Among the deceptive practices employed by the five defendants were
- using stolen identities of deceased children to falsely claim them as dependents on clients’ returns;
- claiming “business losses” from fictitious businesses;
- claiming as deductions thousands of dollars in non-existent charitable contributions and miscellaneous job expenses;
- falsely claiming credits for education expenses; and
- falsely claiming credits for child-care expenses.
Each of the defendants earned inflated commissions and fees related to the fraudulent refunds.
Morrison, 60, of New York, pleaded guilty on August 13, 2010, to one count of conspiracy to defraud the IRS, and one count of obstructing the administration of internal revenue laws. He faced up to eight years in prison, and agreed to make full restitution. On January 20, 2011, Morrison was sentenced in Manhattan federal court to 72 months in prison for his role in the conspiracy. He was also ordered to pay restitution of $17.3 million to the IRS.
Bullock, 51, of North Carolina, pleaded guilty on August 13, 2010, to one count of conspiracy to defraud the IRS, and one count of obstructing the administration of internal revenue laws. She faces up to eight years in prison, and agreed to make full restitution.
David, 28, of New Jersey, pleaded guilty on June 22, 2010, to one count of conspiring to defraud the IRS, and one count of obstructing the administration of revenue laws. David faces up to eight years in prison.
Vaden, 47, of New York, pleaded guilty on June 23, 2010, to a twenty-count Superseding Information charging him with conspiring to defraud the United States and to violate the tax laws; engaging in a scheme to obstruct the administration of the revenue laws; filing false and fraudulent personal tax returns; aiding and assisting in the preparation of false and fraudulent tax returns; and aggravated identity theft. Vaden faces up to 61 years in prison.
Hanna, 30, of New Jersey, pleaded guilty on July 14, 2010, to a four-count Superseding Information charging him with conspiring to defraud the United States and to violate the tax laws; engaging in a scheme to obstruct the administration of the revenue laws; making false statements to the government; and aggravated identity theft. Hanna faces up to 15 years in prison.
Defendants Bullock, David, Vaden, and Hanna are scheduled to be sentenced on various dates in January through March 2011.
Yabba Dabba Do
Among the jobs that I wish that I had was the one where you come up with all those clever names for military and law-enforcement operations. Sometimes the results are funny. Other times, well, to be as polite as possible, the effort is painful.
Apparently, it wasn’t enough to simply launch a joint investigation of tax preparers by the U.S. Attorney’s Office and the Internal Revenue Service. No, the feds needed a catchy name. They came up with “Operation Brass Tax.” Okay, not bad – frankly, that’s both clever and funny.
In reading about the efforts of Operation Brass Tax, I note the self-congratulatory characterization that the operation was the “largest coordinated takedown of corrupt tax preparers in history.” Not just this week, month, or year but, impressively, in “history.” Of course, there was a time when brass wasn’t really manufactured – you know, the Stone Age, the Bronze Age and Iron Age periods of history. So, notwithstanding those several thousands of years before brass existed, Operation Brass Tax could reasonably argue its valid historical assertion for something like 3,000 or so years of more recent civilization.
From what I understand, one of the earliest illegal tax preparation cases involved a Fred Flintstone, CPA, who was working for H&R Bedrock Tax Preparation Service, where he prepared the ancient Form 0001 (that was the precursor of the modern day Form 1040). Flintstone was arrested and convicted for filing the return of a Bernard Rubble in which that client claimed improper deductions for a non-existent son, Dino. At the time of Flintstone’s conviction, the tax laws were literally carved in stone.
For one of the funniest takes in history on the government’s naming of operations, see this recent “Street Sweeper” column:
Also see these recent IRS stories from “Street Sweeper”: