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Tax Fraud Blotter: Shame shame

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2 years ago

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Careless; the PTIN shuffle; time for Time; and other highlights of recent tax cases.

Washington, D.C.: Recent IRS Office of Professional Responsibility disciplinary sanctions include censure, suspension or disbarment from practice before the IRS. Individuals disciplined include (all dates 2024):

  • Milton, Georgia: CPA Peter J. Tarantino, indefinite from July 22.
  • Hampton, Iowa: Attorney Daniel F. Wiechmann Jr., indefinite from July 18.
  • St. Louis: CPA Richard L. Van De Riet, indefinite from Aug. 20.
  • New City, New York: CPA George J., Silverman, indefinite from Aug. 14.
  • Shelby, North Carolina: Appraiser Walter “Terry” D. Roberts II, indefinite from Aug. 2.
  • Philadelphia: CPA Howard C. Lapensohn, indefinite from July 22.
  • Signal Mountain, Tennessee: Attorney David J. Fulton, indefinite from Aug. 8.
  • Round Rock, Texas: CPA Chuks L. Iheke, indefinite from Aug. 21.

Meanwhile CPA John J. Savignano, of White Plains, New York, was reinstated to practice before the IRS effective July 17.

Albuquerque, New Mexico: Stacy Underwood, third and final defendant in a tax scheme that operated for more than a decade, has been sentenced to time served to be followed by three years of supervised release, and ordered to pay more than $5.5 million restitution.

David Wellington of Albuquerque was previously sentenced to 40 months in prison and ordered to pay more than $5.5 million restitution for his role; he was also permanently prohibited from running any business advising clients or dealing with the IRS. Jerry Shrock, of Meadowview, Virginia, was sentenced to five years of probation and ordered to pay $1.5 million in taxes, interest and penalties.

Between 2005 and 2015, Wellington and Underwood operated National Business Services, which specialized in creating LLCs for clients seeking to evade federal taxes. The pair organized at least 192 LLCs in New Mexico and opened at least 114 bank accounts for these clients.

Underwood was sole signer for 99 of these accounts, allowing clients to conduct financial transactions anonymously. From January 2011 to July 31, 2018, more than $40 million was deposited into clients’ accounts nominally controlled by Underwood.

Shrock had three LLCs formed by National Business Services while undergoing an IRS audit. Between 2011 and 2015, he deposited nearly $4.9 million into a bank account opened for one of his LLCs, concealing more than $4.3 million in income without filing returns.

Syracuse, New York: Robert Rahrle, formerly of Florida and now residing in New York, has pleaded guilty to tax evasion and wire fraud.

Rahrle admitted that from 2017 through 2024 he ran a fraudulent online gift basket website called iCare Gifting Solutions LLC, which purported to cater to families of incarcerated individuals, promising to send care packages into prisons. The company charged hundreds of customers some $50 a basket but never sent the gift packages.

He also evaded federal taxes; he self-prepared and filed returns for 2017 and 2018 that falsely reported business losses and failed to report hundreds of thousands of dollars of gross receipts.

Sentencing is June 11. Rahrle faces up to five years in prison on the tax evasion charge and up to 20 years on the wire fraud charge, along with a post-imprisonment term of supervised release of up to three years. He could also be fined up to $250,000 or a fine based on his gain or the victims’ losses; he owes restitution to the IRS of some $175,000 and restitution to the victims of his fraud; and he must forfeit $2 million to the United States. 

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Germantown, Wisconsin: IT consultant Vikram Naik has submitted what authorities called a “shamefaced plea” to one count of filing a false individual income tax return.

He was indicted in October with three counts of filing false 1040s for 2017, 2018 and 2019. Naik had federal income tax withholding amounts that were substantially less than he reported on each of the federal returns he filed and had taxable income and total tax owed greater than he reported.

Naik owned and operated Naik Consulting Inc. since 2015, providing services to some clients who treated him as an employee, paid him wages and provided W-2s. Other clients treated Naik as a contractor. Naik was his company’s only employee, and he issued himself a W-2.

From 2016 through 2019, Naik inflated withholdings on his 1040s. He falsely reported on W-2s from his company that it had withheld federal income tax from his wages of $60,000 in 2017, $61,500 in 2018 and $146,000 in 2019. Naik Consulting never actually withheld and paid over to the IRS any federal income taxes from Naik’s wages. He did the same with some of his consulting clients in tax years 2018 and 2019, as well as his wife’s employer in 2018, inflating the federal income tax withheld. His 1040s claimed that he was entitled to sizable refunds for each of those years.

He caused a tax loss of some $277,257.

Sentencing is March 21. Naik faces up to three years in prison and a $250,000 fine, as well as a term of supervised release after any imprisonment.

St. Louis: Tax preparer Shasherese M. Reed, 53, has admitted preparing fraudulent tax returns.

Reed admitted using a tax prep business, Majac Money, which was opened by her daughter because the IRS revoked the PTIN assigned to Reed and her business, Sha-Sha Taxes, in 2015. Reed falsely identified her daughter as the paid preparer on the returns that Reed prepared at Majac Money.

On these returns, Reed commonly included a false Schedule C that reported tens of thousands of dollars in business expenses when the taxpayer either had substantially smaller expenses or did not own a business. Reed also claimed false and fraudulent deductions for such items as state and local taxes, medical and dental expenses, and mortgage interest.

She admitted preparing a fraudulent return for an undercover IRS agent; without asking if the agent had a business, Reed prepared a return that included a false Schedule C showing $26,242 in expenses.

Reed charged clients hundreds of dollars in fees for preparing returns, making about $378,026 in fees for the 2017 to 2021 tax years. She prepared at least 41 false tax returns for 13 different taxpayers, costing the IRS at least $312,192.

Sentencing is May 6.

Montgomery, Alabama: Tax preparer Natoshia Lashawn Crawford, 47, has been sentenced to 30 months in prison for making false returns and assisting in the filing of false returns.

From 2018 through 2022, Crawford owned and operated On Time Professional Tax Service, where she prepared and filed federal income tax returns for clients. Crawford admitted that she included false information on returns filed on behalf of herself and others to, in some cases, inflate refunds.

In one example, Crawford reported a total income of $23,116 in her 2020 return and when she pleaded guilty in May admitted that she knowingly excluded other income from her business. The false reporting of Crawford’s income for 2020 resulted in a lower amount of tax due and an underpayment to the IRS of $32,867.

Crawford further admitted to filing a 2019 return for a client claiming a loss of $90,171 for a janitorial services business that did not exist and admitted that multiple false returns she filed for herself and others during the 2017 to 2021 tax years caused a total loss of $1,721,047.45 to the IRS.

Crawford was also ordered to pay restitution to the IRS.

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Accounting

AI-Driven Automation and Continuous Accounting Frameworks

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7 days ago

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August 15, 2026

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The accounting profession is undergoing a fundamental structural transition as enterprise finance departments shift from periodic month-end closes toward automated continuous accounting models. By integrating specialized machine learning algorithms directly into enterprise resource planning (ERP) platforms, chief accounting officers are transforming financial reporting from a retrospective exercise into a real-time operational asset.

The Shift from Periodic Close to Continuous Financial Reporting
Traditional accounting workflows heavily relied on manual data reconciliation, spreadsheet calculations, and multi-week closing cycles at the end of each fiscal period. In contrast, continuous accounting frameworks utilize automated software agents to process, validate, and post transactional data in real time as business activities occur.

Automated bank reconciliation tools cross-reference incoming bank feeds, invoice records, and purchase orders automatically. By resolving transactional variances instantly throughout the month, corporate accounting teams eliminate the traditional workload spikes associated with quarterly and annual closes.

Machine Learning in Audit Trails and Anomaly Detection
Advanced natural language processing (NLP) and machine learning tools are redefining internal audit and financial control environments. Automated systems analyze 100% of general ledger entries, identifying anomalous transactions, duplicate payments, and unauthorized journal entries in real time.

Rather than relying on random statistical sampling, corporate internal auditors can focus their attention on high-risk flags automatically surfaced by algorithmic monitoring platforms. This continuous risk assessment strengthens internal controls over financial reporting (ICFR) and significantly reduces fraud risk.

Evolving Roles for Accounting Professionals
As routine data entry and manual reconciliation tasks become fully automated, the skill set required for accounting professionals is shifting toward data analysis, system design, and strategic business advisory.
– Systems Governance: Accountants are increasingly responsible for monitoring algorithmic accuracy and managing data integration pipelines.
– Business Partnership: Finance professionals leverage real-time financial dashboards to advise operational leaders on margin management and working capital allocation.
– Regulatory Compliance Management: Accounting teams utilize automated platforms to ensure compliance with dynamic tax codes and international accounting standards.

Core Implementation Recommendations
1. Deploy Automated Reconciliation Tools: Integrate continuous transaction processing modules into existing enterprise ERP architectures.
2. Establish Algorithmic Governance Controls: Implement strict internal testing protocols to ensure automated accounting rules comply with GAAP/IFRS standards.
3. Reskill Accounting Teams: Invest in training finance staff on data analytics, workflow automation, and predictive financial modeling.

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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2 weeks ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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2 weeks ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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