New Jersey Man Teaches His “Clients” How to Cheat the IRS

A federal grand jury in Camden, NJ issued an indictment to Kenneth Crawford, Jr, charging him with conspiring to defraud the United States Government by promoting a tax refund scheme, filing false claims and obstructing the internal revenue laws.

Crawford and unnamed co-conspirators were charged with executing a “mortgage recovery” tax fraud scheme; assisting client taxpayers to file false tax forms by falsely claiming that substantial amounts had been withheld and paid to the IRS. Crawford recruited and convinced clients, who were behind on their mortgage payments, many facing foreclosure, that they could recover through their tax refunds, the mortgage debt they owed and paid to financial institutions. Crawford would charge a fee for his services of 25% of the refund issued.

According to the indictment, when the IRS discovered the fraud and attempted to recover the refunds issued, Crawford supplied his clients with false documents to send to the IRS.

The amount of fraudulent refund claims was $2.3 million, of which the IRS paid over $1.3 million.

Mental Health Company Owners Must Have Lost Their Minds!

Haydn Thomas from Durham, NC, pled guilty in federal court to one count of making a false statement relating to health care matters and one count of tax evasion. His business partner Catinia Farrington also pled guilty to one count of health care fraud and one count of tax evasion.

Court documents show that the pair, who owned the Durham County Mental Health and Behavioral Health Services, LLC, submitted false claims to Medicaid for services that were not performed.  From 2011 through 2015, they received approximately $4 million from thousands of false claims.

Thomas and Farrington diverted the funds from the company to other business bank accounts and used the money to pay personal expenses.  The funds were never reported on their income tax returns.

Sentencing will take place on February 2019.  Thomas could face 5 years for making a false statement relating to health care matters and 5 years for tax evasion.  Farrington could be sentenced up to 10 years for health care fraud and 5 years for tax evasion.  Both also face a period of supervised release, restitution and monetary penalties.

The IRS Catches Restaurant Owner Cooking the Books

Chu Chuk Cheung, owner of a restaurant in Springfield, Illinois, was indicted by a grand jury on 2 counts of tax evasion and 10 counts of structuring bank withdrawals to evade tax reporting requirements.

According to the indictment, Cheung, owner of the Osaka Japanese Restaurant, failed to report income he received from the restaurant of $376,976 in 2012 and $145,958 in 2013. In order to avoid his bank reporting transactions, Cheung would withdraw amounts less than $10,000, and it was shown he withdrew $9,000 on 10 separate occasions between August 2013 and September 2014. Cheung was also accused of failing to declare $187,911 of personal income in 2010 and $231,813 in 2011, although he was not charged.

If convicted, Cheung could face up to three years for each count of tax evasion, 10 years for each count of payment structuring, supervised release, restitution and monetary penalties.

Strange State Tax Facts

  • The Rhode Island individual income tax return form features emoticons.  A smiley face appears on the “Amount Overpaid” (refund) line, while a frowny face is shown on the “Total Amount Due” line.
  • Nebraska taxes the sale of illegal controlled substances.  The state’s law says drug dealers must buy drug tax stamps at the rate of $100 per ounce of marijuana, $150 per gram of controlled substances, or $500 per 50 dosage units of controlled substances that aren’t sold by weight.
  • Indiana has several strange food taxes.  Marshmallow crème is tax exempt but marshmallows are not. Icing in tubes and containers of frosting are exempt, but cake decorations are not.
  • Florida has a “greenbelt law” that before it was strengthened over the years was widely open to abuse. The law provided tax breaks for farms and ranchers, so property developers took to renting cows to avoid paying taxes while preparing their land for building. Even Disney World took advantage.

Alabama Woman Will Receive Jail Time, Not for Embezzling but For Not Reporting it on Her Tax Returns

Alita Baker Edeker, of Valley, AL, pled guilty to 6 counts of wire fraud and 3 counts of filing false tax returns.

From February 2007 through May 2014, Edeker directed her company’s client’s payments to her own debit and credit cards she controlled. To conceal her crime from her employer, she made false statements and representations in the company’s books.  The amount of funds embezzled was over $700,000, which she did not disclose on her tax returns.

Edeker could face up to 20 years in prison for each count of wire fraud, 3 years for each count of filing a false tax return, a period of supervised release, restitution and monetary penalties.

American Flag Manufacturer Will Be Seeing Stars and Wearing Stripes After Indictment

Richard Spencer, of Canton, Ohio was indicted by a federal court of 15 counts for failure to account for, collect and pay employment taxes.

Spencer, owner of RS Sewing, which manufactures American flags, was responsible for the company’s financial operations. For W-2 employees, Spencer withheld federal income, Social Security and Medicare taxes but failed to turn the money over to the IRS.  The indictment also alleges that Spencer misclassified a portion of his employees as independent contractors and he also withheld employment taxes.  It was found in an audit in 2011 that Spencer improperly classified the workers and was fined as a result, but he continued to do the same thing.

According to the indictment, the amount of money Spencer collected but failed to pay the IRS, was over $162,000. If convicted, the sentence will be determined by the court after reviewing factors such as the defendant’s prior criminal record, his role in the office and characteristics of the violation unique to his case. A trial date is pending.

Your IRS Questions Answered Here…

Question: I owe back taxes and am not sure how to resolve this issue and I’m panicking. What should I do?

Answer:  If you owe back taxes to the IRS, some amount of panic is understandable. After all, the Internal Revenue Service has the power of the federal government in its corner, something no other debt collector can claim. They are considered the most brutal collection agency on the planet. It is easy to freeze up and just do nothing when you owe back taxes to the IRS, but hiding from, or doing nothing about your tax debt will not make it go away. In fact, ignoring the taxes you owe will only make the situation worse, since interest and penalties can really add up. You also risk having your paycheck garnished (the IRS does need a court order to do this) or your bank account levied. The IRS can also file a Notice of Federal Tax Lien making it all but impossible to obtain financing for a car or home. So instead of panicking about your tax debt and hoping the problem will go away, you need to take some proactive steps. Now is not the time to panic and hide – now is the time to start taking action. Some of these steps you can do on your own if you’d like, while others will likely require the intervention of an experienced tax resolution expert. There are some proactive steps you can take to get a handle on your tax debt.

The IRS Breaks Up Phone Scam Ring That Stole Hundreds of Millions of Dollars

After years of investigative work by the Justice Department and other governmental agencies, 21 individuals were sentenced in July, 2018 for defrauding over 15,000 victims from 2012 to 2016 in an elaborate phone scam operation. Indictments were also issued to 32 conspirators located in India.

The scam worked like this:  A person posing as an IRS or immigration official would phone the victim through call centers in India and would threaten them with arrest, deportation or other penalties if the victims did not pay their “debts” immediately with prepaid cards or wire transfers. The call centers would then turn the information over to a network of “runners” based in the US who used the cards to purchase money orders that were then deposited to a bank account.

Examples of victims include an 85- year old woman in San Diego paid $12.300 to people claiming to be IRS employees who threatened her with arrest for tax violations, and a New Hampshire woman was told to pay the IRS $3,980 in debit cards as the caller ID showed up as “U.S. Government”.

The longest prison sentences include three men; Miteshkumar Patel of IL, who received a sentence of 20 years in prison, Hardik Patel also of IL, was given 15 years and Sunny Joshi of TX was sentenced to 12 years in prison.  22 of the defendants were also ordered to pay the victims restitution of $8.9 million and judgements of over $72 .9 million.

The defendants from India have not been arraigned yet.

Virginia Couple Tries to Outsmart the IRS and Gets Caught

Barry and Joan Edwards, from Concord, VA, who were convicted on one count of filing a fraudulent tax return, and one count of conspiring to structure cash transactions, were sentenced to prison time.

Joanne Edwards was previously sentenced in May, 2018 and received a sentence of 18 months in prison and 3 years supervised release.  Barry Edwards was sentenced to 36 months in prison and ordered to pay $7,929 in restitution to the IRS for unpaid taxes.

It was shown in court that the Edwards created two false religious missions in 2006, which they used as nominees to receive income from nutritional supplement sales. The earnings were deposited into bank accounts held in the nominee’s name. The couple withdrew more than $475,000 in increments of less than $10,000 to evade bank-reporting requirements. The Edwards used the funds to pay personal expenses such as car payments, tuition and paid cash for a five-acre farm.  They also filed fraudulent tax returns from 2013 to 2015 in which they did not fully report their income.