Not a lot of Latitude; the cupboards are bare; lots of energy; and other highlights of recent tax cases.
Jacksonville, Florida: Exec Brent Brown has pleaded guilty to failing to pay over payroll taxes withheld from employees.
Brown was the CEO of Latitude 360 Inc. and manager of its subsidiaries. He oversaw the company’s business affairs, including payments of wages to employees and disposition of funds in the company’s bank accounts. He also had corporate responsibility to collect and pay over the company’s payroll taxes. Brown, on behalf of the company, filed quarterly returns that accurately reflected the payroll taxes due but he caused the company to fail to pay over the payroll taxes to the IRS.
He faces up to five years in prison. He has agreed to pay $3,832,360.48 in restitution to the IRS for unpaid payroll taxes, including both taxes withheld from employees and taxes that should have been paid by the company.
Davie, Florida: Attorney Michael L. Meyer has pleaded guilty to conspiracy to defraud the United States and tax evasion arising out of his promotion of an illegal tax shelter involving false charitable deductions.
From at least 2013 through 2021, he organized and sold the Ultimate Tax Plan, a tax shelter to assist high-income individuals reduce taxes with deductions for charitable donations that he knew were fraudulent. Meyer prepared boilerplate paperwork for clients that made it appear that they had donated valuable property to charities that Meyer controlled; the clients retained complete control over the donated assets and Meyer illegally advised that clients could access their donated assets for their own use through tax-free loans and execute an “exit strategy” to buy back their donations at a discounted rate.
In 2018, the Justice Department filed a civil suit against Meyer seeking to enjoin him from continuing to promote the Ultimate Tax Plan and subpoenaed his clients for records. Meyer created false and backdated documents and directed clients to submit them to the Justice Department. He also provided false, backdated documents in response to document demands from the Justice Department.
In 2019, a federal district court
He faces up to five years in prison for each charge, as well as a period of supervised release, restitution and monetary penalties.
Granite Falls, North Carolina: Business owner James Christopher Robinson has pleaded guilty to charges of tax and credit card fraud.
Robinson owned multiple local cabinet manufacturing and retail businesses. Between March 2020 and April 2023, he accessed the credit cards of customers and without authorization made 294 fraudulent charges totaling some $1 million. He also created at least four counterfeit checks totaling more than $93,000, using information from actual checks written to his companies by customers.
For tax years 2017 to 2022, Robinson caused two of his companies to fail to comply with their employment tax obligations by failing to timely account for and pay over more than $3.1 million in employment taxes. Court documents indicate that he used the money to make large cash withdrawals from his business accounts and make hundreds of thousands of dollars in cash deposits at casinos.
Robinson pleaded guilty to access device fraud, which carries a maximum of 15 years in prison, and failure to truthfully account for and pay over trust fund taxes, which carries a maximum of five years.
Rochester, New York: Eugene Jamar Thomas has pleaded guilty to submitting false claims to the IRS.
On his 2015 return, Thomas reported that he earned $819,934 of interest income in 2015 and that he had $818,834 of that income withheld and paid to the IRS as tax. Thomas falsely claimed that he was entitled to a refund of $495,655.
After receiving the fraudulent refund, he deposited the $482,017 check into two separate bank accounts. In September and October 2016, he withdrew some $226,000 from these accounts. Subsequently, the IRS discovered the fraudulent filing and return and levied the bank accounts, recovering about $256,250.
Thomas in fact earned no interest income in 2015, did not have any interest income withheld and was not entitled to any refund. In addition, on his 2016 return, he again falsely claimed that he had earned $4,731,845 of interest income and had $4,683,641 of that income withheld and paid to the IRS. The IRS flagged the 2016 tax return and did not pay a $2,683,945 anticipated refund to Thomas.
The charge carries a maximum of five years in prison and a $250,000 fine. Sentencing is April 25.
New York: Tax preparer Melinda Jacob, 48, former owner of a tax prep business, has pleaded guilty to charges of preparing false returns.
Jacob owned and operated Melinda Jacob Tax Services, a tax prep business in her home in Brooklyn. Between 2019 and 2022, she prepared false and fraudulent 5695s for multiple clients for expenditures or costs associated with clean-energy or energy-efficient improvements to their home and claimed one or both of the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit.
Jacob inflated clients’ refunds by preparing and submitting false federal returns that claimed fictitious expenses relating to solar water heaters and geothermal heat pumps, which resulted in the clients receiving fraudulent Residential Energy Credits. In most cases, Jacob made up the energy expenses listed on her clients’ returns and did not discuss the REC with her clients.
The IRS suffered a tax loss of some $1,151,761.
Jacobs faces up to three years in prison as well as restitution and monetary penalties.
Overland Park, Kansas: Resident Christopher S. Savell has been sentenced to a year and a day in prison for lying on federal income tax returns.
In his 2016 returns, Savell reported to the IRS to have paid $458,711 in mortgage interest while knowing that he had actually paid $4,363. That same year, he also reported having paid $10,987 in real estate taxes when the real amount was $5,663.
On 2017 returns, he declared $486,725 in mortgage interest payments when the actual amount was $24,108; he claimed to have paid $68,980 in real estate taxes when he had paid $10,750. Also in his 2017 returns, Savell indicated he paid $36,537 in state income taxes and $109,965 in federal income tax withholdings, knowing he paid nothing of either.
In 2018 returns, Savell falsely stated that he’d paid $71,400 in mortgage interest when the true amount was $20,605 and he said he paid $20,315 in real estate taxes after paying $10,315. He submitted documents claiming to have paid $34,033 in state income taxes and $81,252 in federal income tax withholdings. Savell paid no state income taxes or federal income tax withholding in 2018.
Connoquenessing, Pennsylvania: Constance Stobert has been sentenced to 51 months in prison and three years of supervised release on her convictions for wire fraud and making false statements on her returns.
Stobert was a controller for Mechanical Operations Co. from 1994 until July 2021. Between January 2014 and July 2018, she stole at least $1,678,893 in company assets to pay for her personal expenses.
Among other things, Stobert wrote checks from business banking accounts to make personal credit card payments and used company credit cards to withdraw cash at ATMs in casinos in Pittsburgh and Las Vegas.
She also admitted that, during the tax years 2016 through and including 2019, she willfully and knowingly filed false returns on which she failed to report the money she’d embezzled, resulting in a tax loss to the government of $545,990.
