KNOXVILLE, Tenn. - On Mar. 20, 2013, a federal jury in U.S. District Court for the Eastern District of Tennessee, at Knoxville, found James E. Beavers and Beverly S. Beavers, each guilty of conspiracy to defraud the United States and three counts of filing false claims for tax refunds. After the jury’s verdicts were announced, the defendants were remanded into federal custody by the Honorable Thomas Varlan, U.S. District Judge. Sentencing has been set for 10:00 a.m., August 7, 2013.
The evidence at trial showed that James Beavers held a Ph.D. in civil engineering and was employed as an engineering consultant. He was formerly the director of an academic engineering center at the University of Tennessee. His wife Beverly Beavers owned a small formalwear and jewelry store in Knoxville.
In June 2009 the Beavers arranged to have a fraudulent 2008 tax return prepared by PMDD Services LLC, tax return preparation firm that helped clients claim exorbitant tax refunds specifically intended to help the clients pay off their personal debts. The tax return falsely reported that the amount of their mortgage, limits on all their credit cards, and other personal debts were actually income and withheld federal income tax. This fictitious income and fictitious tax withholding was reported to the Internal Revenue Service (IRS) on false Forms 1099-OID, which were prepared by Penny Jones of PMDD Services based on information provided by the Beavers. Jones was convicted in the Southern District of Florida for her involvement in the same scheme. She is currently serving a sentence of 144 months in federal prison.
As a result of the fraudulently-inflated income and withholding, the 2008 tax returns for the Beavers claimed a fraudulent tax refund of over $591,000. Upon receiving the funds, the Beavers paid off their home mortgage. They then conveyed their newly-unencumbered real estate to sham trusts, in order to impede IRS efforts to collect the erroneously-paid refund. The Beavers later filed false amended tax returns for the 2006 and 2007 tax years, also prepared by Jones, requesting fraudulent tax refunds of $193,056 and $202,625 respectively.
“We will aggressively investigate and prosecute those who intentionally violate federal tax laws. Disagreement with the income tax laws and failure to recognize the authority of the government to tax will not excuse criminal conduct," said U. S. Attorney Bill Killian.
The Beavers case was investigated by special agents of the IRS-Criminal Investigation. The case was prosecuted by Trial Attorneys Jonathan Marx and Jed Silversmith of the Department of Justice, Tax Division, with local assistance from Assistant U.S. Attorney Charles E. Atchley, Jr., with the U.S. Attorney’s Office for the Eastern District of Tennessee.
Source: U.S. Department of Justice, Office of the United States Attorneys
