GUILTY4EVER; lack of security; just trust me; and other highlights of recent tax cases.
Orlando, Florida: Six Florida individuals have been sentenced and three more await sentencing in connection with a racketeering conspiracy that involved cyber intrusions and millions in tax fraud.
Louisaint Jolteus, of West Palm Beach, pleaded guilty in 2022 and was sentenced to nine years and two months in prison and ordered to pay $2,928,841 in restitution. Michael Jean Poix, also of West Palm Beach, pleaded guilty in August and was sentenced to 10 years and 10 months in prison and ordered to pay $130,771 in restitution.
Monika Shauntel Jenkins, of Hollywood, pleaded guilty in September and was sentenced to 87 months in prison and three years of supervised release and ordered to pay $3,384,913 in restitution. Alain Jean-Louis, of Miami, pleaded guilty in August and was sentenced to 102 months in prison and three years of supervised release and ordered to pay $2,554,907 in restitution.
Louis Noel Michel, also of Hollywood, pleaded guilty in July and was sentenced to 87 months in prison and ordered to pay $1,941,533 in restitution. Jeff Jordan Propht-Francisque, of Pompano Beach, pleaded guilty in August and was sentenced to four years in prison and ordered to pay $2,574,235 in restitution. Andi Jacques, of Greenacres, was scheduled for sentencing this month, as was Vladimyr Cherelus of Lauderdale Lakes. Dickenson Elan, of Clearwater, was found guilty in November and is scheduled for sentencing on Feb. 7.
From 2015 through 2019, these individuals and other conspirators — including a now-deceased conspirator referenced in the indictment as “RICH4EVER4430” — engaged in a sophisticated cybercrime and tax fraud, using the dark web to purchase server credentials for the computer servers of CPA and tax prep firms nationwide.
The conspirators created and operated fraudulent tax businesses to file false returns in the names of thousands of victims. They also registered PTINs using the names and information of ID-theft victims and formed an enterprise through which they filed thousands of false returns in the names of ID-theft victims. They directed the resulting refunds to debit cards and bank accounts that they controlled. Also, to make the businesses appear more legitimate, members of the enterprise opened bank accounts in the names of these fraudulent tax businesses to receive fake “tax preparer fees,” among other crimes.
The conspiracy claimed more than $45 million in false refunds over some four years. The loss to the federal government was estimated at more than $7 million.
Seattle: Si Yong Kim, 45, former owner of two local sushi restaurants, has been sentenced to 10 months in prison and two years of supervised release and ordered to pay a $10,000 fine for tax evasion.
Kim failed to pay taxes on more than $1.7 million in income at the restaurants and took Paycheck Protection Program loans during the pandemic.
Between 2016 and 2020, he underreported income by keeping cash proceeds and periodically depositing the cash to his personal bank account or keeping the cash at his home. He paid his employees in cash and failed to pay over various employment taxes and overestimated the costs associated with the two restaurants.
When authorities searched Kim’s Mukilteo, Washington, home and his businesses in 2022, they discovered he kept handwritten books in which he documented the actual gross income and legitimate expenses for his restaurants and noted a separate “CPA number” provided to his accountant for tax purposes. The number omitted the cash receipts for his restaurants and understated credit card charges. The search also revealed an extensive collection of designer goods, large amounts of cash and records that indicated employees were paid under the table.
Kim used the money from his scheme to invest in properties in Georgia and to pay off his home mortgage.
IRS analysis revealed that in each calendar year from 2016 to 2020 Kim failed to report his actual income for each restaurant. In 2017 he failed to report more than $586,395 in income.
He has paid restitution of $511,750 and has reportedly sold one of the restaurants.
Webster, New York: Alan Laird and Steven Rosenbaum, previously convicted of filing a false federal return, have each been sentenced to six months in prison to be followed by six months of home confinement.
They owned Swoop1 Inc., which provided security personnel to area high schools, colleges, businesses and performing arts venues. At the time of the offense, Laird was chief of the Irondequoit, New York, Police Department; Rosenbaum is a former police officer with the department.
For 2016 through 2021, Laird and Rosenbaum failed to report on corporate income tax returns gross receipts totaling $5,598,354. These receipts derived primarily from the two cashing hundreds of Swoop1 clients’ checks at a local check-cashing company rather than depositing the checks into Swoop1’s business bank account.
From the more than $5.5 million in cash received from the cashed checks, Laird and Rosenbaum used $2,675,467 to pay hundreds of Swoop1’s employees their wages in cash. As a result of paying employees in cash, the pair caused Swoop1 to fail to pay $204,673 in payroll taxes to the IRS. The remaining amount of the cash from the more than $5.5 million in cashed checks not paid to Swoop1’s employees was split by the defendants and subsequently not reported on their personal income tax returns.
By each failing to report the more than $1.3 million in cash, they received from the cashed checks, the defendants failed to pay hundreds of thousands of dollars in personal income taxes to the IRS.
Laird was also ordered to pay $632,722 and Rosenbaum $559,898 in restitution to the IRS.
Albuquerque, New Mexico: Financial advisor and investment broker Richard Kessler has been sentenced to two years in prison for fraud charges and a year for tax charges.
Kessler, who pleaded guilty in 2022, was self-employed and doing business as Guardian Group Investments. He earned commissions by managing retirement accounts for small businesses that included an oil and gas company in New Mexico. Kessler occasionally made presentations to employees of that business regarding retirement planning and financial investments and used those interactions to convince several of the workers to take funds out of their established retirement accounts and entrust their retirement funds to him.
Between 2013 to 2016, several investors entrusted Kessler with retirement funds totaling more than $161,000. Kessler said he would place their retirement funds in qualified investment accounts. Instead, he deposited investors’ retirement funds into his company’s business savings account. From there, Kessler converted and expended those funds through transfers to personal bank accounts, cashier’s checks that he would use for personal expenses and cash withdrawals. He also used a portion of the funds to make payments to earlier investors to replace funds that he had previously misappropriated.
Kessler also failed to file federal tax returns or pay federal income tax for tax years 2014 through 2017. During that time, he earned commissions from legitimate investment management as well as the illicit income from his frauds, his income over these four years, both legitimate and illegitimate, totaling $446,925. This resulted in a tax liability of $82,627.
His two sentences will run concurrently. Upon release from prison, Kessler will be subject to three years of supervised release with the condition that he make full restitution to the victims of his fraudulent scheme and pay the income taxes owed to the U.S. At the time of his sentencing, he had prepaid $82,500 of the $97,481.35 owed to his victims.
Prior Lake, Minnesota: Resident Beau Wesley Gensmer has pleaded guilty to wire fraud and assisting in the preparation of a false income tax return.
From 2012 to 2018, Gensmer schemed to assist in the preparation of at least 50 false returns that claimed fraudulently inflated refunds on behalf of unwitting taxpayer clients. He hired a tax preparer in Anchorage, Alaska, and emailed her false information, including fraudulent business losses and charitable contributions for each return she prepared. The preparer relied on the information she received from Gensmer to prepare and e-file false returns for each of his clients. Gensmer charged a commission of some 30% of each fraudulent refund.
He caused a tax loss to the IRS of at least $3.5 million.
Sentencing is May 7. Gensmer faces up to 20 years in prison for wire fraud and three years for assisting in the preparation of a false return. He also faces a period of supervised release, restitution and monetary penalties.
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