Tax Fraud Blotter: Human error

Accounting

Pharma fraud; foreign affairs; spreading the scheme around; and other highlights of recent tax cases.

Union City, New Jersey: Former pharmacy co-owner Igor Fleyshmakher, of Holmdel, New Jersey, has been sentenced to 41 months in prison for a scheme to bribe health care professionals and for evading taxes on $33.9 million in income.

The Prime Aid Pharmacies — now closed — operated out of locations in Union City and Bronx, New York. They processed expensive medications to treat various conditions, including Hepatitis C, Crohn’s disease and rheumatoid arthritis. Fleyshmakher co-owned Prime Aid Union City.

Starting in 2010, to obtain a higher volume of prescriptions, Fleyshmakher and conspirators bribed doctors and doctors’ employees to steer prescriptions to the Prime Aid Pharmacies. The bribes included expensive meals, designer bags and payments by cash, check and wire transfers.

Fleyshmakher, who previously pleaded guilty, agreed that the take in attempting to violate the federal anti-kickback statute was $3.5 million to $9.5 million.

In addition, between 2012 and 2014, Fleyshmakher diverted a substantial amount of Prime Aid Union City income into a secret bank account that he opened and controlled. He concealed the account from the pharmacy’s tax preparers and did not report any of the funds he deposited into it on his personal income tax returns. In total, he diverted $33.9 million of income into the account, all of which he failed to report to the IRS. The tax loss was $5.8 million to the IRS.

Fleyshmakher was also sentenced to three years of supervised release and ordered to pay $5.8 million in restitution and a $100,000 fine.

Windham, New Hampshire: Exporter Georges Mazraani has pleaded guilty to willfully failing to file a FBAR.

Mazraani owned and operated Dot Square, a corporation that exported computers and related goods primarily to Lebanon. He also had a financial interest in bank accounts held in Lebanon, from which he sometimes wired money to Dot Square’s bank account in Salem, New Hampshire.

For calendar 2012, Mazraani filed an FBAR identifying three accounts in Lebanon. During 2013 through 2017, Mazraani did not file FBARs, even though he had an interest in at least one Lebanese bank account holding more than $10,000 during each of those years. For example, in calendar 2017, $554,245 was sent in 13 separate wire transmissions from Mazraani’s account at a bank in Beirut to Dot Square’s business checking account in New Hampshire.

Although Mazraani’s tax preparer advised the defendant’s bookkeeper about the FBAR filing requirement and Mazraani acknowledged on his 2016 and 2017 returns that he was required to file an FBAR, he nevertheless failed to file the report.

Sentencing is Feb. 14.

Pittsburgh: Tax preparer Jamar White has been sentenced to four months in prison on charges of aiding and assisting in the preparation and presentation of false and fraudulent income tax returns.

White had earlier entered a plea of guilty to tax charges covering the years 2010 through 2014, during which time he created false returns for clients. To secure undeserved refunds, White created false deductions that did not represent the actual income and eligible deductions of many of his clients.

He was also ordered to pay $67,000 in restitution to the IRS, pay a special assessment of $500 and serve a year of supervised release after his prison term.

Country Club Hills, Illinois: Tax preparer Lisa Lloyd Taylor, 57, has been sentenced to two years in prison for orchestrating a variety of schemes that defrauded the IRS, the U.S. Department of Education and the Social Security Administration.

Taylor, owner of Ebiz Accounting Services, filed personal or corporate returns from 2010 to 2013 that substantially underreported her income or that earned by her business. From 2011 to 2015, Taylor also prepared thousands of returns for her clients that claimed false deductions for purported charitable contributions and childcare expenses.

Taylor’s schemes resulted in a total federal and state tax loss of more than $1.02 million.

She also underreported her income to fraudulently obtain more than $53,000 in financial aid benefits for her children, who otherwise would not have qualified for Department of Education grants.

She defrauded the Social Security Administration by applying for and collecting more than $134,000 in disability benefits to which she was not entitled. From 2011 to 2017, Taylor concealed from the SSA the extent to which she was working and the amount of income she received from Ebiz.

She pleaded guilty to federal tax and theft charges.

Hillard, Ohio: Resident Mustafa Shalash has pleaded guilty to one count of filing a false return with the IRS.

In 2015, Shalash won $1 million on a single lottery ticket. He received $710,000, and $290,000 was withheld in taxes. On his 2015 return, Shalash reported gambling winnings of $1,069,100 and falsely claimed gambling losses of $1,069,100. Shalash knew that his actual gambling losses were no more than $300,000.

To conceal his winnings, Shalash wired $690,000 abroad, including $440,000 to a bank account under his control in Jordan. From 2014 through 2019, he had some $576,077 to $909,614 in a foreign bank account in Jordan. Shalash also accumulated money in foreign bank accounts by transporting more than $10,000 in funds across the U.S. border on multiple occasions.

He never filed Form 105. Before he knew he was being investigated, Shalash also never filed a FinCen Form 114, “Report of Foreign Bank and Financial Accounts.” On his 2015 return, Shalash also failed to disclose that he had a foreign bank account, reporting to his return preparer that he did not have such an account.

Shalash caused a federal tax loss of $255,967. Filing a false income tax return carries a maximum of three years in prison and a fine of up to $100,000.

Miami: Kevin Dewayne Kirby has been sentenced to 57 months in federal prison for laundering more than $500,000 connected to two wire frauds.

In the first scam, a fraudster pretending to be from the IRS called victims and convinced them that they owed back federal taxes. The fraudster would threaten arrest and other legal action if the tax obligations were not immediately paid. Victims wired their money to bank accounts that Kirby or his conspirators controlled.

The second scam involved computer services. Fraudsters pretending to work for a fake computer service company called victims and told them that they had to pay a fee to fix or update their computers. Alternatively, the fraudsters told the victims that the fake computer company owed them refunds. Victims allowed the fraudsters remote access to their computers, which the fraudsters used to steal from victims’ accounts.

To execute the money-laundering conspiracy, Kirby and his co-conspirators used bank accounts connected to eight different companies. After money was wired to these accounts, Kirby and his conspirators drained the funds from the accounts by wire transfers, cash withdrawals, money order purchases and cashier check purchases. More than half a million dollars was laundered.

Kirby pleaded guilty in July.

St. Croix, U.S. Virgin Islands: Jacinta Gussie has been sentenced to 45 months in prison for her part in a complex tax fraud.

From January 2011 to July 2012, Gussie and others participated in a scheme to obtain phony federal income tax refunds. The scheme involved acquiring personal ID information of Virgin Islanders to e-file falsified returns with a designation of refunds to the acquired bank accounts or debit cards. Gussie and her conspirators withdrew the deposited refunds for personal use.

Some $44,561.11 of falsely claimed refunds were deposited into Gussie’s bank accounts. The defendants obtained more than $400,000 in illegal refunds; they claimed additional refunds totaling in excess of $100,000 that were not paid.

Gussie must also serve three years of supervised release and pay $44,561.11 in restitution to the IRS.

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