Tax Fraud Blotter: Helter skelter

No Relief; fakin’ it; consider it reconciled; and other highlights of recent tax cases.

Atlanta: Tax shelter fraudsters Jack Fisher and James Sinnott have been convicted of conspiracy to defraud the United States, conspiracy to commit wire fraud, aiding and assisting the filing of false returns, and subscribing to false returns. Fisher was also convicted of money laundering.

The convictions stem from their fraudulent tax shelter involving syndicated conservation easements dating back nearly two decades. A co-defendant, Clay Weibel, was acquitted.

Fisher and Sinnott designed, marketed and sold to high-income clients abusive syndicated conservation easement shelters based on inflated charitable contribution deductions, promising the clients deductions 4.5 times greater than the amount they paid.

Fisher and Sinnott used the money from their clients to buy land and property-holding companies and had the tax shelters cause the companies to donate the land or a conservation easement over the land, often within days or weeks of purchase.

To reach the inflated FMV of the donations, the two primarily used appraisals of the conservation easements and land donations at valuations often more than 10 times higher than what they paid for the property. The pair then backdated or instructed others to backdate false documents for the IRS, including subscription agreements, payment documents, engagement letters and other records. Fisher’s accountant, who testified at trial and previously pleaded guilty for his role in the scheme, prepared returns claiming charitable contribution deductions in the fraudulently inflated amounts. 

Fisher, Sinnott and others received more than $41 million in criminally phony payments. Fisher purchased a Mercedes Benz, a private jet, and an RV and trailer. He also used money from the scheme to purchase homes in the U.S. and on the Caribbean island of Bonaire, which the jury found to be forfeitable.

In total, the two sold more than $1.3 billion in fraudulent deductions through this scheme. 

Fisher and Sinnott face a maximum of three to 20 years in prison for each count of conviction. The government also seeks forfeiture of monetary proceeds and real properties purchased by Fisher and Sinnott in connection with their fraud. 

Newport Beach, California: Craig Steven Voyton, 56, of San Pedro, California, owner of an artificial turf company, has been sentenced to 15 months in prison for failing to report nearly $9 million in income that his business earned and for attempting to evade more than $946,000 in federal income taxes.

Voyton, who pleaded guilty in July, owns and operates Smart Grass LLC, which installs artificial turf for residential and commercial customers. From 2016 to 2020, Smart Grass generated more than $1.5 million in gross income per year from its business operations.

He attempted to conceal that income from the IRS, emailing customers federal tax forms listing false ID information so payments would not be linked to him or to Smart Grass. Three times in 2020 he emailed customers a W-9 with false information and a signature in a fictitious identity. Voyton sent similar fraudulent W-9s during the tax years 2016 to 2019 and provided a false W-9 to an area school in 2016.

While attempting to evade taxes during this time, Voyton made more than $63,000 in transfers to the Coinbase cryptocurrency exchange from a Smart Grass bank account and used more than $500,000 in company money to make real estate purchases in Nevada and Mexico.

He also failed to report some $8,926,333 in income, which prevented the IRS from assessing some $946,479 in federal income taxes for 2016 through 2020.

Voyton paid the IRS all the back taxes he owes, plus interest, and paid a 75% penalty. He was also ordered to pay a fine of $50,000.

Warren, Michigan: Ryan Richmond, of Bloomfield, Michigan, owner of a marijuana dispensary, has been found guilty of evading federal income taxes and obstructing the IRS, among other charges.

Richmond operated the dispensary Relief Choices LLC, and from 2011 through at least 2014 had Relief pay operating expenses in cash, routing customer credit card payments through an unrelated third-party bank account to conceal his true business gross receipts.

In 2015 and 2016, he misled IRS investigators about his knowledge of, role in and profits derived from his Relief Choices operation.

Richmond caused a tax loss to the IRS of more than $1.15 million.

Sentencing is Dec. 13. Richmond faces a maximum of five years in prison for each count of tax evasion, three years for obstructing the IRS and one year for the willful failure to file a tax return count. He also faces a period of supervised release, restitution and monetary penalties.

Macon, Georgia: Lonnise Janelle Andrews has admitted that she falsified tax documents and received more than $331,758 in refunds, including by creating a fake business that claimed hundreds of non-existent employees, to commit a tax fraud totaling more than $3.5 million.

Andrews falsified IRS tax forms for herself, her father and a fake business, including reporting incomes, losses and withholdings. On her own 1040 for 2019, she used a tax prep website to generate fake 1099-MISCs and 1099-Rs. The IRS issued her a $165,245 refund check that she was not entitled to.

She also filed false 941s and 7200s. Andrews filed for an entity named Andrews Harris Corbin, listing her father and the fictitious “Greg Corbin” as the organizers of AHC. The entity never filed an income tax return, had not been reported as a Schedule C business on a return and never filed with the Social Security Administration pertaining to its employees.

Andrews signed and filed the false forms in 2020 and attempted to, and at one point successfully did, obtain refunds and credits. She reported AHC had 957 employees and requested a credit via a 7200 for $3,086,325. In April 2020, she filed a 941 reporting AHC paid $1,435,500 in wages, tips and other compensation and requested $25,978.83.

The IRS processed the 941 request for refund and sent a check for $25,978.83 to AHC at a UPS mailbox in Macon that Andrews had her father set up. Surveillance video later confirmed that her father picked up the check, which was never deposited and which was later found in her bedroom during a search.

Sentencing is Jan. 4. Andrews faces a maximum of 13 years in prison and up to $600,000 in fines. She has agreed to pay $331,758 in restitution to the IRS.

Hutto, Texas: Exec Steven Marquez has been sentenced to 30 months in prison for embezzling from his employer and for filing a false return.

Beginning in April 2010 and through October 2017, he embezzled more than $700,000 from his employer, an Austin, Texas-based property management company, while serving as head of its bank reconciliation team. To conceal the crime, he altered his employer’s corporate bank statement by deleting his transfers and making it appear as if the statements reconciled with company records.

Marquez filed a false tax return for 2017 that did not report as income the embezzled funds he took that year.

He was also ordered to serve three years of supervised release and to pay $188,493 in restitution to the U.S., as well as an additional $704,262 in restitution related to his embezzlement.

New Bedford, Massachusetts: Christopher Pomavilla Minchala, 31, owner of a construction company, has agreed to plead guilty to a multiyear tax evasion and cash payroll scheme.

From 2017 to 2021, Pomavilla, owner of Rossy Construction Corp., cashed customer checks, hid that fact from his tax preparer, and under-reported income on his returns, failing to pay more than $1.1 million in federal income taxes for 2017 to 2021. Pomavilla also admitted that he paid employees in cash while failing to pay over to the IRS more than $670,000 in payroll taxes.