Tax Fraud Blotter: Give us this loot

Advice

This will hurt a bit; death and taxes; millions in income, decades of not filing; and other highlights of recent tax cases.

Miami: CPA Darryl Sharpton has been sentenced to 39 months in prison for tax evasion.

Sharpton pleaded guilty in December to evading payment of federal income taxes for 2004 through 2008, and 2010. He owned The Sharpton Group, formerly known as Sharpton, Brunson and Co., which specialized in financial and management consulting, audit and attestation, and tax and wealth planning.

Sharpton filed personal returns for years 2004 through 2008 and 2010 but evaded taxes by having The Sharpton Group pay his personal expenses through its corporate bank accounts, and then falsely stating to the IRS that he did not pay his personal expenses from the corporate bank accounts.

The indictment also alleged that, after the IRS issued levies and liens against Sharpton, he dodged collection efforts, including by removing himself from The Sharpton Group’s payroll after the IRS issued a levy against his wages in 2007. Sharpton also admitted to not filing personal income tax returns for the years 2009 and 2011 through 2016. He also failed to pay federal payroll taxes for The Sharpton Group for the quarters ending Dec. 31, 2012, through Dec. 31, 2013 and Dec. 31, 2014, through Dec 31, 2017.

Sharpton was also ordered to serve three years of supervised release and to pay $1,380,602 in restitution to the IRS.

Annapolis, Md.: The state comptroller has stopped processing electronic returns from 24 preparers in four states and the District of Columbia. The suspensions were due to a high volume of questionable returns.

The Maryland preparers were CB2 Consulting in Kensington; Innovative Business Accounting & Taxation Services in Elkridge; Square & Eagle Group and Aldrin F. Ngwa in Silver Spring; Kang Solutions in Hyattsville; Albert Nsiah in Greenbelt; DonNeshia Tax Service and Sheila’s Tax Service in Landover; CPG & Associates in Waldorf; Foundation Enterprises, M&S Tax Service and Kate E. Whaley in Temple Hills; Sum Up Tax Services in Lanham; Keep It Simple Tax Services and Taxjam in Bowie; Agadbak Tax and Financial Services in Montgomery Village; Dionne Makins in District Heights; Valerie Robinson Tax Service in Upper Marlboro; and Excellent Tax Professional in Accokeek.

Elsewhere, returns were stopped from Richman Financial Services and Henry’s Tax in Alexandria, Va.; Whites Tax Service in Archdale, N.C.; Keen Taxes And Associates in Macon, Ga.; and SW Accounting Associates in Washington.

St. Louis: Preparer Joseph Thomas, 62, has pleaded guilty to two counts of filing false returns.

Thomas admitted that on April 22, 2012, he filed a false 2011 Form 1040 which understated his income by more than $25,000 and his tax due and owing by more than $10,000. He further admitted that on May 1 of the next year he filed a false 2012 Form 1040 that understated his income by more than $125,000 and his tax due and owing by more than $40,000.

Sentencing is May 9. Thomas faces up to three years in prison per count, a fine of up to $250,000 per count or both imprisonment and a fine.

Snyder, N.Y.: Dentist Charles Weber, 63, who was convicted of making and subscribing a false tax return, has been sentenced to 30 months in prison.

Prosecutors said that prior to 2009 Weber operated a private dental practice in Williamsville, N.Y. In April 2009, he filed returns for the 2006 and 2007 tax years falsely stating that he was not a U.S. citizen and had not been present in the U.S. at any time during 2006 or 2007. Weber also falsely stated that his only taxable income in 2006 and 2007 came from dividends.

Weber was in fact born in the United States and knew that he was a American citizen and had been living and working in the U.S. in the two years in question. Weber also knew that in 2006 and 2007, in addition to his income from dividends, his gross receipts from his dental business exceeded $297,000 for 2006 and $283,000 for 2007.

Weber was also ordered to pay $190,547 in restitution to the IRS.

Scranton, Pa.: Funeral home director Al T. Hughes, 60, has pleaded guilty to tax evasion.

According to prosecutors, Hughes admitted to diverting some $892,000 in corporate receipts to his personal benefit and failed to report the diverted receipts as income on his federal returns. The resulting tax loss to the U.S. is approximately $231,000.

Hughes also admitted that he began diverting corporate receipts in 2009 and continued through 2014, and that he cashed hundreds of customer checks intended for payment of funeral home services at various financial institutions, including a check-cashing service in Scranton. He diverted corporate receipts from four area funeral homes.

Portland, Ore.: A federal jury has found Mary Holden Ayala, 59, guilty of stealing nearly $1 million from an Oregon foster care agency, money laundering and filing false personal income tax returns.

From at least 2008 to 2015, Ayala served as the president, executive director and primary agent of Give Us This Day, a private foster care agency and residential program for youth.

According to court documents, since its inception in 1979, This Day was primarily funded by the Oregon state and federal government for foster care services, including hiring and screening foster parents for community placements, compensating foster parents for services and placing foster children in residential or group homes.

Ayala wrote checks and used the agency’s debit card to withdraw cash using the organization’s bank accounts as her own. She used the stolen money to pay her mortgage, remodel her home and fund other retail, travel and transportation expenses. She also used the money to fund other, non-This Day business ventures, including a media company and a fish and ribs restaurant, and to purchase and flip a commercial property.

In total, Ayala stole nearly $1 million from This Day. Agency residential center and house managers complained about a lack of basic necessities, including food, toiletries and cleaning supplies.

In 2015, the day after Ayala resigned her position at the agency, she filed five false federal income tax returns for tax years 2009 through 2013; she soon filed a sixth false return, for tax year 2014. She failed to file a return in 2015.

Sentencing is May 29.

Houston: Dr. Edward J. Crouse, who practiced medicine for more than 30 years, has been sentenced to 18 months in prison, to be immediately followed by a year of supervised release, after his conviction on one count of tax evasion.

Crouse acknowledged that he had not timely filed a U.S. individual income tax return since 1997 despite earning more than $4.4 million in years 2009 through 2012.

He admitted that he consistently committed numerous acts of tax evasion over the years to conceal his true income from the IRS, including concealing the complete business records of his medical practice for calendar years 2006 through 2012 from his bookkeeping and prep firm. Crouse also admitted that he signed an IRS Collection form around May 2010 in which he understated the amount of his income from his medical practice.

The total tax loss was some $678,103, counting both unpaid U.S. individual income taxes and the amounts of federal taxes and FICA that Crouse withheld from the wages of the employees of his medical practice but did not pay over to the IRS.

Crouse also paid restitution of $678,103 prior to his recent hearing.


Jeff Stimpson

Jeff Stimpson

Jeff Stimpson is a veteran freelance journalist who previously served as editor of The Practical Accountant.

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