Cigar bars; Loyal to the end; keeping that pipeline full; and other highlights of recent tax cases.
Miami: Father and son tobacco company owners from the Dominican Republic have been sentenced to prison for a scheme to avoid millions of dollars in excise taxes on imported tobacco products.
Remberto Antormachy Estrella Jimenez and Remberto Andres Estrella Gomez were the managing members of Dominican Tobacco Products LLC, a Florida company that imported tobacco products from the Dominican Republic through Miami.
Previously, Estrella Jimenez admitted that he partnered with his co-defendant (and father), Estrella Gomez, and a California tobacco distributor named Akrum Alrahib to fraudulently lower their costs by underreporting the Federal Tobacco Excise Tax that was due and owing on cigars that their companies manufactured and imported into the U.S.
Over several years, the conspirators consistently evaded taxes by concealing the price Alrahib paid for the cigars; Alrahib sent Estrella Jimenez and Estrella Gomez’s companies more than $5.6 million in exchange for Dominican cigars.
Estrella Jimenez and Estrella Gomez each pleaded guilty to one count of conspiracy to defraud the U.S. Estrella Jimenez was sentenced to eight months in prison; Estrella Gomez was previously sentenced to a 14-month prison term. Both were also ordered to serve an additional term of supervised release and jointly pay more than $1.98 million in restitution.
Alrahib, charged in a separate case, pleaded guilty and was sentenced to five years in prison and ordered to pay $7,207,970.66 in restitution.
Keswick, Iowa: Businessman Thomas Sieren has been sentenced to 18 months in prison for failing to pay over $700,000 in employment taxes for his business and for making a false statement to obtain a Paycheck Protection Program loan.
From 2014 through 2020, Sieren was a co-owner of TCS Fabricating Inc. and during that time failed to pay $703,615.69 in employment taxes to the IRS, including failing to pay taxes he had collected from TCS employees through withholding, as well as matching contributions to Social Security and Medicare. In 2020 and 2021, Sieren obtained two PPP loans on behalf of TCS in the total amount of $237,379; the loan applications misrepresented that TCS had paid its payroll tax obligations.
Sieren must pay TCS’s unpaid payroll tax obligations, together with interest and penalties, and $237,379 in restitution to the U.S. Small Business Administration. Following his release from prison, he will also serve two years of supervised release.
Riverside, California: Tax preparer Andrew Zepeda Hansack has been sentenced to six years in prison for filing thousands of returns that claimed false deductions and caused more than $3 million in losses to the IRS.
Starting in 2015, Hansack, who pleaded guilty earlier this year, prepared personal income tax returns at AJ Loyal Income Tax Service. He filed returns for some clients that indicated that they had paid mortgage interest for their homes when, as Hansack knew, his clients did not own a home. He also claimed false medical expenses, sales tax and gifts by cash or check on some returns that he knew to be false.
For tax years 2015 through 2019, he filed some 2,533 returns with false deductions on behalf of clients, costing the government some $3.37 million.
Hansack was also ordered to pay a $50,000 fine and $3,369,886 in restitution.
Hazelhurst, Mississippi: Construction firm CFO Julian Russ of Houma, Louisiana, has pleaded guilty to failing to report and pay over employment taxes withheld from employees’ paychecks.
Russ was the CFO of Community Construction Co. LLC, a pipeline-maintenance and construction company. From at least 2012 through October 2018, he did not file quarterly employment tax returns or pay over to the IRS the taxes withheld from employees’ wages. Russ caused a tax loss to the IRS of more than $6 million.
He faces a maximum of five years in prison as well as a period of supervised release, restitution and monetary penalties.
West Palm Beach, Florida: Resident Dion De Cesare has pleaded guilty to operating an illegal sports-gambling business, to conspiring to commit money laundering, to using a facility of interstate commerce for prostitution and to tax evasion.
De Cesare admitted that from around April 2008 to November 2022, he owned two social clubs and that during various times the businesses provided prostitution services. De Cesare collected the proceeds from those businesses and laundered them through third-party bank accounts and the payment of mortgages and expenses owed on several of his local properties.
From about May 2015 to October 2022, De Cesare operated an online sports-gambling business through a website whose server was located in Costa Rica. He laundered the gambling proceeds by having the gamblers send debt payments to third-party individuals and entities.
Finally, he admitted that from 2011 to 2017 he owned a local restaurant and nightclub and during various times between 2011 and 2013 and from 2015 to 2016 failed to pay personal and payroll taxes.
De Cesare has agreed to pay $1,177,438.65 in restitution to the IRS. He faces up to 35 years in prison, 12 years of supervised release and a $1 million fine in addition to restitution. He has also agreed to forfeit two commercial properties, five condos, six vehicles, a Rolex watch and some $93,000.
Tampa, Florida: Dr. Qing McGaha has been found guilty of 14 counts of unlawful drug distribution, four counts of money laundering and one count of filing a false tax return.
McGaha owned and operated a local pain management clinic. Over 20 months, undercover Drug Enforcement Administration agents conducted numerous appointments with her and at each they received hydrocodone, hydromorphone or oxycodone, controlled substances not for a legitimate medical purpose. Between January 2016 and January 2021, McGaha distributed more than 2.1 million opioid pills.
In addition, she engaged in multiple monetary transactions involving funds criminally derived from the operation of her clinic. In 2021, McGaha filed false and fraudulent tax forms for tax year 2020 that underreported her clinic’s gross revenue by nearly $300,000.
She faces a maximum of 20 years in prison for each count of unlawful drug distribution, up to 10 years for each money laundering count and three years for filing a false return. Sentencing is Sept. 15.
Myrtle Beach, South Carolina: Resident Janice A. Livingston, 30, has been sentenced to 20 months in prison after pleading guilty to making and presenting a false claim to the IRS and theft of government property.
In 2020, Livingston submitted three false claims to the IRS for tax credit entitlements in the amount of $1,126,553.68 and submitted false documentation to receive individual unemployability benefits from the Department of Veterans Affairs. She also made multiple false representations in applying for two Economic Injury Disaster Loans.
Livingston was also sentenced to three years of court-ordered supervision and was ordered to pay $183,406.01 in restitution.
Providence, Rhode Island: Cheryl S. Sullivan, 68, of Dedham, Massachusetts, former chair of the Board of Tax Assessors for that town, has pleaded guilty to a charge of wire fraud.
She admitted that while serving as a Dedham town official, real estate broker, tax preparer and property manager for the River Island Condominium Association in Woonsocket, Rhode Island, she schemed to access nearly $50,000 in association funds for her personal use.
Sullivan admitted that she used an association debit card 58 times to withdraw cash between January and November 2019. During that time, she gambled at a casino 176 times, almost every day.
Sullivan defrauded the condo association of a total of $49,156, of which, to date, she has paid back nearly half. Sentencing is Sept. 26.
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