Tax Fraud Blotter: waffles with a sham side

Too much for man; just sign here; frank scam; and other highlights of recent tax cases.

Atlanta: Shanga A. Hankerson, 45, former owner of Gladys Knight’s Chicken and Waffles restaurant in Atlanta and son of the music legend, was sentenced to two years in prison for willful non-payment of payroll taxes.

In 1997, Hankerson opened his first restaurant; over the following years, it expanded to at least three other locations in northern Georgia and Washington, DC

Hankerson was the sole owner of the businesses that operated the restaurants and, from at least 2012 to 2016, he did not pay more than $ 1 million in payroll taxes in full.

Hankerson, who was convicted after pleading guilty, was also sentenced to one year on probation and ordered to pay $ 1,039,310.65 in restitution.

Williamsburg, Virginia: Financial agent Michael J. Tiernan was convicted of making false statements and failing to file a return.

From at least 2014 to 2017, Tiernan was the financial manager of business entities related to Ford’s Colony, including Ford’s Colony Realty, a large resort community. For the 2015 and 2016 tax years, he filed federal income tax returns that falsely underestimated the income he received from these entities. Although he declared income in the two years, he made up for his claimed income with high deductions which resulted in zero taxable income for 2015 and 2016, and declared himself insolvent to exclude the release of the debt. in 2015.

Tiernan received underreported income from business entities of at least $ 289,401 in 2015 and at least $ 204,523 in 2016. In addition, he did not file a return for 2017 despite receiving 111,352 $ from a business. From 2015 to 2017, he deposited over $ 1.6 million into his personal bank account and spent almost all of that funds on a combination of checks and debit card transactions. Tiernan further prepared and filed corporate statements for the entities that obscured the actual compensation he had received.

He faces a maximum of seven years in prison when sentenced on March 2.

Carrolton, Texas: Tax preparers Carlos Hinojosa, 37, Mario Jose Sanchez, 48, and Magda Lopez-Sanchez, 51, who previously had all pleaded guilty to assisting in the preparation of false and fraudulent returns, have been convicted .

Hinojosa was sentenced to 22 months in prison; Sanchez and Lopez-Sanchez were each sentenced to three years probation. Each was also ordered to pay more than $ 6 million in restitution, jointly and severally, to the IRS.

From 2012 to 2016, the three worked as preparers in the tax department of Miguelitos. They prepared statements that included, among other misrepresentations, false tuition expenses to make clients appear eligible for education credits that they knew clients were not eligible to receive. Hinojosa admitted that he usually includes these bogus expenses in his clients’ statements without their knowledge.

To cover up the false statements, the three men attempted to get clients to sign forms justifying the expenses. Hinojosa admitted that he didn’t explain the forms to clients and most had no idea what they were signing. He further admitted that he charged clients money to prepare their returns – sometimes up to $ 2,000 – without informing them that Miguelitos would also deduct a preparation fee from their refunds.

The federal tax loss was $ 7,306,191.

Milton, Delaware: Freelance photographer Bruce Kevin Fleming has been sentenced to one year in prison for tax evasion.

Fleming pleaded guilty in August 2020. At that time, he had not filed or paid federal income tax since 1981.

His sentence includes $ 192,529 in restitution to the IRS for income taxes owed and owed from 2002 to 2016. Fleming was also ordered to return to the IRS for $ 22,584 in payroll taxes that he withheld on salaries of its employees in 2016 and 2017, but never turned. to the IRS.

Authorities said Fleming had the money to pay his income taxes for those years, his net income amounting to $ 393,000, but he was living beyond his means. Authorities added that a criminal investigation was only opened after Fleming ignored numerous letters and assessments from the IRS.

Florence, South Carolina: Twelve people in seven construction-related companies have pleaded guilty to charges of employment tax evasion and hiring unauthorized foreigners.

The pleas are the result of a multi-year undercover investigation across the South Carolina coast conducted by the IRS and Homeland Security Investigations.

The operation targeted those in the construction industry who used unlicensed check tellers to facilitate cash payments to employees, many of whom were unauthorized foreigners. Check tellers would also provide certificates of insurance incorrectly stating that employees were covered by workers’ compensation.

Each of the 12 defendants pleaded guilty to an information accusing them of one count of conspiracy to defraud the United States and one count of illegal employment of foreigners.

At least $ 15 million in checks were cashed by these defendants, resulting in millions of dollars in total losses for the government. Based on the investigation, authorities said at least tens of millions of dollars in tax losses have occurred across the coast of South Carolina due to similar schemes.

In this diagram, a member of the construction company would encounter an unlicensed check teller in places such as parking lots for retail stores or cafes. The construction company would give the check teller a business check for a certain amount payable to a business created by the check teller, and the check teller would give the construction company representative a bag of money. money that would be used to pay employees. In return for their services, the check teller withheld a commission of about 3%.

To give the impression that the employees had valid insurance on construction sites, the check teller would also provide a certificate of workers’ compensation insurance which was not in fact valid for any of the construction employees. The parties agreed that the cashier of the check would pretend on paper to be a subcontractor who supplied the employees and provided the insurance.

Around 2019, various undercover IRS-CI agents established themselves in the Myrtle Beach area and recorded multiple interactions with the various companies of the defendants.

Each accused faces a maximum of five years in prison for conspiring to defraud the United States and six months in prison for illegal employment of aliens. Each also faces a fine of up to $ 250,000 and $ 3,000 for each unauthorized stranger, and three years of surveillance to follow the jail term. Each agreed to reimburse the IRS, for a total restitution amount of just under $ 3 million.

Detroit: A federal court has permanently banned the region’s tax preparer Abdou Ndiaye from preparing federal tax returns for others and from owning or operating a tax filing business in the future.

Ndiaye and Ndiaye’s LLC, dba Pro Tax Services, have consented to the registration of the injunction. The order requires Ndiaye and Pro Tax Services to notify prior clients of the injunction and authorize the United States to monitor compliance.

The civil complaint alleged that Ndiaye reported business losses or fabricated income on client returns, leading those individuals to claim unearned earned income tax credits and claim false reporting statuses.

Bonifay, Florida: Ahmad T. Ismail pleaded guilty to underwriting and transmitting multiple fraudulent federal income tax returns.

Ismail admitted to filing false federal income tax returns for 2017 and 2018. He also agreed that he underestimated his gross income by thousands of dollars a year, failing to report all cash payments from patients in his practice. medical during the two years. While searching his residence last year, law enforcement found $ 39,000 in cash as well as hundreds of thousands of dollars in cash receipts from his office.

The IRS estimates that the tax loss exceeds $ 100,000.

The sentence is pronounced on January 20. Ismail faces up to six years in prison as well as paying restitution to the IRS.

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