Tax Fraud Blotter: Wrong Identities


Tanked; pastime in the hall; you are not undercover, are you ?; and other highlights from recent tax cases.

Evansville, Indiana: Former CPA Mark A. Harmon was sentenced to two years in prison on several counts of tax evasion.

Harmon owned and operated Mark Harmon and Co., CPA and Consultants, and was an accountant for over 25 years and CPA until his license expired in June 2015. His largest accounting client from 2012 to 2015 was a group of three companies related to the Pittsburgh Tank and Tower Group: Pittsburgh Tank and Tower Co., Pittsburgh Tank and Tower Maintenance and Allstate Tower Inc. Harmon had worked with these companies for over 25 years, performing accounting and financial audits.

During an IRS review, Harmon said he earned some $ 75,000 a year in group accounting fees and sent him an invoice for services rendered, which the group always paid promptly. He also said the group did not issue him a 1099 for the tax years in question because he treated the payments to Harmon as deductions for expenses for professional services.

A closer examination of Harmon’s books of accounts revealed some $ 435,000 in alleged loans made to Harmon by the group. He said the company would confirm the loans and he produced invoices, some of which reflected a “loan request”. Agents also requested documents from the Pittsburgh Group, whose CFO informed agents that during the process of collecting paper invoices from files, he observed that several invoices labeled “Loan Request” appeared to have been modified.

Company officials said the group had never loaned Harmon any money. Harmon had access to the company’s files and they suspected that he had physically removed the original invoices from their files and changed the invoice description. The company also located the original invoices in another format that did not include this description. After discovering the discrepancy, Harmon admitted that he had replaced the invoices. The $ 435,000 that was falsely classified as loans to Harmon was professional service income.

His unpaid federal taxes for 2012 to 2015 totaled more than $ 208,000.

Harmon must also pay $ 208,160 in restitution and serve one year of supervised release after his imprisonment.

Arcadia, California: Venture capitalist and political fundraiser Imaad Shah Zuberi, 50, was sentenced to 12 years in prison for falsifying documents in order to cover up his work as a foreign agent while pressuring senior government officials US, by avoiding the payment of millions in taxes, campaigning illegal contributions and obstructing a federal investigation into the source of donations to a presidential inauguration committee.

Zuberi operated Avenue Ventures LLC, a San Francisco-based venture capital firm, and solicited foreign nationals and foreign government officials claiming he could use his contacts in Washington to change US foreign policy and create opportunities. business for his clients and himself. Clients gave money to Zuberi for consulting fees, to make investments or to fund campaign contributions. Although Zuberi had limited success with some US officials, most of his business efforts failed and his clients suffered significant financial losses.

He failed to report on his 2014 performance in millions of dollars in revenue he received from a foreign government. While his 2014 federal tax return claimed income of $ 558,233, for example, Zuberi did not report more than the $ 5.65 million he received as part of a lobbying effort. His tax evasion from 2012 to 2015 caused tax losses ranging from $ 3.5 million to $ 9.5 million; he also violated the federal election campaign law in 2015.

Zuberi, who had previously pleaded guilty, was also ordered to pay $ 15,705,080 in restitution and a criminal fine of $ 1.75 million.

Missoula, Montana: 64-year-old CPA Daniel Brian Burke, who was convicted of filing false income tax returns for a couple’s businesses, was sentenced to two years in prison, followed by one year of supervised release and sentenced to a fine of $ 10,000.

Burke signed false tax returns with co-defendants and clients Traci and Joseph Baumgardner, owners of AJB Inc. and JZ Contracting Inc., for 2011 to 2013. In total, the Baumgardners reported gross receipts of 5,001,374 $ and paid federal taxes totaling $ 10,066 for the time.

Through AJB and JZ Contracting Inc., the Baumgardners operated two businesses, Splash Car Wash and Pro Sweeps Plus, an industrial maintenance service. Burke owned and operated Burke and Co. PC and prepared corporate and personal income tax returns for the Baumgardners.

A secret IRS investigation showed that Burke instructed the Baumgardners not to deposit cash in the bank or report it as income as required, to deduct personal expenses as business expenses, and to unduly depreciate assets. An undercover agent met Burke, and in a taped interview, Burke agreed to file false statements for the agent. At one point, Burke asked the officer, “Aren’t you an IRS undercover agent or whatever?”

The Baumgardners also pleaded guilty to one count of conspiracy and were sentenced to three years probation and to pay $ 89,918 in restitution.

Greenbelt, Maryland: Preparator Anita Fortune, 56, of Alexandria, Va., Pleaded guilty to conspiring to defraud the United States and assisting in preparing and filing false statements.

Fortune was convicted of wire fraud in 2007, which resulted in the revocation of its federal electronic filing privileges. After his release from prison, a conspirator agreed to allow Fortune to use his e-filing credentials in exchange for a fee of $ 29 per tax return. Beginning in 2012, Fortune and this conspirator agreed to operate a business that would allow Fortune to misrepresent its identity on federal client returns.

In August 2015, the IRS expelled the conspirator from its electronic tax filing program due to a criminal investigation into fraudulent returns filed with the conspirator’s credentials. A second conspirator who was also participating in the e-filing program agreed to allow Fortune to use their credentials in exchange for the use of office space in Maryland.

Fortune and the two conspirators then continued to produce bogus returns and falsely claim refunds. They used inappropriate Schedule A deductions and bogus business expenses to reduce taxes and inflate refunds and continued to file false returns even after the investigation forced them to use, and ultimately induce into error, a third party electronic declaration sender. The federal tax loss for the 2012 to 2018 tax years totaled $ 189,748.

Fortune faces a maximum of five years in prison for the conspiracy and up to three years in prison for aiding and assisting in the preparation and filing of false tax returns. It will also have to pay a restitution corresponding to the total amount of the loss. Sentencing is June 4.

Tenafly, New Jersey: Emmanuel A. Barrientos-Fermin pleaded guilty to filing 18 fraudulent statements to obtain undeserved refunds.

Early last year, Barrientos-Fermin conspired to use stolen personal identification information to submit fraudulent statements. His conspirator obtained social security cards, driver’s licenses, birth certificates and W-2s bearing the victims’ stolen IDs. The conspirator provided the documents to Barrientos-Fermin and others who used the information to file returns at various branches of a tax preparation company, posing as the victims. Barrientos-Fermin made around $ 200 per return.

Barrientos-Fermin pleaded guilty to one count of conspiracy to commit electronic fraud, access device fraud and aggravated identity theft. The count of conspiracy to commit wire fraud carries a maximum sentence of 20 years in prison, and the count of access device fraud carries a maximum of 10 years. The aggravated charge of identity theft carries a minimum sentence of two years in prison, which must run consecutively to any other prison sentence imposed. All three counts are also punishable by a fine of $ 250,000, which is double the gain or loss caused by the offense, whichever is greater.

Richland, Washington: Preparator Jonathon F. Schumann was sentenced to six months in prison, running concurrently with a one-year period of judicial supervision, and was ordered to pay $ 195,202 in restitution to the IRS on three counts of help and assistance in the preparation and filing of false income tax returns.

Schumann, who pleaded guilty in November, operated a tax preparation business under the name J’s Income Tax from his residence. He prepared fake returns for clients in Washington and Las Vegas, claiming fraudulent and inflated itemized deductions, including charitable contributions, personal property taxes, and unreimbursed employee business expenses.

The fraudulent claims resulted in a loss of $ 195,202 to the IRS.

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