Tax Fraud Blotter: Everybody dance now

Accounting

Pawn king; tell us where it hurts; check’s not in the mail; and other highlights of recent tax cases.

Fort Lauderdale, Florida: Tax preparer Guy Telfort has pleaded guilty to criminal contempt for continuing to prepare and file returns with the IRS in violation of a federal court order barring him from doing so.

Telfort previously owned and operated the prep business Tax Houses and Accounting Services in Lauderdale Lakes, Florida. From about January 2015 through April 2019, he and other employees of the business prepared and filed returns for clients.

To generate inflated federal refunds, some of these returns reported false items, including fictitious business income and losses and mileage deductions. In April 2019, a federal district court entered an injunction against Telfort, permanently barring him from preparing federal returns for others.

Despite this injunction, in 2020 and 2021 Telfort continued to prepare and file returns out of a local pawn shop. He charged clients as much as $1,000 for each federal return. Some of the returns reported false medical and dental expenses and charitable contributions, as well as fictitious businesses. Telfort used PTINs belonging to other tax preparers and over the two years helped prepare nearly 1,200 returns for clients in violation of the permanent injunction.

Sentencing is Aug. 16. He potentially faces imprisonment, a term of supervised release and a fine. 

Malvern, Pennsylvania: Resident Michael Goldner has been convicted of tax evasion and failing to file returns, charges arising from his scheme to use his cash and his employer’s business bank accounts to hide his actual income and avoid paying his taxes.

For tax years 2013 through 2017, Goldner reported more than $4 million in income and $1.8 million in tax due, of which he paid less than $100,000. From 2016 to 2020, he evaded these outstanding taxes while earning a substantial income.

Instead of depositing his paychecks into a personal bank account, he cashed the checks and used his employer’s business accounts to pay hundreds of thousands of dollars of personal expenses, including rent, a second home, groceries, private school and dance lessons for his child, country club dues and restitution from a prior fraud conviction for which he was on federal probation.

For 2016 and 2017, Goldner filed returns that failed to report this additional income from his employer. For tax years 2018 and 2019, he failed to file a return altogether.

Pittsburgh: Tax preparer John C. Thornton, of Gibsonia, Pennsylvania, has been sentenced to 18 months in prison and two years of supervised release on his conviction of aiding or assisting in the preparation or filing of false federal income tax returns.

Thornton owned and operated Tax Centers of America franchises. Between 2012 and 2017, IRS investigators uncovered a high pattern of personal income tax returns containing Schedules C and falsification of those forms by Thornton and tax preparers at his business.

He was also ordered to make restitution of $511,718.50.

Gulfport, Mississippi: Tax preparer Orland Reed has pleaded guilty to preparing false federal returns for clients.

Between 2012 and 2014, Reed prepared returns that included false household help income, education credits, dependent information and federal income tax withholdings to inflate refunds. At times, he also listed a different preparer though he prepared the returns.

On at least two occasions, he diverted for his own use clients’ federal refunds that had been sent to the tax prep business on prepaid debit cards. Reed withdrew some of the funds on the cards before delivering them to the clients.

Sentencing is Sept. 22, when he will face a maximum of three years in prison as well as a period of supervised release, restitution and monetary penalties.

Hands-in-jail-Blotter

Delray Beach, Florida: Business exec Marc Sporn has been sentenced to 14 years in prison for health care and wire fraud that cost Medicare more than $20 million dollars, and for evading taxes.

Sporn owned and operated several telemarketing and telemedicine companies and used them to market medically unnecessary genetic tests to Medicare beneficiaries and to sell prescriptions for medically unnecessary genetic tests to laboratories in exchange for kickbacks and bribes.

Through nominee owners, he also operated and controlled the local companies Medi Biotech and Walmol Holdings. Sporn used Medi Biotech to market compounded prescription creams to customers with certain health conditions. Pharmacies and laboratories associated with Medi Biotech filled the prescriptions, billed the customers’ insurance companies and paid Sporn kickbacks.

In addition to opening bank accounts for Medi Biotech in nominee names, Sporn opened accounts in the name of Walmol, a shell corporation, and in 2014 and 2015 avoided paying more than $1.6 million in personal income taxes by diverting millions through the company’s accounts. Sporn used these accounts to purchase luxury items such as high-end watches and diamond jewelry, classic and exotic cars, two yachts and other items. He also evaded paying more than $2.5 million in personal income taxes for other years dating back to 2000.

When the IRS attempted to collect back taxes from Sporn, he tried to conceal assets by transferring property to trusts and individuals and by repeatedly opening and closing companies, among other moves.

Sporn was also ordered to pay more than $4 million in restitution to the IRS.

Key West, Florida: Business owner Mykhaylo Chugay has been convicted of conspiracy to harbor non-resident aliens and induce them to remain in the country, conspiracy to commit money laundering and conspiracy to defraud the IRS.

Chugay and others owned and operated labor-staffing companies between August 2007 and July 2021. Through these companies, he facilitated the employment of individuals in hotels, bars and restaurants in Key West and other locations even though the employees were not authorized to work in the U.S.

He and his conspirators defrauded the IRS out of more than $10 million in Social Security and Medicare taxes. He conspired to encourage workers to enter the U.S. and remain in the country in violation of immigration laws; Chugay and others also sent checks and wires totaling more than $11 million from the scheme to conspirators in Ukraine and elsewhere.

Chugay will be sentenced on Aug. 22 and faces a maximum of five years in prison for tax conspiracy, 10 years for conspiring to harbor aliens and induce them to remain in the U.S. and 20 years for the money laundering conspiracy. He also faces a period of supervised release, restitution and monetary penalties. 

Voorhees, New Jersey: Resident Lori Andrews has pleaded guilty in connection with stealing hundreds of checks and money orders from her employer and failing to pay taxes on the income.

Andrews worked in the property management office of an apartment building in Philadelphia, where tenants paid rent and other expenses to the property management office. From January 2011 to October 2018, Andrews stole 697 checks and money orders totaling $2.67 million from her employer, drove them to New Jersey and deposited them into a nominee bank account she opened using a fake Social Security number. She used the money to pay personal expenses.

Andrews also admitted that for tax years 2011 through 2015 she did not report the stolen income on her returns or pay taxes on that income. She also admitted that she did not file income tax returns for 2016 through 2018 and failed to pay taxes on her income and stolen funds.

The interstate transportation of stolen property charge to which Anderson pleaded guilty carries a maximum of 10 years in prison; the income tax evasion charge carries a maximum of five years. Both carry a potential fine of $250,000. Sentencing is Oct. 27.

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