• Accounting

  Tax Fraud Blotter: All the trimmings

  Posted by Accounting on June 21, 2024 at 2:49 am

  Card shark; the roof falls in; a dynamic duo; and other highlights of recent tax cases.

  Baltimore: Dolapo Lawal has pleaded guilty to charges of access device fraud and aggravated ID theft.

  Lawal trafficked and used 24 Green Dot Bank debit cards in elderly victims’ names in the spring of 2022, the cards fraudulently loaded with more than $200,000 in 2021 tax refunds stolen via ID theft. In April of that year, police stopped and searched Lawal’s Mercedes and found some $18,900 in cash and these 24 debit cards. The vehicle also contained multiple plastic bags filled with opened packaging for these or similar debit cards.

  Lawal had used these cards to conduct more than 300 cash withdrawals at ATMs to obtain more than $80,000 in the preceding month, later admitting that he used the money for payments on his Mercedes and to pay off credit card debt.

  He also had more than 300 additional unique Green Dot Bank debit cards in his home around June 21 last year when authorities searched his home. Some 200 of these cards were linked to bank accounts opened in the names of additional victims, which were listed as the direct deposit accounts for fraudulent 2021 and 2022 tax refund claims filed in the names of those victims. The total of fraudulent refund claims associated with these cards exceeded $3 million, which the IRS had not issued before authorities searched Lawal’s home.

  He faces up to 10 years in prison, followed by up to three years of supervised release for access device fraud, and a minimum of two years for aggravated ID theft to run consecutively, followed by up to a year of supervised release.

  Miami: Tax preparer Jean Wesner Pierre Louis, 52, has been sentenced to 30 months in prison, to be followed by a year of supervised release, and ordered to pay more than $4 million restitution for aiding and assisting the preparation and presentation of false returns.

  Pierre Louis, who pleaded guilty in February, was the president and CEO of a tax prep business in Miami-Dade County, Florida. For tax years 2015 through 2019, he on multiple occasions prepared returns for clients that falsely claimed credits that increased the amount of refund owed or decreased taxes owed, such as the American Opportunity Credit and the federal Fuel Tax Credit. For those same tax years, he also prepared returns for clients that falsely claimed losses for Schedule C businesses that did not exist.

  Platte Woods, Missouri: Business owner Daniel Alan Ryan has been sentenced to a year in prison for failing to pay more than $600,000 in federal income taxes.

  In 2012, IRS investigators began questioning Ryan, the owner of a roofing company and a construction company, about his non-payment of taxes. This investigation continued over the following years; after it became known to him Ryan failed to file income tax returns from 2015 through 2017, resulting in a tax loss over those years of $138,385. He also admitted that he caused tax loss from 2009 through 2013 of an additional $487,627.

  Ryan, who pleaded guilty in December, was ordered to pay a $20,000 fine and $626,012 in restitution, plus interest, to the IRS.

  White Plains, New York: CPAs George Sanossian and Jack N. Sardis have pleaded guilty to conspiracy to defraud the IRS.

  The two were partners in an accounting firm in Scarsdale, New York, that provided accounting and income and payroll tax services to clients, including nine businesses in the construction industry. From around 2012 through at least April 2018, Sardis and Sanossian agreed with clients to fraudulently reduce the latter’s income tax liability, conceal wages paid to the clients’ employees and reduce the payroll tax liability; and conceal personal income of the clients.

  The defendants advised the clients to issue checks made payable to a shell company and give the checks to Sardis and Sanossian, who then caused the checks to be cashed at a check cashing service and returned the cash, minus a fee, to the clients. Some of the clients used the cash to pay employees without reporting the cash wages on their 941s; some clients took the cash for personal use without reporting the income on their personal returns.

  Sardis and Sanossian caused checks to be cashed for more than $2 million.

  Sardis, 66, of Englewood Cliffs, New Jersey, and Sanossian, 70, of Scarsdale, New York, pleaded guilty to one count of conspiracy to defraud the IRS, which carries a maximum of five years in prison. Sanossian’s sentencing is Sept. 24; Sardis will be sentenced on Sept. 26. The two have also agreed to pay $652,883.60 in restitution to the IRS and New York State. 

  

  Bethlehem, Pennsylvania: Businessman Ammar Jali has been sentenced to a year and a day in prison and a year of supervised release for filing false returns.

  Jali, who pleaded guilty in January, was the sole shareholder of 36 Domino’s Pizza restaurants throughout Pennsylvania and Ohio. From 2014 to 2016, he underreported the gross receipts for his stores by $10 million and caused his accountant to file false returns, causing more than $2.5 million in federal tax loss.

  He was also sentenced to a $50,000 fine and ordered to pay $2.5 million to the IRS.

  West Springfield, Massachusetts: Former home builder Kent Pecoy has pleaded guilty to conspiring to defraud the U.S. and to creating false documents to help one of his clients obtain a mortgage.

  He owned and operated Kent Pecoy & Sons, Construction Inc., a commercial and luxury home construction company. From 2009 through 2016, Pecoy conspired with others to conceal income from the IRS by dealing in cash.

  Specifically, Pecoy received $1,116,900 in cash payments from Kevin Kennedy, who has been sentenced to prison for tax crimes, for the purchase and construction of custom-built homes in East Longmeadow, Massachusetts, and on Cape Cod. Pecoy did not deposit most of the cash into the businesses’ bank accounts but distributed it directly to vendors and subcontractors. Pecoy also created and maintained separate ledgers documenting Kennedy’s cash payments, created and maintained false contracts and cover sheets and created false entries in the company’s accounting system to conceal the cash payments. For payments Pecoy did deposit, he deposited the cash in amounts less than $10,000 to avoid currency transaction reports.

  For the East Longmeadow home, in January 2010 Kennedy and Pecoy created two contracts, one with the agreed purchase price and one with a price $160,000 lower than the contract price, which was the amount Kennedy had paid to Pecoy in cash as a down payment. Kennedy then submitted the deflated home purchase contract to the bank for a mortgage for part of the home.

  Pecoy caused a loss to the IRS of more than $250,000. The IRS served a grand jury subpoena on Pecoy, to which he responded. When IRS agents searched Pecoy’s construction business, they found dozens of documents relevant to the subpoena that Pecoy had not turned over to the government.

  His sentencing is Aug. 20. He faces up to five years in prison for conspiring to defraud the U.S. and 30 years for making a false statement to a bank. He also faces a period of supervised release, restitution and monetary penalties.

  Rogers, Arkansas: Businessman Carlos Gonzalez, 59, has pleaded guilty to filing a false individual income tax return.

  Gonzalez filed returns that underreported the gross receipts from his tree-trimming and removal business. From 2014 through 2020, he underreported more than $3 million in gross receipts from his business, resulting in a tax loss of some $920,694.

  He faces up to three years in prison. 

  Tampa, Florida: Abdul Q. Aziz has been sentenced to 15 months in prison for aiding in the preparation and filing of false and fraudulent income tax returns. 

  Aziz, who previously pleaded guilty, helped prepare income tax returns for friends and family members. He offered to help obtain large and unwarranted refunds by filing returns that falsely claimed income obtained and withholding credits based on payment of interest on mortgages which the taxpayers had previously obtained.

  The returns Aziz helped to prepare and file led to claims for unlawful refunds totaling more than $1.5 million. The actual loss to the IRS exceeded $226,000.

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