Taxable Talk

Back in April I reported on Martha Vernon and her daughter Tiffany Dunbar. The team engaged in perhaps the stupidest Bozo scheme a tax preparer could: They stole names and social security numbers from her employer, invented a phony W-2 for each individual, prepared a tax return which, of course, showed that the individual would receive a refund. Did I mention they had the refunds direct deposited into their own bank accounts? Given that these individuals would inevitably submit their own tax returns it was impossible for the IRS not to discover this scheme.

They received $188,931 in refunds before the IRS discovered their scheme. The pair pleaded guilty back in April and were sentenced yesterday—Ms. Vernon received 40 months at ClubFed while her daughter, Ms. Dunbar, got 33 months at ClubFed.

There's only one more item to go with this story. Ms. Vernon's attorney, Lora Collins, told the judge that her client was told how to conduct the scheme by a former prison inmate who she had gotten involved with. I wonder if Ms. Vernon asked that man what he was in prison for...but I suspect that sort of question never occurs to the Bozo brain.

It was a busy week for the bozo side of the tax profession. Three preparers found themselves in hot water, and in one case some customers will be decoded into the mess.

First, from Beaufort, South Carolina, Sally Berry, the owner of Berry's Bookkeeping and Tax Service allegedly liked sales tax. However, she also allegedly didn't like to remit it to South Carolina. The South Carolina Department of Revenue also alleges that Ms. Berry underreported the amount of sales tax due on clients' returns. Ms. Berry faces up to 34 years in prison if convicted on all ten charges that she faces.

Next, Henry Omozee operated HO Tax Services and Accounting Services in Woodbridge, Virginia. He was found guilty on three counts of filing false tax returns. He underreported his own income on his tax returns from 2001 through 2003 to the tune of nearly $85,000 in tax. He could get up to three years at ClubFed when he's sentenced later this year.

Finally, Sharon Kukhahn had a sure-fire way to avoid income tax. Just buy her "IMF Decoder" and you wouldn't have to pay income taxes. Only one problem—there's no such thing and this was yet another phony scheme to avoid taxes. The Department of Justice estimates that the government has lost $4.9 million to this scheme. Ms. Kukhahn received a permanent injunction to stop selling the scheme, and she must provide a list of her customers to the government. So if you paid between $1,750 and $3,195 for her package you'll get something else in the mail soon—A "Dear Valued Taxpayer Letter" letting you know that your return has been selected for audit.

One final thing about Ms. Kukhahn. She displayed some chutzpah; after the DOJ filed suit against her she told her customers that she had transferred funds to the DOJ to compensate her customers. As you'd expect, there was no transfer of any money and the 328 customers who wrote the DOJ are out of luck. Well, since the DOJ (and likely the IRS) already has their names and addresses they might get some bad luck—they'll probably be among the first to be audited over this scheme. For as usual if it sounds too good to be true it probably is.

Earl Wolfe was an unlicensed architect in Jupiter Farms, Florida. That's one crime in itself. He earned around $750,000 but reported only $600 on his tax returns. The IRS and Department of Justice weren't appreciative of his efforts, and he has been found guilty of tax fraud.

What did he do with the other $749,400? He allegedly cashed $600,000 at check cashing stores, put some of the money in a Nevada Corporation, and hid some as a priest (Church of the Divine Deduction?). Unfortunately, he wasn't a priest, and putting his home and motorcycles in his "ministry" wasn't successful. His co-defendants pleaded guilty earlier this month. Mr. Wolfe will be sentenced later this year and will likely get some time at ClubFed.