Meating their fate; write-off rip-off; a dent in his plans; and other highlights of recent tax cases.
Jennings, Missouri: Tax preparer Darius D. Cobb, 52, has been sentenced to 51 months in prison for preparing at least 23 fraudulent returns.
Cobb, who previously pleaded guilty, prepared at least 200 returns for 2017 and 2018. At least 23 of those returns included fake W-2 information, false Schedules C, false claims for the American Opportunity Credits and false information about dependents.
He was also ordered to pay $85,584 in restitution.
Ottumwa, Iowa: Thein Maung has been sentenced to 12 years in prison after pleading guilty to 49 fraud- and tax-related charges. Phyo Mi, also of Ottumwa, was sentenced to nine years after being convicted of 16 fraud charges.
The fraud of Maung and Mi resulted in nearly $4 million in losses to the IRS, Iowa Workforce Development and Iowa citizens.
For several years, the two ran a fraudulent tax prep business from their home where for cash they prepared and filed clients’ returns, catering primarily to immigrants and refugees who worked at area meat-packing facilities and who had little or no ability to read, write or speak English.
Without clients’ knowledge or approval, Maung and Mi included fraudulent items on federal returns, such as false claims for residential energy credits, business-expense deductions, and moving deductions for members of the U.S. Armed Forces. This increased their clients’ refunds and customer base.
From 2018 to 2022, Maung and Mi caused more than 1,600 returns to be filed, claiming more than $3.5 million in fraudulent residential energy credits.
From 2018 to 2022, the two received more than $200,000 in cash fees from clients. On returns, Maung and Mi sometimes directed portions of the fraudulent refunds to financial institution accounts they had access to, obtaining nearly $50,000 in fraudulent refunds.
The two also offered to help customers with applying for unemployment benefits from Iowa Workforce Development. Without customers’ knowledge or approval, Maung and Mi submitted materials to the state directing that their customers’ benefits payments be sent to, again, accounts that Maung and Mi had access to. The pair obtained nearly $70,000 in fraudulent unemployment insurance benefits.
Following their prison terms, Maung and Mi, who were convicted earlier this year, will be on supervised release for three years.
Key West, Florida: Nataliya Vasylivna Kasyanenko, a former housekeeping manager at a large area hotel, has been sentenced to eight months in prison for her role in a tax and immigration conspiracy related to the operation of a labor staffing business, Phoenix ADB Services.
From at least 2009 to October 2020, a local hotel used staffing services provided by several companies. Kasyanenko used these companies to hire aliens for positions at her hotel whom she knew were not authorized to work in the country; she received kickbacks from the companies for directing unauthorized workers to be placed on their respective payrolls.
Kasyanenko knew that the operators of Phoenix — who included her sons, Roman Riabov and former local police officer Igor Kasyanenko – paid workers without withholding federal income or employment taxes from their gross wages and did not file federal tax forms for such workers employed at hotels, bars and restaurants in Key West and elsewhere in Florida.
Operators of the hospitality labor staffing companies have been sentenced to prison, as have Kasyanenko’s sons.
She was also ordered to serve two years of supervised release and to pay some $1.09 million in restitution to the United States.
Baton Rouge, Louisiana: Pamela Albert, 51, has been sentenced to 33 months in prison following her conviction for wire fraud.
In the second quarter of 2021, Albert submitted false claims for Paycheck Protection Program loans in her name and in the names of others. She also submitted tax documents for her loan claims that were based on fictitious business profits and losses; she also maintained bank accounts in which PPP funds were deposited.
Albert obtained the personal ID information of others, such as names, birth dates and Social Security numbers, to file her false loan claims. She requested that PPP benefits be wired to her bank accounts, totaling over $200,000 in funds to which she and others were not entitled; Albert either gave a portion of the funds to others or kept all the money herself.
She was also ordered to serve three years of supervised release following her term of imprisonment and to pay $223,180 in restitution.
Williamsburg, Virginia: Business owner Stephen G. Genakos has pleaded guilty to aiding and assisting in the preparation of a false return.
From 2016 to at least 2020, Genakos was the sole owner and managing director of Sarantos Inc., a Virginia corporation d.b.a. the restaurant Sportsmans Grille. Since 2016, Genakos skimmed U.S. currency from the restaurant.
In 2020, he listed Sportsmans for sale for $795,000. The following year, IRS undercover agents contacted him and Genakos provided the agents the chance to view the true books and records of the restaurant. For tax years 2016 through 2020, Genakos filed false returns for himself and Sarantos Inc.
Sentencing is March 21. He faces a maximum of three years in prison.
Henderson, Nevada: CPA Lance K. Bradford has pleaded guilty to aiding and assisting the filing of false returns for his role in a scheme to sell false deductions.
Bradford was founder and manager of the accounting firm LL Bradford & Co., which provided services including tax prep, audit and consulting. Bradford also operated a real estate business that developed office buildings and other property. In connection with his real estate development activities, he operated and controlled a real estate investment partnership entity.
In 2011, Bradford began offering LLB’s high-net-worth clients an “investment opportunity” through which the clients would make a payment to his partnership entity and in exchange receive a deduction of some six times the amount of money “invested.”
Bradford advised that the clients’ payments would entitle them to claim the deduction based on losses derived from the partnership entity even though the tax laws did not permit the sale of such deductions in exchange for an investment or money; the partnership also did not incur the losses or depreciation in the amounts Bradford was selling.
Bradford did not report the purported investments as losses on the clients’ tax returns as promised, instead causing the returns to report large false deductions for cost of goods sold, professional and consulting fees, or nonpassive losses.
For example, as part of the scheme, in 2014 Bradford asked a client to make a $417,780 “investment” to his partnership entity in exchange for purported depreciation-based losses to be placed on his client’s 2013 corporate return. Instead of reporting depreciation related to the investment, Bradford caused LLB to prepare and file a 1120S that falsely inflated the company’s cost of goods sold by $2,110,000, causing a tax loss to the IRS of approximately $860,627.
The scheme caused a total federal tax loss of at least $8 million.
Sentencing is Jan. 16. Bradford faces up to three years in prison, as well as a period of supervised release, restitution and monetary penalties.
Maspeth, New York: Business owner Aniello Strocchia has pleaded guilty to conspiring to defraud the U.S. relating to concealing income from the IRS.
From 2013 to 2017, he and others cashed more than $1.3 million in checks payable to his auto repair shop at check-cashing businesses instead of depositing the money into the business bank account. He hid the check cashing from his tax preparers, resulting in the filing of returns that underreported the shop’s gross receipts and ordinary business income, as well as his total personal income.
Strocchia used the unreported income on personal expenditures, including luxury cars and some $500,000 in home renovations.
Strocchia faces up to five years in prison, as well as a period of supervised release, restitution and monetary penalties.
