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Tax Fraud Blotter: Needing relief

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Nothing but the tooth; an offer she can’t refuse; patterns of filing; and other highlights of recent tax cases.

Fort Collins, Colorado: Dr. Ryan Ulibarri, a dentist, has pleaded guilty to six counts of tax evasion related to his use of an illegal tax shelter.

Since 2014 Ulibarri owned and operated Ulibarri Family Dentistry. In 2016, he purchased an abusive-trust tax shelter for $50,000. The shelter concealed income and created phony deductions through a so-called business trust, family trust, charitable trust and a private family foundation, all of which Ulibarri created and controlled. From 2017 through 2022, he used this shelter to conceal from the IRS more than $3.5 million in income from his dental practice.

As the purported trustee, Ulibarri signed trust instruments purporting to create the three trusts and the foundation, and opened bank accounts in the name of each. He recruited friends to falsely sign his trust instruments as the purported creators. Ulibarri transferred majority ownership of his practice to the business trust despite having been warned by attorneys and CPAs that in Colorado a trust could not own a dental practice.

He then transferred more than $3 million from his practice to create the illusion that the funds belonged to those entities. Ulibarri retained complete control over the funds and used them to pay for personal expenses including his home mortgage, credit card bills, boats and professional baseball season tickets.

He filed false returns for himself, his dental practice and the trusts and foundation that falsely reported the income he earned from his practice as income of the trusts. Ulibarri also claimed fraudulent deductions for his personal living expenses, which he disguised as trust expenses and charitable donations.

Ulibarri is alleged to have caused a total tax loss to the IRS exceeding $1 million.

Sentencing is June 17. He faces up to five years in prison for each count of tax evasion, as well as a period of supervised release, restitution and monetary penalties. 

Kingsport, Tennessee: Resident Aylissa Glidewell has pleaded guilty to conspiring to commit wire and mail fraud after making claims for refunds of false pandemic tax credits.

She conspired to file false returns seeking fraudulent refunds based on the Employee Retention Credit and paid sick and family leave credit by creating phony businesses. She filed numerous false returns for those businesses and directed the refunds to addresses that she and conspirators controlled.

In total, the refunds claimed exceeded $3.4 million, of which the IRS paid some $1.8 million.

Sentencing is July 9. She faces a maximum of 20 years in prison.

Irvine, California: Iris Ramaya Au, former girlfriend of cryptocurrency fraudster Adam Iza, who dubbed himself “The Godfather,” has agreed to plead guilty to a federal tax charge for failing to report more than $2.6 million she’d obtained via her then-boyfriend’s criminal activity.

From 2020 to 2024, Iza obtained millions of dollars of unreported income from a series of crimes, including fraudulently obtaining access to advertising accounts and lines of credit provided by Facebook and Meta Platforms and selling access to those accounts. He also engaged active Los Angeles County Sheriff’s Department deputies to provide private security for him and caused the deputies, among other things, to obtain court-authorized search warrants and confidential law enforcement information targeting people with whom he had financial and personal disputes.

On Jan. 30, Iza pleaded guilty; his sentencing is June 16, when he will face up to 35 years in prison. He has been in federal custody since September.

Au created shell corporations and opened bank accounts in the names of those entities. She then used the illicit funds in those accounts to pay some $1 million to the deputies, mostly in cash, purchase or lease luxury real estate, cars, jewelry and clothing, pay for recreational activity for Iza and herself valued at nearly $10 million and to acquire some $16 million in cryptocurrency for Iza.

Au admitted that she transferred more than $2.6 million from these accounts to her personal bank accounts from 2020 through 2023, income that she failed to report to the IRS on her federal returns.

After pleading guilty, Au will face up to three years in prison.

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Orlando, Florida: Marielys Feliciano Rodriguez has been sentenced to a year of house arrest and ordered to pay $3,338,558 in restitution to the IRS for wire and tax fraud. 

Rodriguez established a shell company that purported to be involved in the construction industry. She obtained a workers’ compensation insurance policy in the name of the company to cover a minimal payroll for a few purported employees, then “rented” the insurance to work crews who had obtained subcontracts with construction contractors on projects in Florida counties, as well as to contractors in other states. Rodriguez sent the contractors a certificate as “proof” that the work crews had workers’ comp. The scheme also facilitated avoidance of the higher cost of adequate workers’ comp for the workers on the crews to whom Rodriguez rented insurance.

The contractors issued payroll checks for the workers’ wages to the shell companies and Rodriguez cashed these checks and then distributed the cash to the work crews after deducting their fee, which was typically about 6% of the payroll. Rodriguez cashed payroll checks totaling some $13 million.

Neither the shell company nor the contractors reported to government authorities the wages that were paid to the workers, nor did they pay either the employees’ or the employer’s portion of payroll taxes, totaling more than $3 million.

She was ordered to serve five years of supervised release as well, and the court also entered a money judgment for $347,760, the proceeds of the wire fraud.

Baton Rouge, Louisiana: Tax preparer Whylithia R. Robinson has been held in contempt for violating a permanent injunction that prohibited her and her business, AAA Tax Service LLC, from preparing, filing or assisting in the preparation or filing of federal returns for others.

The U.S. filed a complaint against Robinson and AAA in January 2023. According to the complaint, Robinson prepared and filed 2,629 federal income tax returns for clients through AAA from 2019 to 2021 and displayed a pattern of filing returns during this period that understated clients’ tax liabilities and overstated refunds by fabricating business losses, claiming false charitable donations or claiming undeserved education credits. On April 23, 2023, the court issued a default judgment of permanent injunction that barred Robinson and AAA from preparing returns for others.

The court recently found that she continued to prepare 227 returns for others. For these violations, the court held her in civil contempt and ordered that she disgorge $68,100 in fees she’d earned in violation of the injunction, as well as reimburse the U.S. its costs of litigation and travel.

Hurricane, West Virginia: Businessman Dean E. Dawson, 65, has pleaded guilty to one count of willful failure to pay over employment taxes.

He operated RPC Group, a real estate appraisal business. Dawson, responsible for withholding employment taxes from employees and paying over those funds to the IRS, failed to pay the money over between 2015 and 2022. He also used the RPC business accounts to pay personal expenses, including credit cards and his wife’s home mortgage, and issued checks to his wife from RPC even though she was not an employee.

From 2018 to 2023, Dawson also failed to file personal returns or pay income tax.

In total, he caused a tax loss to the IRS exceeding $250,000.

Sentencing is June 23. He faces up to five years in prison, up to three years of supervised release and a $250,000 fine, as well as restitution to be determined later.

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IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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