THREE TAX PREPARERS RECEIVE PRISON SENTENCES IN FALSE TAX RETURN FILING CASE

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, April 14, 2016

Three Minnesota Tax Return Preparers Sentenced to Prison for Conspiracy to Defraud the Government and Filing False Tax Returns

Defendants Prepared Thousands of False Tax Returns for Filing with IRS and State of Minnesota

Three tax return preparers based in Minneapolis, Minnesota, were sentenced to prison yesterday for their involvement with a fraudulent return-preparation business with multiple storefronts in the Minneapolis area, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Ishmael Kosh, 39, of Philadelphia, Pennsylvania, and Amadou Sangaray, 36, of New York, New York, were convicted following a two-week jury trial in September 2015.  Kosh was convicted of one count of conspiracy to defraud the United States and eight counts of aiding and assisting in the filing of false tax returns.  Sangaray was convicted of one count of conspiracy to defraud the United States, four counts of aggravated identity theft and eight counts of aiding and assisting in the filing of false tax returns.  Francis Saygbay, 43, of Minneapolis, failed to appear for trial, but later pleaded guilty to one count of conspiracy to defraud the United States, one count of aggravated identity theft, and two counts of aiding and assisting in the preparation of false tax returns.

Yesterday, Chief U.S. District Judge John R. Tunheim sentenced Kosh to 52 months in prison, Sangaray to 50 months in prison and Saygbay to 40 months in prison.  In addition to the prison terms, Judge Tunheim also ordered each Kosh and Saygbay to serve three years of supervised release and Sangaray two years of supervised release, following their release from prison.

“As the 2016 tax filing season draws to a close, taxpayers are reminded to be wary of return preparers who make promises that seem too good to be true,” said Acting Assistant Attorney General Ciraolo.  “Dishonest return preparers like Messrs.  Kosh, Sangaray and Saygbay cost the U.S. Treasury billions of dollars each year.  Taxpayers should stay alert for the warning signs that their preparer is more interested in making a quick buck than filing an accurate tax return.”

According to the evidence presented at the trial, Kosh, Sangaray, Saygbay and a fourth individual, Chatonda Khofi, 50, of St. Paul, Minnesota, established a storefront location of Primetime Tax Services Inc. (Primetime), a tax return preparation business in the Minneapolis area.  Along with a fifth individual, David Mwangi, 47, of Arlington, Texas, the defendants prepared over 2,000 fraudulent individual income tax returns on behalf of customers of Primetime for filing with the Internal Revenue Service (IRS) for the years 2006, 2007 and 2008.  The defendants also prepared approximately 1,700 fraudulent state income tax returns for filing with the state of Minnesota for those years.  At yesterday’s sentencing hearing, Judge Tunheim found that the defendants’ conduct caused a total tax loss of between $1.5 and $3.5 million.

On the fraudulent returns, the defendants included false dependents, fake business income and losses, inflated deductions and credits and false filing status in order to obtain inflated tax returns for their customers.  The defendants also bought and sold dependents for use on their customers’ tax returns in order to falsely qualify their customers for inflated deductions and tax credits.  The defendants caused the fraudulently obtained refunds to be sent directly to Primetime in order to maintain control over the funds.  When a customer came to pick up their refund checks or debit card, the defendants sometimes demanded an additional fee in cash, and/or escorted that customer to a check cashing location or ATM.

“Tax-return preparers who try to scam the government for tax refunds are not only stealing from the government, they are stealing from all the honest citizens who pay their fair share of taxes,” stated Special Agent in Charge Shea Jones of IRS-Criminal Investigation St. Paul Field Office.  “The special agents of IRS-Criminal Investigation are committed to protecting the integrity of our system of taxation by investigating tax and accounting professionals who conspire with others to violate the tax laws.  It is our hope that yesterday’s sentencings of Ishmael Kosh, Amadou Sangaray and Francis Saygbay, send the strong message that tampering with the integrity of our nation’s tax system will result in jail time.”

In November 2014, Mwangi pleaded guilty to one count of conspiracy to defraud the United States and Khofi pleaded guilty to one count of conspiracy to defraud the United States and one count of aggravated identity theft.  They are currently awaiting sentencing.  A sixth individual associated with this scheme, Stephanie Robinson, 33, of Minneapolis, pleaded guilty in August 2013 to one count of filing a false tax return in her own name and one count of aiding and assisting in the filing of a false tax return for another individual.

Acting Assistant Attorney General Ciraolo thanked special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Thomas W. Flynn and Ryan R. Raybould, and former Trial Attorney Dennis R. Kihm of the Tax Division, who prosecuted the case.  Acting Assistant Attorney General Ciraolo also thanked the Minnesota Department of Revenue for their significant work on this matter.

COURT SHUTS DOWN TAX PREPARER ACCUSED OF OVERSTATING REFUNDS THROUGH FICTITIOUS REPORTING

FROM:  U.S. JUSTICE DEPARTMENT  
Friday, March 21, 2014
Federal Court Shuts Down Florida Tax Return Preparer

Return Preparer in Plantation, Fla., Allegedly Overstated Refunds Through Fictitious or Inflated Income, Filing Statuses, Exemptions and Tax Credits
A federal court in Fort Lauderdale, Fla., permanently barred Keisha Stewart, a tax preparer in Plantation, Fla., from preparing federal tax returns for others, the Justice Department announced today.  Stewart agreed to the civil injunction order, and a stipulated final judgment of permanent injunction was entered against her by the court on March 20, 2014.

The complaint alleged that Stewart prepared federal income tax returns for customers that inflated income or included fictitious income to qualify her customers to receive or to maximize the earned income tax credit; claimed false tax credits that are refundable or decrease the amount of tax on her customers' returns, including phony education credits (American Opportunity Credit) and residential energy credits; falsely claimed head of household status on behalf of customers who did not qualify in order to improperly decrease their reported tax liabilities; and claimed false dependents on behalf of customers and also claimed the child and additional child tax credits on their behalf.
         
Return preparer fraud is one of the IRS'   Dirty Dozen Tax Scams for 2013 .

JUSTICE SUES TO CLOSE DOWN TAX PREPARER, ALLEGING FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, March 4, 2014

Justice Department Sues to Shut Down Dallas Tax Return Preparer
The United States has asked a federal court in Dallas, Texas, to permanently bar Ricia Daniels and her company, Ricia’s Convenience Tax Service, from preparing federal tax returns for others, the Justice Department announced today.

The complaint alleges that, through her business, Daniels understates her customers’ federal tax liabilities by reporting false or inflated personal and business expenses, reporting false or inflated education expenses and improperly claiming other tax credits.  According to the complaint, an Internal Revenue Service (IRS) investigation revealed that 97 out of 98 income tax returns prepared by Daniels and audited by the IRS resulted in understatements of her customers’ tax liabilities.  The government alleges that the tax harm caused by these understatements exceeds $500,000.
         
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2013 .

JUSTICE SEEKS TO SHUT DOWN NJ TAX PREPARER

FROM: U.S. DEPARTMENT OF JUSTICE
Thursday, February 21, 2013
Justice Department Seeks to Shut Down New Jersey Tax Return Preparer
Garfield, N.J., Woman Prepared Tax Returns That Improperly Claimed Earned Income Tax Credit

The United States has asked a federal court in Camden, N.J., to bar Doris E. Baules, who operates D’Vazquez Tax Solutions, from preparing tax returns for others, the Justice Department announced today. According to the government complaint, Baules continually and improperly claimed the Earned Income Tax Credit (EITC) on her clients’ returns to enable them to receive erroneous tax refunds. The suit alleges that the defendant improperly increases their EITC claims.

According to the complaint, the Internal Revenue Service previously conducted an investigation into the tax returns that Baules prepared for the 2009 tax year, and assessed $12,500 in return preparer penalties against her because she failed to exercise due diligence in determining whether her clients were entitled to the EITC. Baules continued to claim increased EITC on returns she prepared even after the IRS contacted her. According to the complaint, the total harm to the U.S. Treasury caused by Doris Baules’ misconduct is estimated to be as high as $6.2 million.