Month: April 2023

Source: United States Department of Justice Criminal Division

On March 13, 2022, a federal court in Detroit entered a permanent injunction against Jeanisia Saquise Allen and First Choice Tax Solutions, LLC, The Tax Experts, Inc., The Tax Experts, LLC, and Top Notch Taxes, Inc., prohibiting them from preparing federal tax returns for others and owning, operating, or franchising a tax return preparation business. Following a payment by Allen to the government pursuant to a settlement agreement, the court, with the government’s consent, today dismissed claims against Allen and her businesses seeking the disgorgement of ill-gotten gains that they received for the preparation of tax returns.

In addition, in related cases also filed in the same Detroit federal court, the court previously entered permanent injunctions against Jennifer Sherman and Erica McGowan, and their respective related businesses, Sherman Management Co., LLC and America Enterprise, LLC. The government complaints in those cases alleged that Sherman and McGowan entered into agreements with Allen and her entity, The Tax Experts LLC, to use the name “The Tax Experts” to conduct business preparing tax returns. The complaints in the cases against Sherman and McGown alleged that their companies falsely claimed the Earned Income Tax Credit and education credits, fabricated business income and expenses, and claimed improper filing status for customers.

A third lawsuit against Annetta Powell and Jasmine Powell, who the government also alleges entered into agreements to use the name “The Tax Experts” to conduct a tax preparation business, is ongoing in federal court in Detroit. Annetta Powell agreed to the entry of a preliminary injunction barring her and her businesses from preparing federal tax returns for others until the date on which trial on whether a permanent injunction is warranted occurs.

In the case against Allen, the complaint alleges that The Tax Experts has operated as many as 32 tax preparation stores during a single year, primarily in metro-Detroit, but also in Chicago and Los Angeles. Over the course of three years (2017, 2018, and 2019), businesses operating as “The Tax Experts” allegedly prepared more than 17,000 federal tax returns claiming over $82 million in tax refunds. The complaint alleges that Allen and The Tax Experts failed to train, oversee, and control businesses that operate under an agreement to use that name. The complaint against Allen further alleges the Tax Experts prepare false or fraudulent tax returns exhibiting common and widespread false income, expenses, claims, credits, and deductions. According to the complaint against Allen, the IRS examined 716 federal tax returns prepared by The Tax Experts, resulting in a total additional tax owed to the United States of $3,552,114, or an average of $5,349.57 for each adjusted return. 

Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.

Shady tax return preparers remain a concern of the IRS, which recently warned taxpayers about unscrupulous tax return preparers as part of the IRS’s Dirty Dozen series. As the 2023 tax season continues, taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS offers tips on how to accurately file returns and how to choose a tax return preparer, as well as steps taxpayers can take to get a jumpstart on filing. The IRS also offers 10 tips to avoid tax season fraud and ways to safeguard their personal information.  

Taxpayers seeking assistance can access the IRS’s free directory of federal tax preparers. The IRS also has programs offering free basic return preparation for qualifying seniors and individuals with low to moderate income). In addition, IRS Free File, a public-private partnership, offers free online tax preparation and filing options on IRS partner websites for individuals whose adjusted gross income is under $73,000. For individuals whose income is over that threshold, IRS Free File offers electronical federal tax forms that can be filled out and filed online for free.

In the past decade, the Department of Justice Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Source: United States Department of Justice Criminal Division

Federal grand juries in Providence, Rhode Island, and Boston returned separate indictments charging seven commercial fishermen with tax evasion and failing to file returns.

According to the indictments, the commercial fishermen each worked for fishing companies operating primarily out of New Bedford, Massachusetts, or Point Judith, Rhode Island, and received substantial compensation. The companies allegedly paid the fishermen as independent contractors and documented that income by, among other things, filing Forms 1099 with the IRS that reported the funds paid to the fishermen. It is alleged that notwithstanding the receipt of this income, each fisherman did not file individual tax returns or pay all the taxes owed on that income – for some defendants, they allegedly failed to file and/or pay taxes for a decade or more. To conceal the source and disposition of their income, the fishermen allegedly cashed paychecks and then used the cash to fund their lifestyles. One of the defendants allegedly also used the name and Social Security number of another individual to conduct business as a further effort to hide income. In some instances, the fishermen allegedly filed false tax returns for certain years by either not reporting their fishing income or by reporting false business expense deductions to reduce the amount of taxes they owed. Each allegedly evaded tax on between $900,000 and $1.9 million in income.

The seven fishermen indicted are:

Jorge Cazarin of New Bedford, Massachusetts, was charged with five counts of tax evasion and five counts of willful failure to file tax returns for 2016 through 2020.

Christopher Garraty of Newport and East Greenwich, Rhode Island, was charged with three counts of tax evasion and three counts of willful failure to file for 2016 through 2018, and a fourth count of tax evasion related to taxes he allegedly owed for 2007 through 2011.

Wojciech Kaminski of West Warwick, Rhode Island, was charged with five counts of tax evasion for 2014 and 2016 through 2019 and four counts of willful failure to file tax returns for 2016 through 2019.

Brian Kobus of Durham, Connecticut, was charged with five counts of tax evasion for 2017 through 2021.

Rodolfo Membreno of Fall River, Massachusetts, was charged with six counts of tax evasion for 2012 and 2017 through 2021 and four counts of willful failure to file tax returns for 2017 through 2019 and 2021.

John Doe of New Bedford, Massachusetts, was charged with six counts of tax evasion for 2016 through 2021 and three counts of willful failure to file tax returns for 2016 through 2018.

Miguel Cruz Rubio of New Bedford, Massachusetts, and Elizabethtown, North Carolina, was charged with four counts of tax evasion for 2016 through 2019.

If convicted, each defendant faces a maximum sentence of five years in prison for each evasion count and one year in prison for each failure to file a tax return charge. 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 thanked U.S. Attorney Rachael S. Rollins for the District of Massachusetts and U.S. Attorney Zachary A. Cunha for the District of Rhode Island for their help and assistance in the investigation and prosecution of these cases.

IRS-Criminal Investigation is investigating these cases.

Assistant Chief John Kane and Trial Attorneys Samuel Bean, Matthew Cofer, Christina Grimes, and Ezra Spiro of the Justice Department’s Tax Division are prosecuting the cases.

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

Source: United States Department of Justice Criminal Division

An indictment was unsealed today charging two Florida men for fraudulently obtaining millions of dollars in COVID-19 pandemic relief loans and advances from the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) program. 

According to court documents, from March 2020 through December 2021, Carl Charles, 43, of Miramar, and his brother, Patrick Charles, 41, of Lake Worth, together with their accomplices, submitted applications to the SBA for nearly $5 million in EIDL loans, making false statements regarding the businesses’ revenues, creation dates, and number of employees. As a result of the false and fraudulent applications, the SBA disbursed over $2.5 million in loan proceeds and advances to the defendants and others.

Carl Charles is charged with four counts of wire fraud and Patrick Charles is charged with three counts of wire fraud. If convicted, they face a maximum penalty of 20 years in prison on each count.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Markenzy Lapointe for the Southern District of Florida, Special Agent in Charge Jeffrey B. Veltri of the FBI Miami Field Office, Special Agent in Charge Mark H. Morini Jr. of the U.S. Treasury Inspector General for Tax Administration (TIGTA) Southern Field Division, and Special Agent in Charge Amaleka McCall-Brathwaite of the U.S. Small Business Administration Office of the Inspector General (SBA-OIG) Investigations Division’s Eastern Region made the announcement. 

The FBI, TIGTA, and SBA-OIG are investigating the case.

Trial Attorneys Ariel Glasner and Samad Pardesi of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Snider for the Southern District of Florida are prosecuting the case.

In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

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

Source: United States Department of Justice News

KNOXVILLE, Tenn. – On April 13, 2023, Andrew Stephen Couch, 37, currently of Knoxville, Tennessee, was sentenced to 720 months’ imprisonment by the Honorable Katherine A. Crytzer, in the United States District Court for the Eastern District of Tennessee at Knoxville. 

As part of the plea agreement filed with the court, Couch agreed to plead guilty to an indictment charging him with two counts of production of child pornography in violation of 18 U.S.C. § 2251(a).  After his release from imprisonment, he will be on lifetime supervised release.  Couch will be required to register with state sex offender registries and comply with special sex offender conditions during his supervised release.

According to the filed plea agreement, in December 2019, after receiving a report that Couch was distributing child pornography, a search warrant was conducted at Couch’s home. Couch’s cellular phone was seized and forensically examined.  Located on the cellular phone were multiple videos of child pornography produced by Couch wherein he was engaged in sexually explicit acts with a four-and-a-half-year-old female who was visiting Couch’s home.  Also on the cellular phone were thousands of other images and videos of child pornography of unidentified children.

The criminal indictment was the result of an investigation by the Knoxville Police Department, Internet Crimes Against Children Unit and the U.S. Department of Homeland Security, Homeland Security Investigations. 

Assistant United States Attorney Jennifer Kolman represented the United States.

This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative launched in May 2006, by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by the United States Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, PSC marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims.  For more information about PSC, please visit www.justice.gov/psc.

For more information about internet safety education, please visit www.justice.gov/psc/resources.html and click on the tab “resources.”

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Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced that PEACHES STERGO pled guilty today before United States District Judge Edgardo Ramos in connection with her years-long scheme to defraud an 87-year-old Holocaust survivor of his life savings.

U.S. Attorney Damian Williams said: “Peaches Stergo stole the life savings from an 87-year-old Holocaust survivor who was just looking for companionship.  This conduct is sick – and sad.  Using the millions in fraud proceeds, Stergo lived a life of luxury, purchasing a home in a gated community and a Corvette, taking vacations at hotels like the Ritz Carlton, and buying thousands in designer clothing, while at the same time causing her elderly victim to lose his apartment.  Thanks to the hard work of the FBI and this Office, Stergo is being held accountable for her fraud.”

As alleged in the Indictment:

From at least in or about May 2017, up to and including at least October 2021, STERGO engaged in a scheme to defraud an 87-year-old Holocaust survivor (the “Victim”) of over $2.8 million, which was his life savings. 

STERGO met the Victim on a dating website approximately six or seven years ago.  In or about early 2017, STERGO asked the Victim to borrow money to pay her lawyer, who she claimed was refusing to release funds from an injury settlement.  After the Victim gave her the money, STERGO said the settlement funds had been deposited into her TD Bank account.  In reality, bank records show STERGO never received any money from an injury settlement.

Over the next four and a half years, STERGO continued her lies.  She repeatedly demanded that the Victim deposit money into her bank accounts.  She claimed that if he did not, her accounts would be frozen and he would never be paid back.  In total, the Victim wrote 62 checks — totaling over $2.8 million — that were deposited into one of two of STERGO’s bank accounts.   

In furtherance of the fraud, STERGO created a fake email account, intended to appear as if it belonged to a TD Bank employee.  She also created fake letters from a TD Bank employee and fake invoices.

While the Victim lost his life savings and was forced to give up his apartment, STERGO lived a life of luxury with the millions she received from the fraud: she bought a home in a gated community, a condominium, a boat, and numerous cars, including a Corvette and a Suburban.  During the course of the fraud, STERGO also took expensive trips, staying at places like the Ritz Carlton, and spent many tens of thousands of dollars on expensive meals, gold coins and bars, jewelry, Rolex watches, and designer clothing from stores like Tiffany, Ralph Lauren, Neiman Marcus, Louis Vuitton, and Hermes.

*                *                *

STERGO, 36, of Champions Gate, Florida, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  In connection with the guilty plea, STERGO agreed to pay $2,830,775 in restitution and to forfeit the same amount, along with over 100 luxury items she purchased with fraud proceeds, including Rolex watches, designer purses and clothing, and large amounts of gold and jewelry.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  Sentencing has been scheduled for July 27, 2023, at 11:00 a.m.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Adam Sowlati is in charge of the prosecution.