Spokane - Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Karen L. Kivett, age 61, was sentenced for the crime of filing a false claim for income tax refund, and her husband, William E. Kivett, Jr., age 66, was sentenced for the crime of failing to file an income tax return. Both individuals are residents of Yakima, Washington. Senior United States District Court Judge Fred Van Sickle sentenced Karen and William Kivett to six months of home confinement, to be followed by a 3 year term of court supervision.
According to information disclosed during court proceedings, Karen L. Kivett became involved in a tax fraud scheme, known as the Form 1099-OID “redemption" scheme, after attending a conference. The scheme misuses IRS Forms 1099-OID, which are a type of information return used to report income from certain investments, to claim fictitious income and withholdings which are used to support false claims for tax refunds. On March 17, 2009, Karen Kivett filed a 2007 joint U.S. Individual Income Tax Return (Form 1040) containing a false claim for income tax refund of $436,942. The false refund claim was based on inflated income tax withholdings reported on fabricated Forms 1099-OID and fraudulent taxable interest. The IRS did not pay the false claim.
According to information disclosed during court proceedings, William E. Kivett, Jr. willfully failed to file an income tax return for the 2008 year reporting gross income he and his wife earned. In 2008, William E. Kivett, Jr. earned $40,759 in wages while employed as an investigative analyst for the U.S. Department of Homeland Security Immigration and Customs Enforcement. In that year, his wife earned $35,068 in commissions selling health care products for a multi-level marketing company. William Kivett also failed to timely file income tax returns for the years 2006, 2007, 2009, 2010 and 2011, reporting his wages from Department of Homeland Security. According to information disclosed during court proceedings, William Kivett is retired from the Department of Homeland Security.
Michael C. Ormsby, U.S. Attorney for the Eastern District of Washington, said, "The privilege of living well in the United States carries certain burdens, one of which is the voluntary payment of taxes. The system only works when everyone truthfully reports their income, pays their fair share of taxes, and does not make false claims for tax refunds."
The investigation was conducted by the Internal Revenue Service, Criminal Investigation. The case was prosecuted by George J.C. Jacobs, III, an Assistant United States Attorney for the Eastern District of Washington.
13-CR-02093-FVS
Source: U.S. Department of Justice, Office of the United States Attorneys
