Family plot; past and present; fat chance; and other highlights of recent tax cases.

Princeton Junction, New Jersey: Former accounting professor Gordian A. Ndubizu has been sentenced to two years in prison for evading federal income taxes and filing false returns.

He was convicted in August of all eight counts of an indictment charging him with four counts of tax evasion and four counts of filing false returns in tax years 2014 through 2017. During those years, Ndubizu was a professor of accounting at a university in Pennsylvania as well as the co-owner of Healthcare Pharmacy in Trenton, New Jersey.

Healthcare Pharmacy was organized as an S corp, the income of which flowed through to Ndubizu and his wife and was to be reported on their personal income tax returns. Ndubizu prepared fraudulent books and records for Healthcare inflating the pharmacy’s costs of goods sold to reduce and underreport the pharmacy’s profits flowing through to Ndubizu and his wife.

Among other falsehoods, Ndubizu identified wire transfers as payments to purchase goods sold by the pharmacy when those transfers were in fact to personal bank accounts under Ndubizu’s control and to bank accounts in Nigeria associated with an automotive company under Ndubizu’s control.

Each of Ndubizu’s returns for 2014 through 2017 underreported his income and falsely reported that he had no financial interest in or signature authority over any foreign bank accounts.

He failed to report some $3.28 million in income from the pharmacy, resulting in the evasion of some $1.25 million in tax.

West Palm Beach, Florida: Lobbyist Eston Eurel Melton III has pleaded guilty to tax evasion.

Melton failed to pay some $1.2 million in taxes for tax years 2005 through 2014. By July 2019, his tax debt, including penalties and interest, was some $1.7 million.

He evaded IRS efforts to collect the taxes in multiple ways. To dissuade the agency from seizing his residence, for example, he represented that he was attempting to sell the residence but then undermined his realtor’s efforts to make the sale. 

Melton also signed some $67,000 in checks to himself from his lobbying business, Global Projects, and the checks were negotiated for cash. A family member then deposited the same or similar sums in cash into her account; that family member then opened a lobbying business, Gryphon Partners, apparently competing with Global Projects. Gryphon’s revenue rose while Global’s fell, and many of Global Projects’ clients transferred to Gryphon.

Global and Gryphon paid him almost nothing after 2019, instead making all distributions to his relative. The latter bought a new area home and lived there with Melton, telling the closing agent that Melton should not be on the deed because the family member was buying the home with her own money. In fact, approximately two-thirds of the cash to close was proceeds of Melton’s lobbying work. Melton also transferred four life insurance policies and the title of two cars to his family member.

Sentencing is May 16.

Arlington, Georgia: Reginald Knight, who has a prior federal conviction for tax fraud in Florida, has been found guilty of another tax scheme.

He filed a federal return in March 2018 that falsely claimed $3,211,907 in wages, $2,586,551 in withholdings, $1,848,000 in Schedule C losses and a refund of $2,165,154. Knight fabricated W-2s and Schedule Cs for two business entities, but neither business generated the income, paid the withholdings or suffered the losses Knight claimed. 

The IRS did not issue a refund and began investigating Knight in 2021, discovering that he’d filed returns with similarly exorbitant financials for the non-operating business for tax years 2014, 2015 and 2016; the IRS did not issue a refund for tax years 2014 and 2015.

The IRS did issue a $745,953 refund to Knight for tax year 2016, which he used to pay for the construction of a new home, made transfers to his investment account, purchased a vehicle and paid for personal living expenses totaling $442,667.30. The IRS recovered $315,466.97.

Knight faces up to three years in prison, to be followed by three years of supervised release and a $100,000 fine. He has a federal tax conviction in the Southern District of Florida from 2005 and was sentenced to serve five months in prison per charge, to be served concurrently.

Las Vegas: Resident Candies Goode-McCoy has pleaded guilty to conspiring to defraud the United States by making claims for refunds of false COVID-19-related credits.

McCoy conspired to file returns seeking fraudulent refunds based on the Employee Retention Credit and paid sick and family leave credit. From around June 2022 through September 2023, she filed 1,227 false returns for her businesses and others claiming these credits.

In total, these claims sought refunds of more than $98 million, of which the IRS paid some $33 million. McCoy personally received more than $1.3 million in fraudulent refunds and was paid about $800,000 from those on whose behalf she’d filed fraudulent returns. She spent the money in part on luxury cars, gambling, vacations and luxury items.

Sentencing is Feb. 23. She faces a maximum of 10 years in prison, as well as a period of supervised release, restitution and monetary penalties. 

Upper Marlboro, Maryland: Charles Anthony Keemer, 64, has pleaded guilty to aiding and assisting the preparation and filing of a false and fraudulent return.

Keemer prepared 1040s for clients in exchange for fees even though he was not registered as a tax preparer with any federal, state or local regulator, had neither education nor work experience in tax prep, and didn’t report income from the tax prep work on his income tax returns.

During tax years 2013 through 2016, he prepared and submitted hundreds of federal income tax returns for clients, e-filing the returns through online software. Keemer met clients at various locations in Maryland to receive payment for the returns.

He added materially false items to the returns to inflate the federal refunds, including fictitious Schedule C businesses and false expenses.

The tax loss caused to the IRS was some $128,691.

He faces up to three years in prison.

Mansfield, Texas: Tax preparer Festus Adenisimi, 65, has been sentenced to 57 months in prison and ordered to pay more than $10 million restitution for the false preparation of returns.

Adenisimi owned FA Tax, where he and other preparers prepared fraudulent returns for clients, often causing the IRS to issue refunds. He admitted to falsely preparing his own returns as well, and admitted that he fraudulently obtained two Paycheck Protection Program loans totaling $760,415 under COVID-19 relief.

Adenisimi, who pleaded guilty in September, was also ordered to pay $10,283,737.65 in restitution.