Archive for the ‘Tax Fraud’ Category

NYC Fights Tax Evasion With Federal Database

“New York Citys Department of Finance has reached an agreement with the U.S. Treasury that will give local officials access to the Financial Crimes Enforcement Network (FinCEN). This federal database will give the city a new financial and analytical tool to use in the investigation of tax evasion. Because income from individuals and businesses is self-reported, it is estimated that the city is owed billions of dollars in unpaid and under-reported taxes.

The Financial Crimes Enforcement Network tracks suspicious financial activity including large cash transactions and money transfers into foreign bank accounts. According to Michael Flowers, the director of the citys Financial Crime Task Force , access to this information gives enforcement agencies a significant advantage in tracking the financial activities of businesses or individuals who arent paying city taxes.

Gaining access FinCEN is just the latest move by the NYC Finance Department to combat tax evasion. Last year the department hired more than two dozen additional auditors. The department may hire additional auditors and is also considering developing a whistleblower program modeled on the IRS program. The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.

The IRS whistleblower statute provides an important tool in law enforcement, says Joel Androphy, attorney and partner at the prestigious Nationwide law firm of Berg & Androphy.”” Any efforts that provide more opportunity for citizens to discover tax fraud benefit the countrys financial health.”””

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Rewards for Tax Fraud Whistleblowers

Tough economic times may lead to more tax fraud schemes. That is good news for tax fraud whistleblowers seeking to reap substantial rewards from a law enacted by Congress in 2006. This law requires the IRS Whistleblower Office to pay rewards to individuals who blow the whistle on persons who fail to pay the taxes that they owe the Government. The rewards range from 15% to 30% of the taxes, penalties, and interests collected by the IRS in the case. However, certain conditions must be met first. For example, the whistleblower only receives this monetary reward if more than $2 million is at issue in the case and the IRS actually uses the information provided by the whistleblower.

The process begins with the whistleblower filling out a Form 211, Application for Award for Original Information, describing the tax fraud that he or she knows about and attaching documents to support the allegations. All whistleblower claims must be submitted under penalty of perjury; therefore, individuals often seek the assistance of an attorney.

Concerns about retaliation for snitching are alleviated by the provisions of this law because the whistleblowers identity, and even his or her existence, remains a secret and kept out of the public forever. This is quite different than in a qui tam case where the whistleblowers identity is eventually revealed.

Once the form is submitted, the IRS evaluates the case and decides whether it is worth pursuing. The IRS keeps a tax fraud whistleblower in the dark about the progress of the case until it is closed, which could take years. Even after waiting for the IRS to successfully prosecute the individual who committed the tax fraud, whistleblowers should not expect to see their reward immediately because the IRS does not pay out the reward until the accused has exhausted his appeals and paid the owed taxes.

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IRS Fraud Office Pays First Major Whistleblower Reward

Three years ago, the Internal Revenue Service established an office that would allow whistleblowers to report information on big tax fraud scams and receive rewards. For the first time, it appears as if the IRS is paying out a substantial reward.

The Wall Street Journal reports that the IRS Office paid $5.5 Million in reward money to a whistleblower who reported tax fraud among several companies. More money is still possible as the IRS continues to investigate and resolve claims involving the accused companies.

The case began nearly eight years ago and involved international stock and tax fraud scenarios, completed in part by an international corporate conglomerate. It is reported that the case recovered over $60 million in unpaid taxes so far.

This award is the first major IRS payout to a whistle blower, but gives future whistleblowers and their attorneys confidence that the relatively new program is working, according to Dean A. Zerb, a former fraud investigator and key player in creating the new IRS office.

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Former IRS Officer Charged in Tax Evasion Scheme

Former Internal Revenue Service (IRS) Officer Mark E. Hunt, along with three other Maryland men, has been charged in a Tax Evasion scheme. The scheme was orchestrated by Potomac attorney Irvin Catlett and totaled $1.2 million. Hunt worked as Catlett’s inside man and provided taxpayer information while using his position with the IRS to convince clients that the scheme was safe from prosecution.

Catlett has been charged with fraud, obstruction of IRS law, and 10 counts of aiding and assisting in the preparation of false tax returns. The scheme worked by absorbing the investments (supposedly in three car dealerships) of clients and then posting the dealerships as losses on the client’s returns, allowing the taxpayers to negate their taxable income because of the supposed losses.

Catlett faces up to 38 years in prison. Hunt faces up to 13 years for lying to an investigator and participation in fraud and the other three conspirators face up to 5 years each.

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Father and Two Sons Accused of $15 Million Tax Fraud

Operators of the family business, Adams Beach Income Tax, are being charged with tax fraud of up to $15 million in damages after allegedly filing false claims on behalf of themselves and clients.

Father Alexander Adams and his two sons, Garrett Adams and Brandon Adams, promoted their tax fraud schemes through live seminars, CD’s and web advertising.

The fraud was built around claims of inflated tax refunds and fabricated income tax with-holdings. If the men are found guilty, they will face civil penalties and be barred from the tax industry in the future.

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Pinnacle Quest International Scammers Convicted of Tax Fraud

According to press release from government agencies, eight individuals from Florida, Oregon and the East Coast were recently convicted on charges of tax, wire-fraud and money laundering. The Justice Department described these individuals, who were working for the firm Pinnacle Quest International (also known as PQI and Quest International) as promoters of fraudulent tax and credit-card debt elimination schemes.

PQI was an umbrella organization for many tax and credit-card debt elimination schemes. The individuals convicted were perpetrators of the scheme, working on the executive council, and in PR and other positions.

Sentencing is scheduled for July 9th. Leaders of the scheme could receive up to 30 years in prison and fines of $1 million. Other defendants in the case will receive lesser penalties: a maximum of 5 years and $250,000 in fines.

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It’s Tax Season: How to Blow the Whistle on Tax Fraud

“As America files taxes, stories of tax fraud, evasion and scams begin to hit the press. Many Americans choose to have their taxes filed by a CPA, and are employed by companies that issue tax paperwork to each employee. Usually, these basic tax-season transactions go as planned. But, if you’re one of the individuals who has seen tax fraud first hand, you should report it today.

If you are having your taxes prepared by a professional who is behaving suspiciously or has tried to sell you on a scam to make more money by filing for losses you don’t have, make sure to report them. If your company has with-held information or asked you to lie to the government on your earnings, you could have a potential case. Our team of experienced attorneys can help you decide what the next steps should be.

As a whistle blower, you will receive a portion of whatever money the U.S. Government gains back in court proceedings. Do your country, fellow citizens and yourself a favor by reporting tax fraud if you suspect it. Berg & Androphy has handled many types of Qui Tam cases, including tax fraud. We’re more than happy to help you assess your potential case and decide what the next steps should be.

If you blow the whistle on fraudulent behavior, you can reap substantial financial rewards.

If you suspect tax fraud, contact Berg & Androphy using our online Qui Tam Form today!”

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Kansas Man Sentenced to 20 Years for Tax Fraud

“Michael Craig Cooper, a 55 year old man from Topeka, Kansas, was sentenced to 20 years in prison for Tax Fraud. Cooper is the founder Renaissance (The Tax People) and was sentenced on more than 70 tax fraud counts.

In addition to serving those 20 years, Cooper will also be required to pay $10 million in restitution to the United States Government to cover the extent of his fraudulent activities, as well as a forfeiture of about $75 million.

The case was decided in 2008 when a federal jury found Cooper guilty on 73 counts of tax fraud including mail fraud, wire fraud, money laundering and conspiracy.”

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U.S. and Switzerland to Work Together on Fraud Charges

Last week, Swiss Parliament approved an agreement between Switzerland and American to disclose information on approximately 4,450 Swiss bank accounts that are held by American clients who are under investigation for tax fraud.

Swiss banking has always been known for secrecy, but recent court orders to disclose client information in criminal investigations could not be ignored. In fact, directors of UBS, the bank in question, could have faced indictment and legal action from American courts for failure to comply with court orders.

Just two years ago, the Switzerland-based investment bank, UBS, came under the scrutiny of the U.S. DOJ for assisting Americans with tax evasion schemes and was fined $790 million for facilitating fraud.

UBS is currently in the process of transferring the court-ordered information on clients. In the wake of recent financial crisis, many governments, including the U.S. Government, have increased efforts to penalize tax evaders.

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A Salinas Tax Preparer Sentenced to Prison for Tax Fraud

Lydia Hernandez of Lydia Hernandez Tax Services in Salinas, California pleaded guilty to tax fraud charges on July 27, 2009 in Federal Court. As a result she was sentenced this week to 15 months in prison for tax evasion including aiding and assisting in preparing false tax returns. She was also ordered to pay $35,433 in restitution, the U.S. Attorney’s Office said, and three years of supervised release.

Authorities said Hernandez prepared 39 income tax returns on behalf of 13 clients for the 2002 through 2005 tax years.

In the plea agreement, they said, Hernandez admitted that she prepared false returns in order to reduce the taxable income for the clients and obtain a bigger refund for them than they were entitled to receive.

Hernandez also admitted that for the 2004 tax year, she underreported her business income by $51,129 on her individual tax returns.

She will begin her sentence September 27, 2010.

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