Tax Fraud Blotter: Twice the fun

Cecilia Nysing

Off to the stockade; for the kids; untrustworthy; and other highlights of recent tax cases.

Columbia, South Carolina: Former IRS employee Wayne M. Garvin, 57, has been sentenced to 13 months in prison after admitting to filing false returns and providing fabricated records to the IRS to obstruct an audit of those returns.

Garvin, who pleaded guilty in March, was a long-time IRS employee who most recently worked in the IRS Taxpayer Advocate Service in Philadelphia. For 2012 through 2016, while an IRS employee, he prepared and filed personal federal income tax returns on which he claimed false deductions and expenses associated with rental properties, fictitious real estate taxes on his personal residence, and fabricated charitable contributions.

On his 2013 return, Garvin deducted nearly $16,000 in false expenses associated with his employment with the U.S. Army Reserve. Although Garvin was formerly a member of the Reserve, he performed no duty in 2013 and was not entitled to deduct any expenses related to that employment.

In total, Garvin caused a loss to the IRS of more than $74,000.

After the IRS began an audit of his 2013 and 2014 returns, he attempted to obstruct the audit by submitting fictitious documents to the IRS. For example, to justify the false deductions and expenses on his returns, he fabricated and submitted to the IRS auditors’ receipts from a church, invoices from a contractor and a letter from the Department of the Army. After learning he was under criminal investigation, he later submitted some of the same fraudulent documents to IRS Criminal Investigation.

Garvin was also ordered to serve three years of supervised release and pay $74,662 in restitution to the IRS.

El Paso, Texas: Tax preparer Elein Rodela Jr., 41, has pleaded guilty to multiple counts of an indictment for his involvement in a tax fraud.

From August 2016 to August 2018, Rodela schemed to defraud the IRS by using legitimate W2s to file fraudulent returns and obtain federal refunds checks in the name of non-citizens working in the U.S. Rodela opened post office boxes in El Paso and New Mexico and used these addresses to receive the fraudulently obtained checks. He subsequently cashed the checks and laundered the money through a bank account belonging to a children’s sports team.

Rodela’s scheme resulted in a total loss to the IRS of some $670,217.

He pleaded guilty to three counts of mail fraud; one count of wire fraud; four counts of aggravated ID theft; five counts of money laundering; and one count of theft of government funds. He faces up to 20 years in prison on each of the mail fraud, wire fraud, ID theft and money laundering counts; he faces up to 10 years on the theft of government funds count.  

Rocky Mount, North Carolina: Tax preparer Thy Muhammad has been sentenced to 15 months in prison for preparing false trust tax returns on behalf of clients.

Muhammad owned and operated the tax prep business Seventh Millennium International. In 2013 and 2014, he prepared fraudulent trust returns, falsely reporting that the clients had paid taxes in the name of purported trusts. One such false return resulted in the IRS issuing a refund check of more than $500,000, of which Muhammad took nearly $78,000 as a prep fee.

During these two years, Muhammad claimed a total of more than $5 million in fraudulent refunds from the IRS.

He was also ordered to serve three years of supervised release and pay $669,000 restitution.

Hands-in-jail-Blotter

Hewitt, New Jersey: William Kawam, who was employed as a CPA, has admitted to failing to disclose income on his returns.

In 2015, Kawam and a conspirator schemed to conceal money from the IRS. The conspirator compensated Kawam for a portion of his accounting services by providing him with a credit card belonging to one of the conspirator’s businesses that Kawam could use for personal expenses. Kawam failed to report the charges as income and the conspirator failed to report the charges as business expenses.

He failed to report $146,605 for tax years 2015, 2016 and 2017, resulting in a tax loss of some $54,400.

The count of subscribing to false returns to which Kawam pleaded guilty carries a maximum of three years in prison and a $100,000 fine; conspiracy to defraud the U.S. count carries a maximum of five years in prison and a $250,000 fine. Sentencing is Nov. 21.

Petaluma, California: Bookkeeper Stephanie Simontacchi has been sentenced to 29 months in prison for bank fraud, embezzlement of credit union funds and tax evasion.

Simontacchi was employed as a bookkeeper and controller at Cavallo Point Lodge, a hotel near Sausalito, California, from December 2009 through April 2016. While there, she had access to accounting records systems and had signatory authority over bank accounts.

She admitted that between October 2012 and March 2016, she used her skills as an accountant and access to the lodge’s accounting systems to steal some 81 checks, which she deposited into her bank accounts. Her actions caused financial institutions to part with some $384,363.28 that belonged to the business.

She also admitted that between April 2016 and April 2019, she was a senior accountant and accounting manager at Redwood Credit Union, where she was responsible for processing voided cashier’s checks and other accounting-related tasks. Simontacchi admitted that she used her position to embezzle and misapply some 35 checks including voided cashier’s checks returned to by the credit union members, U.S. Treasury checks and State of California checks.

She deposited the checks into her bank and credit card accounts for personal use and used the funds to make payments toward a home equity line of credit. Combined, the checks amounted to at least $437,162.24.

Between 2014 and June 2020, she caused to be prepared and filed false returns for 2013 to 2019. Simontacchi acknowledged that the total tax loss from her misconduct exceeded $100,000.

Simontacchi pleaded guilty to one count each of bank fraud, misapplication and embezzlement of credit union funds, and tax evasion. She has agreed to pay at least $821,525.52 in restitution and was also ordered to serve three years of supervised release after her prison term.

Versailles, Missouri: Tax preparer Angela Jo Campbell Young, 56, has been sentenced to 16 months in prison for filing false federal income tax returns.

Campbell Young owned and operated Campbell’s Tax Service and was also employed in a bookkeeping or accountant capacity at a construction firm. She was issued a new Social Security number and card in June 2006 based on her claim that she was a victim of ID theft.

Two years later, she began filing returns under both the old and the new Social Security numbers and continued to do so through 2014. The returns each contained different income information, and in some cases Campbell Young also claimed dependents and head of household status to secure undeserved refunds and Earned Income Tax Credits.

Campbell Young was also receiving Social Security disability benefits during this same time that she would not have been entitled to had she reported her work activity to the Social Security Administration. She received $98,168 in undeserved Social Security disability benefits.

Her false returns caused a loss of some $85,231 to the IRS, as well as an additional loss to the Missouri Department of Revenue.

Campbell Young, who pleaded guilty in October, was also ordered to pay $183,715 in restitution.

https://www.accountingtoday.com/news/tax-fraud-blotter-twice-the-fun

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