American Fraud Report

Daily Open Source Business Crime and Fraud Report

  1. Federal Tax Sector

    1. November 13, 2012 - DOJ - (California) - (Fraud Losses $5K - 1 Yr Fraud) - (CR Sent. 1 Yr - Fines/Rest. $5K) - (Executive/Management Fraud - False Tax Returns) - STOCKTON TAX VIOLATOR SENTENCED TO A YEAR IN FEDERAL PRISON

      SACRAMENTO, Calif. — United States District Judge Morrison C. England Jr. sentenced Saeed Ur Rahman, 47, of Stockton, to a year and a day in prison and a $5,000 fine, United States Attorney Benjamin B. Wagner announced. Rahman was found guilty by a jury on October 24, 2011 of filing false tax returns for tax years 2004 and 2005. At trial, the jury found that in 2004, Rahman failed to pay tax on the profit that he received from the sale of property in Stockton. Evidence established that Rahman used what is referred to as a like-kind exchange to sell one piece of property and buy another piece of property. If done properly, a like-kind exchange can be used to defer paying tax on the profit of the property sold. Evidence at trial, however, established that the exchange was fraudulent and was used by Rahman to avoid paying tax on the gain from the property. The jury also found that Rahman falsely claimed on his 2005 tax return that the gain from the sale of another property was not taxable because it had been his personal residence for at least two years. Evidence at trial established that he had owned it for only seven months. In sentencing Rahman, Judge England said that Rahman was sophisticated in real estate matters and that although Rahman was well known in the Stockton community, that did not absolve him of the responsibility to follow the law. In fact, Rahman’s position in the community almost made his criminal conduct worse. Judge England found that some of the evidence that Rahman presented regarding the tax loss figure was “incredible.” Rahman’s brother, Obed Rahman, was also convicted of a tax offense. Obed Rahman pleaded guilty on June 9, 2011 to conspiring to obstruct the IRS in the computation and collection of income taxes for tax year 2004. Obed Rahman’s co-defendants, Mohammad Nasir Khan and Shaker Ahmed pleaded guilty on June 23, 2011 and October 13, 2011, respectively, to the same offense. The evidence established that the three had utilized a fraudulent 1031 exchange so that Obed Rahman and Mohammad Nasir Khan could avoid paying tax on the gain of a property that they sold. These cases are the product of investigations by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant United States Attorneys John K. Vincent and Michael D. Anderson prosecuted the cases.

    2. November 13, 2012 - DOJ - (California) - (Fraud Losses $NA - 4 Yr Fraud) - (CR Sent. Pend) - (Executive/Management Fraud - Tax Crime/Fraud) - OWNERS OF SANTA CLARA CHARTER BUS COMPANY CHARGED IN TAX FRAUD SCHEME

      SAN JOSE, Calif. – Fidencio Moreno, Arturo Moreno and Elena Moreno, all residents of San Jose, Calif., were charged in a scheme to underreport cash receipts from their bus charter company, United States Attorney Melinda Haag and IRS Criminal Investigation Special Agent in Charge Marcus Williams announced. The defendants made their initial appearances in federal court in San Jose Tuesday, before United States Magistrate Judge Paul S. Grewal. According to the indictment, Fidencio Moreno and Arturo Moreno were part owners of Quality Assurance Travel, Inc. (QAT), a charter bus company that provides transportation services in the Bay Area. Elena Moreno, Fidencio Moreno’s spouse, was QAT’s bookkeeper. Between January 2006 and April 2010, QAT provided transportation services to Chukchansi Casino guests. The contract included a minimum base amount to be paid by Chukchansi Casino for each bus trip completed by QAT. Non-preferred Chukchansi Casino guests paid the bus driver $20 for each round-trip in cash, which was the only accepted form of payment. Cash payments to the drivers were subtracted from the base contract amount. Chukchansi Casino paid QAT the remaining amount of the contract by check. Cash receipts were paid to Fidencio Moreno, Arturo Moreno and Elena Moreno. The indictment alleges that QAT reported the check payments on its corporate tax returns but failed to report the cash receipts. Arturo Moreno provided profit and loss statements that underreported the company’s income to QAT’s return preparer. For the tax years 2006 through 2009, Elena Moreno provided QuickBooks account records to QAT’s return preparer who in turn underreported the income on the corporate tax returns. Fidencio Moreno and Elena Moreno failed to disclose the cash receipts to their return preparer and caused their individual tax returns to underreport their income for tax years 2006, 2007, 2008, and 2009. Arturo Moreno also failed to disclose the cash receipts to his return preparer, which caused his individual tax returns to underreport his income for tax years 2006, 2007, 2008, and 2009. The maximum penalty for conspiracy to defraud the United States, in violation of Title 18, U.S.C. § 371, is five years in prison and a fine of $250,000. The maximum statutory penalty for each count of filing a false tax return, in violation of Title 26, U.S.C § 7206(1) is three years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Special Assistant United States Attorney Charles Parker and Assistant United States Attorney Thomas Moore are prosecuting the case with the assistance of Kathy Tat. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.

    3. November 13, 2012 - DOJ - (Florida) - (Fraud Losses $1.5M - NA Yr Fraud) - (CR Sent. Pend) - (Crime/Fraud by Individual(s) - False Tax Returns - Identity Theft/Fraud) - COOPER CITY RESIDENT PLEADS GUILTY IN STOLEN TAX REFUND SCHEME

      Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CID), and Paula Reid, Special Agent in Charge, United States Secret Service (USSS), announced that defendant David Forbes, 43, a resident of Cooper City, Florida, pled guilty today to five separate counts of theft of government monies, in violation of Title 18, United States Code, Section 641. Sentencing is scheduled for January 18, 2013 at 10:30 am before U.S. District Judge Kenneth A. Marra. At sentencing, the defendant faces a maximum term of imprisonment of ten years, to be followed by a term of supervised release of not more than three (3) years for each count, and mandatory restitution. According to court documents, IRS tax refund payments totaling $1,574,791.83 were deposited into Forbes’ personal and corporate bank account. These tax refund payments had been obtained through the filing of false tax returns using stolen personal identification information of unwitting victims. During the investigation and prosecution, defendant Forbes consented to the Government’s seizure of $888,399.08. In addition, Ally Bank froze and returned an additional $98,255.44 to the Government. Mr. Ferrer commended the investigative efforts of the IRS-CID and Secret Service. The case is being prosecuted by Assistant U.S. Attorney Laurie Rucoba.

    4. November 13, 2012 - DOJ - (Illinois) - (Fraud Losses $120M - 4 Yr Fraud) - (CR Sent. 9.5 Yrs - Fines/Rest. $1.6M) - (Crime/Fraud by Individual(s) -False Tax Returns - Identity Theft/Fraud) - BARBADOS MAN SENTENCED TO 9½ YEARS IN PRISON FOR USING STOLEN IDENTITIES TO FRAUDULENTLY OBTAIN TAX REFUNDS

      CHICAGO — A Barbados national who lived in cities across the United States was sentenced today to 9½ years in federal prison for using stolen identities to file approximately 645 false federal income tax returns in the names of deceased individuals and seeking refunds totaling more than $120 million. The defendant, Andrew J. Watts, was ordered to pay restitution of more than $1.6 million that he actually obtained and used from the scheme. Watts, 35, whose last known residence was in Los Angeles, was sentenced to 7½ years for mail fraud, followed by a mandatory consecutive term of 2 years in prison for aggravated identity theft. U.S. District Judge Joan Gottschall, who imposed the sentence in Federal Court in Chicago, also ordered Watts to pay $1,676,399 in restitution and ordered forfeiture of the same amount. Watts, a permanent resident alien who resided previously in Chicago, New York, and Beverly Hills, Calif., was arrested in April 2011 in Kansas City. He pleaded guilty in July 2012. The sentence was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; Kathryn Keneally, Assistant Attorney General, Department of Justice, Tax Division; Richard Weber, Chief of the Internal Revenue Service Criminal Investigation; and Thomas Jankowski, Acting Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago. “IRS-Criminal Investigation has made investigating refund fraud and identity theft a top priority and we will vigorously pursue those who undermine the integrity of the U.S. tax system,” Mr. Weber said. “Individuals who commit refund fraud and identity theft of this magnitude deserve to be punished to the fullest extent of the law.” Watts fraudulently obtained more than $19 million in tax refunds by filing hundreds of bogus tax returns claiming refunds between 2007 and 2011. Watts prepared and submitted false federal tax returns using the names and social security numbers of actual taxpayers who were deceased and in the names of deceased individuals who were falsely represented to be alive at the time the returns were filed. He then directed that the false tax refunds be mailed to addresses he controlled and electronically deposited into bank accounts under his control, including an address and a bank account in Chicago. According to court documents, Watts used more than $1.6 million in tax refunds to rent apartments in various cities, to purchase luxury automobiles, jewelry, airline tickets between California and New York, as well as for gambling and to provide cash to his girlfriend. Approximately $17 million that Watts obtained in fraudulent refunds was frozen in various accounts and recovered by the IRS. The government is being represented by Assistant U.S. Attorney Patrick J. King, Jr., and Michelle M. Petersen, Trial Attorney in the Justice Department’s Tax Division.

    5. November 13, 2012 - DOJ - (Maryland) - (Fraud Losses $104K - 2 Yr Fraud) - (CR Sent. 1 Yr - Fines/Rest. $104K) - (Executive/Management Fraud - Tax Evasion) - LIQUOR STORE OWNER SENTENCED TO PRISON FOR EVADING INCOME TAXES - “STRUCTURED” MORE THAN $1 MILLION IN DEPOSITS OVER TWO YEARS

      Baltimore, Maryland - U.S. District Judge Richard D. Bennett sentenced Kwang Sik Kim, age 56, of Clarksville, Maryland, today to one year in prison, followed by six months home detention as part of three years of supervised release, for evading his 2009 income taxes. Judge Bennett also ordered that Kim forfeit $104,680 (ten percent of the structured deposits) from $260,900 seized from Kim (including cash on hand and the funds in two bank accounts) on October 18, 2011. Judge Bennett ordered that the balance of the seized funds be remitted to the Internal Revenue Service and applied to Kim’s 2008 and 2009 taxes due. The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Rick A. Raven of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office. “Structuring bank deposits in an effort to under report your taxable income is dishonest,” said Special Agent in Charge Rick A. Raven of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office. “Mr Kim's creative attempts to evade taxes and secrete cash failed. Today's sentence closes the door on Mr Kim's deceitful and unlawful actions, reminding the American public that IRS-CI stands ready to assist the Department of Justice with enforcing our nation's tax laws.” According to his plea agreement, Kim, is the owner of KSJB, Inc., doing business as Limetree Liquors, a liquor store operating at 1720 E. Northern Parkway in Baltimore. Between March 27, 2009 and May 5, 2011, Kim made regular deposits of cash, “structuring” his bank deposits in order to keep the deposits less than $10,000 so as to avoid bank reporting requirements, dividing his deposits between several bank accounts and depositing funds on successive days. In all, Kim deposited $1,046,800, in amounts at or below $10,000, in just over two years. A review by the IRS of Kim’s tax returns indicates that he also under-reported his gross receipts for 2008, 2009 and 2010 by $332,916.63, $232,766.69, and $273,378.00 respectively, resulting in a federal tax loss of $97,986.02 for 2008, $62,322.25 for 2009, and $75,218.61 for 2010. Adding Maryland sales and income taxes for those same years, Kim’s total tax loss for 2008 - 2010 is $326,957.91. United States Attorney Rod J. Rosenstein praised the IRS - Criminal Investigation for its work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Stefan D. Cassella, who prosecuted the case.

    6. November 13, 2012 - DOJ - (Minnesota) - (Fraud Losses $386K - 1 Mo Fraud) - (CR Sent. Pend) - (Crime/Fraud by Individual(s) - Conspiracy - False Tax Returns) - WOMAN PLEADS GUILTY TO HER ROLE IN SCHEME TO DEFRAUD IRS

      MINNEAPOLIS—Today in federal court, Cassidy McDaniel pleaded guilty to her role in a scheme to defraud the Internal Revenue Service (“IRS”) out of money by claiming tax refunds to which she was not entitled. McDaniel specifically pleaded guilty to one count of conspiracy to defraud the federal government. McDaniel, who was charged via an Information on May 2, 2012, entered her plea before United States District Judge Joan N. Ericksen. In her plea agreement, McDaniel admitted she worked with co-conspirators to obtain the names, social security numbers, and other identifiers of unknowing individuals. McDaniel and her co-conspirators then used that information to create false 2010 federal income tax returns that included claims for refunds. In order to receive the refunds, the co-conspirators established or had others establish fictitious income tax preparation businesses in Minnesota and elsewhere, where the refunds were to be sent. Under the direction of McDaniel’s co-conspirators, McDaniel and others also opened bank accounts in the names of the fictitious businesses so the refunds could be deposited. McDaniel’s fictitious business was called C and M Tax Preparation. Between February 17, 2011, and March 25, 2011, McDaniel received, via C and M Tax Preparation accounts, approximately $386,943.20 in fraudulently obtained 2010 federal income tax refunds. On February 17, 2011, McDaniel began transferring and withdrawing from those accounts portions of the refund money, for use by herself and other co-conspirators. For her crimes, McDaniel faces a potential maximum penalty of ten years in federal prison, as well as possible fines and forfeitures. Judge Ericksen will determine her sentence at a future hearing, not yet scheduled. This case is the result of an investigation by the Internal Revenue Service-Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Karen B. Schommer.

    7. November 13, 2012 - DOJ - (Missouri) - (Fraud Losses $100M - 3 Yr Fraud) - (CR Sent. Pend) - (Crime/Fraud by Individual(s) - Conspiracy - False Claims Fraud - False Tax Returns) - RIVERSIDE WOMAN PLEADS GUILTY TO FILING FALSE TAX REFUND CLAIM NATIONWIDE SCHEME ATTEMPTED TO GAIN NEARLY $100 MILLION IN FRAUDULENT REFUNDS

      KANSAS CITY, Mo. – David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that a Riverside, Mo., woman pleaded guilty in federal court today and admitted to her role in a nationwide tax fraud scheme that attempted to receive nearly $100 million in fraudulent refunds from the IRS in the largest federal false claims case that has ever been prosecuted in Missouri. Kristi L. Jones, 39, of Riverside, pleaded guilty before U.S. District Judge Brian C. Wimes to filing a false claim for a tax refund. Jones also admitted she participated in a tax refund scheme that was promoted across the United States from July 1, 2008, to Sept. 21, 2011. Conspirators received more than $3.5 million of the total $96 million in attempted fraudulent refunds. Jones admitted that she instructed and assisted others in preparing Forms 1099-OID. She prepared and filed numerous OIDs, making them appear to have been filed by the purported issuing institution. 1099-OID Tax Fraud Scheme Jones and the other conspirators utilized 1099-Original Issue Discount forms as part of their scheme. These forms are legitimately used by tax filers who must pay taxes on income they receive from the interest on certain investments, such as some types of bonds. Tax on certain bonds must be paid as income accrues. Such bond holders receive annual forms, called 1099-Original Issue Discount (OID), from the debt issuers. Bond holders then file these OID forms with the IRS, along with their income tax forms. However, the scheme in which Jones was involved utilized the 1099-OID forms in a nonsensical manner. Clients of the conspirators, working with their branch managers, assembled financial documents such as mortgage and loan statements, car payments, foreclosure records, bank statements, credit card statements, and other records of debt and spending. This debt information – rather than any actual bond income – was used to prepare and/or finalize false tax returns and fictitious Forms 1099-OID. As part of her role in the OID fraudulent tax refund scheme, Jones looked up Employer Identification Numbers (EINs) – which are required to complete Forms 1099-OID – and she taught several others how to prepare files for download to the IRS’s Filing Information Returns Electronically (“FIRE”) system. FIRE is an electronic system for filing Forms 1099 (including Forms 1099-OID). Jones utilized a downloadable software program called 1099 FIRE, which assisted with the preparation and conversion of the client 1099-OID data into the correct format for final filing on FIRE. Jones taught others how to enter data into the 1099 FIRE software, which would eventually be filed on FIRE. Jones was the contact person for members of the conspiracy and traveled to Ohio on a couple occasions in furtherance of the conspiracy. On April 11, 2009, Jones electronically filed her own Form 1040 for tax year 2008 using Forms 1099-OID. Due to an offset claim against Jones, the $5,160 refund was directed to another government agency for payment of her student loans, so she did not personally receive the refund, and this was later reversed by the government agency. Seven additional co-defendants have also pleaded guilty. Shirley J. Oyer, 71, of Overland Park, Kan., pleaded guilty on Sept. 6, 2012 to filing false claims for tax refunds. Oyer is the owner of ABC Seamless Siding in Kansas City, Mo. Karen A. Olson, 41, of Wood Dale, Ill., and Mark J. Murray, 50, of Newton, Ala., pleaded guilty on Aug. 7, 2012, to their roles in the scheme. Murray also pleaded guilty to filing false claims for tax refunds. John V. Perdido, 56, of Temecula, Calif., acted as a “branch manager” and recruited clients for the scheme. Perdido received the largest single refund from the scheme – $805,749, which must be forfeited to the government. Robert E. Morris, 66, of Rocklin, Calif., and Earl Lee Davis, 53, of Monroe, La., also pleaded guilty to their roles in the conspiracy. Co-defendant Jennifer S. Wilson, 35, of Cumming, Ga., was sentenced on Aug. 2, 2012, to one year and one day in federal prison without parole after pleading guilty to filing a false claim for a tax refund. The court also ordered Wilson to pay $161,514 in restitution. Under federal statutes, Jones is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing is scheduled for March 14, 2013.

    8. November 13, 2012 - DOJ - (North Carolina) - (Fraud Losses $3.8M - NA Yr Fraud) - (CR Sent. Pend) - (Crime/Fraud by Individual(s) - Conspiracy - False Tax Returns) - TWO CHARLOTTE WOMEN PLEAD GUILTY TO FRAUDULENT TAX REFUND SCHEME - DEFENDANTS USED FALSE TAX IDENTIFICATION NUMBERS TO SEEK MORE THAN $3 MILLION IN TAX REFUNDS

      CHARLOTTE, N.C. – Two defendants charged in a scheme to defraud the government by obtaining false and fraudulent income tax refunds have pleaded guilty in federal court, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Jeannine Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division and Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service join U.S. Attorney Tompkins in making today’s announcement. Candida Figueroa, 41, of Charlotte, entered a plea of guilty today before U.S. Magistrate Judge David S. Cayer to one count of false claims conspiracy. Her co-defendant, Cathy Cisneros, 30, of Charlotte, pleaded guilty to the same charge on October 24, 2012. Both defendants have agreed to pay full restitution, the final amount of which will be determined by the Court at sentencing. In September 2012, a superseding criminal indictment charged Figueroa and Cisneros with false claims conspiracy. According to filed court documents and today’s plea hearing, from January to July 2012, Figueroa and Cisneros agreed to defraud the U.S. Treasury Department by participating in a scheme to obtain false tax refunds, using fraudulently obtained Individual Taxpayer Identification Numbers (ITINs). Court records show that the co-conspirators obtained ITIN numbers for various individuals using Mexican birth certificates and other documents. The defendants then used these ITIN numbers to prepare fraudulent federal tax returns seeking refunds based on false wage, income, and withholding tax information and claiming multiple dependents. According to filed court records, as part of the scheme, the defendants rented apartments at complexes featuring centralized mailboxes. The defendants then used multiple addresses at those apartment complexes on the fraudulent tax returns they submitted to IRS seeking tax refunds. Figueroa and Cisneros caused the Treasury Department to mail the false tax refund checks to these specially chosen addresses, court records indicate. According to the superseding indictment and information presented in court, at least 804 fraudulent tax returns have been associated with the conspiracy, claiming $3.8 million in refunds. Of this amount, the IRS issued refunds totaling approximately $1.6 million. As part of the conspiracy, the defendants arranged for the Treasury checks to be cashed, and then deposited the cash into bank accounts or held it in safety deposit boxes before wiring it to Mexico. The amount recovered by law enforcement so far is $136,334. Figueroa and Cisneros face a maximum prison term of 10 years, a $250,000 fine, or both. The defendants have been in local federal custody since August 2012. Their sentencing dates have not been set yet. The case was investigated by the IRS-Criminal Investigations Division with substantial assistance from the U.S. Postal Service. The prosecution is being handled for the government by Assistant U.S. Attorney Jenny Grus Sugar and Special Assistant U.S. Attorney Todd Kostyshak of the U.S. Attorney’s Office in Charlotte.

    9. November 13, 2012 - DOJ - (Pennsylvania) - (Fraud Losses $NA - 2 Yr Fraud) - (CR Sent. Pend) - (Crime/Fraud by Individual(s) - Tax Evasion) - LANCASTER MAN CHARGED WITH TAX EVASION

      Ralph E. Myers, 68, of Lancaster, was charged today by information with tax evasion, announced United States Attorney Zane David Memeger. The information charges that Myers committed this offense in Lancaster, Pennsylvania, from on or about April 2008 through on or about April 2010 by filing false and fraudulent joint personal income tax returns for tax years 2007 through 2009. If convicted, Myers faces a maximum sentence of five years in prison, three years supervised release, and the payment of a $250,000 fine, a $100 assessment, full restitution of taxes, penalties, and interest, and the costs of prosecution. This case was investigated by the Internal Revenue Service, and is being prosecuted by Assistant United States Attorney Joe Khan. An Indictment or an Information is an accusation. A defendant is presumed innocent unless and until proven guilty.

    10. November 13, 2012 - DOJ - (Pennsylvania) - (Fraud Losses $274K - 10+ Yr Fraud) - (CR Sent. 5 Yrs) - (Crime/Fraud by Individual(s) - False Tax Returns) - LOCAL WOMAN SENTENCED TO PROBATION WITH HOUSE ARREST FOR FILING A FALSE TAX RETURN

      PITTSBURGH - A resident of Allegheny County, Pa., has been sentenced in federal court to five years probation, with the condition that the first nine months be served under house arrest, on her conviction of making and subscribing a false tax return, United States Attorney David J. Hickton announced today. During the nine-month period of home confinement, she will be electronically monitored by the U.S. Probation Office at her own expense. Senior United States District Judge Donetta W. Ambrose imposed the sentence on Jennifer Falbo. According to information presented to the court, at the time of the guilty plea proceeding, Falbo made and subscribed, and then filed with the Internal Revenue Service on June 6, 2008, a false income tax return (Form1040) for the calendar year 2003. Falbo falsely reported that gross receipts in 2003 from the operation of Pittsburgh Lawn Care, a business operated by her husband, Michael Falbo, since the late 1990's, were $138,401.00, when, in fact, the gross receipts from the operation of the business were $314,073.34. Falbo acknowledged that she had filed false tax returns for the calendar years 2002, 2003, and 2004, and failed to file returns for the calendar years 2005, 2006, and 2007. The total tax loss was determined to be $274,463. Michael Falbo also entered a guilty plea to the same offense and is serving an 18-month sentence of imprisonment imposed on Aug. 14, 2012. Assistant United States Attorney Carolyn J. Bloch prosecuted this case on behalf of the government. U.S. Attorney Hickton commended the Internal Revenue Service for the investigation leading to the successful prosecution of Falbo.

    11. November 13, 2012 - DOJ - (Tennessee) - (Fraud Losses $277K - 4 Yr Fraud) - (CR Sent. 5 Yrs - Fines/Rest. $277K) - (Executive/Management Fraud - Conspiracy - False Tax Returns) - VIRGINIA MAN SENTENCED FOR FILING FALSE INCOME TAX RETURN

      GREENEVILLE, Tenn. – Steven R. Grose, 52, of Lebanon, Va., was sentenced on Nov. 5, 2012, by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve five years of probation. As special conditions of his probation, Grose was ordered to serve 76 days of intermittent confinement during the first year of his probation, serve 11 months of home detention during the second year of probation, and perform 250 hours of community service. Grose pleaded guilty in May 2012 to an information charging him with filing a false federal income tax return. As set out in his plea agreement, Grose, a certified registered nurse anesthetist (CRNA), reported his business income and expenses via a wholly-owned corporation. The net business profit or loss to the corporation was to be reported on Grose's corresponding individual income tax returns. Grose intentionally and falsely overstated the corporation’s business expenses causing the corporation’s net business profit to be materially understated. He reported net losses from the corporation on his 2005 through 2009 tax returns, when he actually had net income from the corporation each year ranging from $60,640.25 to $234,516.01. As a result, he actually owed taxes totaling $233,744.00 for the five-year period. Grose was also ordered to pay restitution of $277,262.34 to the Internal Revenue Service (IRS) for the taxes due and interest on those taxes. He stated that he also faced substantial civil penalties from the IRS. "The IRS’s largest enforcement program is directed at the portion of American citizens who intentionally violate their known legal duty to pay their fair share of taxes. Those taxpayers who choose to do the right thing should be assured that the system works and justice will be done. No one is above the law," stated Christopher Henry, Special Agent in Charge, IRS Criminal Investigation-Nashville Field Office. The charges were the result of an investigation by the IRS-Criminal Investigation. Assistant U.S. Attorney Neil Smith represents the United States.

    12. November 13, 2012 - DOJ - (Virginia) - (Fraud Losses $NA - 4 Yr Fraud) - (CR Sent. Pend) - (Crime/Fraud by Individual(s) - Conspiracy - False Tax Returns) - GRIMSTEAD MAN CONVICTED OF TAX CRIMES

      NEWPORT NEWS, Va. – Jeffrey Charles, 65, of Grimstead, Va., was found guilty by a federal jury for conspiring with his daughter and son-in-law to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. Charles was convicted of one count of conspiracy, three counts of aiding and assisting in the preparation of false tax returns and one count of filing a false tax return. According to the evidence presented at trial, Charles conspired with his daughter and son-in-law to impair and impede the IRS in ascertaining, computing, assessing and collecting federal income taxes. The evidence also proved that Charles aided and assisted in the preparation of three false tax returns in his daughter’s name for tax years 2000, 2001 and 2005, and attached false documents to each tax return. The evidence at trial also established that Charles filed a false tax return in his own name for tax year 2006 in which he allegedly falsely reported earning $0.00 income. Senior Judge Henry Coke Morgan, Jr. scheduled sentencing for Feb. 25, 2012 in Norfolk, Va. The case was investigated by IRS Criminal Investigation and was prosecuted by Assistant U.S. Attorney Brian Samuels and Trial Attorney Justin K. Gelfand of the Justice Department’s Tax Division.

    13. November 13, 2012 - DOJ - (Virginia) - (Fraud Losses $20K - 1 Yr Fraud) - (CR Sent. 1 Yr - Fines/Rest. $100) - (Crime/Fraud by Individual(s) - Tax Crime/Fraud) - HARDY MAN SENTENCED ON TAX CHARGE DANA C. NUCCIO TO SERVE PROBATION, ORDERED TO PERFORM COMMUNITY SERVICE

      LYNCHBURG, VIRGINIA -- A straw buyer who lied on a tax form and was part of a larger mortgage fraud scheme was sentenced this morning in the United States District Court for the Western District of Virginia in Lynchburg to a tax charge. Dana C. Nuccio, 45, of Hardy, Va., previously waived his right to be indicted and pled guilty to a one count information charging him with willfully making and subscribing a return, statement or other document, under the penalty of perjury, that was not true and correct. This morning, Nuccio was sentenced to one year of probation and was ordered to perform 80 hours of community service. He must also pay a special assessment of $100 and file an amended tax return for FY 2007. “Mr. Nuccio and his co-conspirators enriched themselves by engaging in sham mortgage transactions which defrauded banks,” United States Attorney Timothy J. Heaphy said today. “His failure to pay taxes on the money he received through this scheme justly landed him in federal court. This office will continue to pursue mortgage and other forms of financial fraud and bring to justice those who fail to pay their fair share of federal taxes.” According to evidence presented at previous hearings by Assistant United States Attorney Charlene Day, Nuccio was involved with a mortgage fraud scheme involving Timothy Scott Brooks, Adam Spruill and Susan Helbig. The three would find credit worthy individuals to act as straw buyers to apply for property loans and/or construction loans. These straw buyers would falsify their loan documents to show overstated income and assets. Each straw buyer was paid “good faith” money or kickbacks when the loan closed. Nuccio admitted to being a straw buyer who received a $20,000 “good faith” payment and also to not claiming the payment as income on his FY 2007 tax return. The investigation of the case was conducted by the Federal Bureau of Investigation, the United States Postal Inspection Service and the Internal Revenue Service. Assistant United States Attorneys Charlene Day and C. Patrick Hogeboom III are prosecuting the case for the United States.


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The American Fraud Report, contains recently published articles and legal matters about various business crimes and frauds. The American Fraud Report, is a publication intended to educate and inform owners, executives, managers, and personnel who are engaged in infrastructure protection. All information, commentaries and recommendations herein have been presented for educational purposes, are generic and not meant to serve as individual advice, and should not be taken as such. Readers should consult their registered Certified Fraud Examiner, Attorney or Security representative to determine the suitability of any anti-fruad strategies. Further reproduction or redistribution is subject to original copyright restrictions. JP Sims Consulting publisher of the American Fraud Report, provides no warranty of ownership of the copyright, or accuracy with respect to the original source material.