Tax Fraud Blotter: Bad bets

Accounting

Home boys; going off payroll; building a case; and other highlights of recent tax cases.

Old Forge, Pennsylvania: Christopher Jones has been sentenced to three years of probation for tax evasion.

Jones failed to report more than $500,000 in taxable income between 2014 and 2019 to avoid paying federal income taxes. He failed to report income he gained from illegal bookmaking and made false statements to federal agents in 2019 during the investigation.

He was sentenced to serve six months of his probation on home confinement, and to pay $117,370 in restitution. The judge ruled that his medical conditions placed him at high risk for COVID if incarcerated.

Memphis, Tennessee: Preparer Henley Dolmon Jr. has been sentenced to 15 months in prison for filing a false federal income tax return.

Dolmon, the former owner of Simple Tax Solutions, failed to report most of the income he derived from Simple Tax Solutions on his 2012 federal income tax return.

He was ordered to serve eight months in prison to be followed by seven months of home detention. He was also ordered to serve a year of supervised release after his in-custody sentence and will also be required to pay $124,000 in restitution to the IRS.

Rosedale, Maryland: Nonprofit exec Roslyn Wedington, 50, has been sentenced to two years in prison, followed by three years of supervised release, on federal charges of conspiracy to defraud the United States and for five counts of filing false returns.

Wedington was a full-time salaried employee of the Maryland Center for Adult Training Inc. from 2009 through 2019, initially serving as its student coordinator and in 2012 becoming the organization’s executive director. The center was a nonprofit that provided training and employment certifications for jobs in health care and represented itself to be a private career school accredited by the Maryland Higher Education Commission and the Maryland Board of Nursing.

As an “Eligible Training Provider,” the center received federal funds as well as funding from private philanthropic organizations. In 2015, former Baltimore City employee Gary Brown Jr. became chairman of its board of directors and obtained signatory authority on the center’s bank account.

Wedington conspired with Brown to avoid tax withholdings. In 2013, her salary was garnished due to outstanding student loans and medical bills. To avoid garnishments, Wedington asked Brown to take her “off payroll,” which meant that the center would no longer submit her name to the payroll service provider to calculate taxes to be withheld from her salary. Brown agreed to the arrangement and had the center make electronic deposits into his personal bank account in an amount that exceeded the annual salary owed to Wedington, creating the pretense that he was doing work for MCAT as an independent contractor.

Brown then wrote checks to Wedington or gave her cash equal to or greater than her salary, which was more than $80,000 per year. No taxes were withheld from the funds Brown paid to Wedington nor did her salary go through her bank account, where it could be garnished.

Wedington also admitted that she paid Brown to prepare fraudulent returns for her for tax years 2013 through 2017. The returns did not report Wedington’s income from the center and made a variety of false entries, resulting in undeserved refunds and avoiding more than $121,000 in total taxes.

Brown was previously sentenced to 27 months in prison for conspiracy to commit wire fraud, two counts of conspiracy to defraud the U.S. and for filing a false return. He was also ordered to pay $14,000 in restitution.

Wedington was also ordered to pay $121,592.50 in restitution.

New Orleans: Attorney Robert Hjortsberg has pleaded guilty to one count of willful failure to file a return.

Hjortsberg was employed as an attorney at the Jason R. Williams Law Firm in New Orleans in 2017. He and his spouse were required to file an income tax return for the 2017 tax year by Oct. 15, 2018. Hjortsberg did not file his return for the 2017 tax year until last summer.

He agreed to pay $31,651 in restitution to the IRS. He faces a maximum of not more than a year in prison, a $25,000 fine, or both. Sentencing is June 16.

St. Louis: Unregistered tax preparer Lakisha Smith, 39, has pleaded guilty to two counts of tax fraud.

From 2013 to 2016, Smith prepared some 28 fraudulent returns for clients using the TaxAct commercial website. Smith used false income and withholdings to generate larger refunds and typically received cash payments of up to $2,500 from the false refunds paid to her clients.

Smith was not registered with the IRS as a preparer and did not sign as the preparer on the returns.

Sentencing is June 17.

St. Croix, U.S. Virgin Islands: Joanne Benjamin has pleaded guilty to conspiracy to defraud the United States.

From January 2011 to July 2012, Benjamin and others schemed to fraudulently obtain federal income tax refunds. The scheme involved the acquisition of personal ID information of individuals such as names, Social Security numbers and dates of birth to e-file falsified returns with a designation of refunds to the acquired bank accounts or debit cards.

Some $110,896 in false refunds was designated for deposit into Benjamin’s bank account, of which some $80,425 was actually deposited.

Of 10 defendants charged in the tax fraud, Benjamin is the eighth to plead guilty. Sentencing for Benjamin is July 14, when she faces a maximum of 10 years, up to a $250,000 fine and the payment of restitution.

Las Vegas: Preparer Anita Edoria Santa Ana, 61, has pleaded guilty to preparing fraudulent returns over seven years and to causing nearly $3 million in federal tax losses.

Santa Ana operated tax prep businesses under the names Santana Tax Service and Silver Income Tax. For tax years 2012 to 2018, she falsified clients’ returns by claiming undeserved deductions and exemptions, causing a tax loss of at least $2.9 million to the IRS.

She pleaded guilty to one count of the preparation and filing of a false return. Sentencing is June 21. The maximum Santa Ana faces is three years in prison, a period of supervised release and monetary penalties.

Norwalk, Connecticut: Construction exec Michael C. Monroe has pleaded guilty to one count of tax evasion.

From 2008 through 2013, Monroe owed substantial unpaid income taxes and penalties to the IRS. In 2014, the IRS levied the business bank account used by Monroe as the operating account for his construction company. Monroe subsequently closed his business bank account and, between about November 2014 and November 2017, evaded payment to the IRS of his preexisting tax obligations by using a check cashing service to cash approximately $1.5 million in customer checks paid to his business.

For the 2014 and 2015 tax years, he failed to report to the IRS more than $700,000 that his business generated in gross revenues. In addition to evading payment to the IRS of more than $107,000, he understated the federal income taxes he owed in 2014 and 2015 by some $34,000.

Monroe has agreed to pay total back taxes of $141,041.17, plus interest and penalties.

Sentencing is June 15, when Monroe faces a maximum of five years in prison.

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