The first two pages; a Rainy day; in all modesty; and other highlights of recent tax cases.
Freeport, Texas: Tax preparer Krystal Wright has been sentenced to two years in prison to be followed by a year of supervised release for aiding and assisting in the preparation and filing of false income tax returns.
Wright, who pleaded guilty earlier this year, was the sole owner and only tax preparer at the tax prep firm WW2F. Most of her clients did not have a business nor did they discuss any business income or expenses with her. From 2017 through 2020, she prepared and filed some 83 federal income tax returns that contained false and fraudulent items, including qualified solar electric property costs, gifts by cash or check, business expenses, wages, salaries, tips and supplies. After Wright completed a return, she did not review the completed documents with clients and only provided them with the refund amount and first two pages of the return.
The filings resulted in a total tax harm of $525,404. Wright was also ordered to pay that amount in restitution.
Terrell, Texas: Tax preparer Toronto Henderson, 49, has pleaded guilty to conspiracy to aid, assist, counsel or advise in tax fraud and has been sentenced to two years in prison.
Henderson owned two tax prep businesses and recruited tax preparers to prepare and file income tax returns for clients. Henderson or others at his instruction personally trained the preparers and instructed them to create, among other things, fraudulent Schedule Cs; preparers used taxpayer information unrelated to the operation of any business or created fictitious and false information with respect to operation of a business to allow the claiming of undeserved losses.
The tax loss totaled $373,230, which Henderson was also ordered to pay in restitution.
Columbus, Ohio: Tax preparer Ali Kasimu Alston, 48, has pleaded guilty to aiding in the preparation of false and fraudulent returns.
From at least 2015 through at least 2022, Alston owned and operated the prep business in Columbus Overtime Ventures LLC, d.b.a. Raining Cash Tax Service. He admitted to systematically falsifying client tax returns to maximize federal refunds, filing Schedule Cs with fake businesses to maximize tax credits. He also tried to bribe one of his former employees with $4,000 to provide false information to law enforcement that was investigating the tax prep business.
Aiding in the preparation of a false and fraudulent return carries up to three years in prison. Alston will also pay more than $1.2 million in restitution to the IRS.
Beaumont, Texas: Tax preparer Michelle Denise Johnston, 42, has been sentenced to 15 months in prison and ordered to pay $196,177 in restitution for federal tax violations.
Johnston worked at Allen and Johnston Tax Service, which she formed with Yolanda Allen Morris in 2011; each had worked as Jackson Hewitt office managers at Wal-Mart locations and had decided to open their own tax prep business. The company existed until Allen and Johnston split in February 2021.
Johnston requested refunds on clients’ federal returns that were not based on the clients’ actual income, expenses, deductions and qualifying credits. She inflated refunds based on fabricated income, expenses, deductions and credits reported by Johnston without clients’ knowledge.
The IRS deposited the refunds with a third-party vendor; Johnston then caused the third party to pay the clients a modest tax refund that she’d originally made known to them. Before the vendor paid, however, Johnston deducted what was essentially a second tax prep fee from the refunds, the amount generally being the difference between the filed, larger refund and the modest refund made known to the client.
Johnston also signed an income tax return and falsely stated the amount of gross receipts and fraudulently stated taxpayers’ total expenses on returns, knowing the information was false.
Fairmont, West Virginia: Tax preparer Jack Lee Oliver, 56, of Rivesville, West Virginia, has been convicted on 26 counts of filing false returns.
Oliver owns an insurance sales and tax prep business known as Insurance Depot. He prepared returns for clients claiming business losses for non-existent businesses without the clients’ knowledge and prepared returns for clients who did have businesses, falsely inflating expenses to cause a business loss, again without the knowledge of the clients.
On his own returns, Oliver claimed the foster son of one of his clients, resulting in thousands in undeserved refundable credits.
The expected federal tax loss exceeds $500,000. Oliver faces up to three years in prison for each count.
Lenexa, Kansas: Tax preparer Hophine Bwosinde has pleaded guilty to preparing and filing false income tax returns for clients.
Bwosinde operated the tax prep business Ambroseli Professional Services and from 2018 through 2022 prepared and filed false returns by either inflating legitimate business expenses or claiming losses related to fake businesses. He also falsely reported negative income on clients’ returns, generating undeserved refunds.
Bwosinde caused a total tax loss of more than $1.5 million.
Sentencing is Feb. 18. Bwosinde faces a maximum of three years in prison as well as a period of supervised release, restitution and monetary penalties.
Miami: A federal court has issued an order holding Gerald Vito, James Eleby and Kwame Thomas in contempt for violating a permanent injunction that prohibited Vito and Eleby from preparing, filing or assisting in the preparation or filing of federal returns for others.
According to the complaint filed against them in March 2021, the pair prepared returns that significantly understated clients’ tax liabilities by claiming deductions for fabricated or inflated charitable deductions, medical expenses and employee business expenses. The complaint further alleged that the defendants significantly understated clients’ tax liabilities by reporting false or inflated business losses. In December 2021, the court issued a
Following a hearing in September, the court found that the two violated the injunction by continuing to prepare returns for others. The court further found that Thomas, who was not a defendant in the original complaint, worked with Eleby to prepare returns in violation of the injunction.
The court held Vito, Eleby and Thomas in civil contempt and ordered that they disgorge, in the aggregate, $988,789.56 in fees they earned while violating the injunction. Vito and Eleby were further ordered to disclose to the government the names of all taxpayers for whom they prepared returns after Dec. 27, 2021, notify those taxpayers of the injunction, vacate the premises at which they prepare returns and file an affidavit of compliance with these terms.
San Antonio: Resident Rachel Olivia Markum has been sentenced to 15 months in prison for tax evasion.
Markum and her husband, Robert Franklin Markum Jr., prepared and signed a false joint 1040 for 2016 attesting that the couple’s sole income was gross receipts or sales from the business Camping and Fishing Outlet as $3,530,473. She was aware that the true gross receipts exceeded $4 million.
Rachel Markum pleaded guilty on May 28 to one count of tax evasion and aiding and abetting. Robert Markum pleaded guilty on April 1 to one count of tax evasion, and on Aug. 28 was sentenced to 27 months in prison. The couple was also ordered to pay $359,108 in restitution.
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