Tax evasion blotter: identity crisis
A skillful client; give him credit; unhappy camper; and other highlights of recent tax cases.
New York: Todd Kozel, a former CEO of a foreign oil multinational, was sentenced to five years in prison after pleading guilty to five counts of willfully failing to file personal income tax returns.
From at least around 2004 to at least around 2014, Kozel was the co-founder and CEO of a London-based oil company with operations in Iraq. From 2011 to 2015, Kozel, a US citizen, won compensation totaling over $66 million.
Kozel failed to file a timely federal personal income tax return for calendar years 2011 through 2015, resulting in more than $20 million in unpaid federal taxes. He used sophisticated offshore structures, trusts and bank accounts to hide some of his undeclared income.
He was also sentenced to two years of probation and ordered to pay $29,462,965.23 in restitution to the IRS.
Memphis, TN: Tax preparer Pia Sims pleaded guilty to charges of access device fraud, possession of access device manufacturing equipment, aggravated identity theft and conspiracy to defraud states States, according to the media. Two other charges were reportedly dismissed.
Sims allegedly conspired with accomplices to obtain stolen names and social security numbers. Investigators said an accomplice, an employee of the Illinois Department of Social Services, sold him nearly 500 names, according to cited court documents.
Reports added that she had more than 4,100 social security numbers on her computer and had filed nearly 80 fraudulent claims totaling nearly $500,000. Authorities told media she also had 15 stolen credit cards.
Sims will pay compensation to the victims and faces a maximum of 42 years in prison and a $750,400 fine, according to reports, adding sentencing is May 10.
Hattiesburg, Mississippi: A federal court has permanently barred tax preparer Terance Price from owning or operating a tax preparation business and preparing returns for others.
The permanent injunction is against Price, both individually and as a company as Superior Taxes. The court issued the injunction after Price failed to respond to the government’s complaint to him.
The complaint alleged that Price, who began operating his tax preparation business in 2015, knowingly took unreasonable positions on returns he prepared that understated tax owed by his clients, exaggerated refunds due to its customers, or both. The complaint alleged that Price prepared statements that falsely claimed home energy credits, fuel tax credits and unreimbursed business expenses for employees.
The government further alleged that Price had filed hundreds of returns since 2015 and that he had filed returns using the personally identifying information of other preparers. According to the complaint, the IRS imposed penalties on Price for failing to make reasonable inquiries to ensure that its clients were legitimately entitled to various tax credits and Price did not pay those penalties.
Durham, North Carolina: Attorney Tiffany Dawn Russell pleaded guilty to conspiracy to commit multiple fraud schemes and to file a false federal income tax return.
Russell and his co-conspirators applied for loans and credit cards with Social Security numbers that were not issued to them by the Social Security Administration. They created themselves new credit profiles or synthetic identifiers to open financial accounts and make purchases from retailers without any intention to pay for the items and services. For example, she was accused of using such a fake ID to buy a BMW and obtaining a credit card which she used to pay for her buttock augmentation surgery in 2016.
His conspirators previously pleaded guilty to committing bank fraud for their illegal use of synthetic IDs.
Russell agreed to plead guilty to participating in a massive, multi-year conspiracy to obtain more than $2.5 million from at least 12 financial institutions and the Small Business Administration. According to the government, she used a synthetic identity because she had bad credit. Beginning in August 2017, Russell embarked on a new scheme, known as credit washing, to remove legitimate debt accounts from her credit history by falsely claiming that she had been the victim of identity theft and that she had not opened these accounts. Once the credit reporting agencies removed those accounts, his credit rating improved, allowing him to get credit. She and her conspirators continued to make these false claims of identity theft, demanding that credit reporting agencies delete newly opened accounts. As a result, financial institutions relied on these washed credit reports to decide whether or not to extend his credit.
In 2020, Russell and others also fraudulently obtained over $1 million in loans under the CARES Act. The 10 loan applications, including two for his law firm, contained false statements regarding the number of employees, monthly payroll, income and expenses. Russell used the money to buy property in three states and to pay personal debt.
Russell pleaded guilty to conspiracy to commit mail, wire and financial fraud, for which she faces a maximum of 30 years in prison and a $1 million fine; she faces an additional fine of three years and $250,000 for filing a false statement. She also faces a mandatory restitution order of $2,041,605 to the victim financial institutions, the SBA and the IRS. She will also give up an additional $2,019,571 in the United States.
Hampton, Virginia: Resident Clarence M. Rice Jr. pleaded guilty to defrauding area victims of more than $630,000 and evading more than $50,000 in income tax.
Between 2013 and 2019, Rice told victims he would receive a large inheritance from his father’s death on the condition that Rice pay off all of his existing debts. He tricked the victims into giving him money by claiming that he needed the funds to get his inheritance. He stole over $350,000 from a 75-year-old retired bricklayer and over $140,000 from an elderly blind man.
In total, Rice stole at least $632,017.44 in the scheme. As part of the plea, Rice agreed that all of his victims had limited financial means and suffered substantial hardship as a result of his fraud.
Rice also hasn’t filed taxes since 2011. Between 2015 and 2019, he defrauded the IRS by living a cash life, brokering victims’ checks for cash, hiding assets on prepaid cards and lying to law enforcement about his income and assets. The approximate tax owed as a result of Rice’s default is $52,064.18.
He pleaded guilty to wire fraud and tax evasion and is expected to be sentenced on May 25. He faces a maximum of 20 years in prison for the fraud offense and a maximum of five years for tax evasion.
Alma, Arkansas: RV salesman Joshua Wood, previously of Alma, pleaded guilty to tax evasion and admitted lying to IRS agents.
Wood told his employer not to withhold tax from his pay and then failed to file returns from 2014 to 2016. During those years, Wood earned more than $378,000 selling recreational vehicles and automobiles.
When questioned by IRS agents, Wood falsely claimed he was shot and injured while on a Navy mission, causing him to suffer from post-traumatic stress disorder. He also lied that a CPA prepared statements on his behalf.
He faces a maximum of five years in prison.
San Antonio: Resident Robert Steven Powell was sentenced to 51 months in prison and ordered to pay $345,136.68 in federal restitution for tax evasion.
Powell, convicted in 2018, was a member of a tax regime organization that encouraged tax evasion. Although he earned salaries as high as $236,098 a year, he paid no income tax from 2000 to 2013.
Powell evaded his federal taxes by submitting bogus W-4s to his employer and claiming he was exempt from federal withholding. Powell also placed a house and an RV under other names and attempted to conceal his physical address from the IRS by obtaining multiple state identification documents using false personal residence addresses.