Tax Fraud Blotter: Grinding true

Accounting

No account; unnamed and unregistered; on standby — for jail; and other highlights of recent tax cases.

Toledo, Ohio: Businessman Michael Meridieth has been sentenced to a year and a day in prison and ordered to pay $1,125,268.84 in restitution after pleading guilty to attempting to cheat on his income tax.

Beginning in 2004, Meridieth owned and operated five local businesses and in each handled the accounting and bookkeeping. At four of the businesses, he failed to timely file employer tax returns or make timely deposits of employer taxes to the IRS. Each business except for one was shut down owing federal payroll taxes and withholdings.

Instead of making these payments, Meridieth transferred the assets of one business to another to continue business operations and avoid paying accumulated tax liabilities. He used these withheld funds on personal expenses to support a lavish lifestyle, such as the purchase of a snowmobile and to pay for a visit to a rehabilitation facility. In addition, while payroll taxes were outstanding, Meridieth allowed himself and his business associates to spend business money on personal expenditures, including furniture, jewelry and a country club membership.

In total, he failed to pay more than $1.1 million in employment taxes.

Middletown, Ohio: David Keith Fraley has been sentenced to 30 months in prison and ordered to pay $725,106.84 in restitution to the IRS after pleading guilty to income tax evasion.

Fraley attempted to evade paying income taxes and the assessment of income taxes associated with his 2009 through 2012 income tax returns. Fraley evaded payment and assessment of income taxes by halting deposits of his income in his bank accounts once the IRS started levying those accounts.

He did not file his 2009 income tax return timely and a substitute for returns was posted. Later, the IRS issued an intent to levy for 2009. The SFRs were assessed for 2007, 2008 and 2009 for a total of $1,071,382 in tax due, excluding penalties and interest.

Fraley spoke to the IRS revenue officer and asked for an extension to file the 2009 return. Based on the Letter 1058, Fraley understood that the IRS would institute levies toward the funds held in his bank accounts.

He transferred ownership of income to his business and brother. Initially, Fraley called his contractor and told them not to issue any income in his name and Social Security number but to issue the income in his business name and EIN. When the IRS began levying wages from Fraley’s account, he stopped making deposits into his business bank account and started depositing into his brother’s bank account.

Lawrenceville, Georgia: A federal court has permanently enjoined tax preparers Ramon Maduro and Blanca Dalila Elvir Alvarenga from preparing federal income tax returns for others.

Maduro and Alvarenga, individually and d.b.a. Maduro Tax Services Corp. and Maduro Global Service Firm Inc., prepared and filed numerous returns that understated their clients’ taxes and improperly claimed refunds.

The court found that the pair misidentified the person preparing returns; manipulated head-of-household status selections; claimed ineligible dependents to manipulate filing statuses, generate false Child Tax Credits and inflate Earned Income Tax Credits; and included false information on Schedules C. They were also found to have manipulated income to generate false or inflated credits and misrepresented their due diligence to determine eligibility for credits claimed.

San Antonio: Tax preparer Richard Medina Sr. has been sentenced to five years of home confinement and ordered to pay $273,372 in restitution for preparing false returns.

Medina operated an unnamed and unregistered tax prep business out of his residence from 2013 to 2016. He prepared false federal returns for clients by claiming false credits, IRAs and itemized deductions. Medina fraudulently maximized tax credits to generate undue refunds, causing a loss of more than $273,000. He was also required to notify the bankruptcy trustee of all forms of income after filing for bankruptcy in 2013 but lied under oath about income from his tax prep business.

He pleaded guilty in 2020 to one count of aiding and assisting in the preparation of a false return and one count of false statement in bankruptcy.

Hands-in-jail-Blotter

North Las Vegas, Nevada: Former airline exec William Acor has pleaded guilty to failing to pay over $2.6 million in employment taxes to the IRS.

Acor was president and CEO of Vision Airlines, headquartered in North Las Vegas. He was responsible for collecting, accounting for and paying over federal taxes withheld from employee wages and admitted that from 2014 to 2016 he failed to pay over $2,657,254.75 in combined employee tax withholdings and employer-matching share of taxes.

Sentencing is July 27, when he faces a maximum of five years in prison, a term of supervised release and a fine of $250,000. He has also agreed to pay $1,667,290.46 in restitution to the IRS.

Wapello, Iowa: Bradley Earl Ewart, owner and operator of Louisa County Millwright, has pleaded guilty to two counts of failure to file federal income tax returns.

Ewart admitted he knew he was required to file federal income tax returns for the years 2015, 2016, 2017 and 2018 and failed to do so. He additionally admitted that he filed no federal income tax returns for 2004 through 2014.

Sentencing is July 28. Each count of failure to file a return has a maximum sentence of a year in prison, a maximum fine of $25,000, or both.

Greenbelt, Maryland: Sandra Denise Curl of Charlotte, North Carolina, and Percy Leroy Jacobs of Prince Frederick, Maryland, have been convicted for conspiring to defraud the U.S., helping file false returns and theft of government funds.

Between 2013 and 2016, Curl and Jacobs filed returns on behalf of multiple fraudulent trusts they owned, seeking refunds. They also filed false individual tax returns in their own names, claiming fictitious false tax withholdings to generate refunds.

The pair attempted to defraud the IRS of more than $2.2 million.

Curl and Jacobs face a maximum of five years in prison for conspiracy to defraud the U.S., three years for each count of aiding and assisting the filing of a false return and 10 years for theft of government property. Sentencing is July 7.

Mission, Texas: Tax preparer Linda Lopez has admitted to preparing false and fraudulent returns on behalf of taxpayers.

Lopez owned and operated the local prep business Premier Tax Solutions, which operated from 2012 through 2022. She admitted that around February 2017, she prepared a federal return for a taxpayer that included multiple instances of false and fraudulent information, including false employee business expenses and false residential energy credit qualifying expenses.

Sentencing is July 18, when Lopez faces up to three years in prison and a $100,000 fine.

Hammond, Indiana: Tax preparer Yvonna Lee, 36, of South Holland, Illinois, has been sentenced to 28 months in prison and a year of supervised release on her plea of guilty to wire fraud and aggravated ID theft.

Between 2014 and 2017, Lee and others filed fraudulent federal returns that generated improper refunds for clients who then paid them a cut of the refunds. As part of the scheme, Lee assisted in the preparation of 146 fraudulent returns resulting in a total loss of more than $400,000 to the IRS.

Lee was also ordered to pay $405,867 in restitution to the IRS.

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