Tax Fraud Blotter: Ill repute
Bouncy bouncy; PPP penalty; doughnut try this at home; and other highlights of recent tax cases.
Orem, Utah: Resident Louis Hansen has been sentenced to 51 months in prison for tax evasion and corruptly endeavoring to obstruct the IRS.
In March 2012, Hansen gave the IRS a $342,669.41 check that he knew was drawn on a closed bank account, in a fraudulent effort to evade paying taxes, penalties and interest he’d owed for years. In June of that year, he presented 10 additional checks to the IRS drawn on a different closed bank account in another attempt to fraudulently discharge his debt; each of these 10 checks was made out for $425,000, and Hansen sent them to at least six IRS offices.
Hansen was also ordered to serve three years of supervised release and to pay some $342,699 in restitution to the United States.
Grand Rapids, Michigan: Tax preparer Gonzalo Ramon Rodriguez, 59, has been sentenced to 18 months in prison after pleading guilty to aiding and assisting in the preparation of false and fraudulent returns.
Rodriguez admitted to improperly using the e-filing credentials of two other providers, selecting the wrong filing status for his clients, reporting business expenses and losses that his taxpayer clients did not incur, and claiming the Earned Income Tax Credit for clients who didn’t qualify.
He cost the U.S. some $111,504 by filing 41 false returns for tax years 2014 through 2018.
Rodriguez was also ordered to pay that amount in restitution to the U.S. and sentenced to a year of supervised release following the prison term.
Peabody, Massachusetts: Argyrios “Eric” Mavros, owner of a now-defunct construction company, has pleaded guilty in connection with a scheme to defraud the IRS of payroll taxes and to defraud his workers’ compensation carrier by failing to disclose how many workers he employed.
He pleaded guilty to 10 counts of failure to collect or pay over taxes and one count of mail fraud.
Mavros, who owned Mavros Construction Inc., cashed more than $3.3 million in customer checks at a local check-cashing business and used some of those funds to pay his employees in cash. He failed to report these employees or their wages in quarterly corporate filings to avoid paying Social Security and Medicare taxes on employee wages and withholding federal income taxes.
It is alleged that Mavros failed to pay and withhold federal taxes on more than $2.5 million in wages, resulting in a tax loss of more than $1 million. Mavros also failed to report these employees to his workers’ comp insurance carrier, defrauding his insurer of premiums.
Sentencing is Feb. 17. Failure to collect and pay over taxes provides up to five years in prison, three years of supervised release and a fine of $10,000. The charge of mail fraud provides for up to 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater.
Miami: Tax preparer Leonel Rivero, 35, has been sentenced to two years in prison, to be followed by three years of supervised release, for a scheme to fraudulently obtain relief loans under the Paycheck Protection Program.
Rivero owned a tax prep business and submitted some 118 fraudulent PPP loan applications on behalf of himself and his accomplices; combined, the applications sought more than $2.3 million in PPP funds. On each application, he falsified the applicant’s prior-year sole proprietorship income and expenses and submitted fraudulent IRS forms. He and his accomplices received some $900,000 in PPP loans through the fraud.
Rivero agreed to forfeit that entire amount and was also ordered to pay more than $1 million in restitution.
Morgantown, West Virginia: Office manager and bookkeeper Diann Clark has pleaded guilty to willfully failing to pay over to the IRS employment taxes withheld from employees’ wages.
Clark worked at Alpha Associates, an architectural firm, where she managed payroll between 2014 and 2018. Despite knowing the firm withheld payroll taxes from employees’ paychecks, she did not pay over these taxes to the IRS and caused a total tax loss of $1,986,410.
Clark faces a maximum of five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Washington, D.C.: Tax preparer Yohanness Ayechew, 49, has been sentenced to 14 months in prison for aiding and assisting in the filing of a false return and causing a loss of at least $250,000 to the IRS.
Ayechew, a CPA in Virginia, operated Endalk and Yohannes Associated with a business partner, Endalkachew Asfaw, in the District of Columbia since 2011. From 2016 through 2019, the two prepared some 10,000 returns.
Ayechew knowingly aided and assisted in the preparation of false income tax returns for 2014 through 2017 on behalf of clients. He overstated unreimbursed employee business expenses on clients’ Schedule A deductions, including uniforms and unreimbursed mileage expenses. Ayechew also admitted to creating fraudulent Schedule C expenses and deducting exemptions for individuals that his clients were not entitled to claim. Ayechew admitted to fabricating these items to generate larger refunds for his clients.
Ayechew, who pleaded guilty in August, also admitted that he filed false returns, resulting in a federal tax loss totaling more than $250,000.
Asfaw, 38, of Alexandria, Virginia, also pleaded guilty in August. He was sentenced to three years of probation, including a year on home detention. He also was ordered to pay restitution to the IRS.
Ayechew was also ordered to pay restitution to the IRS, as well as a $10,000 fine.
Newark, New Jersey: Former police officer Julio I. Rivera, of Old Bridge, New Jersey, has been sentenced to 46 months in prison for soliciting and accepting cash payments from a brothel owner in Newark and for failing to report those cash payments on his personal federal income tax returns.
From September 2014 to August 2015, Rivera, who previously pleaded guilty, solicited and accepted cash payments from a Newark brothel owner. In exchange, Rivera performed official acts and violated his lawful duties for the benefit of the owner, including declining to arrest individuals who were committing and promoting prostitution, agreeing to protect these individuals from arrest and agreeing to take adverse action against a competing brothel. Rivera collected between $40,000 and $95,000 in bribes in exchange for protecting those and other local brothels.
He also intentionally withheld information from his tax preparer regarding the cash bribes that he received, which caused Rivera’s filed federal returns for certain tax years, including 2015, to understate his total income. Rivera stipulated that this misconduct resulted in a loss to the IRS of $15,000 to $40,000.
He was also sentenced to three years of supervised release and 1,000 hours of community service, as well as ordered to pay $17,408 in restitution and forfeit $79,941.
Rome, New York: A couple and their son have been convicted for conspiring to defraud the U.S. and for tax evasion.
John Zourdos, his wife Helen Zourdos and their son Dimitrios Zourdos operated three Dippin Donuts stores. From 2013 to 2017, they concealed more than $2.8 million in cash sales from the IRS and evaded more than $650,000 in individual taxes by depositing cash directly into their personal bank accounts instead of business bank accounts, providing incomplete information to their accountant and causing their accountant to file false federal individual and corporate returns. The defendants used unreported cash sales to fund a lavish lifestyle that included, among other things, the purchase of multiple luxury vehicles.
Evidence also showed that they paid some employees off-the-books cash wages for overtime; they paid other employees entirely in cash for all hours worked.
John, Helen and Dimitrios Zourdos were each convicted of one count of conspiracy to defraud the U.S., seven counts of tax evasion and seven counts of aiding and assisting in the filing of false corporate returns. All face a maximum penalty of five years in prison on each count of conspiracy and tax evasion and three years on each count of assisting the filing of false returns.