J’accuse; just a little boost; independent thinking; and other highlights of recent tax cases.
Los Angeles: A wholesale clothing importer and two of its executives have been found guilty of avoiding the payment of more than $8 million in customs duties and of running a scheme in which the company laundered money and failed to report more than $17 million from cash transactions.
A jury has found the following guilty:
- C’est Toi Jeans, which imported apparel and exported clothing;
- Si Oh Rhew, of La Cañada Flintridge, California, C’est Toi’s president and a majority owner of the company; and,
- Lance Rhew, of Los Angeles, Si Oh Rhew’s son, a C’est Toi corporate officer and the owner of another Los Angeles-based company, GLLR Inc., that did business as C’est Toi.
The jury found C’est Toi and Si Oh Rhew guilty of two conspiracies and multiple counts of failure to file reports of currency transactions over $10,000 in a trade or business. The jury also found all three defendants guilty of three counts of entry of falsely classified goods, three counts of entry of goods by means of false statements, three counts of passing false and fraudulent papers through a customhouse and two counts of international promotional money laundering.
C’est Toi was found guilty of an additional two concealment money laundering counts involving drug proceeds. Si Oh Rhew was found guilty of an additional two counts of aiding, assisting and procuring the filing of a false return. Lance Rhew was found guilty of one additional count of aiding, assisting and procuring the filing of a false return; Lance Rhew was also found guilty of one conspiracy count.
C’est Toi was owned by Si Oh Rhew and his wife and received bulk cash from drug trafficking as payment for customer invoices. The company and Si Oh Rhew failed to file currency transaction reports and concealed the cash receipts from an accountant who prepared their taxes, which led to the fraudulent omission of more than $17 million in gross sales from returns filed with the IRS. The defendants also avoided customs duties and tariffs by purchasing garments from overseas manufacturers, including from China, but then submitting false information to U.S. Customs and Border Protection. Overall, C’est Toi imported goods that were undervalued by more than $51 million, causing approximately $8.4 million in unpaid tariffs and duties.
Sentencing is Jan. 21, when the Rhews will each face decades in prison and the company will face fines of as much as $100 million.
Roanoke, Virginia: Resident Alisha Warrick, 40, who pleaded guilty last year to wire fraud, distributing fentanyl and illegally selling firearms, has been sentenced to 10 years in prison.
Beginning in 2015 and continuing at least through 2019, Warrick prepared and filed tax returns for others and included false and fraudulent information in the returns. She would “boost” the returns by including false employment and wage information or false information about dependents, or both. Warrick also filed returns for some individuals without their knowledge and used those individuals’ names and personal ID information to file.
While on bond pending trial, Warrick arranged to sell heroin (which later testing showed to contain fentanyl) and two firearms, one of which was connected to a prior fatal shooting in the Roanoke area.
West Orange, New Jersey: Tax preparer Michael Ewell Sr., of Milford, Pennsylvania, has been sentenced to a year and a day in prison and a year of supervised release, according to news reports that added that his tax prep businesses filed returns with false information.
Ewell, who previously pleaded guilty, owned Ewell Tax Center and between 2015 and 2022 prepared 157 income tax returns that contained false information, according to cited IRS information, adding that the exaggerated returns resulted in an additional $824,835 in refunds. The false information reportedly included itemized deductions, business expenses and education credits.
On his personal returns between 2017 and 2020, he also underreported his company’s gross revenue by $81,116 and exaggerated its business expenses by $6,338, causing him to avoid paying about $118,000 in taxes, officials told news outlets.
Ewell will also have to pay $736,581 in restitution and is barred from preparing an income tax return for anyone except for himself, reports added.
Woodbridge, New Jersey: Accountant Thomas Kohutich, 34, has been sentenced to a year and a day in prison for filing false returns.
A former accountant for a New Jersey-based manufacturing company, he filed 1040s for 2018 and 2019 on his and his wife’s behalf. He failed to report funds that he embezzled from his former employer and which he knew constituted reportable income.
Kohutich, who previously pleaded guilty, was also sentenced to one year of supervised release and ordered to pay $234,821 in restitution to the IRS and $829,457 to his former employer.
Charleston, West Virginia: Accountant Luther A. Hanson has pleaded guilty to willful failure to pay over taxes.
From at least 2015 to September 2020, Hanson did not withhold or pay over some $149,905.37 in federal employment taxes for two employees of his accounting services businesses. Hanson owns and operates The Estate Planning Group Inc. and L.A. Hanson Accounting Services; the two employees provided services for both.
Hanson admitted that some time before June 30, 2015, he and the two employees agreed that he would begin treating them as independent contractors. Hanson knew this arrangement would relieve him of paying the employer portion of the employment taxes to the IRS and of withholding from the two employees. Hanson paid gross wages by check to the employees though neither changed their job duties or responsibilities.
Sentencing is Jan. 30. Hanson faces up to five years in prison, up to three years of supervised release and a $250,000 fine. He also owes restitution.
Somerville, Massachusetts: Tax preparer Yves Isidor, 68, has been convicted of preparing false returns. He was convicted of five counts and acquitted on one count.
From at least 2012 through 2020, Isidor operated a tax prep business under the name Tax and Realty Pro to file more than 1,200 returns in the names of clients, charging $100 to $500 per return. Isidor added false information to six returns to claim deductions for fictitious medical and dental expenses, gifts to charities and unreimbursed employee business expenses, resulting in inflated refunds or falsely lower tax liabilities.
Six taxpayers testified that Isidor had never discussed the false items with them, and they were not aware he had inserted them into their returns. An undercover agent also testified that he was present and observed the defendant create a false return.
The counts of aiding and assisting in the filing of false federal returns each provide for up to three years in prison, a year of supervised release, a fine of $250,000 and restitution. Sentencing is Feb. 6.
Miami: A federal district court has issued a permanent injunction against tax preparer Niclas Pierre and his prep business, Niclas Tax and Express Inc., and a permanent injunction against Elius Bessard and his prep business, Bessard Immigrations and Tax Services LLC.
The injunctions bar Pierre and Bessard from preparing returns, working for or owning a tax prep business, assisting others to prepare returns, or transferring a list of clients. The court also ordered Pierre to pay $563,000 and Bessard $208,000 in gains received from their tax prep businesses. Pierre and Bessard each agreed to both the injunction and the order to pay.
The complaint alleged that the two prepared returns claiming false or fabricated deductions and credits, including fabricated residential energy credits, false and fraudulent deductions, and inflated business expenses. Pierre and Bessard each prepared more than 1,000 returns for clients over the past six years.
Credit: Source link
