Tax Fraud Blotter: Win, place and jail

Accounting

End of some long roads; just can’t quit; what a pain; and other highlights of recent tax cases.

Houston: Exec Alejandro Joael Colbert has pleaded guilty to failing to account for and to pay over withholdings of federal income and FICA taxes from the wages of his employees.

Colbert was majority owner and CEO of Colbert Ball Tax Service, which franchised tax prep businesses across the country. He admitted that from 2015 to 2018 he failed to file employment returns and did not pay all taxes withheld from the wages of employees to the IRS.

Colbert admitted he caused some $710,000 in tax revenue loss.

He has agreed to pay more than $196,000 in restitution to the IRS, the amount of withholdings from employee wages for the quarters in years 2015 to 2018 that remained unpaid at the time he was charged.

Sentencing is Aug. 12. He faces up to five years in prison and a possible $250,000 fine.

Patterson, Louisiana: The Louisiana Department of Revenue has won an order of contempt against tax preparer Dawanna Monay Monroe for operating a tax prep business in violation of a court judgment. 

The original judgment, signed in December, prohibits Monroe from filing, assisting in or directing the preparation of any Louisiana return but her own; she had previously pled guilty to multiple felonies for a tax fraud involving fabricated business losses for companies that did not exist. After her conviction, Louisiana sued Monroe to prevent her from working as a tax preparer in the state.

The DOR went back to court this year after investigators determined that Monroe was still working as a preparer. They interviewed numerous taxpayers who said Monroe participated directly or indirectly in the preparation of their returns through her business, Tax & Financial Consultants, operating in two area locations. Authorities said Monroe’s email address is listed as a primary contact on the firm’s Facebook page and records from the Louisiana Secretary of State show that she maintains an ownership interest.

She must withdraw any interest she has in any business engaged in the preparation or filing of Louisiana returns or other related documents or forms.

Los Angeles: Longtime fugitive Robin J. McPherson, formerly of San Diego, has made a court appearance after being apprehended and deported from Costa Rica so he could be sentenced on his U.S. conviction for tax crimes.

In December 2000, McPherson and two conspirators were found guilty of conspiring to defraud the IRS and of tax evasion. McPherson was the president, COO and co-owner of Continental Wireless Cable Inc., a telemarketing company that sold more than $30 million in purported partnership interests in wireless cable systems before being shut down by the Securities and Exchange Commission. McPherson and his conspirators tried to evade paying taxes on profits earned by Continental Wireless, causing a tax loss to the IRS of more than $1 million in taxes.

Following McPherson’s conviction 22 years ago, the district court ordered him and his co-defendants to appear for sentencing in March 2001. Instead, McPherson fled the U.S.

He faces a maximum of five years in prison on each of the conspiracy and tax evasion counts, as well as a period of supervised release, restitution and monetary penalties. He is also wanted to stand trial in Oregon for fraud and money laundering.

East Lansing, Michigan: Real estate developer, former CPA and attorney Scott Chappelle, 61, has pleaded guilty to tax evasion arising from his near decade-long effort to prevent the IRS from collecting taxes he and his businesses owed.

Chappelle, of Okemos and East Lansing, Michigan, operated Terra Management Co., Strathmore Development Co., Michigan and Terra Holdings, all of which were involved in real estate development and property management in the area. He admitted he did not pay over to the IRS employment taxes withheld from the wages of the companies’ employees.

When the IRS sought to collect the unpaid taxes, he made false statements to the agency about his and his companies’ assets and income, concealed his vacation house on Lake Michigan and purchased real property in nominee names instead of his own. Chappelle also lied to the IRS that he could not afford to pay his tax debts when he was using business bank accounts to pay for personal expenses such as mortgage payments, college tuition, credit card bills, life insurance premiums, car payments and boat expenses. He told investigators that he hadn’t purchased property since the IRS began collection activities and concealed the source of the money to pay for a mortgage on a condominium. He also admitted to making false statements on a loan application when he refinanced the mortgage on his vacation house.

Sentencing is Aug. 2, when he will face up to five years in prison for tax evasion. He also faces a period of supervised release, restitution and monetary penalties. 

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Philadelphia: Tax preparer Guy Menard Charles, 51, of Naples, Florida, has been convicted of 23 counts of fraud and identity theft for filing false federal income tax returns as part of a scheme to fraudulently reduce taxes and inflate clients’ refunds.

He owned and operated Menard Tax Services. A conspirator in Philadelphia recruited clients for the business and purchased personal ID information for dependents, which Menard used on clients’ federal returns. Menard also included false income, education credits and federal fuel tax credits on various returns, generating undeserved refunds. Menard and his conspirator split the prep fee.

Edison, New Jersey: Auto repair owner Gabriel Ferrari has pleaded guilty to filing a false corporate federal return.

Ferrari owned Buses and Trucks Inc. and used B&T funds to pay for personal items, including gambling on horse races. He did not inform his tax preparer about the diverted corporate funds for tax years 2011 through 2014 and, as a result, B&T’s corporate returns and his personal income tax returns for each of these years were false.

Sentencing is Sept. 14. He faces up to three years in prison and a period of supervised release, restitution and monetary penalties. 

Phoenix: Tax preparer Freddy Danilo Naranjo, 48, formerly of Avondale, Arizona, has been sentenced to 10 months in prison after pleading guilty to making false claims.

His co-defendant, Jairo Roberto Hidalgo, 51, of Phoenix, pleaded guilty to the same charge and was sentenced earlier this year to 17 months in prison.

From 2015 to 2017, the pair worked together to submit false returns in the name of Mexican nationals who neither lived nor worked in the United States. Naranjo filed the returns, which were based on W-2s that contained false wage and withholding information. Hidalgo provided Naranjo with the fake forms and other personal ID information about the purported taxpayers.

The government paid out some $500,000 in undue refunds. Naranjo and Hidalgo, along with other individuals, shared those refunds.

Queensbury, New York: Dr. Ehab Kodsi, of Watervliet, New York, has pleaded guilty to filing a false return and admitted deliberately underreporting his income.

Kodsi is the sole owner of a pain management clinic; he is also a partner in a real estate company that owns several properties, including the office building housing his clinic. He admitted that from 2015 to 2018 he underreported his business revenues to the IRS, and improperly deducted personal and business expenses.

Kodsi failed to report $822,069 in income and to pay $245,212 in taxes. He did not report income received from third parties reimbursing services provided by his clinic, deducted personal expenses as business expenses, deducted the same business expense multiple times and overstated business expenses related to use of vehicles.

He faces up to three years in prison and a $250,000 fine at sentencing on Sept. 8. He has agreed to pay $245,212 in restitution to the IRS. 

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