Month: November 2022

Source: United States Department of Justice News

A superseding indictment was returned by a federal grand jury in Dallas today charging a Texas lawyer and three co-conspirators with wire fraud, conspiracy to commit wire fraud, helping their clients file false tax returns, and conspiracy to defraud the United States, all based on an illegal tax shelter they promoted and helped implement. Joseph Garza, of Dallas, was previously charged on Oct. 18. The superseding indictment adds charges against three tax professionals, Kevin McDonnell, James Richardson and Craig Fenton.

According to the original indictment, from approximately 2012 to 2021 Garza promoted a tax shelter that allowed high-income clients to claim fraudulent tax deductions that reduced the taxes they owed to the IRS. Garza and his co-conspirators allegedly directed the clients to transfer funds into shell companies, then returned this money to the clients, untaxed, for their personal use. To conceal the circular flow of funds, Garza and the co-conspirators allegedly commissioned fictitious business valuation reports, created invoices for fake business expenses, and drafted sham contractual agreements.

The superseding indictment alleges that Garza directed clients to use hand-picked CPAs and other tax professionals, including McDonnell, Richardson and Fenton. McDonnell and Richardson, both CPAs, allegedly owned and operated McDonnell Richardson, P.C., an accounting, tax preparation, and legal services business located in Waxahachie. McDonnell allegedly is also a licensed attorney. Fenton allegedly was employed as a tax manager at McDonnell Richardson.

McDonnell, Richardson and Fenton allegedly helped Garza run the illegal tax shelter by preparing and filing fraudulent tax returns for the high-income clients and the shell companies, among other entities. The scheme allegedly allowed clients to conceal $1 billion from the IRS and caused a total tax loss exceeding $200 million.

McDonnell, Richardson and Fenton will all make their initial appearances at a later date before a U.S. Magistrate Judge of the U.S. District Court for the Northern District of Texas. If convicted, all four men face a maximum penalty of 20 years in prison for each count of wire fraud, 20 years in prison for conspiracy to commit wire fraud, three years in prison for each count of aiding and assisting in the filing of false tax returns, and five years for conspiracy to defraud the United States. A federal district court judge will determine any sentences after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Chad E. Meacham for the Northern District of Texas made the announcement.

IRS Criminal Investigations and the FBI are investigating the case.

Assistant U.S. Attorneys Renee Hunter, Katherine Miller and Marty Basu and trial attorney Robert A. Kemins of the Tax Division are prosecuting the case.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: United States Department of Justice

The owner of a Sergeant Bluff, Iowa, construction firm pleaded guilty today to tax evasion for evading payment of his company’s employment taxes.

According to court documents and statements made in court, Kevin Alexander, 62, of Sioux City, owned K&L Construction, Inc., a landscaping and construction company. As the sole shareholder and president of K&L Construction, Alexander was responsible for filing quarterly employment tax returns and collecting and paying over to the IRS payroll taxes withheld from employees’ wages. From the second quarter of 2014 through the first quarter of 2017, K&L Construction paid approximately $3.8 million in wages to its employees and withheld approximately $1 million in payroll taxes, but the company did not pay over any of these withholdings to the IRS.

During IRS collection proceedings, Alexander accepted responsibility for paying K&L Construction’s outstanding tax balance. Alexander, however, submitted a false form to the IRS that concealed some of his assets. As part of his plea agreement, Alexander admitted that he submitted the false form for the purpose of concealing assets and evading payment of K&L Construction’s outstanding payroll tax liability.

Alexander is scheduled to be sentenced at a later date and faces a maximum penalty of five years in prison for tax evasion. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Timothy T. Duax for the Northern District of Iowa made the announcement.

IRS-Criminal Investigation is investigating the case.

Assistant U.S. Attorney Ron Timmons of the Northern District of Iowa and trial attorney Meredith Havekost of the Tax Division are prosecuting the case.

Source: United States Department of Justice News

Hattiesburg, Miss. – A Hattiesburg woman was sentenced today by U.S. District Judge Keith Starrett to 60 months in federal prison for conspiracy to distribute methamphetamine, announced U.S. Attorney Darren LaMarca and Special Agent in Charge Brad L. Byerley of the Drug Enforcement Administration.   

According to court documents, beginning in October 2020, and continuing to December 9, 2020, Maketia Dozier, 35, conspired with others to distribute methamphetamine in and around the Hattiesburg area.  During the course of the conspiracy, Dozier was found to be responsible for the distribution of 18 pounds of methamphetamine.

In addition to the prison sentence, Dozier was ordered to pay a $5,000 fine.

The case is the result of an extensive investigation, dubbed “Don’t Tell On Me Bro,” which began as an operation targeting illegal drug trafficking in the Hattiesburg, Mississippi area. “Don’t Tell On Me Bro” is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

The case was investigated by the Drug Enforcement Administration, Lamar County Sheriff’s Office, Mississippi Bureau of Narcotics, Hattiesburg Police Department, Forrest County Sheriff’s Office, and the Columbia Police Department.  It was prosecuted by Assistant United States Attorney Keesha Middleton.

Source: United States Department of Justice News

A federal grand jury in Charlotte, North Carolina returned an indictment today charging two tax attorneys and an insurance agent with conspiring to defraud the United States and helping clients file false tax returns based on their promotion and operation of a fraudulent tax shelter.

According to the indictment, from 2011 to the present Michael Elliott Kohn and Catherine Elizabeth Chollet, both attorneys and residents of St. Louis, Missouri, and David Shane Simmons, a licensed insurance agent and broker based out of Jefferson, North Carolina, conspired to defraud the United States by promoting, marketing, and selling to clients a fraudulent tax scheme known as the Gain Elimination Plan (“GEP”). The defendants allegedly designed the GEP to conceal clients’ income from the IRS by fraudulently inflating business expenses through fictitious royalties and management fees. These fictitious royalties and management fees allegedly were paid, on paper, to a limited partnership largely owned by a charitable organization. In reality, Kohn and Chollet allegedly fabricated the royalties and management fees. In total, the defendants allegedly caused a tax loss to the IRS of tens of millions of dollars.

The indictment further alleges that Kohn and Simmons engaged in a scheme to defraud an insurance company by providing false information on insurance applications on behalf of their clients. The false information allegedly included fraudulent representations concerning the clients’ financials and the purpose of the insurance policies. In total, Kohn and Simmons allegedly caused the insurance company to issue more than $200 million in insurance policies based on false application information. Simmons allegedly earned large commissions for selling the insurance policies, many of which he split with Kohn and Chollet. Simmons also allegedly filed false personal tax returns by underreporting his business income and inflating his business expenses.

If convicted, Kohn, Chollet, and Simmons each face a maximum sentence of five years in prison for conspiring to defraud the United States and three years in prison for each of multiple counts of aiding and assisting in the preparation of false tax returns. Kohn and Simmons both also face a maximum sentence of 20 years in prison for wire fraud, and Simmons faces a maximum sentence of three years in prison for several counts of filing false personal tax returns, if convicted. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, and U.S. Attorney Dena J. King for the Western District of North Carolina made the announcement.

IRS-Criminal Investigation is investigating the case.

Trial Attorneys Kevin Schneider and Todd Ellinwood of the Tax Division and Assistant U.S. Attorney Caryn Finley of the U.S. Attorney’s Office for the Western District of North Carolina are prosecuting the case.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: United States Department of Justice News

Natchez, Miss. – A Mesquite, Texas man was sentenced today by U.S. District Judge David C. Bramlette, III, to 90 months in federal prison for his participation in an interstate drug trafficking operation distributing kilogram quantities of illegal drugs in the Natchez area from 2016 through 2018, announced U.S. Attorney Darren J. LaMarca and Special Agent in Charge Brad L. Byerley of the Drug Enforcement Administration.

Jimmie Lee Swearengen, Jr., 43, of Mesquite, Texas, was indicted by a federal grand jury and subsequently pled guilty to conspiracy to possess with intent to distribute methamphetamine. Swearengen had prior convictions in Adams County Circuit Court in 2001 for possession and sale of cocaine in a church zone, and in 2010 for controlled substance violations.

According to court documents, Swearengen conspired with Sammy Davis Wright, of Woodville, Wesley Bell of Natchez, Thomas Jerome Mitchell, of Victorville, CA, Justine Chambers of Victorville, CA, and Arthur Wilson, of Moreno Valley, CA, to distribute kilogram quantities of methamphetamine in the Natchez area.  Wright, Mitchell, and Chambers were separately sentenced today for their participation in drug trafficking operations in the Natchez area. Arthur Wilson was convicted by a federal trial jury in August 2022 of conspiracy to possess with intent to distribute methamphetamine and marijuana, as well as conspiracy to commit money laundering for his operation of a separate drug trafficking organization in the Natchez area.  Wilson is scheduled for sentencing on January 11, 2023. Bell is currently awaiting sentencing.

This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

This OCDETF case is the result of an extensive investigation targeting illegal narcotics distribution by the Drug Enforcement Administration, the Organized Crime and Drug Enforcement Task Force in Atlanta, GA, the Mississippi Bureau of Narcotics, the Adams County Sheriff’s Office, the U.S. Postal Inspection Service, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Mississippi Highway Patrol, and the Pearl Police Department. 

Assistant U.S. Attorney Carla J. Clark prosecuted these cases.