Businessman Constructs False Tax Returns for Hefty Refunds

Shawn Smith, a Chicago business owner, was  sentenced to three years in prison for filing false tax returns.

 

Smith created several companies, including a construction business, that did very little work, but provided him with the opportunity to create false W2s that falsely listed him as earning millions of dollars in wages.

 

In total, Smith filed eight false tax returns seeking 3.1 million dollars in tax refunds by claiming Schedule E losses that greatly reduced his income.

 

The IRS paid Smith $815,000 in fraudulent returns. He used the money to fund a lavish lifestyle that included purchasing a trailer for his truck, several BMWs, expensive dinners, and shopping sprees at luxury retailers.

Couple Strikes Out with Gambling Ruse, Ends Up in Prison!

Cherie and Dudley Hellenbrand, owners of Middleton Sports Bowl, a bowling alley and sports bar in Wisconsin, pleaded guilty to underreporting the sales receipts from video gambling machines they had installed in their business in 2010.

 

The Hellenbrands scheme came to light when they admitted to a potential buyer of the business that they did not report all the sales from the machines. They said that the company that provided the machines gave them receipts with whatever amount they wanted to report to the IRS. The potential buyer was an IRS criminal investigation special agent working undercover.

 

The case ultimately included four others, employees and owners of Global Vending, the company that provided the machines to the business, along with false receipts, in exchange for 25% of the true profit.

 

The Hellenbrands used the money skimmed from the machines for cars, vacations, $40,000 on landscaping and to pay some employees in cash.

 

They were found guilty of a tax loss  of $268,852.04 for the years 2010 to 2017 and were each sentenced to six months in prison.

Corporate Secretary Puts Plumbing Company in Hot Water for Embezzling Almost a Million Dollars!

Sara Collins, the corporate secretary of a plumbing, heating, and air conditioning business in Delaware, pleaded guilty for failing to pay employment taxes on behalf of her employer. From 2013 to 2019 Collins paid less than $37,000 in payroll taxes when the business owed a total of more than $960,000.

 

Collins used the diverted funds to pay for personal expenses and covered her tracks by entering bogus purchases and payments in the company’s accounting program. She faces a maximum sentence of five years in prison for each of five counts.

Millionaire Tax-Evader and Medicaid Thief Goes to Jail!

Jeffrey Scott Allen, a Missouri businessman, pleaded guilty to tax evasion for underreporting his income from 2012 to 2017.

Allen’s business provides installation services for satellite based Internet and television, and he contracts labor with five different contractors. He claims an annual profit of 2.1 million dollars, and takes a $6,000 monthly draw from the company.

In order to avoid paying taxes, Allen grossly underreported his net income from the business and paid the majority of his family’s personal expenses through the company. He lowered his taxable income by so much that he was able to qualify for federal benefits for his family, including $15,856 in Medicaid for three of his children, $4,392 in free and reduced school lunches, and $35,453 in federal student aid under the Pell Grant program.

Allen was sentenced to two years in prison without the possibility of parole, and was ordered to pay $758,517 dollars in restitution. He’s also required to pay back federal and state agencies for the services received from Medicaid, the school lunch program, and the Pell Grant.

Your IRS Questions Answered Here…

Question: I owe a several years of back taxes, about $43,000, but do not have the money to pay the IRS.  I want to get them off my back and heard of something called an Offer in Compromise.  What is it and how do I get one?

 

Answer:  An Offer in Compromise (“OIC”) is the IRS’ tax resolution debt settlement program.  It’s a program for taxpayers who owe the IRS more money than they can afford to pay back, even over time. It’s the IRS’s version of a “fresh start” when it comes to tax debt.  If approved, the IRS accepts a lesser amount (sometimes a fraction of what’s owed) to settle your debt.  However, it isn’t always easy to gain approval due to its strict criteria. Most taxpayer’s fail when they attempt to go up against the IRS and try to do this themselves.

 

The IRS considers your income, assets, expenses, liabilities, ability to pay, and whether paying the full amount would cause financial hardship. It’s important to remember that the IRS wants its money and will only accept an Offer in Compromise if it thinks it couldn’t collect from you otherwise.

 

Your odds for approval increase significantly when you have an experienced tax resolution specialist in your corner when it comes to negotiating with the IRS.

Tobacco Farmer’s False Federally Insurance Claims Go Up in Smoke

Christopher Hickerson, a tobacco farmer in Kentucky, was found guilty of crop insurance fraud and tax fraud.

From 2009 to 2016 Hickerson filed false claims of loss on his Multi-Peril Crop Insurance policies. These policies are federally sponsored and funded with taxpayer money.

Hickerson got the owner of a tobacco warehouse to give him fake sales receipts and grading reports that made it appear as if he was producing and selling poor quality tobacco. He then submitted these on his loss claims. As a result, he caused the insurance program a loss of almost one million dollars.

Hickerson also admitted that he underreported his income in 2012, 2013 and 2015, causing the IRS a loss of more than $150,000.

He was sentenced to 66 months in prison and under federal law must serve 85% of his sentence.

Bookkeeper’s Numbers Don’t Add Up She Faces Jail Time and a $750K Fine

Melodie Ann Eckland pleaded guilty to defrauding her extended family and her employer, a non-profit adoption and surrogacy agency.  From 2011 to 2018 Eckland, a bookkeeper, stole funds from her employer by making unauthorized wire transfers, wiring checks to herself and paying herself unauthorized bonuses.

Eckland maintained two sets of agency books, one for the board of directors and one that showed the payments made to herself.  To cover the stolen money she applied for loans and altered financial records to make it appear that she owned the agency.  Beginning in 2016 she stopped paying the agency’s  quarterly employment tax payments to the IRS, and stopped filing employment tax returns.  As a result the agency owed more than $94,000 in past due employment taxes.

Eckland also stole more than $123,000 from the estate of her deceased brother-in law.  Her husband was the executor of the estate and Eckland forged his signature on stolen checks.  She used some of this money to replace a portion of the stolen funds from her employer.

She did not report the embezzled funds on her tax returns in 2013, 2014 and 2017. In 2015 and 2016 she reported more than $550,000 as “other income” but did not pay the taxes due.  Between 2013 and 2017 she failed to report more than $675,000 in income, resulting in a tax loss to the IRS of more than $345,000.

Eckland faces up to 30 years in prison, a $750,000 fine and restitution.

Businessman Gambles with the IRS and Loses

A Florida businessman, Alejandro Gomez, pleaded guilty to tax evasion after causing the IRS a tax loss of over $545,000.

Gomez ran Fleischmann’s Produce, a company that imported fresh herbs for wholesale distribution, and got in the habit of writing off gambling losses as company expenses.

In 2014 Gomez lost $896,951 gambling, and in 2015 his gambling debt totaled $1,051,213. When he filed his taxes for those years he declared the gambling losses as cost of goods sold.  This in turn reduced the income that Gomez received from the business, which he also underreported.

In addition to restitution, Gomez faces up to five years in prison.

You Steal, Cheat and Commit Tax Evasion? BINGO! Your Number’s Up

Linda Pylant, the office administrator for a trade organization in Maryland, has been indicted on charges of tax evasion, wire fraud, identity theft and social security fraud.

From 2012 to 2020 Pylant was responsible for the organization’s bookkeeping, and in 2017 opened a bank account in her employer’s name that only she had access to.  Over a period of three years she deposited checks worth more than $700,000 into this account.  She spent more than $75,000 at a bingo hall, more than $100,000 in retail stores and restaurants and withdrew over $200,000 in cash.

In 2015 she applied for social security disability insurance and falsely stated that she was disabled.  She was approved and collected more than $125,000 in benefits while she continued to work for her employer.

If convicted, in addition to restitution, she faces a maximum of 20 years in prison for wire fraud, two years for identity theft, five years for social security fraud and five years for tax evasion

Bogus Tax Deduction Gets Dentist Extracted from Society and Sent to Prison

Homayoun Zadeh, an associate professor of dentistry at USC, pleaded guilty to filing a false tax return in connection with the college admissions scandal.  Zadeh paid $100,000 to a bogus charitable organization run by Rick Singer, the mastermind behind the admissions scandal, in order to secure his daughter’s acceptance to USC.  He then deducted the payment from his taxes as a charitable donation, despite knowing it was not a legitimate donation.

In a plea agreement, the parties have agreed to a prison sentence of six weeks, a $20,000 fine and 250 hours of community service.