Assistant U.S. Attorney Joseph J.M. Orabona (619) 546-7951
NEWS RELEASE SUMMARY - Nov. 12, 2015
SAN DIEGO - On the day after Veteran’s Day 2015, former U.S. Navy sailor Leonard Damon Washington pleaded guilty to tax evasion and filing false tax returns for a scam that resulted in more than $1 million in inflated tax refunds for fellow Navy service members, and over $140,000 in fraudulent tax preparation fees for Washington. Washington entered his guilty plea before U.S. Magistrate Judge Barbara L. Major, and remains in custody pending a sentencing hearing on February 5, 2016.
According to admissions in court and in his plea agreement, Washington was an active-duty sailor aboard the USS Higgins in San Diego in 2010 when he marketed himself to more than 140 Navy service members as someone who could assist in preparing and filing income tax returns. Washington convinced his fellow Navy service members to hire him as their tax preparer, and to pay him the exorbitant fee of $1,000 per return, by using a variety of false and misleading representations, including that he could obtain “special military tax" deductions and other special tax preparation services because of their military status.
Washington then prepared and filed false income tax returns on behalf of clients, including returns that claimed falsified gambling winnings and phantom tax withholdings, and thereby generated fraudulent tax refunds for his clients. Although he received over $140,000 in preparation fees from clients, Washington concealed his role as their paid tax preparer from the Internal Revenue Service (IRS). Washington directed his fraudulently-acquired fees into various bank accounts (including nominee accounts) in order to frustrate and impede the IRS’s efforts at determining his true income. Ultimately, Washington spent a substantial portion of his fraud proceeds on hotels, flights, restaurants, luxury items, jewelry and other personal expenses, and evaded more than $49,000 in personal federal income taxes he owed for 2010.
“This service member used his position in the U.S. Navy to recruit clients and cheat the system," said U.S. Attorney Laura Duffy. “On the day after Veteran’s Day, when we are reminded of the amazing character and sacrifice of our best and brightest, this defendant stands in sharp contrast." She reminded the public to always review a copy of any tax return prepared and filed on their behalf.
“Leonard Washington perpetrated a scheme that systematically defrauded the government, his fellow service members, and the taxpaying public," said IRS Criminal Investigation’s Special Agent in Charge Erik Martinez. “IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false income tax returns."
DEFENDANT Criminal Case No. 15CR0951-JM
Leonard D. Washington Age: 43 Springdale, Arkansas
SUMMARY OF CHARGES AGAINST DEFENDANT:
Count 1: Title 26, United States Code, Section 7201 B Tax Evasion. Maximum penalties: 5 years’ imprisonment, $250,000 fine, $100 special assessment, 3 years of supervised release
Count 2: Title 26, United States Code, Section 7206(2) - Aiding and Assisting Preparation of False Tax Returns. Maximum penalties per count: 3 years’ imprisonment, $100,000 fine, $100 special assessment, 1 year of supervised release
INVESTIGATING AGENCIES
Internal Revenue Service-Criminal Investigation
Source: U.S. Department of Justice, Office of the United States Attorneys
