Tax Fraud Cases

Posted by Jeffrey Siegel on June 24, 2014

Tax Fraud Blotter: Families Gone Wrong

(From Accounting Today)

Destrehan, La.: Preparers Cathy Ross Vinnett, 46, and her daughter Lashanda Ruth Vinnett, 29, have pleaded guilty to conspiracy to defraud the IRS.

According to court documents, Cathy Vinnett opened D&C Tax Service in 2006 and two years later with her daughter created River Parish Tax Professionals. The Vinnetts, through River Parish, filed approximately 310 returns that falsely claimed the First-Time Homebuyer Credit and the EITC, as well as listing false dependents resulting in approximately $1.845 million in fraudulent refunds.

Cathy Vinnett will be sentenced on October 1 and Lashanda Vinnett on September 17. They face a maximum of 10 years of imprisonment followed by up to three years of supervised release, as well as restitution and a $250,000 fine.

Atlanta: Preparers Frederick and Willie Jenkins have been arraigned on federal charges that they conspired to prepare and file false federal returns claiming more than $1 million in refunds. According to case documents and authorities, since 2006 the brothers owned and operated Global Tax Service LLC, with multiple locations in the Atlanta area and in other states, including Alabama. During the tax years under investigation (2008 through 2011), the Jenkins brothers allegedly prepared and filed false income tax returns for clients, claiming primarily fraudulent and fictitious business income and losses to inflate refunds.

Fresno, Calif.: A federal court has permanently barred preparers Ken and Alice Mendoza from preparing federal tax returns for others. The Mendozas, who operated under the business name Mendoza Business Services, consented to the civil injunction order.

According to the complaint, the couple understated clients’ federal taxes by fabricating expenses, claiming false or inflated credits (particularly educational credits) and deducting personal expenses of their clients. The complaint alleges that loss from the Mendozas’ activities might total $2.8 million for tax years 2010 through 2011.

The court requires the Mendozas to contact all persons for whom they prepared a federal return since Jan. 1, 2008, to inform them of the injunction.

Miami: A federal district judge permanently barred Lazaro Jesus Toyos and his daughter Dilma Carida Garcia, a.k.a. Dilma Toyos Garcia, and their companies L. Toyos Tax Service Inc. and Toyos Garcia Tax Service Inc. from preparing federal returns for others.

The suit alleges that the defendants prepared thousands of returns and unlawfully understated income tax liabilities and overstated refunds by fabricating or exaggerating deductions and credits. Their practices allegedly included fabricating Schedule C losses for non-existent businesses, falsely claiming the First-Time Homebuyer Credit and falsely claiming American Opportunity Credits for taxpayers who did not acquire education expenses or attend college.

The government alleged that loss from the defendants’ activities may reach millions of dollars.

Huntsville, Texas: Preparer Cedric Keith Oliphant has been sentenced to 33 months in prison following his conviction related to the preparation of false returns.

Oliphant owned and operated Oliphant Tax Service where, according to court documents, he included false deductions on at least 69 returns without clients’ knowledge and fraudulently increased their refunds by some $325,000 for tax years 2006 through 2008.

The most egregious refund was on a 2007 return that claimed false deductions for medical, charitable and unreimbursed business expenses totaling almost $65,000. This return alone caused an estimated tax loss of $11,261. Total losses from his scheme could reach $1 million.

Youngsville, La.: Preparer Lutricia S. Feast, 52, has received 24 months in prison and one year of supervised release for preparing false returns for herself and for clients.

According to evidence at the guilty plea last November, Feast, a preparer beginning in 2001, admitted that from 2006 to 2009 she reported only a fraction of her income to the IRS. On her 2008 return, for example, she reported her income as $14,400, when she actually earned $280,170. Feast also admitted that between 2006 and 2009 her actual income was $830,986 and that she owes $287,860 in unpaid taxes.

Feast was also ordered to pay $382,582 restitution.

Houston: Preparer Charles Lee Harrison pleaded guilty to aiding and assisting in the preparation and presentation of a false return. Authorities said that Harrison, owner of the Harrison and Harrison tax prep business in Houston and Navasota, Texas, placed false items on a client’s return that caused a tax loss exceeding $9,000. As part of his plea, Harrison stipulated that some $396,057 actually includes tax losses from returns he prepared for others, as well as his own.

Sentencing is September 15, when he faces up to three years of imprisonment and a possible $250,000 fine.

Call your Kansas City Tax Attorney, Jeffrey R. Siegel, for assistance with IRS problems.