The mortgage is better; become professional; get me a cell, stat; and other highlights of recent tax cases.
Capital Heights, Maryland: Business owners Ercin and Lizette Kalender, of Alexandria, Va., were sentenced to one year and a day in prison, followed by three years of probation, for conspiracy to evade tax on their tax returns and business taxes.
Ercin Kalender owned and operated Butch’s, an auto body shop. Lizette Kalender worked at the store as a manager and accountant, handling tax returns and working regularly with an outside agency that prepared taxes for Butch’s and personal returns for Ercin and Lizette.
From 2015 to 2018, the Kalenders conspired to include materially false information on their 1120 filed for Butch’s, including a significantly lower figure for gross income and taxable income. They misappropriated earnings and avoided having large earnings deposited into Butch’s business accounts and reported to the IRS.
The Kalenders kept two sets of financial records: the shop’s annual revenue from 2015 to 2018 was understated by more than $6.6 million; the federal tax loss was $2,219,602.
In 2018, the Kalendars sought to sell Butch’s. An undercover federal agent posed as a potential buyer, and during their conversations, Ercin and Lizette explained Butch’s profitability and revealed their longstanding underreporting of earnings and income and that Lizette said a significant W-2 income, which helped them escape scrutiny by the IRS.
While working with the outside tax preparation and accounting agency, Lizette deliberately hid the money circulating at a local check cashing business, sending bank statements for the company’s accounts. , check stubs, credit card statements, payroll records, and other business documents, but withholding revenue from cashed checks. She also showed the agent falsified records.
Ercin also said he paid cash for all of his employees’ additional compensation to avoid tax liabilities, except for a secretary.
In 2019, after the Kalenders learned of the IRS investigation, Butch’s reported gross revenue of over $4.5 million, an increase of over $2.2 million from the 2018 financial year.
The couple were also ordered to pay $2,219,602 in restitution.
Covington, Georgia: Tax preparer Yomarie Febres was sentenced to 51 months in prison for conspiracy to defraud the United States by promoting a nationwide tax evasion scheme involving more than 200 participants in at least 19 states.
Febres prepared 77 bogus tax returns that collectively claimed more than $23.8 million in federal refunds. Between 2014 and 2016, the Febres conspirators held seminars around the country where they promoted the scheme and recruited clients to file false federal returns telling them that their mortgages and other debts qualified them for refunds. Information collected from customers was then provided to Febres for use in preparing false claims.
The statements claimed that banks and other financial institutions had withheld large amounts of income tax from customers, which entitled customers to refunds. Indeed, the financial institutions had not paid any income or withheld tax to the clients.
The returns caused the IRS to pay out more than $15 million in fraudulent refunds. Febres concealed her role in the scheme by falsely reporting that all statements were prepared by herself.
Febres admitted his conspirators charged patrons between $10,000 and $15,000 to participate. She received a portion of the fee — typically $500 per client — for each return she prepared. She also failed to report in her 2014 and 2015 returns the income she received for preparing those returns and she reported false business losses in her personal returns.
Several conspirators have already been convicted in this case.
Febres was also ordered to serve two years of probation and pay $11,140,842.65 in restitution to the IRS.
Elsewhere, tax preparer Eurich Griffin III of St. Petersburg, Florida, was sentenced to 57 months in prison for conspiracy to defraud the United States by preparing false and fraudulent returns.
Between 2013 and 2018, Griffin, who has already pleaded guilty, helped prepare and file returns for clients who claimed over $5.2 million in fraudulent refunds. The statements also incorrectly claimed that banks and other financial institutions had withheld large amounts of income tax from customers when, in fact, the institutions had paid no income and withheld no tax from these individuals.
Griffin and his conspirators filed fraudulent documents with the IRS that matched withholding information on the returns. He also submitted fraudulent promissory notes to the IRS totaling over $1.35 million in which he falsely claimed to pay clients’ tax debts.
He was also ordered to pay more than $1.6 million in restitution to the United States.
Los Angeles: Tax preparer Seir Robinson Havana, 46, pleaded guilty to conspiring with others to defraud the IRS and the Paycheck Protection Program.
Havana was the VP/Director and CEO of Mana Tax Services and conspired to commit two sets of frauds.
From May 2019 to November 2021, Havana conspired with Quin Ngoc Rudin and others to prepare and file false federal tax returns on behalf of at least nine professional athletes. Returns reported fabricated business and personal losses to generate undeserved refunds. Havana and his conspirators told the athletes that Rudin had specialist knowledge that their former taxmen lacked and that Mana could obtain large refunds. The conspirators also told them that Mana could alter statements from the previous year to correct alleged errors.
Mana charged 30% of the resulting reimbursement, which Havana asked the athletes to send to fictitious entities he controlled. He collected more than $3.1 million in fees.
From April 2020 to December 2021, Havana and its conspirators used Mana to apply for PPP loans on behalf of small businesses, shell entities with few or no employees controlled by the conspirators, and business entities controlled by others . The conspirators grossly inflated the number of employees and monthly salary costs on loan applications and submitted fabricated statements in support. Some business owners never saw their loan applications before Mana filed them and some businesses were not eligible for PPP loans.
Mana again charged a 30% fee, this time of the value of the loan received. Havana and her conspirators ordered the companies to pay the fees by cashier’s checks and incorrectly noted on the memo lines that the funds were payroll-related. The cashier’s checks were deposited into accounts controlled by Havana, which then transferred the funds to other bank accounts.
Investigators then seized more than $11.8 million in accounts containing fraudulent money from PPP loans controlled by Havana and others. He also handed over bank checks worth approximately $5.6 million.
The two schemes resulted in total losses of over $25 million.
The sentence is handed down on November 9. Havana faces a maximum of five years in prison for conspiracy and 20 years for money laundering, as well as a period of supervised release, restitution and monetary penalties. Rudin, who pleaded guilty in May, will be sentenced on September 14.
Golden, Mississippi: Dr. Kevin L. Crandell was sentenced to three years in prison for failing to pay his taxes.
Crandell was an emergency physician who earned between $30,000 and $40,000 a month and stopped paying personal income tax in 2007. From 2006 to 2012, he racked up some $972,493 in tax debt, including penalties and interest.
Crandell submitted a bogus 433-A in 2014 to negotiate a payment plan for his tax debts. He lied on this form saying his expenses exceeded his income and did not list the assets and company bank accounts he used for personal expenses.
Although Crandell attempted to blame a tax resolution service he hired in 2010, he intentionally manipulated his pay stubs to show a decrease in his 2014 annual income before submitting the pay stubs to the resolution service.
He was also ordered to pay $972,493 in restitution.