Accounting
Tax Fraud Blotter: Pro and con
J’accuse; just a little boost; independent thinking; and other highlights of recent tax cases.
Los Angeles: A wholesale clothing importer and two of its executives have been found guilty of avoiding the payment of more than $8 million in customs duties and of running a scheme in which the company laundered money and failed to report more than $17 million from cash transactions.
A jury has found the following guilty:
- C’est Toi Jeans, which imported apparel and exported clothing;
- Si Oh Rhew, of La Cañada Flintridge, California, C’est Toi’s president and a majority owner of the company; and,
- Lance Rhew, of Los Angeles, Si Oh Rhew’s son, a C’est Toi corporate officer and the owner of another Los Angeles-based company, GLLR Inc., that did business as C’est Toi.
The jury found C’est Toi and Si Oh Rhew guilty of two conspiracies and multiple counts of failure to file reports of currency transactions over $10,000 in a trade or business. The jury also found all three defendants guilty of three counts of entry of falsely classified goods, three counts of entry of goods by means of false statements, three counts of passing false and fraudulent papers through a customhouse and two counts of international promotional money laundering.
C’est Toi was found guilty of an additional two concealment money laundering counts involving drug proceeds. Si Oh Rhew was found guilty of an additional two counts of aiding, assisting and procuring the filing of a false return. Lance Rhew was found guilty of one additional count of aiding, assisting and procuring the filing of a false return; Lance Rhew was also found guilty of one conspiracy count.
C’est Toi was owned by Si Oh Rhew and his wife and received bulk cash from drug trafficking as payment for customer invoices. The company and Si Oh Rhew failed to file currency transaction reports and concealed the cash receipts from an accountant who prepared their taxes, which led to the fraudulent omission of more than $17 million in gross sales from returns filed with the IRS. The defendants also avoided customs duties and tariffs by purchasing garments from overseas manufacturers, including from China, but then submitting false information to U.S. Customs and Border Protection. Overall, C’est Toi imported goods that were undervalued by more than $51 million, causing approximately $8.4 million in unpaid tariffs and duties.
Sentencing is Jan. 21, when the Rhews will each face decades in prison and the company will face fines of as much as $100 million.
Roanoke, Virginia: Resident Alisha Warrick, 40, who pleaded guilty last year to wire fraud, distributing fentanyl and illegally selling firearms, has been sentenced to 10 years in prison.
Beginning in 2015 and continuing at least through 2019, Warrick prepared and filed tax returns for others and included false and fraudulent information in the returns. She would “boost” the returns by including false employment and wage information or false information about dependents, or both. Warrick also filed returns for some individuals without their knowledge and used those individuals’ names and personal ID information to file.
While on bond pending trial, Warrick arranged to sell heroin (which later testing showed to contain fentanyl) and two firearms, one of which was connected to a prior fatal shooting in the Roanoke area.
West Orange, New Jersey: Tax preparer Michael Ewell Sr., of Milford, Pennsylvania, has been sentenced to a year and a day in prison and a year of supervised release, according to news reports that added that his tax prep businesses filed returns with false information.
Ewell, who previously pleaded guilty, owned Ewell Tax Center and between 2015 and 2022 prepared 157 income tax returns that contained false information, according to cited IRS information, adding that the exaggerated returns resulted in an additional $824,835 in refunds. The false information reportedly included itemized deductions, business expenses and education credits.
On his personal returns between 2017 and 2020, he also underreported his company’s gross revenue by $81,116 and exaggerated its business expenses by $6,338, causing him to avoid paying about $118,000 in taxes, officials told news outlets.
Ewell will also have to pay $736,581 in restitution and is barred from preparing an income tax return for anyone except for himself, reports added.
Woodbridge, New Jersey: Accountant Thomas Kohutich, 34, has been sentenced to a year and a day in prison for filing false returns.
A former accountant for a New Jersey-based manufacturing company, he filed 1040s for 2018 and 2019 on his and his wife’s behalf. He failed to report funds that he embezzled from his former employer and which he knew constituted reportable income.
Kohutich, who previously pleaded guilty, was also sentenced to one year of supervised release and ordered to pay $234,821 in restitution to the IRS and $829,457 to his former employer.
Charleston, West Virginia: Accountant Luther A. Hanson has pleaded guilty to willful failure to pay over taxes.
From at least 2015 to September 2020, Hanson did not withhold or pay over some $149,905.37 in federal employment taxes for two employees of his accounting services businesses. Hanson owns and operates The Estate Planning Group Inc. and L.A. Hanson Accounting Services; the two employees provided services for both.
Hanson admitted that some time before June 30, 2015, he and the two employees agreed that he would begin treating them as independent contractors. Hanson knew this arrangement would relieve him of paying the employer portion of the employment taxes to the IRS and of withholding from the two employees. Hanson paid gross wages by check to the employees though neither changed their job duties or responsibilities.
Sentencing is Jan. 30. Hanson faces up to five years in prison, up to three years of supervised release and a $250,000 fine. He also owes restitution.
Somerville, Massachusetts: Tax preparer Yves Isidor, 68, has been convicted of preparing false returns. He was convicted of five counts and acquitted on one count.
From at least 2012 through 2020, Isidor operated a tax prep business under the name Tax and Realty Pro to file more than 1,200 returns in the names of clients, charging $100 to $500 per return. Isidor added false information to six returns to claim deductions for fictitious medical and dental expenses, gifts to charities and unreimbursed employee business expenses, resulting in inflated refunds or falsely lower tax liabilities.
Six taxpayers testified that Isidor had never discussed the false items with them, and they were not aware he had inserted them into their returns. An undercover agent also testified that he was present and observed the defendant create a false return.
The counts of aiding and assisting in the filing of false federal returns each provide for up to three years in prison, a year of supervised release, a fine of $250,000 and restitution. Sentencing is Feb. 6.
Miami: A federal district court has issued a permanent injunction against tax preparer Niclas Pierre and his prep business, Niclas Tax and Express Inc., and a permanent injunction against Elius Bessard and his prep business, Bessard Immigrations and Tax Services LLC.
The injunctions bar Pierre and Bessard from preparing returns, working for or owning a tax prep business, assisting others to prepare returns, or transferring a list of clients. The court also ordered Pierre to pay $563,000 and Bessard $208,000 in gains received from their tax prep businesses. Pierre and Bessard each agreed to both the injunction and the order to pay.
The complaint alleged that the two prepared returns claiming false or fabricated deductions and credits, including fabricated residential energy credits, false and fraudulent deductions, and inflated business expenses. Pierre and Bessard each prepared more than 1,000 returns for clients over the past six years.
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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