Tax Fraud Blotter: Next on the docket | #phishing | #scams

Rage against the Machine; property casualty; herbal remedy; and other highlights of recent tax cases.

Kissimmee, Florida: Tax preparer Joseph Amaya has been sentenced to a year in prison for aiding and assisting in the preparation of false returns.

From 2014 through about 2018, Amaya co-owned and managed the tax prep business Tax Machine. Amaya knowingly prepared and filed and trained employees to prepare and file numerous false and fraudulent returns on behalf of clients. He and his employees created bogus expenses or deliberately overstated such deductible expenses as unreimbursed employee expenses, gas, mileage, medical and dental expenses, and gifts to charity. Amaya also trained employees to include false claims of net business losses on returns. Tax loss was some $1.6 million.

Amaya, who pleaded guilty in February, was also ordered to pay more than $1.6 million in restitution to the IRS.

St. Louis: Tax preparer Tiffany McAllister, 44, of Florissant, Missouri, has been sentenced to 37 months in prison and ordered to pay $902,854 in restitution after pleading guilty to three counts of tax fraud.

McAllister operated a tax prep service from 2009 through the 2019 tax year. During that period, she registered two companies with the Missouri Secretary of State and obtained EINs for them though she never transacted business nor employed anyone through either company.

In 2014 through 2016, she prepared fraudulent returns claiming that she and some of her clients received wages and had taxes withheld with respect to fictitious companies. She also prepared returns for clients that fraudulently claimed wages and withholdings from other fictitious businesses, self-employment business losses and educational expenses to inflate federal refunds.

McAllister was paid for assisting in the fraudulent preparation of 39 tax returns for the tax years of 2014 through 2017. Federal tax losses totaled $920,854.

Las Vegas: Businesswoman Graciela Rueda Alvarez, a.k.a. Graciela Masso, has pleaded guilty to filing a false return.

Alvarez owned and operated All Hose Inc. and All Hose South, distributors of industrial, hydraulic and pneumatic hoses, connectors and fluid transfer systems. From 2013 to 2016, she transferred more than $950,000 in the companies’ profits to bank accounts she controlled but did not report these funds as income on her personal federal returns. The federal tax loss was $210,807.

Sentencing is Sept. 27. She faces a maximum of three years in prison, a year of supervised release and a fine of $250,000. Alvarez has agreed to pay $458,728.52 in restitution, including past-due taxes, interest and penalties.

Kewadin, Michigan: Businesswoman Jessica Marie Dowker has pleaded guilty to the willful failure to pay over federal employment taxes.

Dowker and her husband own Northshore Dock LLC, a boat-ramp and storage facility that employed some 30 regular and seasonal workers each year and which until 2013 collected, reported and sent FICA contributions as required. Between 2013 and 2018, the business continued deducting the payroll taxes from its laborers’ wages but failed to file employment tax returns or remit the money to the IRS. Dowker, who has an accounting degree, was responsible for the company’s tax compliance.

Sentencing is Oct. 4. She faces up to five years in prison and a $250,000 fine. Dowker will pay $494,043.30 in restitution to the U.S. Treasury.

Louisville, Kentucky: Resident Frank Littriello has pleaded guilty to two counts of tax evasion.

From 2009 through 2013 and 2016, he purchased two properties with corporate proceeds (later classified as loans) in the name of Paramount Real Estate Investments, a company owned by Littriello’s wife. He structured loan payments on these properties to conceal his ownership from the IRS and evade payroll tax liabilities. The properties were purchased for $614,328.15 and $112,064.32; the second property was later sold and proceeds of $88,600 were deposited into his wife’s account.

Littriello was sentenced to three years of probation, including six months of home incarceration. He acknowledged a debt of $1,510,549.98 to the IRS.

Fort Lauderdale, Florida: Importer Alejandro Gomez, of Broward County, Florida, has pleaded guilty to tax evasion.

Gomez operated Fleischmann’s Produce, a company that imported fresh herbs for wholesale distribution. Gomez spent approximately $896,951 in 2014 and $1,051,213 in 2015 gambling at a Broward County casino. In March 2015, he filed a 2014 federal corporate return for Fleischmann’s that overstated total business expenditures by falsely reporting the $896,951 in gambling expenditures as cost of goods sold. The next year, Gomez caused a 2015 corporate return to be filed that again falsely characterized his gambling expenditures as cost of goods sold. He also substantially underreported his personal income for both years.

Gomez caused a tax loss to the IRS of more than $545,000.

Sentencing is Sept. 30, when he faces a maximum of five years in prison. He also faces a period of supervised release, restitution and monetary penalties.

Phoenix: Luis Alberto Ortiz-Garcia has been sentenced to 28 months in prison and ordered to pay $587,367 in restitution to the IRS after pleading guilty to money laundering and unlawful use of means of identification.

Ortiz-Garcia is a longtime resident of Arizona and has lived in Tucson and Nogales since 2006. Beginning in at least January 2010, he filed income tax returns with the IRS using others’ personal ID information to generate fraudulent refunds.

He obtained the information by purchasing documents from individuals living on or around the Mexican border, obtaining it from others engaged in the false return scheme or stole it while volunteering prep services. His phony returns included falsified wages, employers, tax withholdings, fictitious dependents and falsified claims for credits.

Between 2010 and 2015, he filed some 203 false income tax returns using the ID information of others in an attempt to obtain some $1,151,491 in fraudulent refunds.

Leonardo, New Jersey: Construction exec Peter Alvarez, 54, of Atlantic Highlands, New Jersey, has admitted evading employment and personal income taxes.

From 2011 to 2016, Alvarez owned and operated Mr. Demo, a construction and demolition business. Alvarez cashed numerous checks from the company’s clients and used the cash, in part, to pay employees’ wages. He concealed from the IRS his payment of employees’ wages and his failure to report, account for and pay employment taxes of a total of $177,649.

Alvarez filed individual federal tax returns for 2011 to 2016 in which he falsely and substantially understated Mr. Demo’s total gross receipts by not reporting the numerous clients’ checks he had cashed. For those calendar years, Alvarez owed additional income tax of $432,019 on Mr. Demo’s unreported gross receipts less allowable payroll expenses.

Alvarez agreed to make restitution to the IRS of $609,668. He was charged with one count each of employment tax evasion and personal income tax evasion. Each charge carries a maximum potential five years in prison and a maximum $250,000 fine. Sentencing is Oct. 28.

Hampton, Virginia: Tax preparer Karl Burden-El Bey (aka Carl L. Burden) has been convicted of aiding and assisting in the preparation of false returns, theft of government funds and failing to file federal income tax returns.

From at least 2013 through 2019, he prepared false returns for clients, claiming false dependents, residential energy credits, gifts to charity, deductions and child and dependent care expenses to inflate federal refunds. He also stole $5,000 by directing a portion of client refunds into his personal bank account.

He also did not file his personal individual federal returns for 2013 through 2017.

Burden-El Bey faces a maximum sentence of 10 years in prison for theft of government funds, three years for each count of aiding and assisting in the preparation of a false return and one year for each count of failing to file a return. Sentencing is Dec. 7.

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