Wire happy; defense rests; re-model behavior; and other highlights of recent tax cases.
Ladera Ranch, California: Tax attorney Ania Lowenthal of Trabuco Canyon, California, has pleaded guilty to underreporting $1.68 million in income during tax years 2016 through 2018, causing a tax loss of nearly $645,000, including money she embezzled from a client’s trust.
Lowenthal has agreed to pay $644,579 in restitution to the IRS and to transfer deeds on two properties purchased with money embezzled from a deceased person’s family trust for which she was the trustee.
The settlor of the trust died in March 2016; that December, Lowenthal embezzled $1.1 million from a bank account belonging to the trust by causing a wire transfer to an account in the name of JAWLO LLC, which Lowenthal controlled. She then wired the money from JAWLO’s account to an escrow account to purchase a residence in Coto de Caza, California.
In May 2017, Lowenthal embezzled $500,000 from a bank account belonging to the trust by wiring money from the trust’s account to an account in the name of JAWLO. Lowenthal subsequently wired those funds from JAWLO’s account to an escrow account to purchase another residence, for her mother, in Rancho Santa Margarita, California.
In May 2018, the U.S. Treasury issued a refund check to Lowenthal on behalf of the deceased settlor of the trust for some $84,861. Lowenthal deposited that check into her personal bank account rather than depositing it into an account of the trust.
For the tax years 2016, 2017 and 2018, Lowenthal underreported her income by $1,684,861, resulting in $644,579 in additional federal taxes due.
Baton Rouge, Louisiana: Dr. Melissa Rose Barrett has been found guilty of income tax evasion.
Barrett owned and operated two urgent care clinics and owed the IRS some $1.6 million in taxes, excluding penalties and interest.
The IRS notified Barrett that she owed taxes multiple times. She took steps to evade her tax liability, including preparing and filing with the IRS a form that underreported income and inaccurately detailing assets, including concealing cash in a safe instead of depositing it in the bank.
She also purchased millions of dollars of real estate and personal property in the names of nominees, including a personal residence, a boat, an airplane and parcels of farmland.
She faces up to five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Clarksville, Tennessee: Business owner David Haley, 65, has been sentenced to two years in prison for filing returns that omitted income he earned from his heating and plumbing company.
Haley, convicted last November of three counts of filing false tax returns for 2015, 2016 and 2017, and acquitted of one count of filing a false return relating to his 2014 tax filing, owned Haley & Associates Mechanical Contractors. From 2014 through 2017, that company was a subcontractor on commercial projects in middle Tennessee and paid more than $1 million for each year.
Generally, the contractors that hired Haley & Associates paid via check and reported the payments with 1099-MISCs. Even though Haley personally received a portion of the company’s earnings as business income and non-employee compensation, he reported on his 2014 to 2017 returns that he’d earned no income. His failure to report that income caused a federal tax loss of some $186,290.
Haley was also ordered to pay a fine of $5,000 and restitution of $186,290. On release from prison, he will be subject to a year of supervised release.
Baltimore: Tax preparer Adis Smith, of Chula Vista, California, and formerly of Baltimore, has pleaded guilty to preparing false returns.
From at least 2017 through 2022, Smith prepared and filed false income tax returns for clients that fraudulently lowered the taxes they owed or generated undeserved federal refunds. He typically reported fictitious or inflated business losses and itemized deductions.
To conceal his fraud, Smith prepared and filed each client’s return as a ghost preparer, claiming it self-prepared by the client rather than by Smith. He prepared more than 1,000 false returns and caused a federal tax loss of some $4,729,311.
Sentencing is Feb. 2. He faces a maximum of three years in prison, as well as a period of supervised release, restitution and monetary penalties.
Washington, D.C.: American businessman Robert N. Dooner has pleaded guilty to evading federal income taxes.
Since 2007, Dooner has lived outside the U.S., intermittently in the United Arab Emirates and Ibiza, Spain. Around 2007, Dooner worked as a business associate of another American living abroad. Together with others, including this ex-pat, Dooner formed a joint venture incorporated in the UAE to provide internet services to U.S. military personnel at Kandahar Airfield in Afghanistan. The expat helped fund the joint venture with money from a business providing commodities to the U.S. Department of Defense in Kyrgyzstan, Afghanistan and the Middle East.
For 2015 through 2019, Dooner evaded federal taxes by underreporting to his tax preparer the profits he earned from his ownership interest in the joint venture, as well as other compensation he received through his work for the expat. Dooner diverted his distributions to UAE bank accounts in the name of a Dubai-based shell company and then tried to conceal the foreign bank account records when they were specifically requested by U.S. authorities.
In total, Dooner concealed some $2 million that he earned from 2015 through 2019, causing a tax loss to the IRS of more than $744,977.
Dooner, the fifth defendant associated with the defense contracting company to plead guilty, faces up to five years in prison as well as a period of supervised release, restitution and monetary penalties.
Corpus Christi, Texas: John Longoria, a former member of the Corpus Christi Independent School District Board, has pleaded guilty to filing a false return.
Investigation of Longoria began in December 2018 following an approximately two-year extensive and suspicious remodeling project that occurred at his home. Authorities ultimately executed several search warrants at his residence and elsewhere in November 2020.
Law enforcement determined that Longoria had underreported his income to the IRS for tax years 2014 through 2016, which he admitted as part of his plea. He has agreed to pay $187,315 in restitution to the U.S. Treasury.
Sentencing is Jan. 24. Longoria faces up to three years in federal prison and a possible $100,000 fine.
Alexandria, Virginia: Tax preparer Lawrence Appiah-Osei has been sentenced to 18 months in prison for defrauding the U.S. government by preparing false returns on behalf of his unsuspecting clients.
Between 2016 and 2020, Appiah-Osei ran the tax prep business New Look Enterprise out of his home. From at least 2017 through 2020, he schemed to fraudulently inflate clients’ refunds by falsely claiming that his clients operated businesses that lost thousands of dollars each year.
The IRS estimates Appiah-Osei’s actions resulted in a federal tax loss of some $1.4 million.
