Good-bye, sailor; concrete evidence; lack of protection; and other highlights of recent tax cases.
New Bedford, Massachusetts: Fisherman Joaquin Sosa has been sentenced to 18 months in prison for evading taxes on income.
Sosa worked as a commercial fisherman and deckhand operating primarily out of the Port of New Bedford. Despite receiving some $1.9 million in income between 2012 and 2021, he did not file tax returns reporting the income and did not pay the income taxes owed.
Sosa also worked under false identities over the years and cashed paychecks at check-cashing businesses, at times using false identities.
In total, Sosa caused a tax loss to the IRS of $520,415.
He was also ordered to serve three years of supervised release and pay that amount in restitution to the U.S.
San Diego: Resident Alvin Pates has pleaded guilty to bank and tax fraud, admitting that he participated in a scheme to deceive banks by using straw borrowers and bogus financial information to obtain loans.
Beginning as early as July 2014 and continuing through at least April 2020, Pates used the names, SSNs and credit of straw borrowers to obtain loans and LOCs that primarily benefited himself. He prepared or directed others to prepare the fraudulent loan and credit card applications; the applications included information about the borrowers’ income and employment that Pates knew to be false and were supported by false pay stubs, W-2s and bank statements procured by Pates. He typically paid a 10% kickback from the loan proceeds to the borrowers and lied that he’d make all payments on the loans.
He funneled most of the money through the bank accounts of one of his shell companies to use for his personal benefit. Pates admitted that the value of the fraudulent loans charged in the indictment is $87,000 and that he will be required to pay restitution of at least $40,500.
Pates also admitted to aiding and assisting in the preparation of false returns for two taxpayers for calendar 2015. The return for one of the taxpayers falsely stated that the individual received Other Income of $538,462 and had paid federal income taxes of $543,643, entitling him to a refund of $376,260. Pates supplied false 1099s to the taxpayer to support the return and accompanied the taxpayer to the IRS to submit the false return. The IRS issued a refund to the taxpayer for $376,260, which was ultimately returned.
Sentencing is March 1.
New York: Hospital dietician Ehrenfriede Kauapirura has been convicted of filing and aiding in the filing of false returns, obstructing the IRS and willfully failing to file returns.
Kauapirura, who worked at a Brooklyn hospital, filed a false amended 2015 return and a false original 2016 return. On both, she reported hundreds of thousands of dollars in fictitious tax withholdings that she used to claim refunds of approximately $250,000 for each year, which the IRS paid her.
After determining that Kauapirura’s claims were fraudulent, the IRS began collection activity. Kauapirura transferred money from her personal bank account to a bank account that she controlled held in the name of a purported trust. She also submitted a bogus check for $1 million drawn on a non-existent bank as payment of her tax obligations.
In addition, she did not file individual federal tax returns for 2017 through 2020 despite earning substantial income from her job at the hospital.
Sentencing is March 7. She faces a maximum of three years in prison for each false return and obstruction count and one year for each count of willful failure to file a return, as well as a period of supervised release, restitution and monetary penalties.
Bondurant, Iowa: Businessman Thomas James Morford has been sentenced to 15 months in prison for failure to pay employee trust fund taxes and failure to file a federal return.
From 2015 to 2020, he operated a local concrete business and failed to pay $355,049 in employment taxes to the IRS. Morford also failed to file federal returns for 2015, 2016, 2018, 2019 and 2020.
After completing his term of imprisonment, he will be required to serve three years’ supervised release. He was also ordered to pay $355,049.68 in restitution to the IRS.
West Palm Beach, Florida: Resident Dion De Cesare has been sentenced to 71 months in prison for operating an illegal sports-gambling business, conspiring to commit money laundering, using a facility of interstate commerce to carry on prostitution and tax evasion.
From around April 2008 to November 2022, De Cesare owned two social clubs that during various times provided prostitution services. De Cesare collected the proceeds from those businesses and laundered them through third-party bank accounts and the payment of mortgages and expenses owed on several of his area properties.
De Cesare also admitted that from about May 2015 to October 2022 he also operated an online sports-gambling business through a website whose server was located in Costa Rica. He laundered the gambling proceeds by having the gamblers send their debt payments to third parties and entities for De Cesare’s benefit. Various times between 2011 and 2013 and from 2015 to 2016, De Cesare also failed to pay personal and payroll taxes.
De Cesare must pay restitution to the IRS of $1,046,224.19. The government seeks some $10 million in the forfeiture of numerous items and money, including two residential properties, two commercial properties, a storage facility, five condos, six vehicles and a Rolex.
Amherst, New York: Business owner George Ward of North Tonawanda, New York, has pleaded guilty to tax evasion.
Between 2015 and 2020, he owned and operated a fire-protection and inspection business. During that time, he failed to file personal income tax returns, which included substantial business revenues. Ward also failed to pay income, Social Security and Medicare taxes withheld from the pay of his employees. This resulted in a tax loss to the IRS of $953,793.
Ward also failed to file his taxes with New York, resulting in a tax loss of $165,645.
Ward made false statements to an IRS revenue officer regarding the filing of his taxes and the status of his business, used a check-cashing business for more than $2 million in gross receipt checks from customers rather than depositing them into his business bank account and deposited cash derived from his business activities into a bank account held in his wife’s name.
Sentencing is March 28. The charge carries a maximum of five years’ prison and a $250,000 fine.
Largo, Maryland: Tax preparer Ronald Eugene Watson, aka Sabir Muhammad, has been sentenced to 27 months in prison for preparing and filing false returns on behalf of his clients.
From at least 2015 through 2017 Watson, a self-employed preparer who operated SW Accounting Associates, prepared and e-filed clients’ federal returns that falsely reported income and deduction information, including fictitious or overstated business and unreimbursed employee expenses.
Watson varied his preparation fees depending on the amount of the refund requested, with fees typically ranging from $500 to $1,500.
He was also ordered to serve a year of supervised release and pay some $268,634 restitution to the United States.
