Tax Fraud Blotter: Just another day in Paradise

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This beauty’s a steal; rough landing; flag at midfield; and other highlights of recent tax cases.

Puyallup, Washington: Donna Powell, 56, co-owner and financial manager of a steel fabrication business, has pleaded guilty to nine counts of failing to pay over employment taxes.

Powell co-owns and operates Pinnacle Steel Fabricators, serving as secretary/treasurer and accounting manager. Between 2010 and 2018 the company withheld some $1,167,891 in payroll taxes from employees’ paychecks and failed to pay any of those funds over to the IRS.

The company has 15 to 20 employees. Powell failed to file any 941s for the period between 2010 and the first quarter of 2018. Instead of paying the taxes, Powell and her husband spent the money on personal travel, gambling and online gaming, and on spa and pool-related purchases.

Sentencing is Nov. 7. Willful failure to pay over employment taxes is punishable by up to five years in prison.

Imperial, Missouri: Used car salesman Donald Benck has pleaded guilty to three tax charges and admitted hiding more than $300,000 in commissions from the IRS.

He was primarily compensated through commissions and admitted that starting in 2014 he recruited acquaintances to receive the commissions by check, cash the checks and give the cash to Benck. The acquaintances kept a small fee. In total, the acquaintances cashed $326,000 in checks from 2014 to 2016.

Benck’s employer issued 1099s to the acquaintances instead of to Benck, who did not inform his tax preparer of the commissions and did not report the income on his returns. Benck failed to report $31,300 in income for 2014, $131,400 for 2015 and $93,035 for 2016, causing a federal tax loss of $84,092. 

Sentencing is Nov. 18.

Albany, New York: Sean O’Hare, 54, of South Portland, Maine, has pleaded guilty to wire fraud in connection with a scheme to defraud his tax prep clients.

O’Hare, a former tax preparer and accountant, admitted that from September 2015 through September 2016 he filed quarterly New York State returns for three companies; these returns understated the amount of taxes owed by the companies. O’Hare collected the full amount of taxes owed and stole the difference between the amount in taxes remitted to New York and the amount he received from the companies.

He admitted to stealing $131,758, which he has agreed to repay as restitution. His wire fraud conviction carries a maximum of 20 years in prison, a fine of up to $250,000 and supervised release of up to three years. Sentencing is Jan. 11.

East Stroudsburg, Pennsylvania: Hope Carbone and Donna Venturini have been sentenced to two years of probation for conspiring to evade federal excise taxes on imported cigars.

Carbone and Venturini admitted to conspiring with Jose Dominguez, the owner of cigar manufacturer Victor Sinclair Cigars, to evade excise taxes from 2009 to 2011. Carbone and Venturini served as the U.S. importer for Dominican Republic-based Victor Sinclair Cigars. Through fraudulent invoices, Dominguez, Carbone and Venturini collected some $3.9 million in excise taxes from U.S. purchasers of the cigars.

The conspirators paid only some $2.1 million to the government, retaining about $1.8 million for themselves.

Carbone and Venturini were ordered to pay restitution. Dominguez pleaded guilty in June and awaits sentencing.

Plano, Texas: Raymond Griggs, 51, former owner of a tax prep business, has been convicted of concealing more than $1 million in income from the IRS.

Between 2011 and 2013, Griggs ran Griggs Financial in the Dallas area. The company generated more than $1.3 million in gross receipts in 2013; Griggs reported to the IRS that his business had brought in about $340,000. That year alone, he spent more than $1.4 million on such items as entertainment, jewelry, travel and flight lessons.

Griggs also consistently underreported his business’s gross receipts to the IRS by about $1 million for both 2012 and 2011.

He faces up to three years in prison.

Hands-in-jail-Blotter

Key West, Florida: Volodymyr Ogorodnychuk, manager of four labor staffing companies, has been sentenced to four years in prison for tax and immigration crimes.

From about January 2016 through October 2020, Ogorodnychuk helped operate Paradise Choice, Paradise Choice Cleaning, Tropical City Services and Tropical City Group. The companies provided employees to hotels, bars and restaurants in Key West and other locations, even though the employees were not authorized to work in the United States.

Ogorodnychuk admitted that he and his conspirators paid the workers without withholding Social Security, Medicare and income taxes from their wages and did not report those wages to the IRS. He also admitted he and his conspirators defrauded the IRS out of more than $3.5 million in employment taxes.

Ogorodnychuk was also ordered to serve three years of supervised release. Restitution has yet to be determined.

Midland, Texas: Trucking exec Thomas Valdez Rodriguez has been sentenced to two years in prison for failure to pay over employment taxes.

Rodriguez owned Tom-E-Lee Trucking and Tom-E-Lee Industries and from 2012 through 2018 failed to pay employment taxes withheld from the employees and employment taxes withheld from another company. He also failed to pay personal income taxes since 2011.

Rodriguez caused a total tax harm of $12,714,214.42.

He used some of the money for midfield season tickets at Dallas Cowboys games and chartered jets to take him and friends to those games. He also purchased a new residence for more than $2 million.

Rodriguez, who pleaded guilty in January, was ordered to pay $12,714,214.42 in restitution to the IRS, $1 million of which he paid before sentencing.

Waukegan, Illinois: Resident Wilmer Alexander Garcia Meza has been sentenced to 29 months in prison for using stolen IDs to file false returns.

Garcia used others’ personal information — including names, dates of birth and identification documents such as foreign passports — to fraudulently obtain ITINs. From 2013 through 2017, he used the ITINs to file returns in the name of the stolen identities, claiming thousands of dollars in fraudulent refunds. Garcia then used identification documents in those same names to cash the refund checks issued by the IRS. In total, Garcia caused a tax loss of some $221,923.

He was also ordered to serve three years of supervised release and pay some $221,923 in restitution to the United States.

Buffalo, New York: Ronald Rechan, of Douglasville, Georgia, previously convicted of making a false statement on a bank loan application and tax evasion, has been sentenced to six months in prison and ordered to pay $628,144 in restitution.

In November 2017, Rechan submitted a $150,000 home loan application to First National Bank of America, on which he fraudulently overstated his income.

Between April 2013 and January 2018, Rechan also committed tax evasion. While serving as a CFO, Rechan paid himself $1,962,167.21 and to avoid paying tax on this income, he paid personal expenses directly from a company account and deposited $332,746.19 into a nominee bank account.

His actions resulted in a tax loss to the IRS of $628,144.


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