRS.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, each defendant faces a maximum of 86 years in prison.

The case is being investigated by IRS-Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Todd Brown and by Tax Division Trial Attorneys Charles M. Edgar, Jr. and Michael Boteler.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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