Tax Fraud Blotter: Lions and tigers and jail, oh my!

Accounting

Royal pain; cashing out; midnight at the Oasis; and other highlights of recent tax cases.

Dallas: Tax consultant Steven Jalloul, a Liberian national who orchestrated a scheme to secure more than $23 million in forgivable Paycheck Protection Program loans, has been sentenced to 10 years in prison.

Jalloul, who pleaded guilty in October, admitted that he defrauded lenders participating in the PPP while awaiting sentencing in a separate tax fraud case. He admitted that he submitted some 170 false PPP loan applications seeking more than $23 million on behalf of more than 160 clients of his tax prep business, Royalty Tax & Financial Services.

Jalloul inflated clients’ employee rosters and monthly payroll to increase the amount of PPP funds for which their businesses would be eligible. He generally charged clients up to a 20% commission on the loans they received, and listed his ex-wife as Royalty Tax’s authorized representative, without her consent, when seeking an inflated PPP loan for his own business.

Ninety-seven false loan applications were approved. Jalloul’s clients were awarded more than $12 million in PPP money; those clients paid him at least $972,114 in fees. Jalloul also admitted to submitting a fraudulent PPP loan application on behalf of his tax prep company and receiving $163,500 in PPP funds.

He was already jailed after having pleaded guilty to tax fraud in a separate case in 2020, for which he was sentenced to six years in prison. He will serve his sentence in the PPP case consecutive to his sentence in the fraud case.

Durham, North Carolina: Tax preparer Markeith Jamar Norman, 56, has been sentenced to 27 months in prison for aiding and assisting in the preparation and presentation of a false return.

Norman worked as a professional preparer at two tax companies from 2014 until 2019 and made various false claims on behalf of his clients to increase refunds. Beginning in 2015, he prepared and e-filed at least 23 false U.S. individual income tax returns and income tax returns for single and joint filers. The returns contained false reports of education credits, Schedule C businesses, 1099 withholdings and itemized deductions unbeknownst to his clients.

Despite both of Norman’s former employers stating that preparers were not authorized to receive cash payments from clients, multiple clients told investigators that Norman requested payment in cash, sometimes up to $500, for return prep. Upon receiving their returns, clients were instructed to deposit their checks and pay him in cash.

Investigators also uncovered that beginning in 2014 Norman failed to report any of the income he earned as a preparer. In 2017 and 2018, he failed to file any returns at all.

He must also pay $375,390 in restitution.

Houston: Tax preparer Krystle Robinson has admitted to aiding and assisting in preparation of at least 50 false returns.

Between 2013 and 2017 she helped prepare income tax returns under the business name Tax Tigers. After January 2017, Robinson’s business name was changed to Tax Lions. On the fraudulent returns, she made false claims of business losses from sole proprietorships and inflated Schedule A deductions and education credits. She also admitted to helping prepare a false income tax return for an undercover IRS agent.

The fraudulent returns resulted in a total loss of $245,995. Robinson agreed to pay restitution to the IRS. 

Sentencing is May 18. She faces up to three years in prison and a $250,000 fine. 

Belgrade, Montana: Construction company co-owner Melissa Lynne Horner, of Bozeman, Montana, has admitted to failing to pay the IRS some $2.8 million in employee and employer taxes.

Horner, charged in a 34-count information, pleaded guilty in April to one count of failure to truthfully account for and pay over withholding and FICA taxes, a felony, and one count of failure to file employer’s quarterly return and pay tax, a misdemeanor. 

She co-owns and co-founded H & H Earthworks, a family business the projects of which include schools, shopping centers, hospitals and residential subdivisions in Montana, North Dakota, Wyoming and Idaho. The company had 20 to 60 employees during 2014 through 2019.

Beginning in March 2014 through 2019, Horner had Earthworks pay hundreds of thousands of dollars of expenditures for her personal benefit while it failed to pay over federal payroll tax. Horner spent more than $100,000 on motorsport vehicles, $90,000 at a local real estate title company, at least $50,000 on personal home renovations and $20,000 for a motorhome.

She also failed to file 941s prior to being notified of the criminal investigation. Horner subsequently filed the delinquent forms but hasn’t paid any of the outstanding tax liability.

She faces a maximum of five years in prison, a $250,000 fine and three years of supervised release on the felony charge. A plea agreement calls for the government to seek dismissal of 32 remaining counts and for Horner to be responsible for $2,878,522 in restitution if the court accepts the agreement. Sentencing is Aug. 10.

p1amce9hgh1j3n18ctkircke7hf9.jpg

Sarasota, Florida: Michael J. DaCorta has been found guilty of conspiracy to commit wire and mail fraud, money laundering and filing a false return. 

From November 2011 through April 2019, DaCorta ran the investment company Oasis International Group. He and his conspirators persuaded at least 700 victims to invest in Oasis through promissory notes and other means, costing victims’ more than $80 million.

DaCorta, who had been banned from conducting foreign exchange trading, falsely represented to victim investors that Oasis was reaping enormous profits by being a “market maker” and collecting “spread” on big trades. DaCorta also pitched the opportunity as essentially risk-free.

Oasis had no true revenue. The “spread” earnings paid on each trade went back to the company to create the illusion of revenue; this information was then published to investors on fictitious account statements and an online investor portal, the latter of which concealed catastrophic underlying trading losses.

DaCorta and his conspirators used the balance of the money to make Ponzi-style payments to perpetuate the scheme and fund lavish lifestyles. He bought a Maserati and Range Rovers for his family, a country club membership, multiple million-dollar homes in Florida, college tuition for family members, flights on private jets and trips to Europe and the Cayman Islands. DaCorta also underreported his income on his 2017 federal income tax return, where he claimed negative income and received a refund. 

He faces up to 33 years in prison.

Ogden, Utah: Businessman Daniel Fry has been sentenced to a year and a day in prison after pleading guilty to failing to pay and account for trust fund taxes related to his four businesses.

Fry owned and operated four local health care-related businesses, now all closed. He was responsible for handling the payroll for the businesses and was required to collect, account for and pay over federal trust fund taxes. He was also responsible for paying over the employer portion of these taxes to the IRS.

From January 2013 to December 2016, Fry withheld from employee paychecks and collected the taxes for the businesses and reported the withholdings of his businesses to the IRS. At the same time, he failed to pay over any of the taxes and failed to pay to the IRS the employer portion of the taxes, a total of $568,590.

Wellington, Florida: Former defense contractor Ronald L. Thomas has pleaded guilty to tax evasion.

From 2010 through 2016, Thomas worked in Afghanistan, Oman and the United Arab Emirates for a Department of Defense contracting company as a project director and in other roles. In 2016 and 2017, he served as a paid consultant for a Mexican oil and gas venture.

From 2010 to 2017 Thomas evaded taxes owed to the IRS by underreporting to his tax preparer the salaries and bonuses he earned for each of those years. In total, Thomas did not report some $870,000 in compensation he earned, causing a tax loss to the government of more than $227,000.

Thomas is the third defendant associated with the defense contracting company to plead guilty. He faces a maximum of five years in prison as well as a period of supervised release, restitution and monetary penalties. 

Products You May Like

Articles You May Like

How Are the Childcare Tax Credits Different?
Here’s what to consider before starting a side hustle
Congress seeks ways to reduce Social Security customer service delays
You might start hearing about capitulation in the markets. Here’s why you should invest anyway
Corporate taxes plunged to new low worldwide

Leave a Reply

Your email address will not be published.