Accounting
Tax Fraud Blotter: Chips have fallen
Dutch treat; for the record; last Resort; and other highlights of recent tax cases.
New York: Frank Butselaar, a native of Naarden, Netherlands, has pleaded guilty to one count of aiding or assisting in the filing of a false or fraudulent return.
Butselaar advised the creation of offshore structures for ultra-high-net-worth individuals and did so while a shareholder in the Amsterdam office of a major U.S.-based international law firm. When the clients were becoming or had become U.S. tax residents, Butselaar and his co-conspirators, who were partners at the firm, sought to conceal the clients’ offshore income through nominee owners, generally a family member who lived outside the U.S. The clients, with the knowledge of Butselaar and his co-conspirators, unknowingly continued to operate their offshore entities as their own and believed they had access to and could direct the money they were accumulating offshore.
The amount of unreported income for two of the client taxpayers exceeded $70 million. Butselaar was also repeatedly warned that the income being collected offshore for his clients was reportable.
He faces up to three years in prison. Sentencing is Feb. 13.
St. Louis: Tax preparer Robert Droege, 59, has been sentenced to 46 months in prison for filing false returns that caused an estimated tax loss of $2.5 million.
Droege pleaded guilty in June to four counts of aiding in the preparation of a fraudulent return, admitting to preparing at least 34 false returns in his home office, Bob’s Tax Service.
He prepared returns that contained false or fraudulent information including medical expenses, charitable contributions, personal property rental expenses, non-business bad debt and other deductions.
White Plains, Maryland: Part-time tax preparer Anthony Judd has pleaded guilty to preparing and filing a false return for a client.
Since at least 2013, Judd, who was also a full-time special police officer at the National Archives and Records Administration, prepared and filed more than 40 false returns for individual clients that reduced the clients’ taxes and inflated refunds. These returns reported losses for businesses that the clients did not have and deductions for expenses, such as transportation and job-related expenses, that the clients did not actually incur.
Judd prepared and filed each return as a ghost preparer and caused a tax loss to the IRS of some $484,525.
Sentencing is April 16. He faces a maximum of three years in prison as well as a period of supervised release, restitution and monetary penalties.
Naples, Florida: Tax preparer Heidi Torres-Moncaleano, 45, has been sentenced to a year and a day in prison for aiding in the preparation of false and fraudulent income tax returns.
From 2018 through 2021, Torres-Moncaleano, through her business Torres Tax Services, submitted fraudulent returns and Schedules C to the IRS, inflating clients’ losses to generate larger refunds. The federal tax loss exceeded $847,000.
Torres-Moncaleano, who pleaded guilty in April, was also sentenced to a year of supervised release with the condition that she pay $429,888 in restitution to the IRS.
New York: Ilya Kahn, a national of the U.S., Israel and Russia, has pleaded guilty to conspiracy to violate the Export Control Reform Act for his role in a scheme to secure and illegally export dual-use semiconductors and other sensitive technology to Joint Stock Company Research and Development Center Elvees and other entities in Russia. Kahn also pleaded guilty to attempted tax evasion for failing to pay taxes on his income from the scheme.
Kahn owns Senesys Incorporated and Sensor Design Association, which operated in California and Brooklyn, New York. Kahn operated these businesses as fronts for a years-long conspiracy to acquire and export sensitive and sophisticated dual-use electronics from the U.S. to Elvees, one of the leading Russian developers of microchips and which was sanctioned by the U.S. in 2022.
Many of these items required an export license for national security and anti-terrorism reasons, which Kahn did not obtain. He also arranged for Elvees to continue to fabricate and import semiconductors after Russia’s February 2022 invasion of Ukraine, using a network of front companies and bank accounts.
Kahn’s export activity for the benefit of Elvees dates to at least 2012, and accounts under his control received more than $50 million from Elvees and related entities between 2012 and 2022. Of that money, Kahn channeled nearly $5 million for his personal use, which he did not report to the IRS and on which he did not pay income taxes.
Kahn agreed to forfeit $4,923,548.94 and to pay an additional $1,892,816.00 in restitution to the IRS. He also faces up to 20 years in prison.
Newark, New Jersey: Insurance broker Joseph Schwartz of Suffern, New York, has admitted his role in a $38 million employment tax fraud scheme involving nursing homes.
He pleaded guilty to two counts of an indictment charging him with willfully failing to pay over employment taxes withheld from employees of his company and willfully failing to file a Form 5500 for a 401(k).
Schwartz, operator of Skyline Management Group, with headquarters in New Jersey, failed to pay employment taxes relating to health care and rehabilitation facilities that Skyline operated in 11 states. From October 2017 through May 2018, Schwartz caused taxes to be withheld from employees’ pay but failed to then pay over more than $38 million in employment taxes to the IRS. He also failed to file the 5500.
The employment tax fraud count carries up to five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater. The failure to file a Form 5500 carries a maximum of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is April 10.
Cape Coral, Florida: William Skaggs Jr. and Billie Adkison have pleaded guilty to conspiracy to commit tax fraud.
Skaggs owned and operated Nastar Roofing; Adkison was the main office administrator for Nastar, and her duties included managing the company’s payroll. Between 2013 and 2023, Nastar paid its employees predominantly in cash to avoid paying taxes the pair knew were owed to the federal government. Typically, one or more Nastar employees, including Skaggs and Adkison, withdrew significant amounts of cash on Thursdays and Fridays to make Nastar’s payroll at the end of the work week.
Between 2013 and 2023, Nastar employees withdrew more than $21 million from the company’s bank accounts to pay employees in cash. The company did not withhold taxes from the cash payments, nor did it pay its own share of FICA taxes.
Skaggs and Adkison have agreed to make full restitution to the United States for the employment taxes, including an upfront partial restitution payment of $1 million before their sentencing. Each faces up to five years in prison.
Ocala, Florida: Tax preparer Steven Cabrera has been sentenced to three years in prison for assisting in preparing false tax documents, submitting false tax documents and willfully failing to file returns.
From 2017 to 2019, Cabrera, who pleaded guilty in August, engaged in widespread tax fraud, adding unauthorized and fraudulent deductions and credits to clients’ returns without their knowledge and then embezzling the additional tax return money.
He also defrauded clients directly by telling them to make out checks to “IRS” and pledging that he would send the funds to the IRS himself. Instead, he deposited those checks into an account he controlled for a fictitious business, “International Resort Services.”
Cabrera caused total losses of nearly $1 million.
Big Four firm PwC announced new agentic AI capacities, including a model that proactively identifies areas of value leakage and acts inside the tools teams already use to fix them itself.
The new solution,
The software, which is supported by PwC’s recently released
The system connects directly into ERP environments, continuously monitors key metrics, and acts inside the tools teams already use. For example, a supply chain agent might detect rising shipping costs and automatically reroute deliveries to reduce spend. Finance agents can spot and correct billing errors before they reach the customer. Clients typically see measurable efficiency gains in the first quarter, with continued improvements over time as the system learns and adapts.
“Too many transformations still rely on one-off pilots and stale data, stretching the gap from insight to impact and suffocating ROI,” said Saurabh Sarbaliya, PwC’s principal for enterprise strategy and value. “Agent Powered Performance flips the economics by distilling PwC’s industry transformation playbooks into AI agents that turn static insights into compounding gains, without rebooting each time.”
Agent Powered Performance is platform-agnostic and built on an open architecture so it can work across different LLMs based on client preferences and task-specific needs. It works with major enterprise platforms including Oracle, SAP, Workday and Guidewire.
Agent OS Model Context Protocol
PwC also
By integrating this standard, agent systems registered as MCP servers can be used by any authorized AI agent. This reduces redundant integration work and the overhead of writing custom logic for each new use case. By standardizing how agents invoke tools and handle responses, MCP also simplifies the interface between agents and enterprise systems, which will serve to reduce development time, lower testing complexity, and cut deployment risk. Finally, any interaction between an agent and an MCP server is authenticated, authorized and logged, and access policies are enforced at the protocol level, which means that compliance and control are native to the system—not layered on after the fact.
This means that agents are no longer siloed. Instead, they can operate as part of a coordinated, governed system that can grow as needs evolve, as MCP support provides the interface to external tools and systems. This enables organizations to move beyond isolated pilots toward integrated systems where agents don’t just reason, but act inside real business workflows. It marks a shift from experimentation to adoption, from isolated tools to scalable, governed intelligence.
Research Composer
Finally, a PwC spokesperson said the firm has also launched a new internal tool for its professionals called Research Composer, a patent-pending AI research agent embedded in the firm’s ChatPwC suite, designed to accelerate insight generation by combining web data with PwC-uploaded content.
Professionals will use the Research Composer to produce in-depth, citation-backed reports for either the firm or its clients. The solution is intended to enhance the quality of client work by equipping teams with research and strategic analysis capabilities.
The AI agent prompts users through a step-by-step research workflow, allowing them to shape how reports are packaged—tailoring the output to meet strategic needs. For example, a manager in advisory services might use Research Composer to evaluate white space opportunities across industries or geographies, drawing from internal reports and up-to-date market data.
Eide Bailly, a Top 25 Firm based in Fargo, North Dakota, is growing its presence in the Pacific Northwest by adding Traner Smith, based in Edmonds, Washington, effective June 2, 2025.
Traner Smith’s team includes two partners and 16 staff members and specializes in tax compliance and advisory services. Financial terms of the deal were not disclosed. Eide Bailly ranked No. 19 on
Eide Bailly already has offices in Seattle, but hopes to grow further in the Pacific Northwest. “We’re pleased to welcome the talented team at Traner Smith to Eide Bailly,” said Eide Bailly managing partner and CEO Jeremy Hauk in a statement Monday. “Their expertise with high-net-worth individuals, real estate and privately held businesses aligns well with our strengths, and their client-centric approach is a perfect cultural fit. Having an office in Edmonds, Washington, is a great complement to our existing presence in Seattle. Together, we’re poised to deliver even greater value to families and businesses in the Seattle metro area.”
“Joining Eide Bailly is a natural next step for us — it provides access to deeper technical resources in areas like state and local tax, national tax, succession planning and international tax while allowing us to continue the personalized service our clients value,” said Kevin Smith, a partner at Traner Smith, in a statement.
“With this expanded support and platform, we’re excited to grow our reach, elevate what we do best, and help more clients than ever before,” said Shane Summer, another partner at Traner Smith, in a statement.
Eide Bailly has announced several other mergers in recent weeks. Earlier this month, it added
In 2023, Eide Bailly added
Top 100 firm
“We began working with Knuula in Spring 2024 to streamline our engagement letter process,” said Don Murphy, Managing Member of BMSS. “It quickly became clear that Knuula was not only a strong solution for us, but also an ideal partner in advancing industry-wide automation.”
While the specific terms of the deal were not disclosed, a spokesperson with Knuula said that, after this investment, BMSS and a collection of 21 of their partners now own 13% of the company. The investment represents not some passive revenue deal but an active collaboration between the two companies, with the spokesperson saying they will be working closely together on things like product development, new features, improvements, and networking.
The deal comes about a year after Knuula integrated with QuickFee, a receivables management platform for professional service providers, which allowed users to have engagement letters directly connecting to their QuickFee billing platform, tying the execution of the letter directly to the billing process.
“We’ve long sought to partner with a firm focused on strategic innovation in the accounting space,” said Jamie Peebles, founder of Knuula. “To develop a perfect solution for large firms, it is ideal to have a partner that is willing to work closely together and iterate quickly. This requires constant feedback between our two teams. The IT team from BMSS worked with our development team constantly and helped us iterate rapidly. We also had consistent input from partners, manager, and administrative staff to help us make valuable changes to Knuula. BMSS was a perfect partner for us.”
PwC AI agent acts proactively to preserve value
Eide Bailly merges in Traner Smith
BMSS announces investment, collaboration with Knuula
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
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