Tax Division

New York Man Pleads Guilty to Employment Tax Crimes Defendant Paid Employees Millions in Cash Wages to Thwart the IRS A New York man pleaded guilty to employment tax crimes for not collecting and paying over employment taxes from the wages of his company’s employees. According to court documents and statements made in court, Victor Aguayo, of Nassau County, was owner and president of Mabel Interior Design Inc., an interior painting business in Westbury, New York. Aguayo was responsible for withholding Social Security, Medicare and federal income taxes from his employees’ wages, reporting those wages and withholdings to the IRS quarterly and paying those withheld taxes to the IRS quarterly as well. Instead, Aguayo paid his employees approximately $3.6 million in cash wages but did not withhold or pay taxes from those wages. In addition, he caused false quarterly tax returns to be filed that did not report those cash wages. As a result, Aguayo caused a tax loss to the IRS of $545,743. Aguayo is scheduled to be sentenced on April 21, 2025. He faces a maximum penalty of five years in prison. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement. IRS Criminal Investigation is investigating the case. Assistant Chief Sarah Ranney and Trial Attorney Joseph D. G. Castro of the Tax Division are prosecuting the case. Press Release: https://lnkd.in/gkEQTc3w

Brazilian Resident Pleads Guilty for Role in Fraudulent Tax Refund Scheme Defendant Received nearly $600,000 in Fraudulent Refunds A South Carolina man currently residing in Brazil pleaded guilty earlier this week in federal court in San Francisco to conspiracy to submit a false claim. According to court documents and statements made in court, Robert Xan Paul, 45, of Sao Paulo, Brazil, conspired with others to defraud the United States by preparing and submitting to the IRS a fraudulent income tax return that claimed a nearly $600,000 refund, which the IRS paid. Paul was a client of O.I.D. Process, a business owned by his co-conspirators that helped others prepare and file individual federal income tax returns that claimed fictitious Original Issue Discount interest income and federal tax withholdings, resulting in fraudulent claims for tax refunds. To support his refund claim, Paul created fraudulent IRS forms from financial institutions where he had accounts. Those forms falsely indicated that the financial institutions had withheld federal income tax on his behalf. In total, Paul caused a tax loss to the IRS of $595,110. Paul pleaded guilty to one count of conspiracy to submit false claims. He is set to be sentenced on Jan. 21, 2025. Paul faces a maximum sentence of 10 years in prison. He also faces a period of supervised of release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and First Assistant U.S. Attorney Patrick D. Robbins for the Northern District of California made the announcement. IRS Criminal Investigation is investigating the case. Trial Attorney J. Parker Gochenour of the Tax Division and Assistant U.S. Attorney Michael Pitman for the Northern District of California are prosecuting the case. Press Release: https://lnkd.in/g5rgQKs7

Tax Attorneys and Insurance Agent Sentenced in Tax Shelter Scheme Defendants Caused $22M in Tax Loss to the IRS Two tax attorneys and an insurance agent were sentenced today to a combined 16 years in prison for conspiring to defraud the United States and helping clients file false tax returns, based on their promotion and operation of a fraudulent tax shelter. Michael Elliott Kohn, an attorney, was sentenced to seven years in prison. Catherine Elizabeth Chollet, also an attorney, was sentenced to four years in prison. David Shane Simmons, an insurance agent and broker, was sentenced to five years in prison. According to court documents and evidence presented at trial, from 2011 to November 2022, Kohn and Chollet, both of St. Louis, and Simmons, who is based out of Jefferson, North Carolina, promoted, marketed and sold to clients the Gain Elimination Plan, a fraudulent tax scheme. The defendants designed the plan to conceal clients’ income from the IRS by inflating business expenses through fictitious royalties and management fees. These fictitious fees were paid, on paper, to a limited partnership largely owned by a charity. In reality, Kohn and Chollet fabricated the fees. Read more: https://lnkd.in/gVMij8ni

Client of Fraudulent Tax Shelter Scheme Pleads Guilty to Obstruction Ohio Doctor Fabricated and Backdated Documents in Response to Civil Subpoena An Ohio doctor pleaded guilty today to corruptly endeavoring to obstruct the due administration of the internal revenue laws. According to court documents and statements made in court, Dr. Suman Jana, of Strongsville, was a client of fraudulent tax shelter promoter Michael Meyer and his sub-promoter Rao Garuda. Dr. Jana used Meyer’s scheme, the “Ultimate Tax Plan,” to fraudulently claim $764,350 in charitable contribution tax deductions for tax years 2012 through 2015. Meyer and his co-conspirators marketed the scheme as a way for high-income clients to reduce their taxes by claiming they had donated valuable property to charities Meyer controlled, while in reality retaining complete control and use over their “donated” assets. Clients, such as Dr. Jana, were able to use the funds in the purported charities’ accounts to pay for personal expenses. In fact, Dr. Jana used the funds he claimed to have donated to charity to, among other things, purchase several cars for him and his wife. Read more: https://lnkd.in/gY3rwpGF

Maryland Store Owner Pleads Guilty to Tax Evasion Defendant Did Not Report More than $2.2M in Cash A Maryland man who owns a retail store pleaded guilty today to evading his income taxes by not reporting cash taken from his business. According to court documents and statements made in court, for over 20 years, William M. Bundy of District Heights owned and operated Bab’s Inc., a store located in District Heights, that only accepted cash payments. From 2017 through 2021, Bundy received wages from Bab’s but also took cash from the business without reporting that cash as income on his tax returns. He used the cash for personal expenditures, including gambling. Over a five-year period, Bundy gambled and lost over $3 million at two Maryland-area casinos, funded in part by $2.2 million in cash from Bab’s. In total, for the years 2017 through 2021, Bundy had additional taxes due of $672,558. Bundy is scheduled to be sentenced on Feb. 21, 2025. He faces a maximum penalty of five years in prison. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Erek L. Barron for the District of Maryland made the announcement. IRS Criminal Investigation is investigating the case. Trial Attorney Michael C. Vasiliadis of the Tax Division and Assistant U.S. Attorney Coreen Mao for the District of Maryland are prosecuting the case. Press Release: https://lnkd.in/da7rKpZ5

Texas Couple Charged in Multimillion-Dollar Tax Refund Fraud Scheme https://lnkd.in/gQ-HQP_R

California Restaurant Owner Convicted of Tax and COVID-19 Fraud Schemes https://lnkd.in/gz7UcdgK

The Justice Department celebrates National Hispanic Heritage Month! #HispanicHeritageMonth #MesDeLaHerenciaHispana https://lnkd.in/eKxYm9EX

#ThisWeekatJustice, the Department: ▶️ Attorney General Merrick B. Garland delivered an address to the Justice Department workforce ▶️ Charged leaders of a transnational terrorist group with soliciting #HateCrimes & conspiring to provide materials to terrorists ▶️ Commemorated the 23rd Anniversary of September 11 ▶️ Issued new guidance regarding #VoterRegistration ▶️ Held a #ViolentCrime Reduction Sterring Committee meeting – announcing continued decline in violent crime ▶️ Convened an interagency meeting with Muslim, Arab, Sikh, South Asian & Hindu community stakeholders Keep up with the latest news from the Justice Department at justice.gov/news For closed captions: https://lnkd.in/gwsz_4tQ

#ThisWeekatJustice, the Department: ▶️ Announced terrorism charges against the senior leaders of Hamas ▶️ Convened the Election Threats Task Force to announce major #LawEnforcement actions to secure our elections ▶️ Announced Civil Rights investigation into correctional staff sexual abuse at two California prisons ▶️ Arrested a dual U.S. and Iranian Citizen for unlawfully exporting U.S. technology to Iran ▶️ Seized aircraft used by Nicolás Maduro Moros in violation of U.S. Export Control and Sanctions Laws Keep up with the latest news from the Justice Department at justice.gov/news