Several people have been found guilty and sentenced to prison for violating federal tax laws over the past few months, said Carole S. Rendon, U.S. Attorney for the Northern District of Ohio, and Troy Stemen, Acting Special Agent in Charge of IRS-Criminal Investigation’s Cincinnati Field Office.
As the 2017 tax filing deadline approaches, these cases serve as reminders that there are civil and sometimes criminal penalties to filing erroneous tax returns.
“Tax day is not fun, but the vast majority of Americans who properly report and pay their fair share need to know that we will aggressively prosecute those who shirk or flaunt their obligations," Rendon said.
“We are in the midst of this year’s income tax filing season, so it is important for people to have confidence that when they pay their taxes, their neighbors and co-workers are doing the same," Stemen said. “The IRS Criminal Investigation, together with the U.S. Attorney’s Office, will investigate and prosecute those who violate our tax system. This joint announcement should serve as a warning to anyone who might consider evading their federal tax obligations, as we will hold accountable those who use deceit and fraud to line their pockets with money, especially when that money represents stolen federal taxes."
Details on a few cases over the past year:
U.S. v. Farmer: Darryl Farmer, of Cleveland Heights, was sentenced to nearly six years in prison and ordered to pay $100,230 in restitution last month. Farmer held himself out as a neighborhood tax preparer who paid recruiters a “referral fee" to provide him identifications and personal identifiers of others. Farmer used this information to file false tax returns, including claiming tax credits for businesses that did not exist. He also opened multiple personal and business bank accounts, which he controlled, in the names of these various people in order to deposit the refunds from the tax returns he filed. Farmer falsely claimed more than $100,000 from the IRS between 2010 and 2012, according to court documents.
U.S. v. Lin et. al.: The owners of the Royal Buffet and Grill restaurant in Akron are awaiting sentencing after admitting they did not report the majority of cash receipts at the restaurant. Yuan Lin, of Fairlawn, and Rui Xu, Xin Hsu and Zhou Qiang Zou, all of Akron, conspired between 2002 and 2013 to defraud government by not reporting the majority of cash receipts on their taxes. Xu, Hsu, and Zou also conspired to harbor at least 10 undocumented workers, which included employing the undocumented workers at restaurant, where they worked for below minimum wage or only for tips. At one time, they housed as many as 14 undocumented workers inside a single-family residence on Annapolis Avenue, according to court documents. Lin issued a check to the IRS for $450,000 in partial payment of his restitution.
U.S. v. Vonderembse: Sandra Vonderembse, a psychiatrist from Oregon, Ohio, was sentenced last year to serve 18 months in prison and ordered to pay $565,128 in restitution. She failed to pay taxes and filed and false and fraudulent tax returns that included false statements regarding her income and the amount of tax due and owing. For three years, she falsely claimed to have no taxable income and to owe no taxes, despite earning more than $240,000 each year while working as a psychiatrist. In total, from 2005 through 2011, she attempted to evade more than $360,000 in income tax liabilities.
U.S. v. Klocker: Thomas Klocker, of Lakewood, was sentenced to a year in custody and ordered to pay nearly $1.8 million restitution and fines for taking improper write-offs and not reporting taxable income. Klocker was the sole shareholder and operator of All Metal Sales (AMS) in Westlake. He also operated TT Charter Leasing, which was in the business of chartering the luxury yacht “Tommy Time". Klocker diverted corporate funds from AMS for his own use to benefit his personal lifestyle and avoid personal income liabilities between 2007 and 2010. For example, Klocker diverted funds from AMS to construct a waterfront residence in Lakewood and to maintain his 68’ Sunseeker yacht, as well as to pay for luxury travel and to make cash withdrawals. He reported substantial business losses arising from the operating costs and expenses arising from the personal use of the TT Charter Leasing yacht, according to court documents. He also misrepresented his personal expenses entered into AMS’ books and records by falsely describing them as legitimate business expenses. Klocker also provided false information to his tax-return preparers about expenses he described as business-related which were, in fact, personal in nature - including luxury travel with his family, according to court documents.
Source: U.S. Department of Justice, Office of the United States Attorneys
