Taxable Talk

I never inspired to be a football player; I'm just not big. I do enjoy watching football games, as my friends are well aware.

Joe Bowden enjoyed a nine-year career as a linebacker with Houston, Tennessee, and Dallas (he's now a coach at Central Oklahoma). Antowain Smith was a running back for Buffalo, New England, Tennessee, and New Orleans. And these two former NFL players figure into a tax fraud case.

Anthony Quinn Welch is accused of "borrowing" Bowden and Smith's names, and filing tax returns on their behalf from 1997 - 2002. Mr. Welch allegedly opened bank accounts in their names, created phony addresses for them, and filed tax returns...and received over $2 million in refunds. And he deposited the refunds (using phony signatures) into his bank accounts.

Most likely the scheme fell apart when the IRS saw the real tax returns for Bowden and Smith. One individual, two tax returns? Not particularly likely. Mr. Welch faces four counts of filing fraudulent tax returns, and two counts of filing false claims. He's looking at a lengthy term at ClubFed if found guilty.

News Story: Click2Houston.com

Wade Cook, convicted last week for not reporting all of his income, will be retried on tax fraud charges. Additionally, his wife, who also had a hung jury, will also be retried. The Seattle Times reported that the new trial will be held in Seattle, probably this Spring.

It's time for yet another round-up of tax fraud. We have some of the usual suspects, but there is one that rises to the top.

I wrote about Wade Cook in December 2005
when he was indicted for tax fraud. On Tuesday Cook was found guilty of seven charges of failing to pay taxes on $8.9 million of income between 1998 and 2000. The jury did deadlock on one charge against Cook. His wife, Laura, had a much better outcome: the jury deadlocked on all the charges against her. The government proved to the jurors satisfaction that Cook took royalties from his books and moved them into a trust. Cook then used the trust to support a luxurious lifestyle. Cook's attorney noted that he plans to appeal. You can read more about the Cook case here.

Meanwhile, some tax preparers are in trouble. In Orange City, Florida, Keith Warner had a good way of making a living as a tax preparer (until he was caught); he kept over half of the refunds that should have gone to his clients. And he also neglected to report his embezzled income on his tax return. He's looking at a visit to ClubFed, and a fine of $500,000 (coincidentally, that's about how much he pocketed), and restitution. Meanwhile, a preparer in nearby Polk County, Florida is accused of making up deductions for her clients. She's accused of inventing $2.7 million of deductions for her clients. She could face 81 years in ClubFed if found guilty on all counts.

Newman, California is one of the small towns in the Central Valley. Bonnie Arnell, of Newman, also made up questionable deductions for her clients, and she has pleaded guilty to 39 counts of filing false income tax returns and 3 counts of making false statements to the IRS. She also had another problem—when she was supposed to show up for an audit, she never did (inventing excuse after excuse). She'll be spending significant time at ClubFed.

In Columbus, Georgia, yet another preparer is in trouble with the law. In early February, Valerie Renfroe was arrested on charges of overcharging clients and putting false information on tax returns. She's now being sought on additional charges of theft by deception.

Finally, in New Jersey an accountant and his children have been indicted on charges of conspiring to steal more than $500,000 from the state by inventing 745 applications for homestead rebate checks. The Philippine News states that Ronnie Lapuz used the accused accountant's firm and that Achilles Amante had 'doctored' various documents to allow him to get a larger refund. “I was shocked when his children were arrested because I thought what he was doing was legal,” Lapuz told the News. The case resulted from a tip to the Jersey City Police Department that many refund checks were directed to a business owned by the accused.

Not a good week for some of the lesser members of the tax preparation community. Doctoring documents, inventing deductions, and stealing refunds. Oh, I forgot to mention that Achilles Amante apparently charged $65 to do a tax return, according to the Philippine News. His clients may have gotten what they paid for....I should mention that tax preparer fraud is on this year's list of the "Dirty Dozen" tax scams. As the IRS says, if it sounds too good to be true, it probably is.

I've been under the weather the last two days, fighting a bout of the flu. That's better than these individuals, including some doctors who should (one day) have a prescription to fight off the malady.

Dr. Steven Herman was a plastic surgeon, with a practice in Norwalk, Connecticut and Manhattan. I say "was" because he'll be spending 20 months at ClubFed. Dr. Herman started by committing tax evasion; he took $883,000 from his medical practice and didn't report the income. Then he asked friends and household employees to buy money orders payable to him at post offices. He would have them buy (typically) four $700 money orders, so that the $3,000 requirement for reporting wouldn't happen. That's a second felony, structuring. Finally, he billed a health insurance company for procedures that were cosmetic, but he told the insurance company that they were medically necessary. That's a trifecta, and it earned Dr. Herman the prison time, $800,000 in a civil settlement to the IRS, $150,000 in restitution to the insurance company, $236,000 in forfeiture because of the structuring, and a fine of $60,000. You can read the story here.

Meanwhile, phony trusts snagged three in Morgantown, West Virginia. Dr. Max Harned and his wife were found guilty last November of hiding money in trusts; they face up to 25 years in prison according to this AP Story. And a forest service employee who hid $1.1 million in trusts faces nine years in prison. I missed the first story of Dr. Harned's indictment last June. Dr. Harned apparently told IRS agents, "I'd like a piece of you, I'd kick your butt" and "I'm a very good shot." All three convicted in West Virginia were clients of Las Vegas attorney Robert A. Jones. Mr. Jones told the Pittsburgh Post-Gazette that he'd win both of these cases. Apparently he needs to buy a new crystal ball.

It's a shame that these medical practitioners haven't spent some money in finding a cure for the flu. If they had been successful, they wouldn't have any money problems.