Source: United States Department of Justice Criminal Division

A federal grand jury in Kansas City returned an indictment yesterday charging a Kansas woman with tax evasion and wire fraud.

The indictment alleges that Michelle O’Connor, of Louisburg, owned and operated a realty company based in the Kansas City metro area. For tax years 2008 through 2015, O’Connor filed federal income tax returns, self-reporting that she owed approximately $300,000 in taxes. Despite acknowledging she owed the taxes, O’Connor did not pay them. In 2011, the IRS audited her 2008 and 2009 tax returns and concluded that O’Connor had improperly claimed tens of thousands of dollars in personal expenses as charitable deductions to the “Church of Revelation and Love,” a purported church she and her husband created and were, along with her family, its primary members. Based on that audit, the IRS assessed over $40,000 in additional taxes against O’Connor.  

Starting in 2011, the IRS began trying to collect the outstanding taxes from O’Connor, sending her over 50 notices regarding them. From 2011 through 2023, however, Michelle O’Connor tried to stymy the IRS’s collections efforts by, among other things, filing three separate false and frivolous bankruptcy petitions, purchasing approximately $250,000 of cashier’s checks to reduce her bank account balances, and closing her personal bank accounts and using her business’ bank accounts to pay personal expenses.

By 2020, O’Connor owed the IRS nearly $500,000 in taxes, penalties, and interest.

In 2020, O’Connor submitted 34 fraudulent COVID-19 Economic Injury Disaster Loan (EIDL) applications on behalf of her real estate business and seven other corporate entities she created for the purpose of maximizing potential EIDL credits. Under the EIDL program, a small business could receive a loan of up to $150,000 from the Small Business Administration to cover six months of working capital. In total, O’Connor received nearly $300,000 from her fraudulent EIDLs, which she used for personal purposes, including $115,000 to purchase cryptocurrency.

If convicted, O’Connor faces a maximum penalty of five years in prison for tax evasion and a maximum penalty of 20 years in prison for each count of wire fraud. 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 Karen E. Kelly of the Justice Department’s Tax Division made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorneys Dominick Giovanniello and Robert Kemins of the Tax Division are prosecuting the case.

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

The Justice Department filed a proposed statement of interest today in the U.S. District Court for the Northern District of Texas to make clear that federal law protects the equal right of all Americans to make and enforce contracts regardless of their race.

According to the allegations in the case, the 2024 ¡Lánzate!/Take Off! Travel Award Program was an annual program in which college and graduate students could receive free Southwest Airlines flight vouchers, but only Hispanic students were eligible to apply. The American Alliance for Equal Rights sued Southwest alleging that by denying that opportunity to all other students on the basis of their race or ethnicity, Southwest’s program facially discriminated against non-Hispanic students in violation of 42 U.S.C. § 1981. The Department’s proposed statement of interest affirms its continuing commitment to eradicating racially exclusionary practices across the government and in the private sector.

“Every person in the United States should have equal and nondiscriminatory rights to make and enforce contracts, and race should never be a consideration,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. “The Department of Justice is working to end discrimination using all of the tools at our disposal.”

“Discrimination of any kind will not be tolerated in our community,” said Acting U.S. Attorney Chad Meacham for the Northern District of Texas. “Our office will continue to enforce federal anti-discrimination laws to address racial discrimination affecting our residents.”

To learn more about the Civil Rights Division visit www.justice.gov/crt, and to report possible violations of federal civil rights laws go to www.civilrights.justice.gov.

Source: United States Department of Justice Criminal Division

A federal grand jury returned a two-count indictment this week, charging Ishmael Petty, 56, with first degree murder and murder by a federal prisoner serving a life sentence.

According to court documents, on Sept. 19, 2020, Petty murdered a fellow inmate while the two were housed in the same unit at the U.S. Penitentiary-Florence, Administrative Maximum Facility (ADX) in Florence, Colorado. Petty has been in federal custody since a 1998 conviction for bank robbery. In 2002, Petty was sentenced to life in prison for murdering an inmate at another federal prison. In 2015, Petty was sentenced to 60 years in prison for an assault on two federal officers at ADX.

For the current charges, the maximum penalty is death, and Attorney General Bondi has authorized the United States Attorney for the District of Colorado to pursue capital punishment in this case. Consistent with that authorization, the U.S. Attorney filed a notice of intent to seek the death penalty against Petty.

Matthew R. Galeotti, Head of the Justice Department’s Criminal Division, and Acting U.S. Attorney J. Bishop Grewell for the District of Colorado made the announcement.

The FBI Denver Field Office investigated the case.

This case is being prosecuted by the Violent Crime and Immigration Enforcement Section of the United States Attorney’s Office for the District of Colorado and the Criminal Division’s Capital Case Section.

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

Note: View order here.

A federal court in Ohio yesterday permanently enjoined a Columbus, Ohio, tax preparer from preparing returns for others and from owning or operating any tax return preparation business in the future. According to the court’s order, Michael Craig, both individually and doing business as Craig’s Tax Service, consented to the entry of the injunction.

The court’s order requires Craig to send notice of the injunction to each person for whom he prepared federal tax returns or refund claims after Jan. 1, 2022. According to the government’s complaint, many tax returns that Craig prepared made false and fraudulent claims, including:

• Reporting losses for fictitious Schedule C businesses;
• Claiming costs of goods sold (COGS) for types of businesses that cannot legitimately claim COGS and without supporting documentation;
• Inventing or inflating expenses for otherwise legitimate Schedule C businesses; and
• Taking deductions for both cash and non-cash charitable deductions that are either exaggerated or completely fabricated.

According to the complaint, the IRS estimated a tax loss of more than $3.1 million in 2022 alone from tax returns prepared by Craig.

The Justice Department’s Tax Division made the announcement.

Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers. The IRS also offers guidance on the credentials and qualifications that taxpayers should seek from their return preparer.

In the past decade, the Justice Department’s 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.