Tax Fraud Blotter: Just another day in paradise

This beauty is a steal; hard landing; flag in midfield; and other highlights of recent tax cases.

Puyallup, Washington: Donna Powell, 56, co-owner and chief financial officer of a steel manufacturing company, pleaded guilty to nine counts of failing to pay employment taxes.

Powell is co-owner and operator of Pinnacle Steel Fabricators, serving as Secretary/Treasurer and Accounting Manager. Between 2010 and 2018, the company withheld some $1,167,891 in payroll taxes from employee paychecks and did not remit any of those funds to the IRS.

The company has 15 to 20 employees. Powell did not file a 941 for the period between 2010 and the first quarter of 2018. Instead of paying the taxes, Powell and her husband spent the money on personal trips, gambling and online gambling, as well only in purchases related to the spa and the swimming pool.

Sentencing is November 7. Willful non-payment of employment taxes is punishable by up to five years in prison.

Imperial, Missouri: Used car salesman Donald Benck pleaded guilty to three tax charges and admitted hiding more than $300,000 in commissions from the IRS.

He was mainly paid by commissions and admitted that from 2014 he had recruited acquaintances to receive the commissions by check, cash the checks and give the money to Benck. Acquaintances kept a small fee. In total, the acquaintances cashed $326,000 in checks from 2014 to 2016.

Benck’s employer issued 1099 forms to the acquaintances instead of Benck, who did not inform his tax preparer of the commissions and did not report the income on his returns. Benck failed to report income of $31,300 for 2014, $131,400 for 2015 and $93,035 for 2016, resulting in a federal tax loss of $84,092.

Sentencing is November 18.

Albany, New York: Sean O’Hare, 54, of South Portland, Maine, pleaded guilty to wire fraud in connection with a scheme to defraud his clients in preparation for taxes.

O’Hare, a former tax preparer and accountant, admitted that from September 2015 to September 2016, he filed quarterly returns in New York State for three companies; these declarations underestimated the amount of taxes owed by companies. O’Hare collected the full amount of taxes owed and stole the difference between the amount of taxes paid to New York and the amount he received from businesses.

He admitted to stealing $131,758, which he agreed to repay as restitution. His wire fraud conviction carries a maximum of 20 years in prison, a fine of up to $250,000 and probation for up to three years. Sentencing is January 11.

East Stroudsburg, Pennsylvania: Hope Carbone and Donna Venturini were sentenced to two years probation for conspiring to evade federal excise taxes on imported cigars.

Carbone and Venturini admitted to conspiring with Jose Dominguez, the owner of cigar manufacturer Victor Sinclair Cigars, to evade excise duties from 2009 to 2011. Carbone and Venturini served as the U.S. importer of Republic-based Victor Sinclair Cigars. Dominican. Through fraudulent invoices, Dominguez, Carbone and Venturini collected some $3.9 million in excise duties from American cigar buyers.

The conspirators only paid some $2.1 million to the government, keeping about $1.8 million for themselves.

Carbone and Venturini were ordered to pay restitution. Dominguez pleaded guilty in June and is awaiting sentencing.

Map, Texas: Raymond Griggs, 51, a former owner of a tax preparation business, was found guilty of concealing more than $1 million in income from the IRS.

Between 2011 and 2013, Griggs ran Griggs Financial in the Dallas area. The company generated over $1.3 million in gross revenue in 2013; Griggs reported to the IRS that his business made about $340,000. That year alone, he spent over $1.4 million on items such as entertainment, jewelry, travel, and flight lessons.

Griggs also consistently underreported his company’s gross receipts to the IRS by approximately $1 million for 2012 and 2011.

He faces up to three years in prison.

Key West, Florida: Volodymyr Ogorodnychuk, director of four labor recruitment companies, was sentenced to four years in prison for tax and immigration offences.

From January 2016 to around October 2020, Ogorodnychuk helped operate Paradise Choice, Paradise Choice Cleaning, Tropical City Services and Tropical City Group. The companies provided employees to hotels, bars and restaurants in Key West and other locations, even though the employees were not permitted to work in the United States.

Ogorodnychuk admitted that he and his conspirators paid the workers without withholding Social Security, Medicare, and taxes from their wages and did not report those wages to the IRS. He also admitted that he and his conspirators defrauded the IRS out of more than $3.5 million in employment taxes.

Ogorodnychuk was also sentenced to three years of probation. Return is to be determined.

Midland, TX: Trucker Thomas Valdez Rodriguez was sentenced to two years in prison for non-payment of social contributions.

Rodriguez owned Tom-E-Lee Trucking and Tom-E-Lee Industries and from 2012 to 2018 failed to pay employment taxes withheld from employees and employment taxes withheld from another company. He has also failed to pay personal income tax since 2011.

Rodriguez caused a total tax damage of $12,714,214.42.

He used some of the money to buy midfield season tickets at Dallas Cowboys games and chartered jets to take him and his friends to those games. He also bought a new residence for over $2 million.

Rodriguez, who pleaded guilty in January, was ordered to pay $12,714,214.42 in restitution to the IRS, including $1 million he paid before sentencing.

Waukegan, Ill.: Resident Wilmer Alexander Garcia Meza was sentenced to 29 months in prison for using stolen ID to make false statements.

Garcia used other people’s personal information – including names, dates of birth and identification documents such as foreign passports – to fraudulently obtain ITINs. From 2013 to 2017, he used ITINs to file claims on behalf of stolen identities, claiming thousands of dollars in fraudulent refunds. Garcia then used IDs with those same names to cash refund checks issued by the IRS. In total, Garcia caused a tax loss of some $221,923.

He was also ordered to serve three years of probation and paid some $221,923 in restitution to the United States.

Buffalo, New York: Ronald Rechan, of Douglasville, Georgia, previously convicted of making a false statement on a bank loan application and tax evasion, was sentenced to six months in jail and ordered to pay $628,144 in restitution.

In November 2017, Rechan applied for a $150,000 home loan from First National Bank of America, on which he fraudulently overstated his income.

Between April 2013 and January 2018, Rechan also committed tax fraud. While serving as CFO, Rechan paid himself $1,962,167.21 and to avoid paying tax on that income, he paid his personal expenses directly from a business account and deposited $332,746.19 into a nominee bank account.

His actions resulted in a tax loss to the IRS of $628,144.

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