Accounting
Tax Fraud Blotter: State of crisis
Tax Fraud Blotter: State of crisis
Fictitious relatives; countless meals; the road to Morocco; and other highlights of recent tax cases.
Kennedale, Texas: Tax preparer Anthony “Tony” Floyd, 51, who previously
He filed some 400 fraudulent returns that included false information designed to inflate refunds. He recruited victim “clients” outside big box stores and through other clients obtained victims’ personal information, such as income and deduction information, via text or cell phone conversations, rarely meeting clients in person. Floyd submitted the returns without reviewing them with the taxpayer and then diverted all or most of the refund to his own account.
The tax filings included falsified W-2s for individuals purportedly working in catering, lawn care, event planning, interior décor and other professions and included nonexistent charitable deductions, non-existent college attendance and fictitious relatives. The tax loss to the U.S. exceeded $2.6 million.
Floyd was also ordered to pay more than $1.9 million in restitution.
Philadelphia: Abdur Rahim Islam, former CEO of Universal Community Homes and Universal Education Companies, has been sentenced to 84 months in prison, to be followed by three years of supervised release, for his convictions on 18 fraud, corruption and tax charges.
Islam was convicted on charges that he stole more than half a million dollars from the two charities that were established to develop affordable housing and manage charter schools in Philadelphia. The jury also convicted Islam on charges that he bribed the president of the Milwaukee public schools board of directors and cheated on six years of personal income taxes.
The jury also convicted Islam and his co-defendant, former Universal CFO Shahied Dawan, of conspiring to defraud the federal government by impeding, impairing, obstructing and defeating functions of the IRS.
Islam and Dawan used their positions at Universal to pay themselves unauthorized bonuses and to pay Islam “expense reimbursement” checks, which included payments for such purely personal expenses as trips to Caribbean resorts, family vacations, travel upgrades, Broadway shows, personal gym memberships, cellphone bills, and countless meals at restaurants with friends and family members.
Islam and Dawan hid these illegal payments from the IRS, which enabled Islam to cheat on six years of personal income taxes. Islam also bribed Dr. Michael Bonds, the former president of the Milwaukee public schools board of directors, in return for political favors. Bonds has since pleaded guilty to the bribery scheme and awaits sentencing.
Dawan has been sentenced to 18 months in prison, a year of supervised release and a $15,000 fine; he must also pay $196,952 in restitution to the IRS.
Islam has also been ordered to forfeit $609,651.31 and pay restitution to Universal of $609,651.31 plus attorneys’ fees; he must also pay $309,581.66 in restitution to the IRS and a special assessment of $1,800.
Bedford, New Hampshire: Andrew Park, 49, of Bedford, co-founder and CEO of a startup technology company, has pleaded guilty to failing to pay more than $14 million in employment taxes and for not filing personal returns.
Park was responsible for the company’s financial matters, including quarterly employment returns and collecting and paying over Social Security, Medicare and income taxes withheld from the employees’ wages to the IRS, as well as the Social Security and Medicare taxes the company owed. He was also responsible for collecting and paying over state and local employment taxes.
From the company’s founding in 2014 through the third quarter of 2021, Park withheld these taxes from employees’ wages but did not pay them over, nor did he pay over the portion of the employment taxes that the company owed. A payroll service company that he hired notified him that the taxes were due and in more than one instance was notified by an employee that the amount paid to Social Security listed on her W-2 did not match what was reported by the Social Security Administration.
From 2013 through 2020, Park also did not file individual returns despite paying himself a salary of some $250,000 each year.
In total, Park caused a tax loss to the IRS exceeding $14 million, as well as additional losses to state and local taxing authorities.
Sentencing is Nov. 14. He faces a maximum of five years in prison for willful failure to account for and pay over payroll taxes and a year in prison for the willful failure to file a return. He also faces additional penalties including supervised release and fines, as well as the payment of restitution to the IRS and other tax authorities.
Hendersonville, Tennessee: Resident Scotty Thomas Lumley has been sentenced to 47 months in prison and ordered to pay $1,198,833.62 in restitution in connection with financial and tax crimes.
Lumley pleaded guilty to federal wire fraud and money laundering charges in 2015. The more recent charges are based on additional federal crimes that he committed between 2015 and 2021.
Beginning shortly after he was sentenced in 2015, Lumley kept taxes he withheld from his employees’ paychecks rather than paying those funds over to the IRS. In 2017, to avoid a tax debt, Lumley told the IRS that the only vehicle he owned was a GMC 3500 with a negative value; in fact he owned a 2012 Ferrari that he sold the following year for $187,000.
In 2017 and 2018, Lumley obtained a series of loans in connection with commercial real estate-related businesses he owned. His loan documents falsely claimed his personal net worth exceeded $30 million, including cash of some $630,000. Lumley also did not disclose that he had an outstanding tax liability of more than $119,000.
He tricked lenders into providing more than $3.5 million in loans and later provided one bank with additional false personal financial statements purporting to show that his net worth had risen to more than $42 million.
In November 2020, after becoming aware of a federal investigation, he flew to Morocco and did not return until extradited in February 2023. While in Morocco, Lumley also used a fabricated purchase order to defraud a Utah company of more than $500,000.
Bartlesville, Oklahoma: Nonprofit exec Deanna Rachel Long has been sentenced to a year and a day in prison for bank fraud and tax evasion.
In 2012, the Family Crisis and Counseling Center in Bartlesville hired Long as a manager and entrusted her with accounting and finance functions, including recordkeeping.
Within two years of being hired, she began embezzling to fund personal expenses and fuel her gambling addiction. Long embezzled more than $278,000. She also failed to report the illegal income and failed to file federal returns for 2014 through 2022. After leaving FCCC, Long filed false tax forms with her new employer, claiming exemptions to which she was not entitled. Long has been arrested many times for bogus checks and has pleaded guilty.
She was also ordered to serve three years of supervised release and to pay $278,257.54 in restitution to FCCC and $96,622 to the IRS.
Pensacola, Florida: Wesner Jean-Pierre, 33, of Orlando, Florida, owner of the tax prep business WJP Financial Services, has been sentenced to 26 months in prison after previously pleading guilty to charges of preparing false returns.
Between 2015 and 2019, Jean-Pierre prepared and filed some 1,949 false federal returns for clients. He falsely represented the taxpayers’ income, deductions, credits and the refund due.
His prison time will be followed by a year of supervised release, and he was ordered to pay $830,840 in restitution to the IRS.
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