Get with the Program; root causes; significant others; and other highlights of recent tax cases.
Miami: A federal court has permanently enjoined tax preparer Javier Campos and his tax prep businesses from preparing federal income tax returns, training others how to prepare returns or operating any prep business in the future.
Campos owns or controls JBC Tax Services LLC, WK Tax Services Inc., Cutler Bay Tax Services Inc., N.L.T.S. Inc. (d.b.a. Naranja Lakes Tax Services Inc.) and Tax Services Group Corp. According to the complaint, he and the other defendants prepared returns for clients that claimed various false or fabricated deductions and credits, including fabricated residential energy credits, fictitious deductions and credits for education expenses, false COVID-19 sick and family leave credits and bogus deductions for personal property rentals, attorney’s fees for unlawful discrimination claims and reforestation amortization and expenses.
The complaint also alleges that Campos acted as a ghost preparer and trained outside clients and preparers how to fraudulently inflate refunds through Tax Services Group.
Campos and his businesses must immediately close and cease all operations. The injunction against the five employee defendants — David DePablo, Krystallee Gonzalez, Alvaro Jauregui, Katya Rojas and Patricia Vanegas — bars them from the preparation of federal returns for two years. The injunction also requires that they successfully complete the IRS Annual Filing Season Program training course and provide proof of completion before they prepare returns for others.
Campos and his companies were also ordered to pay $500,000 to the U.S. He consented to the permanent injunction and disgorgement order.
Cincinnati: Business owner John Franklin Brock has been sentenced to a year and a day in prison and been ordered to pay a $40,000 fine after previously pleading guilty to tax evasion and money laundering.
Brock operated multiple businesses including UT Service, UTS Inc. and Wolverine Wireless Inc., which perform cellular tower construction and decommissioning services; Impact LLC, d.b.a. Pac-Telephone, a prison inmate communications business; and 6 Bayview Blvd. LLC, which performed money transmission services for his prison inmate communications business.
From January 2016 through at least January 2020, Brock tried to dodge taxes. He purposely created these entities by registering them as corporations or single-member LLCs through which related companies were obligated to report their separate income and losses, in some cases, concealing his ownership and using names of others or aliases.
To evade corporate income tax for UT Service and UTS, Brock failed to file corporate tax returns for the companies and instead filed corporate income tax returns for Wolverine reporting minimal to no income (a total of $2 for the 2016 and 2017 corporate returns, for instance). When applying for a small-business loan, though, Brock submitted returns for UTS that showed net income of more than $1 million in 2016 and more than $420,000 in 2017.
He also transmitted an application for a money transmission terminal for 6 Bayview Blvd to MoneyGram using the alias name Alan Coleman. In the application, Brock did not disclose his involvement in the business, instead listing himself as the “landlord.” When speaking with MoneyGram about the application, Brock said that the business purchased fish, was based in the port and would provide money transmission services to fishermen.
Brock never disclosed that the transfers were originated by inmates and used the money transmission terminal to send and receive interstate money transfers of more than $225,000 associated with his prison communication business.
Atlanta: Business owners Ronald S. Zieve, 75, of Atlanta, and Marshall Boyd, 50, of Douglasville, Georgia, have each pleaded guilty to one count of filing a fraudulent return.
Since 2018, Zieve, owner of Hair Restoration Specialists Inc., failed to report some $3.2 million in income; Boyd failed to report some $790,000.
Ronald Zieve failed to properly report income that he earned from Hair Restoration for tax years 2017 to 2021. In March 2021, for example, he filed a 1040 form for 2020 that falsely reported his “other income” as $107,070 when, in fact, he knew he’d earned more than $1 million in other income.
Investigation revealed that Zieve deliberately concealed his income from the IRS in varied ways, such as improperly classifying personal expenses as business expenses and directing his income into bank accounts of other businesses that he controlled but that did not actually engage in any business activities.
Zieve caused a tax loss to the U.S. of some $1 million.
Investigators also learned that since 2016 Zieve had been paying Boyd hundreds of thousands of dollars in cash commissions that Boyd never reported to the IRS.
Sentencing is March 5.
Jenks, Oklahoma: Lauren Michelle Owen has been sentenced to 27 months in prison, to be followed by five years of supervised release, after previously pleading guilty to bank fraud, wire fraud and tax evasion.
In 2010, Owen was hired by her employer as a secretary, eventually being promoted to vice president and sole financial officer. Her duties included handling the financial books and records for the company, paying bills and preparing checks for legitimate business expenses, overseeing payroll, and hiring and firing personnel.
She made unauthorized checks to herself, using the money for payments on her personal credit cards and unauthorized wage payments to herself from her employer’s accounts. These fraudulent transactions totaled more than $750,000.
After losing her job, Owen devised a plan to defraud the Small Business Administration after Congress passed the CARES Act: She falsified an application for a loan on behalf of Platinum Assets LLC, a company she owned and controlled, and lied that she’d never been criminally charged when in fact she’d previously been arraigned in state court for embezzlement. After approving the loan, the SBA deposited more than $384,000 in her bank account. Owen bought a 2018 Chevrolet Corvette, a 40-foot yacht and paid off a loan on another vehicle.
From 2016 through 2020, she further attempted to evade substantial income tax. Owen admitted that she tried to hide her income by making unauthorized transactions, knowing that reporting her income correctly would leave her owing more than $61,000 in unpaid taxes.
She agreed to pay the IRS an additional $67,800 in other unpaid taxes and was also ordered to pay more than $1.2 million in restitution.
Tampa, Florida: Adetunji Adejumo of Oklahoma City has been sentenced to 33 months in prison and Ibrahim Jinadu of Atlanta has been sentenced to 27 months in prison for their roles in a transnational tax fraud.
Both
The international conspirators obtained unauthorized access to computer servers of businesses in the United States and stole the personal ID information of U.S. residents. They used that information to file false and fraudulent federal tax forms seeking refunds from the IRS.
Adejumo and Jinadu, residing in the U.S., collected fraud proceeds directed to prepaid debit cards in their possession or to bank accounts they controlled or had access to. They also transferred some of the fraud proceeds to other conspirators who filed returns claiming millions in undeserved refunds.
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