A Los Angeles tax preparer has pleaded guilty to engaging in two separate fraud schemes. The first involved filing fraudulent income tax returns for at least nine professional athletes, reporting fabricated business and personal losses. The tax pro and his associates claimed they had specialized knowledge that the athletes’ prior tax professionals lacked and convinced the athletes to amend past returns to generate large fraudulent refunds. They then charged the athletes a fee of 30% of the resulting refund and directed the athletes to send the fee to shell entities. Second, the tax pro and his associates applied for PPP loans on behalf of a number of small businesses, shell entities with few or no employees that they controlled, and business entities controlled by others. They inflated the number of employees and monthly payroll costs claimed on the PPP loan applications and submitted fabricated tax returns in support of the applications. Some of the business owners never saw their loan applications before they were filed. The tax pro charged a fee of 30% of the loan amounts. He’s facing up to 25 years in prison. (https://www.justice.gov/opa/pr/second-defendant-pleads-guilty-multimillion-dollar-tax-fraud-scheme-involving-professional)
CPAs, get four hours of fraud CPE with our Fraud Essentials for CPAs Webinar. Click here for more information.
