Month: July 2022

Source: United States Department of Justice News

A North Carolina man was sentenced today to 15 months in prison for preparing false trust tax returns on behalf of his Washington, D.C.-based clients.

According to court documents and statements made in court, Thy Muhammad owned and operated Seventh Millennium International, a Rocky Mount, North Carolina, tax preparation business. In 2013 and 2014, Muhammad prepared fraudulent trust tax returns for clients, falsely reporting that the clients had paid taxes in the name of purported trusts. One such false return resulted in the IRS issuing a refund check of more than $500,000, of which Muhammad took nearly $78,000 as a preparation “fee.” During these two years, Muhammad claimed a total of more than $5 million in fraudulent refunds from the IRS that his clients were not entitled to receive.

In addition to the term of imprisonment, U.S. District Judge Randolph D. Moss of the District of Columbia ordered Muhammad to serve three years of supervised release and pay $669,000 in restitution.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement.

IRS-Criminal Investigation investigated the case.

Trial Attorneys Jeffrey McLellan and George Meggali, and former Trial Attorney Abigail Burger Chingos, of the Tax Division prosecuted the case.

Source: United States Department of Justice News

      LITTLE ROCK—Four women, all sisters, have pleaded guilty to their involvement in defrauding the U.S. Department of Agriculture out of over $11.5 million that was intended to benefit farmers who had been discriminated against. Lynda Charles, 72, of Hot Springs; Rosie Bryant, 74, of Colleyville, Texas; Delois Bryant, 75, of North Little Rock; and Brenda Sherpell, 72, of Gainesville, Texas, each pleaded guilty to conspiracy to commit mail fraud and to defraud the Internal Revenue Service today before Chief United States District Judge D. Price Marshall. Chief Judge Marshall will sentence the defendants at a later date.

      The four defendants admitted in court today that from 2008 until 2017, they solicited people to file false claims asserting they were discriminated against when they tried to get assistance from USDA for their farming operations. A fifth defendant, Niki Charles, is the daughter of Lynda Charles. A sixth defendant, Everett Martindale, worked as an attorney and acted as the legal representative for most of the claimants that the five women recruited. Both Niki Charles and Martindale are set for trial on August 30, 2022.

      The sisters also admitted today that they hired a tax preparer to falsify tax returns, resulting in failure to report over $4.6 million to the Internal Revenue Service. That tax preparer, Jerry Green, pleaded guilty in January 2021.

      As documented in plea agreements, the defendants submitted claims related to two matters: the Black Farmers Discrimination Litigation (BFDL) settlement and the Hispanic and Women Farmers and Ranchers (HWFR) claim program. The BFDL settlement resulted from a class action lawsuit filed in 2008 in which a group of black farmers claimed they had been discriminated against when they applied for farm credit, credit servicing, or farm benefits from USDA. Similarly, the HWFR litigation originated when groups of Hispanic and women farmers filed separate lawsuits against USDA, also alleging discrimination in their farm benefit programs.

      Both BFDL and HWFR resulted in a claims process where farmers who could show they had applied for participation in a USDA benefit program and believed they had been discriminated against could make a claim for financial relief. A successful claim resulted in an award of $62,500. Of that, $50,000 would be made payable to the claimant, and $12,500 would be transferred directly to the Internal Revenue Service as a tax withholding. Altogether, the sisters were involved with 192 claims, almost all of which were successful, resulting in a loss of over $11.5 million. The claims were false because the claimants had not suffered discrimination and, in most cases, had not even attempted to farm.

      The indictment alleges that Martindale would deposit claim checks into his law firm trust account, issue a check from that trust account to the claimant, and withhold his attorney fee. For both BFDL and HWFR, attorney fees were restricted to $1,500 per claimant. The indictment alleges that the four sisters entered an agreement with Martindale in which they would split the attorney fee. The sisters also demanded and received additional money from the claimants themselves.

      The money received from a claim was income that should have been reported on the claimant’s tax return. The sisters and Green admitted that Green provided tax preparation services for the claimants they had recruited and that Green falsified the tax returns in order to create a tax refund.

      Three of the sisters—Lynda Charles, Rosie Bryant, and Delois Bryant—filed false tax returns of their own and used money from the conspiracy to buy numerous homes and other real properties, a Chevrolet van, and a Mercedes G550. Under the plea agreement, the sisters are required to relinquish any claim to the vehicles immediately and repay, by time of sentencing, the fraud money they used to buy the real properties.

       The investigation is being conducted by USDA-OIG and IRS with assistance from the United States Marshals Service and the United States Postal Inspection Service. The case is being prosecuted by Assistant United States Attorneys Cameron McCree, Bart Dickinson, and Amanda Fields.

# # #

This news release, as well as additional information about the office of the

United States Attorney for the Eastern District of Arkansas, is available online at

https://www.justice.gov/edar

Twitter:

@EDARNEWS

Source: United States Department of Justice News

Steven “Craig” Shelton, 61, pleaded guilty today in federal court in the Eastern District of Texas to violating an arrestee’s civil rights by using excessive force against him. Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, U.S. Attorney Brit Featherston for the Eastern District of Texas, and Special Agent in Charge Matthew DeSarno of the FBI Dallas Field Division made the announcement.

During the plea hearing, Shelton admitted that on or about Sept. 21, 2021, while he was acting as the Chief Deputy and second-in-command of the Van Zandt County Sheriff’s Office, he repeatedly struck a handcuffed and compliant arrestee in the face. Shelton further admitted that his acts, which occurred in front of several other officers in the Rolling Oaks area of Wills Point, Texas, caused bodily injury to the arrestee. Shelton admittedly hit the arrestee out of frustration, despite knowing that there was no legitimate, law enforcement need to use force.

“Those who hold leadership positions inside sheriff’s offices violate the public trust when they abuse their official authority and position to carry out assaults on people detained in their custody,” said Assistant Attorney General Clarke. “The Department of Justice will continue to hold accountable law enforcement officers, at every level, who abuse their authority by using excessive force to deprive people of their constitutional rights.”

“It is the undisputed duty of a law enforcement officer to protect and serve,” said U.S. Attorney Brit Featherston. “Public trust in law enforcement is eroded when officers do not follow the laws they are sworn to enforce, and my office will continue to hold those accountable who think they are above the law.”

“Officers who use excessive force break the trust of their communities and their oath to protect and serve,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “Violating the civil rights of an arrestee is a clear abuse of authority and will not be tolerated by the FBI. We are dedicated to upholding the constitutional rights of everyone and expect those in law enforcement to do the same.”

With his guilty plea and pursuant to the terms of the plea agreement, the defendant faces a 44-month prison sentence.

A sentencing date will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case was investigated by the FBI Dallas Field Division. It is being prosecuted by Assistant U.S. Attorney Tracey Batson for the Eastern District of Texas and Trial Attorneys Kathryn E. Gilbert and Matthew Tannenbaum of the Justice Department’s Civil Rights Division.

Source: United States Department of Justice News

CHICAGO — A federal judge today sentenced a Chicago attorney to four months in prison for false statement and tax offenses in connection with funds he received from the failed Washington Federal Bank for Savings.

PATRICK D. THOMPSON, 52, of Chicago, was convicted in February on all seven counts against him, including five counts of willfully filing a false income tax return and two counts of knowingly making a false statement to the Federal Deposit Insurance Corp.  U.S. District Judge Franklin U. Valderrama imposed the sentence after a hearing in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Jay N. Lerner, Inspector General of the FDIC’s Office of Inspector General; Justin Campbell, Special Agent-in-Charge of IRS Criminal Investigation in Chicago; Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago Field Office of the FBI; Catherine Huber, Special Agent-in-Charge of the Central Region of the Federal Housing Finance Agency, Office of Inspector General; Sally Luttrell, Assistant Inspector for Investigations of the Department of the Treasury, Office of Inspector General; and Kathryn B. Richards, Chicago Housing Authority Inspector General.  Valuable assistance was provided by the City of Chicago Inspector General’s Office.  The government was represented by Assistant U.S. Attorneys Michelle Petersen, Brian Netols, and Jeremy Daniel.

According to evidence presented at trial, Thompson from 2011 to 2014 received $219,000 from Chicago-based Washington Federal via a purported loan and other unsecured payments.  He made one re-payment on the loan but then stopped making payments, and he failed to pay interest on the funds he received.  Washington Federal was shut down in 2017 after the Office of the Comptroller of the Currency determined it was insolvent and had at least $66 million in nonperforming loans.  When the FDIC, as successor in interest to Washington Federal, attempted to obtain repayment from Thompson in 2018, he falsely stated that he owed only $110,000 and that those funds were for home improvement.  In reality, Thompson knew he had actually received $219,000 in three separate installments – none of which went towards home improvements – and that $110,000 of it was paid by the bank directly to Thompson’s law firm as Thompson’s capital contribution to the firm.

The tax charges stemmed from Thompson falsely representing on five years of income taxes that he was entitled to a mortgage interest deduction for interest payments made on money he received from Washington Federal, even though he knew the loan was not a mortgage loan and he did not make interest payments as reported on those returns.